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1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 13D/A

Under the Securities Exchange Act of 1934*

USA Networks, Inc.
(Name of Issuer)

Common Stock, par value $.01 per share
(Title of Class of Securities)

902984 10 3
(CUSIP Number)

Stephen M. Brett, Esq. Pamela S. Seymon, Esq. Karen Randall, Esq.
Senior Vice President and Wachtell, Lipton, Rosen & Katz Universal Studios, Inc.
General Counsel 51 West 52nd Street 100 Universal City Plaza
Tele-Communications, Inc. New York, New York 10019 Universal City, CA 91608
5619 DTC Parkway (212) 403-1000 (818) 777-1000
Englewood, CO 80111
(303) 267-5500

(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)

February 12, 1998
(Date of Event which Requires Filing of this Statement)

If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ].

Note: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copies are to be
sent.

The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).

- -----------------------------
* Note: This statement constitutes the original filing of a Report on
Schedule 13D of the reporting group consisting of Tele-Communications, Inc.,
Barry Diller, The Seagram Company Ltd. and Universal Studios, Inc. This
statement also constitutes the original filing of a Report on Schedule 13D of
BDTV IV INC. This statement also constitutes Amendment No. 12 of a Report on
Schedule 13D of Tele-Communications, Inc., Amendment No. 10 of a Report on
Schedule 13D of Barry Diller, Amendment No. 6 of a Report on Schedule 13D of
BDTV INC., Amendment No. 4 of a Report on Schedule 13D of BDTV II INC., and
Amendment No. 1 of a Report on Schedule 13D of BDTV III INC.

Page 1 of 49 pages

2
(1) Names of Reporting Persons S.S. or I.R.S. Identification Nos. of Above
Persons

Tele-Communications, Inc.
84-1260157

(2) Check the Appropriate Box if a Member of a Group (a) [ ]
(b) [x]

(3) SEC Use Only

(4) Source of Funds

(5) Check if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(d) or 2(e) [ ]

(6) Citizenship or Place of Organization

Delaware

Number of (7) Sole Voting Power None; see Items 3 and 5(a)
Shares Bene-
ficially (8) Shared Voting Power 23,952,401 shares
Owned by
Each Reporting (9) Sole Dispositive Power None; see Items 3 and 5(a)
Person With:
(10) Shared Dispositive Power 23,952,401 shares

(11) Aggregate Amount Beneficially Owned by Each Reporting Person

23,952,401 shares

(12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares [x]

Excludes shares beneficially owned by the executive officers and directors
of TCI, Seagram and Universal. Excludes options to purchase an aggregate of
9,002,924 shares of Common Stock granted to Mr. Diller, none of which is
currently vested or exercisable and none of which becomes exercisable within
60 days. Excludes (i) Liberty Exchange Shares issuable to TCI, (ii)
54,237,170 shares of Common Stock or Class B Common Stock issuable to
Universal upon exchange of shares of USANi LLC ("LLC Shares"), and (iii) 5
shares of Common Stock issuable to Liberty upon exchange of LLC Shares, each
of which is subject to terms and conditions set forth in the Liberty
Exchange Agreement (as defined herein) and the Transaction Agreements (as
defined herein), including the limitations of the Communications Act of
1934, as amended (the "Communications Act"). See Item 6.

(13) Percent of Class Represented by Amount in Row (11)
35.5%
Assumes conversion of all shares of Class B Common Stock beneficially owned
by the Reporting Persons into shares of Common Stock and the exercise of
4,252,924 options to purchase shares of Common Stock which are currently
exercisable by Mr. Diller. Because each share of Class B Common Stock
generally is entitled to ten votes per share and each share of Common Stock
is entitled to one vote per share, the Reporting Persons may be deemed to
beneficially own equity securities of the Company representing approximately
77.6% of the voting power of the Company.

(14) Type of Reporting Person (See Instructions)

Page 2 of 49 pages

3
(1) Names of Reporting Persons

The Seagram Company Ltd.

(2) Check the Appropriate Box if a Member of a Group (a) [ ]
(b) [x]

(3) SEC Use Only

(4) Source of Funds

(5) Check if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(d) or 2(e) [ ]

(6) Citizenship or Place of Organization

Canada

(11) Aggregate Amount Beneficially Owned by Each Reporting Person

23,952,401 shares

(12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares [x]

Excludes shares beneficially owned by the executive officers and
directors of TCI, Seagram and Universal. Excludes options to purchase
an aggregate of 9,002,924 shares of Common Stock granted to Mr.
Diller, none of which is currently vested or exercisable and none of
which becomes exercisable within 60 days. Excludes (i) Liberty
Exchange Shares issuable to TCI, (ii) 54,237,170 shares of Common
Stock or Class B Common Stock issuable to Universal upon exchange of
LLC Shares, and (iii) 5 shares of Common Stock issuable to Liberty
upon exchange of LLC Shares, each of which is subject to terms and
conditions set forth in the Liberty Exchange Agreement and the
Transaction Agreements including the limitations of the
Communications Act. See Item 6.

(13) Percent of Class Represented by Amount in Row (11)
35.5%
Assumes conversion of all shares of Class B Common Stock beneficially
owned by the Reporting Persons into shares of Common Stock and the
exercise of 4,252,924 options to purchase shares of Common Stock which
are currently exercisable by Mr. Diller. Because each share of Class B
Common Stock generally is entitled to ten votes per share and each
share of Common Stock is entitled to one vote per share, the Reporting
Persons may be deemed to beneficially own equity securities of the
Company representing approximately 77.6% of the voting power of the
Company.

(14) Type of Reporting Person (See Instructions)

Page 3 of 49 pages

4
(1) Names of Reporting Persons

Universal Studios, Inc.
95-2011468

(2) Check the Appropriate Box if a Member of a Group (a) [ ]
(b) [x]

(3) SEC Use Only

(4) Source of Funds

(5) Check if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(d) or 2(e) [ ]

(6) Citizenship or Place of Organization

Delaware

(11) Aggregate Amount Beneficially Owned by Each Reporting Person

23,952,401 shares

(12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares [x]

Excludes shares beneficially owned by the executive officers and
directors of TCI, Seagram and Universal. Excludes options to purchase
an aggregate of 9,002,924 shares of Common Stock granted to Mr.
Diller, none of which is currently vested or exercisable and none of
which becomes exercisable within 60 days. Excludes (i) Liberty
Exchange Shares issuable to TCI, (ii) 54,237,170 shares of Common
Stock or Class B Common Stock issuable to Universal upon exchange of
LLC Shares, and (iii) 5 shares of Common Stock issuable to Liberty
upon exchange of LLC Shares, each of which is subject to terms and
conditions set forth in the Liberty Exchange Agreement and the
Transaction Agreements including the limitations of the
Communications Act. See Item 6.

(13) Percent of Class Represented by Amount in Row (11)
35.5%
Assumes conversion of all shares of Class B Common Stock beneficially
owned by the Reporting Persons into shares of Common Stock and the
exercise of 4,252,924 options to purchase shares of Common Stock which
are currently exercisable by Mr. Diller. Because each share of Class B
Common Stock generally is entitled to ten votes per share and each
share of Common Stock is entitled to one vote per share, the Reporting
Persons may be deemed to beneficially own equity securities of the
Company representing approximately 77.6% of the voting power of the
Company.

(14) Type of Reporting Person (See Instructions)

Page 4 of 49 pages

5
(1) Names of Reporting Persons S.S. or I.R.S. Identification Nos. of Above
Persons

Barry Diller

(2) Check the Appropriate Box if a Member of a Group (a) [ ]
(b) [x]

(3) SEC Use Only

(4) Source of Funds

(5) Check if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(d) or 2(e) [ ]

(6) Citizenship or Place of Organization

United States

(11) Aggregate Amount Beneficially Owned by Each Reporting Person

23,952,401 shares

(12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares [x]

Excludes shares beneficially owned by the executive officers and
directors of TCI, Seagram and Universal. Excludes options to purchase
an aggregate of 9,002,924 shares of Common Stock granted to Mr.
Diller, none of which is currently vested or exercisable and none of
which becomes exercisable within 60 days. Excludes (i) Liberty
Exchange Shares issuable to TCI, (ii) 54,237,170 shares of Common
Stock or Class B Common Stock issuable to Universal upon exchange of
LLC Shares, and (iii) 5 shares of Common Stock issuable to Liberty
upon exchange of LLC Shares, each of which is subject to terms and
conditions set forth in the Liberty Exchange Agreement and the
Transaction Agreements including the limitations of the
Communications Act. See Item 6.

(13) Percent of Class Represented by Amount in Row (11)
35.5%
Assumes conversion of all shares of Class B Common Stock beneficially
owned by the Reporting Persons into shares of Common Stock and the
exercise of 4,252,924 options to purchase shares of Common Stock which
are currently exercisable by Mr. Diller. Because each share of Class B
Common Stock generally is entitled to ten votes per share and each
share of Common Stock is entitled to one vote per share, the Reporting
Persons may be deemed to beneficially own equity securities of the
Company representing approximately 77.6% of the voting power of the
Company.

(14) Type of Reporting Person (See Instructions)

Page 5 of 49 pages

6
(1) Names of Reporting Persons S.S. or I.R.S. Identification Nos. of Above
Persons

BDTV INC.
84-1260157

(2) Check the Appropriate Box if a Member of a Group (a) [ ]
(b) [x]

(3) SEC Use Only

(4) Source of Funds

(5) Check if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(d) or 2(e) [ ]

(6) Citizenship or Place of Organization

Delaware

(11) Aggregate Amount Beneficially Owned by Each Reporting Person

23,952,401 shares

(12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares [x]

Excludes shares beneficially owned by the executive officers and
directors of TCI, Seagram and Universal. Excludes options to purchase
an aggregate of 9,002,924 shares of Common Stock granted to Mr.
Diller, none of which is currently vested or exercisable and none of
which becomes exercisable within 60 days. Excludes (i) Liberty
Exchange Shares issuable to TCI, (ii) 54,237,170 shares of Common
Stock or Class B Common Stock issuable to Universal upon exchange of
LLC Shares, and (iii) 5 shares of Common Stock issuable to Liberty
upon exchange of LLC Shares, each of which is subject to terms and
conditions set forth in the Liberty Exchange Agreement and the
Transaction Agreements, including the limitations of the
Communications Act. See Item 6.

(13) Percent of Class Represented by Amount in Row (11)
35.5%

Assumes conversion of all shares of Class B Common Stock beneficially
owned by the Reporting Persons into shares of Common Stock and the
exercise of 4,252,924 options to purchase shares of Common Stock which
are currently exercisable by Mr. Diller. Because each share of Class B
Common Stock generally is entitled to ten votes per share and each
share of Common Stock is entitled to one vote per share, the Reporting
Persons may be deemed to beneficially own equity securities of the
Company representing approximately 77.6% of the voting power of the
Company.

(14) Type of Reporting Person (See Instructions)

Page 6 of 49 pages

7
(1) Names of Reporting Persons S.S. or I.R.S. Identification Nos. of Above
Persons

BDTV II INC.
84-1260157

(2) Check the Appropriate Box if a Member of a Group (a) [ ]
(b) [x]

(3) SEC Use Only

(4) Source of Funds

(5) Check if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(d) or 2(e) [ ]

(6) Citizenship or Place of Organization

Delaware

(11) Aggregate Amount Beneficially Owned by Each Reporting Person

23,952,401 shares

(12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares [x]

Excludes shares beneficially owned by the executive officers and
directors of TCI, Seagram and Universal. Excludes options to purchase
an aggregate of 9,002,924 shares of Common Stock granted to Mr.
Diller, none of which is currently vested or exercisable and none of
which becomes exercisable within 60 days. Excludes (i) Liberty
Exchange Shares issuable to TCI, (ii) 54,237,170 shares of Common
Stock or Class B Common Stock issuable to Universal upon exchange of
LLC Shares, and (iii) 5 shares of Common Stock issuable to Liberty
upon exchange of LLC Shares, each of which is subject to terms and
conditions set forth in the Liberty Exchange Agreement and the
Transaction Agreements including the limitations of the
Communications Act. See Item 6.

(13) Percent of Class Represented by Amount in Row (11)
35.5% Assumes
conversion of all shares of Class B Common Stock beneficially owned by
the Reporting Persons into shares of Common Stock and the exercise of
4,252,924 options to purchase shares of Common Stock which are
currently exercisable by Mr. Diller. Because each share of Class B
Common Stock generally is entitled to ten votes per share and each
share of Common Stock is entitled to one vote per share, the Reporting
Persons may be deemed to beneficially own equity securities of the
Company representing approximately 77.6% of the voting power of the
Company.

(14) Type of Reporting Person (See Instructions)

Page 7 of 49 pages

8
(1) Names of Reporting Persons S.S. or I.R.S. Identification Nos. of Above
Persons

BDTV III INC.
84-1260175

(2) Check the Appropriate Box if a Member of a Group (a) [ ]
(b) [x]

(3) SEC Use Only

(4) Source of Funds

(5) Check if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(d) or 2(e) [ ]

(6) Citizenship or Place of Organization

Delaware

(11) Aggregate Amount Beneficially Owned by Each Reporting Person

23,952,401 shares

(12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares [x]

Excludes shares beneficially owned by the executive officers and
directors of TCI, Seagram and Universal. Excludes options to purchase
an aggregate of 9,002,924 shares of Common Stock granted to Mr.
Diller, none of which is currently vested or exercisable and none of
which becomes exercisable within 60 days. Excludes (i) Liberty
Exchange Shares issuable to TCI, (ii) 54,237,170 shares of Common
Stock or Class B Common Stock issuable to Universal upon exchange of
LLC Shares, and (iii) 5 shares of Common Stock issuable to Liberty
upon exchange of LLC Shares, each of which is subject to terms and
conditions set forth in the Liberty Exchange Agreement and the
Transaction Agreements, including the limitations of the
Communications Act. See Item 6.

(13) Percent of Class Represented by Amount in Row (11)
35.5%
Assumes conversion of all shares of Class B Common Stock beneficially
owned by the Reporting Persons into shares of Common Stock and the
exercise of 4,252,924 options to purchase shares of Common Stock which
are currently exercisable by Mr. Diller. Because each share of Class B
Common Stock generally is entitled to ten votes per share and each
share of Common Stock is entitled to one vote per share, the Reporting
Persons may be deemed to beneficially own equity securities of the
Company representing approximately 77.6% of the voting power of the
Company.

(14) Type of Reporting Person (See Instructions)

Page 8 of 49 pages

9
(1) Names of Reporting Persons S.S. or I.R.S. Identification Nos. of Above
Persons

BDTV IV INC.
84-1260175

(2) Check the Appropriate Box if a Member of a Group (a) [ ]
(b) [x]

(3) SEC Use Only

(4) Source of Funds

(5) Check if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(d) or 2(e) [ ]

(6) Citizenship or Place of Organization

Delaware

(11) Aggregate Amount Beneficially Owned by Each Reporting Person

23,952,401 shares

(12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares [x]

Excludes shares beneficially owned by the executive officers and
directors of TCI, Seagram and Universal. Excludes options to purchase
an aggregate of 9,002,924 shares of Common Stock granted to Mr.
Diller, none of which is currently vested or exercisable and none of
which becomes exercisable within 60 days. Excludes (i) Liberty
Exchange Shares issuable to TCI, (ii) 54,237,170 shares of Common
Stock or Class B Common Stock issuable to Universal upon exchange of
LLC Shares, and (iii) 5 shares of Common Stock issuable to Liberty
upon exchange of LLC Shares, each of which is subject to terms and
conditions set forth in the Liberty Exchange Agreement and the
Transaction Agreements including the limitations of the
Communications Act. See Item 6.

(13) Percent of Class Represented by Amount in Row (11)
35.5%
Assumes conversion of all shares of Class B Common Stock beneficially
owned by the Reporting Persons into shares of Common Stock and the
exercise of 4,252,924 options to purchase shares of Common Stock which
are currently exercisable by Mr. Diller. Because each share of Class B
Common Stock generally is entitled to ten votes per share and each
share of Common Stock is entitled to one vote per share, the Reporting
Persons may be deemed to beneficially own equity securities of the
Company representing approximately 77.6% of the voting power of the
Company.

(14) Type of Reporting Person (See Instructions)

Page 9 of 49 pages
10
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 13D/A

Statement Of

TELE-COMMUNICATIONS, INC.,
BARRY DILLER,
UNIVERSAL STUDIOS, INC.,
THE SEAGRAM COMPANY LTD.,
BDTV INC.,
BDTV II INC.,
BDTV III INC.
and
BDTV IV INC.
Pursuant to Section 13(d) of the
Securities Exchange Act of 1934

in respect of

USA NETWORKS, INC.
(formerly named HSN, Inc.)

This Report on Schedule 13D (the "Schedule 13D") relates to the common
stock, par value $.01 per share (the "Common Stock"), of USA Networks, Inc., a
Delaware corporation (the "Company", which was formerly named HSN, Inc.). The
Report on Schedule 13D originally filed by Tele-Communications, Inc., a Delaware
corporation ("TCI"), on August 15, 1994, as amended and supplemented by the
amendments thereto previously filed with the Commission (collectively, the "TCI
Schedule 13D"), is hereby amended and supplemented to include the information
contained herein, and this Report constitutes Amendment No. 12 to the TCI
Schedule 13D. In addition, the Report on Schedule 13D originally filed by Mr.
Barry Diller (the "Barry Diller Schedule 13D") on August 29, 1995, as amended
and supplemented by the amendments thereto previously filed with the Commission,
is hereby amended and supplemented to include the information contained herein,
and this Report constitutes Amendment No. 10 to the Barry Diller Schedule 13D.
This Report on Schedule 13D also constitutes the original Report (the "Universal
Schedule 13D") of Universal Studios, Inc., a Delaware corporation ("Universal"),
and The Seagram Company Ltd., a Canadian corporation ("Seagram"). This Report on
Schedule 13D also constitutes Amendment No. 6 to the Report on Schedule 13D of
BDTV INC., a Delaware corporation ("BDTV"), originally filed with the Commission
on August 16, 1996 (the "BDTV Schedule 13D"). This Report on Schedule 13D also
constitutes Amendment No. 4 to the Report on Schedule 13D of BDTV II INC., a
Delaware corporation ("BDTV II"), originally filed with the Commission on
December 24, 1996 (the "BDTV

Page 10 of __ pages

11
II Schedule 13D"). This Report on Schedule 13D also constitutes Amendment No. 1
to the Report on Schedule 13D of BDTV III INC., a Delaware corporation ("BDTV
III"), originally filed with the Commission on July 28, 1997 (the "BDTV III
Schedule 13D"). This Report on Schedule 13D also constitutes the original Report
of each of BDTV IV INC., a Delaware corporation ("BDTV IV") (the "BDTV IV
Schedule 13D"), and the Reporting Group (as defined herein) (the "Reporting
Group Schedule 13D"). Barry Diller, TCI, Universal, Seagram, BDTV I, BDTV II,
BDTV III and BDTV IV (each, a "Reporting Person") constitute a "group" for
purposes of 13d-5 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), with respect to their beneficial ownership of the Common Stock
and are collectively referred to hereinafter as the "Reporting Group." The TCI
Schedule 13D, the Barry Diller Schedule 13D, the BDTV Schedule 13D, the BDTV II
Schecule 13D, the BDTV III Schedule 13D and the Liberty Schedule 13D are
collectively referred to as the "Schedule 13D." Capitalized terms not defined
herein have the meanings given to such terms in the prior Reports on Schedule
13D referred to in this paragraph.

The summary descriptions contained in this Report of certain agreements
and documents are qualified in their entirety by reference to the complete texts
of such agreements and documents, filed as Exhibits hereto and incorporated
herein by reference. Information contained herein with respect to each Reporting
Person and its executive officers, directors and controlling persons is given
solely by such Reporting Person, and no other Reporting Person has
responsibility for the accuracy or completeness of information supplied by such
other Reporting Person.

ITEM 1. Security and Issuer

The information contained in Item 1 of the Schedule 13D is hereby
amended and supplemented by adding the following information (and such
information also constitutes Item 1 of the Universal Schedule 13D, the BDTV IV
Schedule 13D and the Reporting Group Schedule 13D):

This statement relates to shares of the common stock, $0.01 par value
(the "Common Stock"), of USA Networks, Inc. (formerly named HSN, Inc.) (the
"Company"). The principal executive office and mailing address of the Company is
152 West 57th Street, New York, New York 10019.

ITEM 2. Identity and Background

The information contained in Item 2 of the Schedule 13D is hereby
amended and supplemented by adding the following information (and such
information also constitutes Item 2 of the Universal Schedule 13D, the BDTV IV
Schedule 13D and the Reporting Group Schedule 13D):

The principal executive offices of Seagram are located at 1430 Peel
Street, Montreal, Quebec, Canada H3A 1S9 and the principal executive offices of
Universal are located at 100 Universal City Plaza, Universal City, California
91608.

Page 11 of __ pages

12
Seagram operates in two global segments: beverages and entertainment.
The beverage businesses are engaged principally in the production and marketing
of distilled spirits, wines, fruit juices, coolers, beers and mixers throughout
more than 150 countries and territories. The entertainment company, Universal,
produces and distributes motion picture, television and home video products;
produces and distributes recorded music; and operates theme parks and retail
stores.

Descendants of the late Samuel Bronfman and trusts established for
their benefit (collectively, the "Bronfman Family") beneficially own directly or
indirectly approximately 35.8% of the outstanding common shares without nominal
or par value of Seagram (the "Seagram Common Shares"). Of that amount, Bronfman
Associates, a partnership of which Edgar M. Bronfman, his children and a trust
for the benefit of Edgar M. Bronfman and his descendants are the sole partners
and of which Edgar M. Bronfman is the managing partner, along with a second
trust for the benefit of Edgar M. Bronfman and his descendants, own directly
approximately 17.6% of the Seagram Common Shares, trusts for the benefit of
Charles R. Bronfman and his descendants own directly approximately 14.9% of the
Seagram Common Shares, trusts for the benefit of the family of the late Minda de
Gunzburg and members of her immediate family own directly or indirectly
approximately 1.8% of the Seagram Common Shares, Phyllis Lambert owns directly
or indirectly approximately 0.29% of the Seagram Common Shares, a charitable
foundation of which Charles R. Bronfman is among the directors owns
approximately 0.95% of the Seagram Common Shares, another charitable foundation
of which Charles R. Bronfman is among the directors owns approximately 0.17% of
the Seagram Common Shares, a charitable foundation of which Edgar M. Bronfman
and Charles R. Bronfman are among the trustees owns approximately 0.07% of the
Seagram Common Shares, a charitable foundation of which Phyllis Lambert is one
of the directors owns less than 0.01% of the Seagram Common Shares and Edgar M.
Bronfman, Charles R. Bronfman and their respective spouses and children own
directly approximately 0.02% of the Seagram Common Shares. In addition, such
persons hold currently exercisable options to purchase an additional 0.99% of
the Seagram Common Shares, calculated pursuant to Rule 13d-3 of the Rules and
Regulations under the Act. Percentages set forth in this Item 2 are based on the
number of Seagram Common Shares outstanding as of January 31, 1998.

Edgar M. Bronfman is Chairman of the Board of Seagram and a director of
Seagram. Charles R. Bronfman is Co-Chairman of the Board and Chairman of the
Executive Committee of Seagram and a director of Seagram. Edgar M. Bronfman,
Charles R. Bronfman, Phyllis Lambert and the late Minda de Gunzburg are
siblings.

Pursuant to a voting trust agreement, Charles R. Bronfman serves as
voting trustee for Seagram Common Shares beneficially owned directly or
indirectly by Bronfman Associates, the aforesaid trusts for the benefit of Edgar
M. Bronfman and his descendants, the aforesaid trusts for the benefit of Charles
R. Bronfman and his descendants, the first two of the four aforesaid charitable
foundations and Charles R. Bronfman. Pursuant to another voting trust agreement,
Edgar M. Bronfman and Charles R. Bronfman are among the voting trustees for
Seagram Common Shares beneficially owned directly or indirectly by trusts for
the benefit of the family of the late Minda de

Page 12 of __ pages

13
Gunzburg and members of her immediate family. Neither voting trust agreement
contains restrictions on the right of the voting trustees to vote the deposited
Seagram Common Shares.

The Bronfman Family may be deemed to be in control of Seagram.
Information concerning the foregoing persons and entities, together with
information concerning the directors and executive officers of Universal and
Seagram, is contained in Schedule 1 attached hereto.

During the last five years, neither Seagram nor Universal, nor to the
best knowledge of Seagram or Universal, any of their respective directors or
executive officers (or any other person or entity set forth in Schedule 1), has
been (i) convicted in a criminal proceeding (excluding traffic violations or
similar misdemeanors) or (ii) a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such proceeding
has been or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to, federal or
state securities laws or finding any violation with respect to such laws.

The principal office and business address of BDTV IV INC. is c/o USA
Networks, Inc., 2425 Olympic Boulevard, 6th Floor, West Tower, Santa Monica,
California 90404. BDTV IV is a company formed by TCI and Mr. Diller to hold
Company securities.

The name, business address and present principal occupation of
employment and the name, address and principal business of any corporation or
other organization in which such employment is conducted of each of the
executive officers and directors of BDTV IV are set forth in Schedule 2 attached
hereto and incorporated herein by reference.

During the last five years neither BDTV IV, nor, to the best knowledge
of BDTV IV, any of the persons named on Schedule 2, has been (i) convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanors) or
(ii) a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction and as a result of such proceeding has been or is subject
to a judgment, decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, federal or state securities laws
or finding any violation with respect to such laws. To the best knowledge of
BDTV IV, each of its executive officers and directors is a citizen of the United
States, except as specifically set forth in Schedule 2 hereto.

ITEM 3. Source of Funds or Other Consideration

The information contained in Item 3 of the Schedule 13D is hereby
amended and supplemented by adding the following information (and such
information also constitutes Item 3 of the Universal Schedule 13D, the BDTV IV
Schedule 13D and the Reporting Group Schedule 13D):

The information set forth in Item 6 of this Schedule 13D is hereby
incorporated by reference herein.

Page 13 of __ pages

14
ITEM 4. Purpose of Transaction

The information contained in Item 4 of the Schedule 13D is hereby
amended and supplemented by adding the following information (and such
information also constitutes Item 4 of the Universal Schedule 13D, the BDTV IV
Schedule 13D and the Reporting Group Schedule 13D):

The information set forth in Item 6 of this Schedule 13D is hereby
incorporated by reference herein.

Depending on market conditions and other factors, and subject to any
restrictions described in Item 6 or contained in the agreements attached as
Exhibits hereto, the Reporting Persons or their respective subsidiaries may
purchase additional shares of Common Stock in the open market or in private
transactions. Alternatively, depending on market conditions and other factors,
and subject to any restrictions described in Item 6 or contained in the
agreements attached as Exhibits hereto, the Reporting Persons or their
respective subsidiaries may sell all or some of their shares of Common Stock.

Except as described in Item 6 or contained in the agreements attached
as Exhibits hereto, neither any Reporting Person nor, to the best of their
knowledge, any of their respective directors or officers has plans or proposals
that relate to or would result in any of the actions set forth in clauses (a)
through (j) of Item 4.

ITEM 5. Interest in Securities of the Issuer

The information contained in Item 5 of the Schedule 13D is hereby
amended and supplemented by adding the following information (and such
information also constitutes Item 5 of the Universal Schedule 13D, the BDTV IV
Schedule 13D and the Reporting Group Schedule 13D):

The information set forth in Item 6 of this Schedule 13D is hereby
incorporated by reference herein.

The Company's Proxy Statement on Schedule 14A filed on January 13, 1998
(the "Company's Schedule 14A") reports that as of December 30, 1997 (the "Record
Date") there were 43,701,098 shares of Common Stock outstanding and 12,227,647
shares of Class B Common Stock outstanding. After giving effect to the
transactions described in Item 6 of this Schedule 13D and other issuances of
Common Stock upon the exercise of employee options since the Record Date, there
are 47,297,248 shares of Common Stock and 16,006,808 shares of Class B Common
Stock outstanding. The Reporting Group beneficially owns 23,952,401 shares of
Common Stock, representing approximately 35.5% of the shares of Common Stock.
This figure assumes (i) the conversion of all shares of Class B Common Stock
beneficially owned by the Reporting Persons into shares of Common Stock and
(ii) the exercise of 4,252,924 currently exercisable options to purchase
shares of Common Stock by Mr. Diller. In addition, (i) Universal beneficially
owns 54,327,170 LLC Shares exchangeable for 36,810,000 shares of Class B
Common Stock and 17,517,170 shares of

Page 14 of 49 pages

15
Common Stock and (ii) TCI beneficially owns 5 LLC Shares exchangeable for 5
shares of Common Stock. In each case, the exchange of LLC shares is subject to
terms and conditions set forth in the Transaction Agreements, including the
limitations of the Communications Act. As disclosed previously, Liberty HSN has
the right, under certain circumstances set forth in the Liberty Exchange
Agreement (as defined below) as amended by the Investment Agreement (as
described below), to acquire the Liberty Exchange Shares.

As a result of its ownership of an indirect 84% interest in Universal,
Seagram may also be deemed to beneficially own the shares of Common Stock
beneficially owned by Universal. Except as set forth in the cover pages of the
Schedule 13D and as described below, neither Universal or Seagram nor, to the
best knowledge of Universal and Seagram, any of their respective directors or
executive officers (or any other person or entity set forth in Schedule 2
attached hereto) has the power to vote or direct the vote or to dispose or to
direct the disposition of any shares of Common Stock. John D. Borgia, Executive
Vice President, Human Resources of Seagram, beneficially owns, directly and
indirectly, 200 shares of Common Stock, representing less than .01% of the
outstanding shares of Common Stock. Frank J. Biondi, Jr., the Chairman and Chief
Executive Officer of Universal and a director of Universal, Seagram and the
Company, beneficially owns, directly and indirectly, through a retirement
account, 1,350 shares of Common Stock, representing less than .01% of the
outstanding shares of Common Stock. Mr. Borgia has shared power to vote and to
dispose of the shares of Common Stock and Mr. Biondi has the sole power to vote
and to dispose of the shares of Common Stock reported to be owned by such
person.

Each Reporting Person disclaims beneficial ownership of the shares of
Common Stock beneficially owned by each of the other Reporting Persons.

Mr. Diller has granted to certain persons economic interests in the
after-tax profits upon the sale for cash of the shares of Common Stock acquired
by Mr. Diller upon the exercise of his Options as follows: Mr. Jaroslaw Bukowski
(with respect to 5,500 shares), (ii) Mr. Michael Conover and Ms. Julie Schaefer
(each with respect to 1,000 shares) and (iii) Messrs. Timothy Kertis, John
Aitchison, Carl Tookey and Roy Kemp (each with respect to 500 shares).

ITEM 6. Contracts, Arrangements, Understandings or Relationships with
Respect to the Securities of the Issuer

The information contained in Item 6 of the Schedule 13D is hereby
amended and supplemented by adding the following information (and such
information also constitutes Item 6 of the Universal Schedule 13D, the BDTV IV
Schedule 13D and the Reporting Group Schedule 13D):

On February 12, 1998 (the "Closing"), pursuant to an Investment
Agreement among Universal, the Company, Home Shopping Network, Inc. and Liberty,
dated as of October 19, 1997 and amended and restated as of December 18, 1997
(the "Investment Agreement"), the Company consummated the transaction (the
"Transaction") through which USA Networks Partner, Inc., a subsidiary of
Universal, sold its 50% interest in USA Networks, a New York general partnership
("USA Networks") to the Company and Universal contributed the remaining 50%
interest in USA Networks and its domestic television production and distribution
operations to the Company. In connection with the Transaction, the Reporting
Persons became parties to a number of other agreements relating to, among other
things, (i) the management of the Company, (ii) the purchase and sale or other
transfer of voting securities of the Company, including securities

Page 15 of 49 pages

16
convertible or exchangeable for voting securities of the Company, and (iii) the
voting of such securities. Such agreements include (a) the Governance Agreement,
dated as of October 19, 1997, among the Company, Universal and Liberty, (b) the
Stockholders Agreement, dated as of October 19, 1997, among Universal, Liberty,
Mr. Diller, the Company and Seagram, (c) the Spinoff Agreement, dated as of
October 19, 1997, among Liberty, Universal and the Company, (d) the Exchange
Agreement, dated as of October 19, 1997, among the Company, Home Shopping
Network, Inc., Universal, Liberty and Mr. Diller and (e) the Amended and
Restated LLC Operating Agreement of USANi LLC, dated as of February 12, 1998,
by and among the Company, Home Shopping Network, Inc., Universal, Liberty and
Mr. Diller (the "LLC Agreement") (collectively, the "Transaction Agreements").
The summary descriptions contained in this Report of the Transaction
Agreements are qualified in their entirety by reference to the complete texts
of such agreements, filed as Exhibits hereto and incorporated herein by
reference.

I. INVESTMENT AGREEMENT

A. General

At the Closing, Universal was issued 3,190,000 shares of Class B Common
Stock, 3,560,000 shares of Common Stock and 54,327,170 LLC Shares of USANi LLC,
a limited liability company (the "LLC") formed to hold all of the businesses of
the Company and its subsidiaries, except for its broadcasting business and its
equity interest in Ticketmaster Group, Inc. ("Ticketmaster") and received a cash
payment of $1,331,913,200. Pursuant to the LLC Exchange Agreement (as defined
below), 36,810,000 of the LLC Shares issued to Universal are each exchangeable
for one share of Class B Common Stock and the remainder of the LLC Shares issued
to Universal are each exchangeable for one share of Common Stock.

At the Closing, Liberty was issued 589,161 shares of Class B Common
Stock, representing all of the remaining Contingent Rights Shares. Of such
shares, 400,000 shares of Class B Common Stock were contributed to BDTV IV, in
which Mr. Diller owns all of the voting equity interests and TCI owns a
non-voting equity interest (which non-voting interest constitutes substantially
all of the equity of BDTV IV). In addition, Liberty purchased 5 LLC Shares at
the Closing for an aggregate purchase price of $200. Liberty has also agreed to
contribute $300 million in cash to the LLC by June 30, 1998 in exchange for an
aggregate of 7,500,000 LLC Shares and/or shares of Common Stock. Liberty's cash
purchase price will increase at an annual interest rate of 7.5% beginning from
the date of the Closing through the date of Liberty's purchase of such
securities (the "Liberty Closing"). Pursuant to the LLC Exchange Agreement, each
LLC Share issued or to be issued to Liberty is exchangeable for one share of
Common Stock.

In addition, the Company, Universal and Liberty have agreed that,
before June 30, 1998, if the parties agree on assets owned by Liberty that are
to be contributed to the LLC, Liberty will contribute those assets in exchange
for LLC Shares valued at $40 per share. If Liberty contributes such additional
assets, Liberty has the right to elect to reduce the number of LLC Shares it is
obligated to purchase for cash by an amount having a value equal to 45% of the
value of the total Liberty asset contribution. If Liberty exercises the option
to reduce its cash contribution, Universal

Page 16 of 49 pages

17
will have a mandatory preemptive right, at $40 per share, with respect to the
net value of the Liberty asset contribution. In addition, Universal will have an
optional preemptive right, valued at $40 per share, with respect to any part of
a Liberty asset contribution which is not applied towards reducing Liberty's
cash contribution.

B. Preemptive Rights

In connection with the Transaction, each of Universal and Liberty has
been granted a preemptive right with respect to future issuances of the
Company's capital stock, subject to certain limitations, to maintain their
respective percentage ownership interests in the Company that they had
immediately prior to such issuances. In addition, with respect to issuances of
the Company's capital stock in certain specified circumstances, Universal will
be obligated to maintain its percentage ownership interest in the Company that
it had immediately prior to such issuances.

1. Universal

General. In the event that following the Closing the Company issues any
shares of capital stock, Universal has the right to purchase for cash the number
of shares of Common Stock (or, if Universal requests, LLC Shares or a
combination of Common Stock and LLC Shares) so that Universal will maintain the
identical percentage equity ownership interest (but not in excess of the lesser
of the percentage ownership interest limitations applicable pursuant to the
Governance Agreement described below and 57.5%) in the Company that Universal
owned immediately prior to such issuance. Universal will not have a preemptive
right with respect to issuances of shares of the Company's securities in a Sale
Transaction, and issuances of restricted stock or issuances of the Company's
securities upon conversion of shares of Class B Common Stock or in respect of
LLC Shares. A "Sale Transaction" is defined as a merger, consolidation or
amalgamation between the Company and a non-affiliate of the Company in which the
Company is acquired by such other entity or a sale of all or substantially all
of the assets of the Company to another entity which is not a subsidiary of the
Company.

Universal's preemptive right percentage is currently 45%. To the extent
that, during the first four years after the Closing, Universal sells shares of
the Company's capital stock (or LLC Shares) or does not exercise its preemptive
rights, its preemptive right percentage will be reduced, and subsequent
purchases of capital stock of the Company by Universal will not result in an
increase in that percentage. After this four-year period, Universal's preemptive
right percentage will increase or decrease to the extent Universal buys or sells
the Company's capital stock (or LLC Shares), as permitted by the Stockholders
Agreement and the Governance Agreement described below.

In measuring the percentage equity or voting interest owned by
Universal (or Liberty) for purposes of the exercise of preemptive rights and the
standstill provisions under the Governance Agreement, the LLC Shares and the
additional shares of Common Stock issuable to Liberty under certain
circumstances pursuant to the Exchange Agreement, dated as of December 20, 1996,
by and

Page 17 of 49 pages

18
between Liberty HSN and the Company (the "Liberty Exchange Agreement"), will be
regarded as outstanding shares on an as-exchanged basis (the "Assumptions").

Mandatory Preemptive Right. Universal will be obligated to exercise its
preemptive right in full (a "Mandatory Purchase Event") for (i) additional
issuances caused by the conversion of Home Shopping Networks, Inc.'s 5 7/8%
Convertible Subordinated Debentures due March 1, 2006 (the "Convertible
Subordinated Debentures") into Common Stock, which debentures the Company has
called for redemption effective on March 2, 1998, (ii) additional issuances
within four months of the Closing in the aggregate amount of up to $200 million
in Common Stock and (iii) additional issuances in the aggregate amount up to 6.3
million shares of Common Stock in connection with the acquisition by the Company
of additional equity of Ticketmaster. Universal's purchase price for these
securities will be $40 in cash per share. These Mandatory Purchase Events are in
addition to Universal's mandatory preemptive right in connection with a Liberty
contribution.

Universal Voting Threshold. If, in connection with the exercise by
Universal of its optional preemptive right, its voting power in the Company
would be less than 67% (based on the Assumptions), Universal may elect to
purchase, in connection with a preemptive right exercise, shares of Class B
Common Stock (or LLC Shares exchangeable for shares of Class B Common Stock).
However, if Universal has previously declined to exercise its optional
preemptive right, then the voting threshold will be reduced to the lower
percentage voting threshold owned by Universal at such time.

In addition, the Company has a right to purchase Universal's LLC Shares
to the extent that the Company purchases or redeems Company securities, to
maintain Universal's ownership percentage at the levels set forth in the
Governance Agreement.

2. Liberty

In the event that the Company issues any securities under the
circumstances described in the first paragraph under Section A.1. above, Liberty
will be entitled to purchase the number of shares of Common Stock or LLC Shares
exchangeable for shares of Common Stock so that Liberty will maintain the
identical percentage equity beneficial ownership interest in the Company that
Liberty owned immediately prior to such issuance (but not in excess of the
percentage equity beneficial ownership interest that Liberty owned immediately
following the Closing or the Liberty Closing). Liberty, unlike Universal, will
not be obligated to maintain its percentage equity beneficial ownership interest
in the Company in connection with a Mandatory Purchase Event, but Liberty may
elect to do so at a cash purchase price of $40 per share. Liberty will only be
entitled to purchase LLC Shares (as opposed to shares of Common Stock) if and to
the extent the total number of Company securities then owned directly or
indirectly by Liberty would exceed the amount allowable under applicable FCC
regulations.

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19
B. Management and Ownership of the LLC

After giving effect to the Liberty Closing (assuming for such purposes
that Liberty purchases 7.5 million LLC Shares), Universal will own 45.8% of the
LLC, Liberty will own about 6% and the Company (primarily through a subsidiary)
will own the remaining 48% interest. Except with respect to certain fundamental
changes related to the LLC, the Company will manage and operate the businesses
of the LLC in the same manner as it would if such businesses were wholly owned
by the Company. Following the CEO Termination Date (as hereinafter defined) or
Mr. Diller's becoming Disabled (as hereinafter defined), Universal (unless
Liberty's beneficial ownership of Company securities and LLC Shares represents
more than 5% in excess of the voting power of the Company represented by the
Company securities and LLC Shares then beneficially owned by Universal) will
designate the manager of the LLC who will generally be responsible for managing
the businesses of the LLC. If Liberty and Universal together do not own Company
securities representing at least 40% of the total voting power of the Company
securities (and which represent a greater percentage than the amount owned by
any other person), then the Company will select the manager of the LLC.

The LLC Shares are exchangeable for shares of Common Stock or Class B
Common Stock (in the case of Universal) and shares of Common Stock (in the case
of Liberty). In the case of Liberty, this exchange obligation is generally
mandatory and will occur prior to any exchange of Liberty HSN's shares of
Home Shopping Network, Inc. stock pursuant to the Liberty Exchange Agreement.
The exchange agreement relating to LLC Shares (the "LLC Exchange Agreement")
provides customary anti-dilution adjustments relating to the capital stock and
assets of the Company (except to the extent that dividends or other
distributions of Company stock are accompanied by pro rata distributions with
respect to LLC Shares held by Universal and Liberty, which the LLC is generally
obligated to do pursuant to the Investment Agreement and the LLC Agreement).

If the Company issues additional Company securities, the Company is
obligated to purchase an equal number of LLC Shares for the same consideration
as received by the Company for the issued Company securities. If the Company
repurchases or redeems shares of its own stock, the Company will sell to the LLC
an equal number of LLC Shares for the same consideration (or for cash, if the
LLC cannot provide the same consideration). The net effect of these provisions
is to cause the LLC generally to hold the proceeds of any Company equity sales
or to fund the costs of any Company equity redemptions.

The LLC Exchange Agreement also contains provisions regarding the
exchange or other conversion of LLC Shares in connection with a tender offer,
merger or similar extraordinary transaction, which permit Universal and Liberty
to participate with respect to their LLC Shares in such a transaction as if they
held Company stock. LLC Shares owned by Universal and Liberty are not
transferable, except to each other in connection with transactions permitted by
the Stockholders Agreement or to their respective controlled affiliates or in
connection with certain extraordinary transactions relating to the Company or
the LLC.

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20
C. Spinoff of Broadcast Assets

The Company has agreed that, generally, following the CEO Termination
Date or Mr. Diller becoming Disabled, at the request of Universal and subject to
applicable law and the Spinoff Agreement (as described below), the Company will
distribute those subsidiaries which engage in broadcasting or other regulated
businesses (the "Spinoff Company") in a distribution to its stockholders (the
"Spinoff") as promptly as practicable on terms and conditions that are
reasonably satisfactory to Universal. Prior to effecting the Spinoff, the
Company will enter into ten-year affiliation agreements with the Spinoff Company
that will provide that the Spinoff Company will broadcast programming produced
by the Company on customary terms and conditions, including arm's-length payment
obligations.

II. GOVERNANCE AGREEMENT

A. General

The Company, Universal, Liberty and Mr. Diller are parties to the
Governance Agreement dated as of October 19, 1997 (the "Governance Agreement"),
which sets forth certain restrictions on the acquisition of additional
securities of the Company, on the transfer of Company securities and other
conduct restrictions, in each case, applicable to Universal. In addition, the
Governance Agreement governs Universal's and Liberty's rights to representation
on the Company's Board of Directors and Universal's, Liberty's and Mr. Diller's
right to approve certain actions by the Company or any subsidiary of the Company
(including the LLC) (the "Fundamental Changes").

B. Restrictions on the Acquisition of Additional Voting Securities

The Governance Agreement provides that, for a four-year period
commencing on the Closing (the "Standstill Period"), without the approval of the
Company's Board, Universal will not acquire additional beneficial ownership of
the Company's common equity other than through the exercise of Universal's
preemptive right to maintain its percentage equity beneficial ownership interest
and will not beneficially own in excess of 45.8% of the Company's common equity
(which amount will increase to 48.5% between the Closing and the Liberty
Closing) or a lesser percentage to the extent Universal transfers Company equity
securities or fails to exercise its preemptive right (except, in any case, to
the extent caused by the Company's redemption or purchase of Company
securities). Following expiration of the Standstill Period, subject to
applicable law, Universal may acquire additional Company securities to increase
its beneficial ownership of the Company's common equity up to 50.1% of the
Company's outstanding equity securities. In addition, following the first
anniversary of the expiration of the Standstill Period and subject to compliance
with applicable law, Universal can acquire up to 57.5% of the Company's
outstanding equity securities, but not in excess of 1.5% in any 12-month period.
Following the CEO Termination Date, Universal also can propose a Permitted
Business Combination (as defined in the Governance Agreement). The maximum
permissible ownership percentages set forth in this

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21
paragraph exclude any shares Universal may acquire from Liberty or Mr. Diller
pursuant to the Stockholders Agreement. (These percentages are all based on the
Assumptions.)

If, during the Standstill Period, Mr. Diller no longer serves as Chief
Executive Officer of the Company (provided that he does not hold a proxy to vote
Universal's Company equity securities under the Stockholders Agreement) or
becomes Disabled, the Standstill Period will be deemed expired and the transfer
restrictions summarized below will terminate. The date that is the later of the
date that Mr. Diller no longer serves as Chief Executive Officer and such date
that Mr. Diller no longer holds the Universal proxy under the Stockholders
Agreement is referred to as the "CEO Termination Date." In addition, the
restrictions described above generally terminate:

(i) if any person or group (other than Universal) beneficially
owns more than one-third of the Company's equity securities
(excluding, among other things, any securities acquired from
Universal, Liberty or Mr. Diller in accordance with the
Stockholders Agreement so long as Universal was offered (and
did not accept) a reasonable opportunity to buy such equity
securities or from the Company); or

(ii) if any person or group (other than the Company or Universal)
commences a tender or exchange offer for more than a majority
of the Company's outstanding equity securities, which is not
recommended against by the Company's Board. In the case of
such an offer by Liberty in breach of its standstill
obligations under the Stockholders Agreement, this provision
applies only if Universal is unsuccessful after using good
faith efforts in enforcing its standstill with Liberty
described below.

"Disabled," when used in the Governance Agreement or the Stockholders
Agreement, means a disability after the expiration of more than 180 consecutive
days which is determined by a designated physician to be total and permanent
(i.e., a mental or physical incapacity that prevents Mr. Diller from managing
the business affairs of the Company) and which continues after 90 days following
receipt of notice from the Company that a disability has occurred.

C. Transfer Restrictions

The Governance Agreement also restricts, until the earlier of the CEO
Termination Date or Mr. Diller becoming Disabled, Universal's ability to
transfer Company securities to another party by providing that during the
Standstill Period and subject to the Stockholders Agreement that further
restricts Universal's ability to transfer Company securities, Universal may only
transfer Company securities in limited circumstances, including as follows:

(i) in a widely dispersed public offering pursuant to registration
rights to be granted to Universal or a pro rata distribution
to Universal's stockholders (which, in the case of Seagram,
must be to its public stockholders);

Page 21 of __ pages

(ii) in a sale in accordance with Rule 144 under the Securities Act
of 1933, as amended (the "Securities Act"), except generally
not to a transferee who would beneficially own more than 5% of
the Company's equity following such purchase;

(iii) in a tender or exchange offer that is not rejected by the
Company Board or to the Company in connection with a
self-tender offer;

(iv) in transfers of up to 5% in the aggregate to any institutional
or financial investors, not exercisable on more than two
occasions in any six-month period;

(v) in pledges in connection with bona fide financings with a
financial institution; and

(vi) in transfers to Liberty, Mr. Diller or any controlled
affiliate of Universal that signs the Governance Agreement.

At any time that Universal beneficially owns at least 20% of the
Company's equity securities, any transfers by Universal, other than the
transfers permitted during the Standstill Period, will be subject to a right of
first refusal in favor of the Company which right is secondary to the right of
first refusal of Mr. Diller (to the extent applicable) provided in the
Stockholders Agreement.

In addition, the Governance Agreement provides that LLC Shares cannot
be transferred by Universal or Liberty to non-affiliates, other than to each
other. Accordingly, prior to a permitted transfer, any LLC Shares intended to be
transferred by either Universal or Liberty generally must first be exchanged for
Class B Common Stock or Common Stock, as the case may be. The Stockholders
Agreement further provides that, as long as the CEO Termination Date has not
occurred and Mr. Diller is not Disabled, Universal or Liberty, as the case may
be, must first offer Mr. Diller (or his designee) the opportunity to exchange
shares of Class B Common Stock owned by the transferring party for shares of
Common Stock. If Mr. Diller (or his designee) does not exchange such shares (or
if the CEO Termination Date has occurred or Mr. Diller is Disabled), any shares
of Class B Common Stock to be transferred by Universal must first be exchanged
into shares of Common Stock unless the transferee agrees to be bound by the
restrictions contained in the Governance Agreement applicable to Universal to
the extent that the transferee owns 10% or more of the Total Voting Power. Such
a transferee would be subject to the remaining limitations on Universal's
acquisition of the Company's securities and conduct restrictions contained in
the Governance Agreement.

D. Universal Conduct Restrictions

Universal has agreed not to propose to the Company Board any merger,
tender offer or other business combination involving the Company. Universal also
has agreed to related restrictions on its conduct, such as:

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(i) not seeking to influence the management of the Company, other
than as permitted by the Governance Agreement and the
Stockholders Agreement;

(ii) not entering into agreements relating to the voting of the
Company's securities, except as permitted by the Governance
Agreement and the Stockholders Agreement;

(iii) generally not initiating or proposing any stockholder proposal
in opposition to the recommendation of the Company Board; and

(iv) not joining with others (other than Liberty and Mr. Diller
pursuant to the Transaction Agreements) for the purpose of
acquiring, holding, voting or disposing of any Company
securities.

The foregoing restrictions terminate on the earlier of the CEO Termination Date
and such time as Mr. Diller becomes Disabled.

E. Representation on the Company Board

Pursuant to the Governance Agreement, Universal is permitted initially
to designate four persons, reasonably satisfactory to the Company, to the
Company Board, of whom no more than one can be a non-affiliate of Universal, and
generally will have the right to designate one Company Board member for each 10%
ownership of Company equity (including LLC Shares) up to a maximum of four
directors. The four Universal designees serving as directors of the Company
since the Closing are Edgar Bronfman, Jr., Robert W. Matschullat, Frank J.
Biondi, Jr. and Samuel Minzberg.

In addition, pursuant to the Governance Agreement, provided that
Liberty's Company stock ownership remains at certain levels and subject to
applicable law, Liberty will have the right to designate up to two directors of
the Company at such time as Liberty is no longer prohibited from having
representation on the Company Board. Pursuant to FCC law and regulations,
Liberty is not currently permitted to have a designee on the Company Board. The
Company has also agreed in the LLC Agreement that, subject to the same ownership
thresholds, Liberty will be permitted to designate, depending on its ownership
level, one or two directors to the Board of Directors of the LLC, to the extent
that Liberty is not permitted to designate directors of the Company. The two
Liberty designees serving as directors of the LLC since the Closing are Robert
R. Bennett and Leo J. Hindery, Jr. The other members of the Board of Directors
of the LLC are the Company's directors.

F. Fundamental Changes

The Company has agreed that neither the Company nor any subsidiary of
the Company (including the LLC) will effect a Fundamental Change without the
prior approval of Universal, Liberty and Mr. Diller (each, a "Stockholder") so
long as such Stockholders beneficially own certain minimum amounts of Company
securities. The Fundamental Changes are as follows:

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(i) Any transaction not in the ordinary course of business,
launching new or additional channels or engaging in any new
field of business which will result in or is reasonably likely
to result in such Stockholder's being required under law to
divest itself of all or any part of its Company securities,
LLC Shares or any material assets or render any such ownership
illegal or subject such Stockholder to any fines, penalties
or material additional restrictions or limitations.

(ii) Any combination of the following, in any case, in one
transaction or a series of transactions during a six-month
period, with a value of 10% or more of the market value of the
Company's outstanding equity securities at the time of such
transaction (assuming that all LLC Shares and Additional
Liberty Shares are converted or exchanged into Company
securities):

(A) acquiring or disposing of any assets or business,
provided that the matters contemplated by the
Investment Agreement, including with respect to the
Spinoff (conducted in accordance with the Spinoff
Agreement (as defined herein)), will not require the
prior approval of Liberty;

(B) granting or issuing any debt or equity securities of
the Company or any of its subsidiaries (including the
LLC) other than as contemplated by, among other
things, the Investment Agreement;

(C) redeeming, repurchasing or reacquiring any debt or
equity securities of the Company or any of its
subsidiaries (including the LLC) other than as
contemplated by, among other things, the Investment
Agreement; or

(D) incurring any indebtedness.

(iii) For a five-year period following the Closing, disposing of any
interest in USA Networks or, other than in the ordinary course
of business, its assets, provided that matters set forth in
this clause (iii) will constitute a Fundamental Change only
with respect to Mr. Diller and Universal and will not require
the approval of Liberty.

(iv) Disposing of or issuing any LLC Shares except as contemplated
by the Transaction Agreements or pledges in connection with
financings.

(v) Voluntarily commencing any liquidation, dissolution or winding
up of the Company or any material subsidiary (including the
LLC).

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(vi) Making any material amendments (other than as contemplated by
the Investment Agreement and the Stockholders Agreement) to
the Amended and Restated Certificate of Incorporation of the
Company, the Amended and Restated By-Laws of the Company, the
LLC Agreement or the By-Laws of the LLC.

(vii) Engaging in any line of business other than media,
communications and entertainment products, services and
programming, and electronic retailing, or other businesses
engaged in by the Company on the date of the Investment
Agreement or as contemplated by the Investment Agreement,
provided that neither the Company nor the LLC shall engage in
theme park, arcade or film exhibition businesses so long as
Universal is restricted from competing in such lines of
business under non-compete or similar agreements and such
agreements would be applicable to the Company and/or the LLC,
as the case may be, by virtue of Universal's ownership
therein. The matters set forth in the foregoing proviso will
constitute a Fundamental Change only with respect to Mr.
Diller and Universal and will not require the approval of
Liberty.

(viii) Settling of any litigation, arbitration or other proceeding
which is other than in the ordinary course of business and
which involves any material restriction on the conduct of
business by the Company or such Stockholder or the continued
ownership of assets by the Company or such Stockholder.

(ix) Engaging in any transaction (other than those contemplated by
the Investment Agreement) between the Company and its
affiliates, on the one hand, and Mr. Diller, Universal or
Liberty, and their respective affiliates, on the other hand,
subject to exceptions relating to the size of the proposed
transaction and except for those transactions which are
otherwise on an arm's-length basis.

(x) Adopting any stockholder rights plan (or any other plan or
arrangement that could reasonably be expected to disadvantage
any stockholder on the basis of the size or voting power of
its shareholding) that would adversely affect such
Stockholder.

(xi) Entering into any agreement with any holder of the Company's
equity securities or LLC Shares in such stockholder's or
interest holder's capacity as such, as the case may be, which
grants such stockholder with approval rights similar in type
and magnitude to those set forth in these Fundamental Changes.

(xii) Entering into any transaction that could reasonably be
expected to impede the Company's ability to engage in the
Spinoff or cause it to be taxable.

G. Registration Rights

Page 25 of 49 pages

26
The Governance Agreement provides that Universal, Liberty and Mr.
Diller are entitled to customary registration rights (including six, four and
two "demand" rights for Universal, Liberty and Mr. Diller, respectively)
relating to the Company securities they own.

III. STOCKHOLDERS AGREEMENT

A. General

Universal, Liberty, Mr. Diller, the Company and Seagram are parties to
a Stockholders Agreement, dated October 19, 1997 (the "Stockholders Agreement"),
which governs the ownership, voting, transfer or other disposition of Company
securities owned by Universal, Liberty and Mr. Diller (and their respective
affiliates) and pursuant to which Mr. Diller will generally exercise voting
control over the equity securities of the Company held by such persons and
certain of their affiliates. The Stockholders Agreement supersedes as of the
Closing, in its entirety, the agreement, dated as of August 24, 1995, between
Mr. Diller and Liberty, as amended by the letter agreement, dated as of August
25, 1996, relating to the securities of the Company.

B. Voting Authority

Pursuant to the Stockholders Agreement, each of Universal and Liberty
has granted to Mr. Diller an irrevocable proxy with respect to all Company
securities owned by Universal, Liberty and certain of their affiliates for all
matters, except for Fundamental Changes, which require the consent of each of
Mr. Diller, Universal and Liberty. The proxy will generally remain in effect
until the earlier of the CEO Termination Date or such date that Mr. Diller
becomes Disabled, provided that Mr. Diller continues to beneficially own at
least 5,000,000 shares of Common Stock (including options to acquire shares of
Common Stock, whether or not exercisable).

Universal, Liberty and Mr. Diller have also agreed to vote all Company
securities over which they have voting control in favor of the respective
designees of Universal and Liberty to the Company Board, as provided in the
Transaction Agreements. In addition, Universal, Liberty and Mr. Diller have each
agreed not to consent to any Fundamental Change to which any other such party
entitled to consent thereto does not consent.

Mr. Diller has agreed with Universal that, after the CEO Termination
Date or such date that Mr. Diller becomes Disabled, and so long as he
beneficially owns Company securities representing at least 7.5% of the Total
Voting Power (excluding securities beneficially owned by Universal or Liberty),
at Universal's option he will either vote his shares in his own discretion or in
proportion to the vote of the Public Stockholders (as defined in the
Stockholders Agreement).

C. Liberty Conduct Limitations; Board Representation

Liberty has agreed with Universal that it will not beneficially own
more than the greater of (i) 20% of the outstanding Company securities or (ii)
the percentage of Company securities

Page 26 of __ pages

27
beneficially owned by it following the Liberty Closing (up to 25%), which
percentage will be reduced to reflect sales of Company equity by Liberty or in
the event that Liberty does not exercise its preemptive right pursuant to the
Investment Agreement (provided that if Liberty's initial ownership percentage is
less than 20%, such reduction is calculated as if it were 20%). Liberty also has
agreed with Universal not to propose to the Company Board the acquisition by
Liberty, in a merger, tender offer or other business combination, of the
outstanding Company securities. These restrictions terminate upon the earlier
of such time as Liberty beneficially owns less than 5% of the outstanding
Company securities or the date that Universal beneficially owns fewer shares
than Liberty beneficially owns (the "Standstill Termination Date").

Liberty has agreed to related restrictions on its conduct, such as:

(i) not seeking to elect directors to the Company Board or
otherwise to influence the management of the Company, other
than as permitted by the Transaction Agreements;

(ii) not entering into agreements relating to the voting of Company
securities, except as permitted by the Stockholders Agreement;

(iii) generally not initiating or proposing any stockholder proposal
in opposition to the recommendation of the Company Board; and

(iv) not joining with others (other than Universal and Mr. Diller
pursuant to the Transaction Agreements) for the purpose of
acquiring, holding, voting or disposing of any Company
securities.

The foregoing restrictions terminate on the earlier of such time as
Liberty beneficially owns less than 5% of the outstanding Company securities) or
the Standstill Termination Date.

Liberty is not permitted to designate for election to the Company Board
more than two directors, subject to applicable law. This restriction terminates
on the Standstill Termination Date.

D. Restrictions on Transfers

Until the earlier of the CEO Termination Date or such date that Mr.
Diller becomes Disabled, neither Liberty nor Mr. Diller can transfer shares of
Company stock, other than (i) transfers by Mr. Diller to pay taxes relating to
certain Company incentive compensation and stock options, (ii) transfers to each
party's respective affiliates, (iii) certain pledges relating to financings and
(iv) transfers of Options or Company stock in connection with "cashless
exercises" of Mr. Diller's Options. These restrictions are subject to a number
of exceptions (which exceptions are subject to rights of first refusal as
described below), including the following:

(i) after August 24, 2000, Liberty or Mr. Diller may generally
sell all or any portion of their Company securities;

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28
(ii) following the CEO Termination Date or such time as Mr.
Diller becomes Disabled, Mr. Diller may transfer his Company
stock; and

(iii) either stockholder may transfer Company stock so long as, in
the case of Mr. Diller, Mr. Diller continues to beneficially
own at least 1,100,000 shares of Company securities (including
stock options) and, in the case of Liberty, Liberty continues
to beneficially own at least 1,000,000 shares of Company
securities and, in the case of a transfer of the shares of
Class B Common Stock by BDTV or BDTV II (which together hold
9,809,111 shares of Class B Common Stock), after such
transfer, Liberty, Universal and Mr. Diller collectively
control 50.1% of the Total Voting Power.

Universal has agreed that, until August 24, 2000, it will not transfer
shares of Company stock (or convert Class B Common Stock into Common Stock)
so that owns a number of shares with fewer votes than if owed immediately
following the Closing, subject to certain exceptions.

E. Rights of First Refusal and Tag-Along Rights

Each of Universal and Mr. Diller has a right of first refusal with
respect to certain sales of Company securities by the other party. Liberty's
rights in this regard are secondary to any Universal right of first refusal on
transfers by Mr. Diller. Liberty and Mr. Diller each also generally has a right
of first refusal with respect to certain transfers by the other party. In
addition, Universal has a right of first refusal (subject to Mr. Diller not
having exercised his right of first refusal) with respect to sales by Liberty
prior to August 24, 2000 of a number of shares of Company stock having the
aggregate number of votes represented by the shares of Common Stock and Class B
Common Stock received by Universal at the Closing. Rights of first refusal may
be exercised by the Stockholder or the Stockholder's designee, subject to the
terms of the Stockholders Agreement.

In addition, Mr. Diller has agreed to grant to Liberty a right to "tag
along" (i.e., participate on a pro rata basis) on certain sales of Company stock
by Mr. Diller. These tag-along rights are subject to a number of exceptions,
including relating to the quantity of shares sold or the permitted transfers
described in paragraph III.D above.

In the event that Universal transfers a substantial amount of its
Company stock (more than 50% of its interest as of the Closing or an amount that
results in a third party owning (i) a greater percentage of the Company equity
than that owned by (x) Universal and (y) Liberty or any other stockholder and
(ii) at least 25% of the Total Voting Power), Universal has granted a tag-along
right to each of Liberty and Mr. Diller.

Under the Governance Agreement, transfers of Company securities by
Universal (whether before or after the CEO Termination Date or such date as Mr.
Diller becomes Disabled) are subject to a right of first refusal in favor of the
Company (but secondary to the rights of first refusal provided in the
Stockholders Agreement), as long as Universal beneficially owns at least 20% of
the total Company securities. This right of first refusal does not apply to
transfers by Universal under the Governance Agreement that are permitted prior
to the Standstill termination of the Standstill period Date.

Page 28 of __ pages

29
F. Put and Call Rights

Universal, Liberty and Mr. Diller have agreed to certain put and call
arrangements, pursuant to which one party has the right to sell (or the other
party has the right to acquire) shares of Company stock held by another party.

Liberty/Universal Put and Call Rights. Prior to the CEO Termination
Date or such date as Mr. Diller becomes Disabled, Universal generally has the
right to acquire substantially all of Liberty's Company securities in the event
that Mr. Diller and Universal agree to take an action that would constitute a
Fundamental Change described in clause (ii) under "Fundamental Changes" in
paragraph II.F above and Liberty has the right to consent to such Fundamental
Change but does not provide its consent. In addition, at any time after the
CEO Termination Date or such date as Mr. Diller becomes Disabled, Liberty has
the right to require Universal to purchase substantially all of Liberty's
Company securities, and Universal has the reciprocal right to elect to acquire
such shares. Universal may effect these acquisitions through a designee. The
Stockholders Agreement sets forth provisions to establish the purchase price
and conditions for these transactions.

Universal also has certain rights and obligations to acquire Liberty's
Company securities in connection with a Permitted Business Combination, in the
event that Universal using its best efforts cannot provide Liberty with tax-free
consideration in connection with such a transaction. This provision effectively
means that, after such a transaction, Liberty would not own in excess of 20% of
the outstanding equity of the resulting company.

Diller Put. Following the CEO Termination Date or such date as Mr.
Diller becomes Disabled (the "Put Event"), Mr. Diller has the right, during the
one-year period following the Put Event, to require Universal to purchase for
cash shares of Company stock beneficially owned by Mr. Diller and that were
acquired by Mr. Diller from the Company (e.g. pursuant to the exercise of stock
options). If the Put Event occurs prior to the fourth anniversary of the
Closing, the purchase price will be a weighted average market price for the
Common Stock for a period following public announcement of the Put Event. If the
Put Event occurs after that four-year period, but Mr. Diller exercises his put
right within 10 business days of the Put Event, the price will be based on a
weighted average market price of the Common Stock prior to public announcement
of the Put Event. In all other cases, the price per share received by Mr. Diller
will be a weighted average market price for a period immediately preceding the
exercise of the put.

Mr. Diller's put right must be transferred by Universal in the event
that it sells a certain amount of its Company securities to a third party.
Universal's obligations with respect to the put terminate at the time that
Universal no longer beneficially owns at least 10% of the Company equity.
Liberty does not have a tag-along right with respect to the Put Event exercise.

G. Transfers of Shares of Class B Common Stock

During the term of the Stockholders Agreement, transfers of shares of
Class B Common Stock are generally prohibited (other than to another Stockholder
party or between a Stockholder and

Page 29 of 49 pages

30
its affiliates). If a stockholder proposes to transfer these shares, Mr. Diller
is entitled to first swap any shares of Common Stock he owns for such shares of
Class B Common Stock and, thereafter, any other non-transferring Stockholder
(with Universal's right preceding Liberty's) may similarly swap shares of Common
Stock for shares of Class B Common Stock proposed to be transferred. To the
extent there remain shares of Class B Common Stock that the selling stockholder
would otherwise transfer to a third party, such shares must be converted into
shares of Common Stock prior to the transfer. This restriction does not apply
to, among other transfers, a transfer by Universal after the CEO Termination
Date. Under the Governance Agreement, a transferee of Universal's shares of
Class B Common Stock must agree to the conduct and securities ownership
restrictions applicable to Universal, if such transferee would own at least 10%
of the Total Voting Power.

H. BDTV Entity Arrangements

Mr. Diller and Liberty will continue to have substantially similar
arrangements with respect to the voting control and ownership of the equity of
BDTV, BDTV II, BDTV III, BDTV IV and any other BDTV entity that may be formed
(collectively, the "BDTV Entities"), which hold a substantial majority of the
Total Voting Power. These arrangements effectively provide that Mr. Diller
controls the voting of Company securities held by these entities, other than
with respect to Fundamental Changes, and Liberty retains substantially all of
the equity interest in such entities. If applicable law permits Liberty to hold
directly the shares of Company stock held by the BDTV Entities, then Liberty may
purchase Mr. Diller's nominal equity interest in these entities for a fixed
price, in which case the shares of Company stock then held by Liberty would
otherwise be subject to the proxy described above held by Mr. Diller with
respect to Liberty's and Universal's shares of Company stock pursuant to the
Stockholders Agreement.

I. Termination of Stockholders Agreement

Universal's rights and obligations under the Stockholders Agreement
generally terminate at such time as Universal no longer beneficially owns at
least 10% of the Company equity.

Mr. Diller's and Liberty's rights and obligations under the
Stockholders Agreement generally terminate (other than with respect to Mr.
Diller's put right) at such time as, in the case of Mr. Diller, he no longer
beneficially owns at least 1,100,000 shares of Company equity securities, and,
in the case of Liberty, 1,000,000 shares. Certain of Liberty's rights and
obligations relating to its put/call arrangements with Universal and its
tag-along rights terminate when it no longer has the right to consent to
Fundamental Changes under the Governance Agreement. Mr. Diller's rights and
obligations (other than with respect to Mr. Diller's put right) also generally
terminate upon the CEO Termination Date or such date as Mr. Diller becomes
Disabled.

Transferees of Company securities as permitted by the Stockholders
Agreement and who would beneficially own in excess of 15% of the Total Voting
Power generally are not entitled to any rights of the transferring stockholder
under the agreement but are, generally for a certain period of time, subject to
the obligations regarding the election of directors among others. These
transferees must also vote with respect to Fundamental Changes in the manner
agreed upon by the other two stockholders. In addition, a

Page 30 of __ pages

31
transferee of Liberty or Mr. Diller who would own that amount of the Total
Voting Power would also be subject, generally for a certain period of time to
the limitations on acquisitions of additional Company securities summarized
above.

IV. SPINOFF AGREEMENT

Universal, Liberty and the Company are parties to the Spinoff
Agreement, dated as of October 19, 1997 (the "Spinoff Agreement"), which
generally provides for interim arrangements relating to management of the
Company and efforts to achieve the Spinoff or a sale of the Company's broadcast
stations and, in the case of a Spinoff, certain arrangements relating to their
respective rights (including preemptive rights) in the Company resulting from
the Spinoff. The provisions of the Spinoff Agreement do not become operative
until the earlier of the CEO Termination Date or such date as Mr. Diller becomes
Disabled.

Liberty and Universal have agreed to use their reasonable best efforts
to cause an interim CEO to be appointed, who is mutually acceptable to them and
is independent of Liberty and Universal. If Universal elects, within 60 days of
the CEO Termination Date or such date as Mr. Diller becomes Disabled, to effect
a sale of the Company's broadcast stations, this designated CEO would generally
have a proxy to vote Liberty's Company Stock, at Universal's option (or, if
Liberty beneficially owns a greater percentage of Company securities than
Universal, Liberty's option), either in such CEO's discretion or in the same
proportion as the public stockholders, pending completion of the station
divestiture.

If Universal elects to complete the station divestiture, Liberty and
Universal (and the Company) have agreed to use best efforts to cause the
divestiture to be structured as a tax-free distribution to the Company's
stockholders (the Spinoff). If a tax-free Spinoff is not available, the Company
has agreed to use its best efforts to sell the stations, except that if the
Company Board (other than any designees of Universal or Liberty) determines that
a taxable spinoff, when compared with a sale, represents a superior alternative
the Company will consummate a taxable spinoff. Universal has agreed to
reimburse Liberty in connection with any such taxable spinoff in an amount up
to $50 million with respect to any actual tax liability incurred by Liberty
in such a transaction.

If Universal makes the election described above, Liberty has agreed not
to transfer, directly or indirectly, any of its Common Stock or Class B Common
Stock for a period of fourteen months after the CEO Termination Date or such
date as Mr. Diller becomes Disabled if such transfer would result in Universal
and Liberty ceasing to own at least 50.1% of the outstanding Company voting
power (as long as Universal has not transferred more than 3% of the outstanding
Company securities following the Closing).

The Company has agreed that, subject to the terms of the Spinoff
Agreement and its obligations under the Investment Agreement, so long as (i)
Universal beneficially owns at least 40% of the total equity securities of the
Company and no other stockholder owns more than the amount owned by Universal,
or (ii) Liberty and Universal together own at least 50.1% of such equity
securities, the Company will use its reasonable best efforts to enable Universal
and Liberty to achieve the purposes of the Spinoff Agreement.

Page 31 of 49 pages

32
The foregoing summary descriptions of the Transaction Agreements are
qualified in their entirety by reference to the Transaction Agreements, which
are attached hereto as Exhibits and incorporated herein by reference.

ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.

The information contained in Item 7 of the TCI Schedule 13D and the
Barry Diller Schedule 13D is hereby amended and supplemented by adding the
following information (and such information also constitutes Item 7 of the
Universal Schedule 13D):

The following documents are filed as exhibits to this statement:

32. Investment Agreement among Universal Studios, Inc., HSN, Inc.,
Home Shopping Network, Inc. and Liberty Media Corporation,
dated as of October 19, 1997 as amended and restated as of
December 18, 1997.

33. Governance Agreement among HSN, Inc., Universal Studios, Inc.,
Liberty Media Corporation and Barry Diller, dated as of
October 19, 1997.

34. Stockholders Agreement among Universal Studios, Inc., Liberty
Media Corporation, Barry Diller, HSN, Inc. and The Seagram
Company Ltd. dated as of October 19, 1997.

35. Spinoff Agreement among Liberty Media Corporation, Universal
Studios, Inc. and HSN, Inc. dated as of October 19, 1997.

36. Exchange Agreement among HSN, Inc., Universal Studios, Inc.
and Liberty Media Corporation, dated as of October 19, 1997.

37. Amended and Restated LLC Operating Agreement of USANi LLC, by
and among USA Networks, Inc., Home Shopping Network, Inc.,
Universal Studios, Inc., Liberty Media Corporation and Barry
Diller, dated as of February 12, 1998.

38. Letter Agreement between Liberty HSN, Inc. and HSN, Inc.,
dated as of October 19, 1997.

39. Fourth Amended and Restated Joint Filing Agreement between
Tele-Communications, Inc., Universal Studios, Inc., The
Seagram Company Ltd. and Barry Diller, dated as of February
23, 1998.

40. Certificate of Incorporation of BDTV IV INC.

Page 32 of __ pages

33
SIGNATURE

After reasonable inquiry and to the best of his knowledge and belief,
the undersigned certifies that the information in this statement is true,
complete and correct.

Dated: February 23, 1998

TELE-COMMUNICATIONS, INC.

By: /s/ Stephen M. Brett
------------------------------
Name: Stephen M. Brett
Title: Senior Vice President and
General Counsel

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

UNIVERSAL STUDIOS, INC.

BY: /s/ Brian C. Mulligan
------------------------------
NAME: Brian C. Mulligan
TITLE: Senior Vice President

THE SEAGRAM COMPANY LTD.

By: /s/ Daniel R. Paladino
------------------------------
Name: Daniel R. Paladino
Title: Executive Vice President

Page 33 of 49 pages

34
BDTV INC.

By: /s/ Barry Diller
------------------------------
Name: Barry Diller
Title: President

BDTV II INC.

By: /s/ Barry Diller
------------------------------
Name: Barry Diller
Title: President

BDTV III INC.

By: /s/ Barry Diller
------------------------------
Name: Barry Diller
Title: President

BDTV IV INC.

By: /s/ Barry Diller
------------------------------
Name: Barry Diller
Title: President

Page 34 of 49 pages

35
INDEX TO EXHIBITS

SEQ. PAGE NO.
1. Written Agreement between TCI and Mr. Diller regarding
Joint Filing of Schedule 13D./*/
2. Definitive Term Sheet regarding Stockholders Agreement,
dated as of August 24, 1995, by and between Liberty
Media Corporation and Mr. Diller./*/
3. Definitive Term Sheet regarding Equity Compensation
Agreement, dated as of August 24, 1995, by and between
the Company and Mr. Diller./*/
4. Press Release issued by the Company and Mr. Diller, dated
August 25, 1995./*/
5. Letter Agreement, dated November 13, 1995, by and
between Liberty Media Corporation and Mr. Diller./*/
6. Letter Agreement, dated November 16, 1995, by and
between Liberty Media Corporation and Mr. Diller./*/
7. First Amendment to Stockholders Agreement, dated as of
November 27, 1995, by and between Liberty Media
Corporation and Mr. Diller./*/
8. Agreement and Plan of Merger, dated as of November 27,
1995, by and among Silver Management Company,
Liberty Program Investments, Inc., and Liberty HSN,
Inc./*/
9. Exchange Agreement, dated as of November 27, 1995, by
and between Silver Management Company and Silver
King Communications, Inc./*/
10. Agreement and Plan of Merger, dated as of November 27,
1995, by and among Silver King Communications, Inc.,
Thames Acquisition Corp. and Savoy Pictures
Entertainment, Inc./*/
11. Voting Agreement, dated as of November 27, 1995, by and
among Certain Stockholders of the Company and Savoy
Pictures Entertainment, Inc./*/

Page 35 of __ pages

36
12. Letter Agreement, dated March 22, 1996, by and between
Liberty Media Corporation and Barry Diller./*/
13. In re Applications of Roy M. Speer and Silver
Management Company, Federal Communications
Commission Memorandum and Order, adopted March 6,
1996 and released March 11, 1996./*/
14. In re Applications of Roy M. Speer and Silver
Management Company, Request for Clarification of Silver
Management Company, dated April 10, 1996./*/
15. In re Applications of Roy M. Speer and Silver
Management Company, Federal Communications
Commission Memorandum Opinion and Order and Notice
of Apparent Liability, adopted June 6, 1996 and released
June 14, 1996./*/
16. Amended and Restated Joint Filing Agreement of TCI, Mr.
Diller and BDTV./*/
17. Amended and Restated Certificate of Incorporation of
BDTV INC./*/
18. Press Release issued by the Company and Home Shopping
Network, Inc., dated August 26, 1996./*/
19. Agreement and Plan of Exchange and Merger, dated as of
August 25, 1996, by and among the Company, Home
Shopping Network, Inc., House Acquisition Corp., and
Liberty HSN, Inc./*/
20. Termination Agreement, dated as of August 25, 1996,
among the Company, BDTV Inc., Liberty Program
Investments, Inc., and Liberty HSN, Inc./*/
21. Voting Agreement, dated as of August 25, 1996, by and
among Certain Stockholders of Home Shopping Network,
Inc. and the Company./*/
22. Voting Agreement, dated as of August 25, 1996, by and
among Barry Diller, Liberty Media Corporation, Arrow
Holdings, LLC, BDTV Inc., and Home Shopping
Network, Inc./*/

Page 36 of __ pages

37
22. Voting Agreement, dated as of August 25, 1996, by and
among Barry Diller, Liberty Media Corporation, Arrow
Holdings, LLC, BDTV Inc., and Home Shopping
Network, Inc./*/
23. Letter Agreement, dated as of August 25, 1996, by and
between Liberty Media Corporation and Barry Diller./*/
24. Second Amended and Restated Joint Filing Agreement by
and between TCI, Mr. Diller, BDTV Inc. and BDTV II
Inc./*/
25. Stock Exchange Agreement, dated as of December 20,
1996, by and between the Company and Liberty HSN,
Inc./*/
26. Letter Agreement, dated as of February 3, 1997, by and
between BDTV INC. and David Geffen./*/
27. Stock Exchange Agreement, dated as of May 20, 1997, by
and between HSN, Inc. and Mr. Allen./*/
28. Stockholders Agreement, dated as of May 20, 1997, by and
among, Mr. Diller, Mr. Allen and Liberty Media
Corporation./*/
29. Letter Agreement, dated as of May 20, 1997, by and
between Mr. Diller and Liberty Media Corporation./*/
30. Third Amended and Restated Joint Filing Agreement by
and between TCI, Mr. Diller, BDTV Inc., BDTV II Inc.
and BDTV III Inc./*/
31. Certificate of Incorporation of BDTV III Inc./*/
32. Investment Agreement among Universal Studios, Inc.,
HSN, Inc., Home Shopping Network, Inc. and Liberty
Media Corporation, dated as of October 19, 1997 as
amended and restated as of December 18, 1997.
33. Governance Agreement among HSN, Inc., Universal
Studios, Inc., Liberty Media Corporation and Barry Diller,
dated as of October 19, 1997.
34. Stockholders Agreement among Universal Studios, Inc.,
Liberty Media Corporation, Barry Diller, HSN, Inc. and
The Seagram Company Ltd. dated as of October 19, 1997.

Page 37 of __ pages

38
35. Spinoff Agreement among Liberty Media Corporation,
Universal Studios, Inc. and HSN, Inc. dated as of October
19, 1997.
36. Exchange Agreement among HSN, Inc., Universal Studios,
Inc. and Liberty Media Corporation, dated as of October
19, 1997.
37. Amended and Restated LLC Operating Agreement of
USANi LLC, by and among USA Networks, Inc., Home
Shopping Network, Inc., Universal Studios, Inc., Liberty
Media Corporation and Barry Diller, dated as of February
12, 1998.
38. Letter Agreement between Liberty HSN, Inc. and HSN,
Inc., dated as of October 19, 1997.
39. Fourth Amended and Restated Joint Filing Agreement
between Tele-Communications, Inc., Universal Studios,
Inc., The Seagram Company Ltd. and Barry Diller, dated
as of February 23, 1998.
40. Certificate of Incorporation of BDTV IV INC.

/*/ Previously filed.

Page 38 of __ pages

39
SCHEDULE 1

1. Set forth below is the name, business address, principal
occupation or employment and citizenship of each director and executive officer
of Universal. The name of each person who is a director of Universal is marked
with an asterisk. Unless otherwise indicated, the business address of each
person listed below is 100 Universal City Plaza, Universal City, California
91608.

Principal Occupation
Name and Business Address or Employment Citizenship
- ----------------------------------------- --------------------------------------- -----------------------

EDGAR BRONFMAN, JR.* Chief Executive Officer United States
375 Park Avenue and President of Seagram and
New York, New York 10152 Chairman of the Executive
Committee of Universal

SAMUEL BRONFMAN II* President of Seagram Chateau United States
2600 Campus Drive & Estate Wines Company (a
Suite 160 division of a subsidiary of
San Mateo, CA 94403 Seagram)

ARNOLD M. LUDWICK* Vice President of Seagram Canada
c/o Claridge Inc.
1170 Peel Street
8th Floor
Montreal, Quebec
Canada H3B 4P2

ROBERT W. MATSCHULLAT* Vice Chairman and Chief United States
375 Park Avenue Financial Officer of Seagram
New York, New York 10152

YASUO NAKAMURA* General Manager, Matsushita Japan
Entertainment & Media Liaison
Office at Universal

FRANK J. BIONDI, JR.* Chairman and Chief Executive United States
Officer of Universal

RON MEYER* President and Chief Operating
Officer of Universal United States

Page 39 of __ pages

Principal Occupation
Name and Business Address or Employment Citizenship
- ----------------------------------------- --------------------------------------- -----------------------

HOWARD L. WEITZMAN Executive Vice President, United States
Corporate Operations of
Universal

BRUCE L. HACK* Executive Vice President and United States
Chief Financial Officer of
Universal

DOUGLAS P. MORRIS Executive Vice President United States

CATHY A. NICHOLS Executive Vice President United States

CASEY SILVER Executive Vice President United States

KAREN RANDALL Senior Vice President and United States
General Counsel of Universal

KENNETH L. KAHRS Senior Vice President, Human United States
Resources of Universal

DEBORAH S. ROSEN Senior Vice President, United States
Corporate Communications and
Public Affairs of
Universal

BRIAN C. MULLIGAN Senior Vice President of United States
Universal

HELLENE S. RUNTAGH Senior Vice President of United States
Universal

JAY E. SHECTER Vice President, Strategic Canada
Sourcing of Universal

PAUL BUSCEMI Vice President, Tax of Joseph United States
800 Third Avenue E. Seagram & Sons, Inc. and
New York, New York 10022 Vice President of Universal

MAREN CHRISTENSEN Vice President of Universal United States

H. STEPHEN GORDON Vice President of Universal United States

MARC PALOTAY Vice President of Universal United States

Page 40 of __ pages

Principal Occupation
Name and Business Address or Employment Citizenship
- ----------------------------------------- --------------------------------------- -----------------------

WILLIAM A. SUTMAN Vice President and Controller United States
of Universal

SHARON S. GARCIA Secretary of Universal United States

PAMELA F. CHERNEY Treasurer of Universal United States

LEW R. WASSERMAN* Chairman Emeritus of United States
Universal

2. Set forth below are the name, business address, principal occupation
or employment and citizenship of each director and executive officer of Seagram.
The name of each person who is a director of Seagram is marked with an asterisk.
Unless otherwise indicated, the business address of each person listed below is
375 Park Avenue, New York, New York 10152.

Principal Occupation
Name and Business Address or Employment Citizenship
- ----------------------------------------- --------------------------------------- -----------------------

EDGAR M. BRONFMAN* Chairman of the Board of United States
Seagram

THE HON. CHARLES R. Co-Chairman of the Board and Canada
BRONFMAN, P.C., C.C.* Chairman of the Executive
501 North Lake Way Committee of Seagram
Palm Beach, Florida 33480

EDGAR BRONFMAN, JR.* Chief Executive Officer and United States
President of Seagram

SAMUEL BRONFMAN II* President of Seagram Chateau United States
2600 Campus Drive & Estate Wines Company (a
Suite 160 division of a subsidiary of
San Mateo, CA 94403 Seagram)

Page 41 of __ pages

Principal Occupation
Name and Business Address or Employment Citizenship
- ----------------------------------------- --------------------------------------- -----------------------

MATTHEW W. BARRETT, O.C.* Chairman and Chief Executive Canada
First Bank Tower Officer of Bank of Montreal (a
68th Floor financial institution)
First Canadian Place
100 King Street West
Toronto, Ontario M5X 1A1

LAURENT BEAUDOIN, C.C.* Chairman and Chief Executive Canada
800 Rene-Levesque Blvd. West Officer of Bombardier Inc. (a
30th Floor transportation, aerospace and
Montreal, Quebec motorized products company)
Canada H3B 1Y8

FRANK J. BIONDI, JR.* Chairman and Chief Executive United States
100 Universal City Plaza Officer of Universal Studios,
Universal City, CA 91608 Inc.

RICHARD H. BROWN Chief Executive of Cable and United States
124 Theobolds Road Wireless plc (a provider of
London, England WC1X 8RX international
telecommunications services)

THE HON. WILLIAM G. DAVIS, Counsel to Tory Canada
P.C., C.C., Q.C. Tory DesLauriers &
Suite 3000, Aetna Tower Binnington (attorneys)
79 Wellington Street West
Toronto, Ontario
Canada M5K 1N2

ANDRE DESMARAIS* President and Co-Chief Canada
751 Victoria Square Executive Officer of Power
Montreal, Quebec Corporation of Canada (a
Canada H2Y 2J3 holding and management
company) and Deputy
Chairman of Power Financial
Corporation

Page 42 of __ pages

Principal Occupation
Name and Business Address or Employment Citizenship
- ----------------------------------------- -------------------------------------- -----------------------

BARRY DILLER* Chairman and Chief Executive United States
c/o USA Networks, Inc. Officer of USA Networks, Inc.
2425 Olympic Boulevard
6th Floor
West Tower
Santa Monica, California
90404

MICHELE J. HOOPER* Corporate Vice President, United States
2211 Sanders Road Caremark
Northbrook, IL 60062 International Inc. (a health care
services provider)

DAVID L. JOHNSTON, Professor of Law at McGill Canada
C.C.* University (an educational
3690 Peel Street institution)
Room 200
Montreal, Quebec
Canada H3A 1W9

THE HON. E. LEO KOLBER, Member of The Senate of Canada
SENATOR* Canada
c/o Claridge Inc.
1170 Peel Street
8th Floor
Montreal, Quebec
Canada H3B 4P2

MARIE-JOSEE KRAVIS, O.C.* Senior Fellow of The Hudson Canada
625 Park Avenue Institute Inc. (a non-profit
New York, NY 10021 economics research institute)

ROBERT W. MATSCHULLAT* Vice Chairman and United States
Chief Financial Officer
of Seagram

C. EDWARD MEDLAND* President of Beauwood Canada
121 King Street West Investments Inc. (a private
Suite 2525 investment company)
Toronto, Ontario
Canada M5H 3T9

Page 43 of __ pages

Principal Occupation
Name and Business Address or Employment Citizenship
- ----------------------------------------- --------------------------------------- -----------------------

SAMUEL MINZBERG* President and Chief Executive Canada
1170 Peel Street Officer of Claridge Inc. (a
8th Floor management company)
Montreal, Quebec
Canada H3B 4P2

JOHN S. WEINBERG* General Partner of Goldman, United States
85 Broad Street Sachs & Co. (investment
New York, NY 10004 bankers)

JOHN D. BORGIA Executive Vice President, United States
Human Resources of Seagram

STEVEN J. KALAGHER Executive Vice President of United States
Seagram and President and
Chief Executive Officer, The
Seagram Spirits And Wine
Group (a division of a
subsidiary of Seagram)

ELLEN R. MARRAM Executive Vice President of United States
Seagram and President and
Chief Executive Officer,
Tropicana Beverage Group (a
division of a subsidiary of
Seagram)

DANIEL R. PALADINO Executive Vice President, United States
Legal and Environmental
Affairs of Seagram

GABOR JELLINEK Vice President, Production of Canada
1430 Peel Street Seagram and Executive Vice
Montreal, Quebec President, Manufacturing, The
Canada H3A 1S9 Seagram Spirits And Wine
Group (a division of a
subsidiary of Seagram)

Page 44 of __ pages

Principal Occupation
Name and Business Address or Employment Citizenship
- ----------------------------------------- --------------------------------------- -----------------------

ARNOLD M. LUDWICK Vice President of Seagram Canada
c/o Claridge Inc.
1170 Peel St.
8th Floor
Montreal, Quebec
Canada H3B 4P2

JOHN R. PRESTON Vice President, Finance of United States
Seagram

MICHAEL C.L. HALLOWS Secretary of Seagram Canada

3. The trustees of the trusts for the benefit of Edgar M. Bronfman and
his descendants are Edgar M. Bronfman, Edgar Bronfman, Jr., Matthew Bronfman,
Harold R. Handler, Mayo O. Shattuck III and John L. Weinberg. The trustees of
the trusts for the benefit of Charles R. Bronfman and his descendants are
Stephen R. Bronfman, Ellen J. Bronfman Hauptman, Trevor Carmichael, Neville
LeRoy Smith, Bruce I. Judelson, Gary J. Gartner, Steven H. Levin, Arnold M.
Ludwick, Jeffrey D. Scheine and Robert S. Vineberg. The trustees of the trusts
for the benefit of the family of the late Minda de Gunzburg are Stanley N.
Bergman, Dr. Guido Goldman and Leonard M. Nelson. The directors of the first two
charitable foundations referenced in Item 2 include Charles R. Bronfman, Stephen
R. Bronfman and Arnold M. Ludwick, the trustees of the third charitable
foundation include Edgar M. Bronfman, Charles R. Bronfman, Samuel Bronfman II,
Edgar Bronfman, Jr., Robert W. Matschullat and Daniel R. Paladino and the
directors of the fourth charitable foundation include Phyllis Lambert, Matthew
Bronfman and Stephen R. Bronfman. Set forth below or under Part 2 above are the
address, principal occupation or employment and citizenship of each person named
in this Part 3.

Page 45 of __ pages

Principal Occupation
Name and Business Address or Employment Citizenship
- ----------------------------------------- --------------------------------------- -----------------------

PHYLLIS LAMBERT Architect Canada
1920 Baile Street
Montreal, Quebec
Canada H3H 2S6

MATTHEW BRONFMAN Chief Executive Officer of United States
30 West 26th Street Perfumes Isabell, L.L.C. (a
2nd Floor perfume company)
New York, NY 10010

STEPHEN R. BRONFMAN Private Investor Canada
c/o Claridge Inc.
1170 Peel Street
8th Floor
Montreal, Quebec
Canada H3B 4P2

ELLEN J. BRONFMAN Private Investor Canada
HAUPTMAN
c/o Withers Solicitors
12 Gough Square
London, England EC4A 3DE

HAROLD R. HANDLER Attorney whose professional United States
425 Lexington Avenue corporation is of counsel to
New York, NY 10017 Simpson Thacher & Bartlett
(attorneys)

MAYO O. SHATTUCK III President and Chief Operating United States
Alex Brown & Sons Incorporated Officer of Alex. Brown & Sons
135 East Baltimore Street Incorporated
Baltimore, MD 21202 (investment bankers)

JOHN L. WEINBERG Senior Chairman of Goldman, United States
85 Broad Street Sachs & Co.
New York, NY 10004 (investment bankers)

Page 46 of __ pages

Principal Occupation
Name and Business Address or Employment Citizenship
- ----------------------------------------- --------------------------------------- -----------------------

ROBERT S. VINEBERG Partner of Goodman Phillips & Canada
1501 McGill College Vineberg (barristers and
Avenue solicitors)
26th Floor
Montreal, Quebec
Canada H3A 3N9

GARY J. GARTNER Resident Counsel of Goodman Canada
430 Park Avenue Phillips & Vineberg (attorneys)
10th Floor
New York, NY 10022

STEVEN H. LEVIN Resident Counsel of Goodman United States
430 Park Avenue Phillips & Vineberg (attorneys)
10th Floor
New York, NY 10022

JEFFREY D. SCHEINE Resident Counsel of Goodman United States
430 Park Avenue Phillips& Vineberg (attorneys)
10th Floor
New York, NY 10022

TREVOR CARMICHAEL, Q.C. Barrister, Chancery Chambers Barbados
Chancery Chambers, Chancery (attorneys)
House
High Street
Bridgetown, Barbados

NEVILLE LEROY SMITH Managing Director of Royal Barbados
Sunset Drive Bank of Canada Financial
Pine Gardens Corporation
St. Michael, Barbados (a financial institution)

BRUCE I. JUDELSON Partner of Bergman, Horowitz & United States
157 Church Street Reynolds, P.C. (attorneys)
New Haven, CT 06510

STANLEY N. BERGMAN Partner of Bergman, Horowitz & United States
157 Church Street Reynolds, P.C. (attorneys)
New Haven, CT 06510

Page 47 of __ pages

Principal Occupation
Name and Business Address or Employment Citizenship
- ----------------------------------------- --------------------------------------- -----------------------

DR. GUIDO GOLDMAN Director of German Studies at the United States
First Spring Corporation Center for European Studies at
499 Park Avenue Harvard University and
New York, NY 10022 Chairman of First Spring
Corporation (an investment
company)

LEONARD M. NELSON Shareholder of Bernstein, Shur, United States
100 Middle Street Sawyer & Nelson, P.C.
Portland, ME 04104 (attorneys)

Page 48 of __ pages

49
SCHEDULE 2

Set forth below is the name, business address, principal occupation or
employment and citizenship of each director and executive officer of BDTV IV.

Principal Business of
Principal Occupation Organization in which such
Name and Business Address Business is Conducted Citizenship
- ---------------------- ---------------------------- ------------------------------------ -------------------

BARRY DILLER Chairman of the Board, Ownership and operation of United States
Chief Executive Officer media and entertainment
and Director of USA related businesses
Networks, Inc., 2425
Olympic Boulevard,
Santa Monica, CA
90404; Chairman of the
Board, President and
Director of BDTV, BDTV
II, BDTV III and BDTV
IV

Page 49 of __ pages

   1
                                                                   Exhibit 99.32
                                                                [CONFORMED COPY]
================================================================================



                              INVESTMENT AGREEMENT

                                      among

                            UNIVERSAL STUDIOS, INC.,
             for itself and on behalf of certain of its Subsidiaries

                                   HSN, INC.,

                           HOME SHOPPING NETWORK, INC.

                                       and

                           LIBERTY MEDIA CORPORATION,
             for itself and on behalf of certain of its Subsidiaries

                          dated as of October 19, 1997,
                 as amended and restated as of December 18, 1997



================================================================================
   2

                                TABLE OF CONTENTS

ARTICLE 1.    THE TRANSACTIONS............................................     1

     1.1.   Formation of LLC..............................................     1
     1.2.   Formation of Investor Newcos..................................     1
     1.3.   Parent and Sub Contributions..................................     1
     1.4.   Assumption of Liabilities.....................................     1
     1.5.   Closing.......................................................     2
     1.6.   Parent Shares.................................................     4
     1.7.   Investor's Preemptive Right...................................     4
     1.8.   Holder's Preemptive Right.....................................     8
     1.9.   Holder To Exchange LLC Shares.................................     9
     1.10.  Issuance of LLC Shares to Parent or Sub.......................     9
     1.11.  Business of the LLC...........................................     9

ARTICLE 2.    REPRESENTATIONS AND WARRANTIES OF INVESTOR..................    10

     2.1.   Organization, Standing, and Authority.........................    11
     2.2.   Authorization and Binding Obligation..........................    11
     2.3.   Absence of Conflicting Agreement; Consents....................    11
     2.4.   Licenses......................................................    12
     2.5.   Real Property.................................................    12
     2.6.   [Intentionally omitted].......................................    13
     2.7.   Contracts.....................................................    13
     2.8.   Intangible Property...........................................    13
     2.9.   Financial Statements..........................................    14
     2.10.  Personnel.....................................................    15
     2.11.  Claims and Legal Actions......................................    16
     2.12.  Compliance with Laws..........................................    17
     2.13.  Transactions with Affiliates; Completeness of Assets..........    17
     2.14.  Cable Subscribers.............................................    17
     2.15.  Ownership of the Partnership..................................    17
     2.16.  Investment....................................................    18
     2.17.  Conduct of Business...........................................    18
     2.18.  Brokers.......................................................    19

ARTICLE 3.    REPRESENTATIONS AND WARRANTIES OF PARENT....................    19

     3.1.   Organization and Good Standing................................    19
     3.2.   Capitalization................................................    20
     3.3.   Due Authorization; Execution and Delivery.....................    21


                                      -i-
   3

     3.4.   Absence of Breach;  No Conflict...............................    21
     3.5.   Shares to Be Issued...........................................    22
     3.6.   Investment Purpose............................................    22
     3.7.   Brokers.......................................................    22
     3.8.   Commission Documents; Financial Information...................    22
     3.9.   Approvals.....................................................    23
     3.10.  Personnel.....................................................    23
     3.11.  Conduct of Business...........................................    25
     3.12.  Licenses......................................................    26
     3.13.  Claims and Legal Actions......................................    26
     3.14.  Compliance with Laws..........................................    26

ARTICLE 4.    REPRESENTATIONS AND WARRANTIES OF HOLDER....................    26

     4.1.   Organization, Standing, and Authority.........................    26
     4.2.   Authorization and Binding Obligation..........................    27
     4.3.   Absence of Conflicting Agreements; Consents...................    27

ARTICLE 5.    INTERCOMPANY TRANSFER OF FUNDS..............................    27

     5.1.   General.......................................................    27
     5.2.   Transfers from LLC............................................    27
     5.3.   Transfers to LLC..............................................    28
     5.4.   Other Transactions............................................    28
     5.5.   Interest......................................................    28

ARTICLE 6.    INVESTOR EXCHANGE OPTIONS; DISTRIBUTIONS; STOCK DIVIDENDS, 
              SPLITS, ETC.................................................    28

     6.1.   Exchange Options..............................................    28
     6.2.   Distributions to LLC Stockholders.............................    30
     6.3.   Tax Treatment.................................................    32
     6.6.   Anti-dilution.................................................    32

ARTICLE 7.    TRANSFERABILITY; ISSUANCE TO OTHER PARTIES..................    32

     7.1.   No Transfer of Shares of the LLC..............................    32
     7.2.   Transfer by Investor or Holder................................    32

ARTICLE 8.    TAX MATTERS.................................................    32

     8.1.   Tax Representations...........................................    32
     8.2.   Tax Indemnification by Investor...............................    33


                                      -ii-
   4

     8.3.   Tax Indemnification by Parent.................................    33
     8.4.   Allocation of Certain Taxes...................................    33
     8.5.   Filing Responsibility.........................................    34
     8.6.   Refunds.......................................................    34
     8.7.   Cooperation and Exchange of Information.......................    34
     8.8.   Section 754 Election..........................................    36
     8.9.   Certificate of Non-Foreign Status.............................    36
     8.10.  Definitions...................................................    36

ARTICLE 9.    ADDITIONAL COVENANTS........................................    36

     9.1.   Annual or Special Meeting.....................................    36
     9.2.   HSR Filings...................................................    37
     9.3.   Related Agreements............................................    37
     9.4.   Other Businesses..............................................    37
     9.5.   Information and Access........................................    38
     9.6.   Reservation...................................................    38
     9.7.   Further Action................................................    38
     9.8.   [Intentionally omitted].......................................    39
     9.9.   Employees.....................................................    39
     9.10.  Investor Give-Back Provision..................................    40
     9.11.  Disclosure Schedule...........................................    42
     9.12.  Financing.....................................................    42
     9.13.  Representations and Warranties................................    42
     9.14.  Spinoff of Regulated Subsidiaries.............................    42
     9.15.  Partnership Interest Purchase Agreement.......................    43
     9.16.  USA Network Cash..............................................    43
     9.17.  Consents......................................................    43
     9.18.  Viacom Non-Competition Covenant...............................    44
     9.19.  Ownership of Licenses.........................................    44

ARTICLE 10.   CONDITIONS..................................................    44

     10.1.  Conditions to Investor's Obligations..........................    44
     10.2.  Conditions to Parent's Obligations............................    45
     10.3.  Conditions to Holder's Obligations and Option.................    47

ARTICLE 11.   SURVIVAL AND INDEMNIFICATION................................    47

     11.1.  Survival......................................................    47
     11.2.  Indemnification by Investor, Holder or Parent.................    47
     11.3.  Third-Party Claims............................................    49

ARTICLE 12.   TERMINATION; LIQUIDATION....................................    50

     12.1.  Termination by Mutual Written Consent.........................    50


                                     -iii-
   5

     12.2.  Termination by Parent or Investor.............................    50
     12.3.  Termination by Parent.........................................    50
     12.4.  Termination by Investor.......................................    50
     12.5.  Termination Following Closing.................................    51
     12.6.  Effect of Termination.........................................    51

ARTICLE 13.   GENERAL.....................................................    51

     13.1.  Definitions...................................................    51
     13.2.  Efforts to Proceed Promptly...................................    60
     13.3.  Maintenance of Business.......................................    61
     13.4.  Notices.......................................................    61
     13.5.  Specific Enforcement..........................................    62
     13.6.  Severability..................................................    62
     13.7.  Entire Agreement..............................................    63
     13.8.  Amendment; Waiver.............................................    63
     13.9.  Headings; References..........................................    63
     13.10. Expenses......................................................    63
     13.11. Counterparts..................................................    63
     13.11. Governing Law.................................................    63
     13.13. Public Announcement...........................................    63
     13.14. No Third Party Beneficiaries..................................    64

Exhibit A      Governance Agreement

Exhibit B      LLC Operating Agreement

Exhibit C      1.  Domestic and International Distribution Agreements
               2.  Studio Facilities Agreement
               3.  Ancillary Business Agreements
               4.  International Joint Venture Agreement
               5.  Transition Services Agreement


                                      -iv-
   6

                              INVESTMENT AGREEMENT

            INVESTMENT AGREEMENT (the "Agreement") dated as of October 19, 1997,
as amended and restated as of December 18, 1997, among UNIVERSAL STUDIOS, INC.,
for itself and on behalf of certain of its Subsidiaries ("Investor"), HSN, INC.
("Parent"), HOME SHOPPING NETWORK, INC. ("Sub"), a direct subsidiary of Parent,
and LIBERTY MEDIA CORPORATION, for itself and on behalf of certain of its
Subsidiaries ("Holder") (Investor, Holder, Parent and Sub, collectively, the
"Parties"). The Parties agree to consummate the following transactions (the
"Transactions") upon the terms and subject to the conditions set forth herein.
Capitalized terms used herein without definition have the meanings ascribed to
such terms in Article 13 hereof.

                                   ARTICLE 1.
                                THE TRANSACTIONS

            1.1. Formation of LLC. On or prior to the Closing Date, Parent
agrees to cause Sub to, and Sub agrees to, organize a new Delaware limited
liability company (the "LLC"). Upon formation of the LLC pursuant to this
Section 1.1, the LLC shall become a party to this Agreement, shall be bound by
all the terms and conditions hereunder and shall constitute a "Party" hereunder.

            1.2. Formation of Investor Newcos. On or prior to the Closing Date,
Investor agrees to organize and form one or more holding companies, or to
designate one or more existing companies reasonably acceptable to Parent (each,
an "Investor Newco" and collectively, the "Investor Newcos") solely for the
purpose of acquiring an equity interest in LLC. Investor agrees that except as
contemplated hereby, during the term of this Agreement it shall be the sole
owner of all of the outstanding equity interest of Investor Sub and each
Investor Newco, and it shall cause Investor Sub and each Investor Newco not to
(i) engage in any other business, except the Transactions contemplated hereby,
or (ii) incur any liability.

            1.3. Parent and Sub Contributions. On or before the Closing, Parent
and Sub shall, subject to Section 1.11(b), contribute, transfer, assign and
convey (collectively, "Contribute") or cause to be Contributed to the LLC, 
(i) all of the assets, rights and businesses owned, held or conducted by Parent
and Sub described on Schedule 1.3 ("Contributed Businesses"), (ii) the portion
of the Acquired Partnership Interest described in Section 1.5(b)(ii) and (iii)
an agreement to contribute the stock or assets of an agreed-upon Subsidiary of
Parent (the "Excluded Sub") as promptly as practicable consistent with tax
efficiencies, in exchange for an aggregate number of LLC Shares to be issued to
Parent or Sub equal to the Parent LLC Shares Number.

            1.4. Assumption of Liabilities. On or before the Closing, the LLC
will assume, and agree to pay and discharge, as and when they become due, or
otherwise take subject to, all liabilities of Parent and Sub, other than the
liabilities set forth on Schedule 1.4 (collectively, the "Assumed Liabilities").
   7

            1.5. Closing. (a) Subject to the conditions set forth below, the
closing of the transactions contemplated hereby (the "Closing") shall take place
at the offices of Wachtell, Lipton, Rosen & Katz, 51 West 52nd Street, New York,
New York 10019 at 10:00 a.m. on the date three days after satisfaction or waiver
of all of the conditions to the Parties' respective obligations to consummate
the transactions contemplated hereby (other than those requiring the delivery of
documents or the taking of other action at the Closing) or such earlier date as
may be agreed upon by the parties. The date on which the Closing is consummated
is hereinafter called the "Closing Date".

            (b) At the Closing, USA Networks Partner, Inc. ("Investor Sub")
shall sell (i) to the LLC a portion of the Acquired Partnership Interest in
exchange for (A) a payment of cash equal to the Cash Amount (but such payment
shall not exceed $1.43 billion) to an account specified by Investor Sub in
writing not less than three days prior to the Closing, and (B) a number of LLC
Shares equal to the Acquired LLC Amount, and (ii) to Parent the remainder of the
Acquired Partnership Interest in exchange for 6.75 million shares of Parent
Class B Stock (provided, however that if FCC Regulations prevent Investor from
acquiring 6.75 million shares of Parent Class B Stock, then any amount in excess
of such amount so permitted shall consist of Parent Common Stock, and provided,
further, that Parent shall cooperate with Investor to provide Investor with the
same voting power that it would have in the absence of FCC Regulations at such
time, if any, as FCC Regulations would permit, including, without limitation,
agreeing to exchange Parent Common Stock for Parent Class B Stock) (the "Parent
Stock Number"), issued to Investor Sub.

            (c) At the Closing, Investor shall Contribute or cause to be
Contributed to the LLC by the Investor Newcos, (i) the Owned Partnership
Interest and (ii) all of the assets, rights and businesses owned, held or
conducted by Investor and its Subsidiaries in its one-hour as well as certain
half-hour domestic television production business and domestic television
distribution business, including and excluding, as the case may be, those
described on Schedule 1.5 (the "UT Contributed Business"), and the LLC will
assume, and agree to pay and discharge, as and when they become due, or
otherwise take the UT Contributed Business subject to, all liabilities of the UT
Contributed Business set forth on Schedule 1.5 excluding any liabilities for
Taxes except as provided in Article 8 hereof (the "Assumed UT Liabilities") in
exchange for a number of LLC Shares equal to the Owned LLC Amount and issued in
such names and denominations as Investor shall request in writing not less than
three days prior to the Closing.

            (d) To the extent that the Cash Amount exceeds the amount of cash
paid under Section 1.5(b), such excess shall be distributed in cash pro rata to
the Investor Newcos in proportion to their LLC Shares and indebtedness of the
LLC shall be allocated to such Investor Newcos in the amount of such
distribution for purposes of Sections 707 and 752 of the Code.

            (e) Notwithstanding the foregoing, LLC may, at its option,
substitute LLC Shares valued at $40 per share for up to $75 million in cash
payable pursuant to paragraph (b) above. In addition, at the Closing, the LLC
shall reduce the cash to be paid or distributed to Investor and the Investor
Newcos pursuant to Sections 1.5(b) and 1.5(d) by $300 million, which amount
shall be paid or distributed or applied to reduce any amount payable by
Universal in connection with the exercise of its preemptive rights on or prior
to the Holder Closing (as defined 


                                      -2-
   8

below), as the case may be, together with interest thereon from the date of the
Closing to the date of payment at a rate per annum equal to the average rate of
borrowing of Investor's ultimate parent company plus 50 basis points, upon the
earlier of the Holder Closing or June 30, 1998, provided that Investor, in its
sole discretion, may elect to waive the interest described in this sentence
after considering various factors that (and to the extent) Investor deems
appropriate. Amounts to be distributed at Closing pursuant to Section 1.5(d)
shall be reduced before amounts payable under Section 1.5(b) are reduced.

            (f) (i) No later than June 30, 1998, the parties shall consummate a
transaction relating to Holder as follows:

                  (A) Subject to the provisions of this Section, Holder agrees
            to purchase, for cash, 7.5 million in the aggregate of LLC Shares
            and/or of Parent Common Shares at an initial purchase price of $40
            per share, which price shall increase by 7.5% per annum from the
            date of the Closing through the date of the closing of the Holder
            transaction described in this paragraph (the "Holder Closing"). The
            Holder Closing (with respect to the cash and shares described in
            this subparagraph) shall be subject only to the conditions that 
            (i) the LLC or Parent, as the case may be, deliver properly
            evidenced LLC Shares and/or Parent Common Shares, duly authorized
            and issued against payment therefor; (ii) the condition set forth in
            Section 10.1(a) was satisfied as of the Closing; (iii) the
            conditions described in Sections 10.1(b)-(j) are satisfied (as
            appled to Holder, the Holder Closing and the transactions described
            by this Section, mutatis mutandis) and (iv) the Closing has
            occurred. Holder shall be entitled to reduce the number of shares
            (valued for this purpose at $40 per share) to be acquired pursuant
            to this subparagraph (A) by the product of 0.45 and the Holder Asset
            Value.

                  (B) Following the date hereof, Parent and Holder shall discuss
            the possibility of a contribution by Holder at the Holder Closing of
            assets acceptable to Parent, Holder and Investor in exchange for LLC
            Shares. If the Parties (including Investor) reach agreement on the
            terms of any such contribution (including on appropriate and
            reasonable representations, warranties, covenants or other terms and
            conditions with respect to such contribution), this Agreement shall
            be amended to provide for such contribution, subject to the
            conditions so agreed upon. The purchase price for each LLC Share
            acquired by Holder pursuant to this subparagraph (B) shall be $40
            (the aggregate value (at $40 per share) of the LLC Shares issued to
            Holder pursuant to this subparagraph being the "Holder Asset
            Value").

                  (C) Shares acquired by Holder at the Holder Closing shall be
            issued in such names and denominations as Holder shall request in
            writing not less than three days prior to the Closing. Holder shall
            be entitled to acquire any such LLC Shares through one or more
            newly-formed Subsidiaries on terms comparable to the Investor Newcos
            as set forth in Section 1.2, mutatis mutandis, above (each, a
            "Holder Newco"), as agreed upon by Parent and Holder.


                                      -3-
   9

                  (ii) Investor shall not have any preemptive right with respect
to the first 7.5 million in the aggregate of LLC Shares and/or Parent Common
Shares issued to Holder at the Holder Closing. Investor shall have a preemptive
right (at 45% and at $40 per LLC Share) with respect to shares issued to Holder
in excess of such amount. Investor's preemptive right shall be mandatory to the
extent that Holder elects to reduce the number of shares purchased under Section
1.5(f)(i)(A), with respect to the net related asset contribution by Holder under
Section 1.5(f)(i)(B) that resulted in such reduction (e.g., if Holder elects
with respect to a nominal $100 million asset contribution to reduce the shares
purchased for cash by $45 million, Investor shall have a mandatory preemptive
right with respect to 1,375,000 shares ($55 million divided by $40)).

                  (iii) It is contemplated that Holder's total net contribution
to the LLC or Parent pursuant to this Section 1.5 would be in an amount that,
assuming Universal exercises its preemptive right with respect to such
contribution, would result in Holder's aggregate equity beneficial ownership
interest (including all LLC Shares and Parent Common Shares acquired by Holder
pursuant to this Section 1.5) in Parent (based on the Assumptions) not exceeding
25%. Subject to tax efficiencies and regulatory requirements, Holder agrees to
acquire Parent Common Shares to the extent possible.

            1.6. Parent Shares. (a) Nothing set forth in this Agreement shall be
construed to prevent Parent from issuing additional Parent Common Shares or any
other capital stock to any other person or entity.

            (b) From and after the Closing Date, at such time that Parent shall
issue any additional Parent Common Shares (including, without limitation, upon
exercise of options or warrants or conversion of convertible securities, other
than shares of Parent Common Stock issued either upon conversion of shares of
Parent Class B Stock or upon issuance of Parent Common Shares pursuant to
Holder's Contingent Shares or Exchange Shares), Parent or Sub shall purchase
from the LLC a number of LLC Shares equal to the number of Parent Common Shares
issued, at a price per share equal to the Issue Price received by Parent for
such Parent Common Shares issued. Parent shall pay the LLC for such LLC Shares
with the same form of consideration as Parent or Sub receives in connection with
the issuance of such Parent Common Shares.

            (c) From and after the Closing Date, at such time that Parent shall
repurchase or redeem any Parent Common Shares, Parent or Sub shall sell to the
LLC a number of LLC Shares equal to the number of Parent Common Shares so
repurchased or redeemed, for an amount per share equal to the Redemption Price
per Parent Common Share paid by Parent for the Parent Common Shares so
repurchased or redeemed. The LLC shall pay Parent for such LLC Shares with the
same form of consideration as Parent or Sub pays in connection with the
repurchase or redemption of such Parent Common Shares, or if such form of
consideration is not available to the LLC, with cash.

            1.7. Investor's Preemptive Right. (a) (i) In the event that after
the Closing Date (and in addition to the mandatory and optional preemptive
rights of Investor pursuant to 


                                      -4-
   10

Section 1.5(f)(ii)), Parent issues or proposes to issue (other than pursuant to
an Excluded Issuance) (I) any Parent Common Shares (including Parent Common
Shares issued upon exercise, conversion or exchange of options, warrants and
convertible securities, but excluding (w) shares of Parent Common Stock issued
upon conversion of shares of Parent Class B Stock, (x) Parent Common Shares
issued upon exercise of the Exchange Options with respect to LLC Shares issued
to Investor Sub, the Investor Newcos, Holder and the Holder Newcos, 
(y) Contingent Shares and Exchange Shares issued in accordance with the Holder
Exchange Agreement and (z) shares of Parent Common Stock issued pursuant to a
public offering described in clause (ii) of the definition of "Stock Amount") or
(II) LLC Shares (other than to Parent and its Affiliates, or to Investor and its
Affiliates), and such issuance in clause (I) or (II), together with any prior
issuances of less than 1% with respect to which Investor had no rights under
this Section 1.7(a)(i), shall be in excess of 1% of the total number of Parent
Common Shares (based on the Assumptions) outstanding after giving effect to such
issuance, Parent shall give written notice to Investor not later than five
business days after the issuance (an "Additional Issuance"), specifying the
number of Parent Common Shares issued or to be issued and the Issue Price (if
known) per share. Investor shall have the right (but, subject to the provisions
of paragraphs (ii) and (iii) of this Section 1.7(a), not the obligation) to
cause Investor Sub and/or one or more Investor Newcos to purchase for cash a
number (but not less than such number) of shares of Parent Common Stock, or at
the request of the Investor, LLC Shares, or any combination thereof, so that
Investor Sub and the Investor Newcos shall collectively maintain the identical
percentage equity beneficial ownership interest (but not in excess of 45%) or
such other percentage equity beneficial ownership as in effect from time to time
pursuant to the standstill provisions contained in the Governance Agreement
(defined below) (but without giving effect to the exceptions to the thresholds
therein)) (it being agreed that under no circumstances shall the preemptive
rights granted to Investor under this Section 1.7 permit Investor to maintain a
percentage equity beneficial ownership interest in excess of 57.5%) in Parent
that Investor Sub and Investor Newcos collectively owned immediately prior to
the notice from Parent to Investor described in the first sentence of this
paragraph (assuming that all Parent Common Shares issuable upon the exercise of
Exchange Options with respect to LLC Shares have been issued and all Contingent
Shares and Exchange Shares not yet issued are outstanding, with such assumptions
being referred to herein as the "Assumptions") after giving effect to such
Additional Issuance and to shares of Parent Common Stock and/or LLC Shares that
are to be issued to the Investor Newcos pursuant to this Section 1.7(a) and to
Holder in accordance with Section 1.8 below by sending an irrevocable written
notice to Parent not later than fifteen business days after receipt of such
notice (or, if later, two business days following the determination of the Issue
Price) from Parent that it elects to cause one or more Investor Newcos to
purchase all of such shares of Parent Common Stock or LLC Shares, as the case
may be (the "Additional Shares"). The closing of the purchase of Additional
Shares shall be the later of ten business days after the delivery of the notice
of election by Investor and five business days after receipt of any necessary
regulatory approvals.

                  (ii) Notwithstanding anything to the contrary contained in
paragraph (i) of this Section 1.7(a), Investor shall be required to exercise its
preemptive right in full (a "Mandatory Purchase Event") for (A) Additional
Issuances caused by the conversion of Sub's 5-7/8% Convertible Subordinated
Debentures due March 1, 2006 ("Sub Convertible Debt") into Parent Common Stock,
at a cash Issue Price to Investor of $40 per Additional Share, (B) Addi-


                                      -5-
   11

tional Issuances within 4 months of the Closing Date in the aggregate amount of
up to $200 million in Parent Common Stock at a cash Issue Price to Investor of
$40 per Additional Share and (C) the transactions described in Section
1.5(f)(i), to the extent described in Section 1.5(f)(ii). The closing of the
purchase of Additional Shares shall be the later of (x) ten business days after
the delivery to Investor of a written notice by Parent ("Mandatory Purchase
Notice") specifying that an Additional Issuance has occurred and that such
Additional Issuance was caused by a Mandatory Purchase Event and (y) five
business days after receipt of any necessary regulatory approvals, including
under FCC regulations.

                  (iii) Notwithstanding anything to the contrary contained in
paragraph (i) of this Section 1.7(a), a Mandatory Purchase Event also shall
occur by reason of Additional Issuances in the aggregate amount up to 6.3
million Parent Common Shares in connection with the purchase of additional
equity in the Excluded Sub, whether by exchange offer, merger or otherwise (a
"Merger Transaction"), at a cash Issue Price to Investor of $40 per Additional
Share. If the Company issues more than 6.3 million Parent Common Shares in the
Merger Transaction, such excess Additional Issuances shall not be deemed to be a
Mandatory Purchase Event, and Investor shall have the right but not the
obligation to exercise its preemptive right in respect of such excess in
accordance with paragraph (i) of this Section 1.7(a). The closing of the
purchase referred to in this paragraph (iii) shall occur on the later to occur
of (v) the events specified in clauses (x) and (y) of paragraph (ii) above and
(w) in accordance with paragraph (i) above.

                  (iv) Notwithstanding anything to the contrary contained in
paragraphs (i) through (iii) above, in the event that as a result of any
Additional Issuance and the issuance of Parent Common Stock to the Investor
Newcos pursuant to Section 1.7(a) and to Holder pursuant to Section 1.8,
Investor's percentage voting power in Parent (based on the Assumptions) would be
below 67 percent, the Investor Newcos shall have the right to purchase Parent
Class B Stock pursuant to Section 1.7(a) in lieu of the number of shares of
Parent Common Stock permitted to be purchased pursuant to Section 1.7(a) in
order to maintain 67 percent voting power in Parent (based on the Assumptions);
provided that if such percentage voting power in Parent has been reduced due to
the failure of Investor to elect to exercise previously its rights pursuant to
Section 1.7(a), Investor Sub and the Investor Newcos shall only be permitted to
maintain such lower percentage voting power.

                  (v) Subject to subparagraph (vi) below, when calculating the
percentage ownership of Parent that Investor Sub and the Investor Newcos
beneficially own in connection with determining the percentage for a preemptive
right event (or an event covered by paragraph (c) below), (A) prior to the
Standstill Termination Date (as defined in the Governance Agreement)), transfers
of Parent Securities shall be taken into account, but acquisitions by Investor
of such securities shall not be included, other than in the case of acquisitions
from Parent or otherwise pursuant to this Section 1.7, and (B) after the
Standstill Termination Date, acquisitions and dispositions of Parent Securities
by Investor at such times and in such amounts permitted under the Governance
Agreement shall be taken into account in calculating the applicable percentage
for the exercise of the rights under this Section 1.7.


                                      -6-
   12

                  (vi) Notwithstanding any other provision of this Agreement or
the Governance Agreement, Investor's percentage for purposes of the preemptive
rights (and for Parent's ability to redeem or purchase Investor's LLC Shares)
(A) shall be 45% for the period from and after the Closing through the Holder
Closing and (B) shall not take into account the effects of the exercise by
Parent of its option described in Section 1.5(e).

            (b) In the event that Parent or any of its Affiliates purchases or
redeems, or proposes to purchase or redeem, any Parent Common Shares (other than
shares of Parent Class B Stock that may be deemed to be purchased or redeemed
upon conversion into shares of Parent Common Stock) following the Closing Date,
and such purchase or redemption, together with any prior purchases or
redemptions of less than 1% with respect to which Investor had no rights under
this Section 1.7(b), shall be in excess of 1% of the total number of Parent
Common Shares (based on the Assumptions) outstanding prior to such purchase or
redemption, Parent shall give written notice to Investor not later than five
business days prior to the purchase or redemption, specifying the number of
Parent Common Shares to be purchased or redeemed and the purchase or redemption
price (the "Redemption Price") (if known) per share. Parent shall have the right
to cause the LLC to purchase for cash a number of LLC Shares from, at Investor's
Option, Investor Sub and/or the Investor Newcos so that Investor Sub and the
Investor Newcos shall collectively beneficially own no greater than a 45 percent
equity beneficial ownership (adjusted to reflect Section 1.5(e)) or such other
percentage as in effect from time to time pursuant to the standstill provisions
contained in the Governance Agreement attached hereto as Exhibit A (or any
successor agreement, the "Governance Agreement") (but without giving effect to
the exceptions to the thresholds therein) (based on the Assumptions) after
giving effect to such purchases or redemptions of Parent Common Shares by Parent
and to purchases from Investor Sub and the Investor Newcos pursuant to this
Section 1.7(b), at a price per share equal to the Redemption Price, by sending
an irrevocable written notice to Investor not later than five business days
prior to the purchase or redemption that it elects to cause the LLC to purchase
all of such number of LLC Shares or, at Investor's election or to the extent
required under applicable FCC Regulations (but only to the extent of the
percentage increase in Investor's beneficial ownership of Parent Common Shares
that would otherwise result from such event), Parent Common Shares. The closing
of such purchase of LLC Shares and/or Parent Common Shares, as the case may be,
shall be simultaneous with the purchase or redemption of Parent Common Shares.

            (c) In the event that there should occur (i) an event, circumstance
or condition with respect to which Investor has been granted a preemptive right
under Section 1.7(a) hereof but Investor is not permitted by law, rule or
regulation from exercising such right, or (ii) another event, circumstance or
condition (but not of the type included or excluded from the preemptive right in
Section 1.7(a)) occurs (excluding sales or transfers of Parent Common Shares or
LLC Shares by Investor and its Affiliates) that results in the percentage of
equity beneficial ownership in Parent of Investor (based on the Assumptions)
being reduced, then, subject to the last sentence of this paragraph (c), Parent
shall promptly agree to sell, at Investor's election, to Investor Sub and/or one
or more of the Investor Newcos a number (but not less than such number) of
shares of Parent Common Stock or, at the request of Investor, LLC Shares (or a
combination thereof) so that Investor, Investor Sub and the Investor Newcos
shall collectively maintain the identical percentage equity beneficial ownership
interest described in Section 1.7(a) with respect to an 


                                      -7-
   13

event that would give rise to a preemptive right. The purchase price for the
shares of Parent Common Stock or LLC Shares shall be the Issue Price (if such
event, circumstance or condition is identifiable and such Issue Price is
measurable) or the Fair Market Value of the Parent Common Stock (or LLC Shares,
based on the Fair Market Value of the Parent Common Stock and the
then-applicable Exchange Rate (as defined in the Exchange Agreement)). The
purchase price shall be paid in cash. The other procedures described in Section
1.7(a) regarding the exercise and consummation of Investor's preemptive right
shall apply to Investor's purchase under this paragraph. In the event that
Parent does not promptly (upon receipt of any required regulatory approvals or
consents so long as there is a reasonable prospect of such approvals or consents
being obtained) sell to Investor shares of Parent Common Stock or LLC Shares,
then Investor shall be permitted to purchase in the open market, in broker
transactions, a number of shares of Parent Common Stock that Investor would have
purchased from Parent hereunder. If an event, circumstance or condition
described in the first sentence of this paragraph shall occur and Investor
elects not to exercise the purchase right contained herein within a reasonable
period of time, then Investor's preemptive right percentage shall be reduced as
though such event were an event as to which the preemptive right in Section
1.7(a) arose and Investor elected not to exercise such right.

            1.8. Holder's Preemptive Right. (a) Subject to paragraphs (b) and
(c) of this Section 1.8, in the event that Parent issues any Parent Common
Shares or LLC Shares (other than to Parent and its Affiliates or Holder and its
Affiliates) under the circumstances set forth in Section 1.7(a)(i) above
applicable to Investor, Holder shall be entitled to purchase, or cause one or
more Holder Newcos to purchase, for cash a number (but not less than such
number) of shares of Parent Common Stock so that the Holder and the Holder
Newcos shall collectively maintain the identical percentage equity beneficial
ownership interest in Parent that Holder and the Holder Newcos collectively
owned immediately prior to the notice from Parent described in Section 1.7(a)
(which shall be in substance the same as the notice provided to Investor
pursuant to Section 1.7(a) and subject to the terms thereof but shall be
addressed to Holder) of a contemplated Additional Issuance (but not in excess of
the percentage equity beneficial ownership interest in Parent that Holder and
the Holder Newcos collectively owned immediately following the Closing or
following Holder's contribution pursuant to Section 1.5(f)) on the same terms
and conditions specified therein and in Section 1.7(c); provided, that Holder
shall only be entitled to purchase LLC Shares if and to the extent the total
number of Parent Common Shares then owned directly or indirectly by Holder would
exceed the Holder Limit after giving effect to the closing of the purchase of
Parent Common Stock by Holder, in which event at such closing, Holder shall be
entitled to purchase a number of LLC Shares at the Issue Price equal to such
excess in lieu of the purchase of shares of Parent Common Stock.

            (b) No Additional Issuance shall be a Mandatory Preemptive Event for
Holder. Additional Issuances in Section 1.7(a)(ii) and (iii), Additional
Issuances (i) caused by the conversion of Sub Convertible Debt as described in
Section 1.7(a)(ii) or (ii) in the aggregate amount up to 6.3 million Parent
Common Shares in connection with a Merger Transaction as described in Section
1.7(a)(iii) shall be governed by the terms applicable to permissive exercise of
the preemptive right under Section 1.7(a)(i), provided that (i) the Issue Price
to Holder shall be 


                                      -8-
   14

$40 per share in cash of Parent Common Stock and (ii) any such issuance shall,
in any event, be subject to the proviso set forth in the last sentence of
Section 1.8(a).

            (c) The purchase or redemption of any Parent Common Shares by Parent
or any of its Affiliates shall not result in an increase in the percentage of
Parent equity that Holder may be entitled to acquire pursuant to the preemptive
right in paragraph (a) above. For purposes of exercise of Holder's preemptive
right pursuant to this Secton 1.8 prior to the Holder Closing, Holder shall be
deemed to own (and there shall be deemed to be outstanding) an additional 7.5
million LLC Shares.

            1.9. Holder To Exchange LLC Shares. Following the issuance or
expiration of all Contingent Shares and prior to the exchange of any Exchange
Shares pursuant to Article 2 of the Holder Exchange Agreement, Holder shall be
required, subject to the terms and conditions described in Section 6.1(a) or as
may be set forth in the Exchange Agreement (including the future condition with
respect to a Holder Newco that such exchange is tax-free to Holder on terms
similar to those contained in the Holder Exchange Agreement), to consummate
transactions under the Exchange Agreement having the effect of exchanging that
number of LLC Shares for shares of Parent Common Stock equal to the then
Available Parent Amount (the "Holder Mandatory Exchange"); provided, however,
(i) if applicable, any such exchange shall only be exercised as to all shares
held by any individual Holder Newco and (ii) that Parent shall have the option,
which may be exercised at any time (or from time to time) after the issuance or
expiration of all Contingent Shares, to suspend the Holder Mandatory Exchange
and/or Holder's right to exchange shares of Sub for Parent Common Shares under
the Holder Exchange Agreement, in either case in connection with future
issuances of Parent Common Shares, in order to permit Parent to purchase or
redeem (in each case in compliance with applicable law, including without
limitation, FCC Regulations) up to 10 million Parent Common Shares, which
suspension shall remain in effect so long as Parent continues to make diligent
efforts to effect such purchase or redemption and to complete such repurchases
as promptly as reasonably practicable. Holder and Parent agree to take
appropriate action to amend the Holder Exchange Agreement to reflect the
provisions of this Section 1.9 (which shall not include a waiver or consent by
Holder of any conditions to an exchange thereunder or of any other rights of
Holder under such agreement other than the re-ordering of the order of the
exchanges contemplated by the Exchange Agreement and the Holder Exchange
Agreement and to reflect the Parent option described above). Capitalized terms
used and not defined in this paragraph shall have the meanings ascribed to them
in the Holder Exchange Agreement.

            1.10. Issuance of LLC Shares to Parent or Sub. Neither Parent nor
Sub shall, and Parent and Sub shall cause the LLC not to, issue any LLC Shares
to Parent or Sub or any of their Affiliates, except pursuant to and in
accordance with the terms of this Agreement.

            1.11. Business of the LLC. (a) From and after the Closing, Parent
and Sub shall conduct, subject to this clause (a) and clause (b) below, all
future business, whether now existing or hereafter created, in the LLC, other
than the Excluded Businesses, the Excluded Sub (but subject to Section 1.3) or
any other business which Parent reasonably determines should be conducted in a
separate company or corporate entity for regulatory or significant tax reasons


                                      -9-
   15

(such business to be deemed an Excluded Business), provided that at such time,
if any, as such regulatory or significant tax restrictions no longer exist (it
being agreed that Parent shall use all reasonable best efforts to (i) avoid
businesses being deemed Excluded Businesses and (ii) eliminate the tax or
regulatory restrictions as soon as practicable with respect to any such Excluded
Businesses), such businesses shall not be Excluded Businesses and shall be
conducted in the LLC as promptly as reasonably practicable following the
elimination of such restrictions and compliance with applicable regulatory
requirements, and provided further that Parent shall not be restricted in any
manner, except as expressly set forth herein, including the Exhibits hereto,
from causing the LLC to engage in any transaction with any third party or Parent
or any subsidiary of Parent, including, without limitation, subsidiaries which
engage in Excluded Businesses (the "Regulated Subsidiaries").

            (b) If any consent or approval is required in connection with, or
the terms or operation of law do not permit, the contribution to the LLC of any
agreement, lease, right, permit, franchise, authorization or other property or
asset relating to the Contributed Businesses or the UT Contributed Business,
other than the Regulated Subsidiaries (a "Consent Asset"), each of Parent, Sub,
Investor and each Investor Newco, as the case may be, agrees to use its
reasonable efforts to obtain any necessary consents or approvals for the
transfer of all Consent Assets contemplated to be transferred to the LLC;
provided that notwithstanding such efforts, if such consent or approval is not
obtained prior to the Closing and such Consent Asset is not contributed, each of
Parent, Sub, Investor and the Investor Newcos, as the case may be, in lieu of
contributing (or causing the contribution of) such Consent Asset, may hold such
Consent Asset for the use and benefit of the LLC (any Consent Asset so held is
referred to herein as a "Beneficial Asset"). In such event, Parent, Sub,
Investor or an Investor Newco, as the case may be, shall take all reasonable
actions necessary so that the LLC shall be afforded the full economic benefits
intended to be conferred by such Beneficial Asset, subject to the LLC satisfying
all of the transferor's liabilities in connection with such Beneficial Asset and
all of such transferor's duties, obligations and responsibilities incident
thereto, including without limitation, by assigning to the LLC the right to
receive all cash flow derived from such Beneficial Asset on and after the
Closing, such cash flow to be paid to the LLC as soon as reasonably practicable
but in no event more than 45 days after the end of each fiscal quarter of the
entity holding such Beneficial Asset. Following the Closing, Parent, Sub,
Investor and the Investor Newcos each agrees to continue to use its reasonable
efforts to obtain any consent or approval necessary to effectuate the
contribution to the LLC of any Consent Asset not contributed to the LLC on the
Closing, and shall take all reasonable action to effectuate the contributions of
such Consent Asset after such consent or approval is obtained.

            (c) For purposes of Section 1.11(b), the Excluded Sub shall be
treated as a Beneficial Asset until such time as Parent Contributes the stock or
assets of the Excluded Sub to the LLC in accordance with the terms of Section
1.3.

                                   ARTICLE 2.
                   REPRESENTATIONS AND WARRANTIES OF INVESTOR

            Investor represents and warrants to Parent and the LLC as follows:


                                      -10-
   16

            2.1. Organization, Standing, and Authority. (a) Each of Investor and
Investor Sub is and, upon formation in accordance with Section 1.2 hereof, each
Investor Newco will be, a corporation duly organized, validly existing, and in
good standing under the laws of their respective jurisdictions of incorporation.
Each of Investor and Investor Sub has and, upon formation in accordance with
Section 1.2 hereof, each Investor Newco will have, all requisite corporate power
and authority (i) to own, lease, and use as now owned, leased, and used by them
all of their respective assets, (ii) to conduct the business and operations of
the UT Contributed Business as now conducted by Investor, and (iii) to execute
and deliver this Agreement and the documents contemplated hereby (to the extent
a party to this Agreement or such documents), and to perform and comply with all
of the terms, covenants, and conditions to be performed and complied with by
them hereunder and thereunder. Investor, Investor Sub and each Investor Newco
are, or will be, qualified to transact business in each jurisdiction in which
the nature of their businesses makes such qualification necessary, except where
failure to be so qualified would not have a Material Adverse Effect on Investor
and its Subsidiaries considered as a whole.

            (b) The Partnership is a partnership duly organized, validly
existing, and in good standing under the laws of the State of New York. The
partnership agreement (as amended, and together with all other documents
governing the operation of the Partnership, the "Partnership Agreement") has
previously been provided to Parent, and is in full force and effect. The
Partnership has all requisite power and authority (i) to own, lease, and use as
now owned, leased, and used by it all of its assets, and (ii) to conduct the
business and operations of the Partnership as now conducted by it. The
Partnership is qualified to transact business in each jurisdiction in which the
nature of its business makes such qualification necessary except where failure
to be so qualified would not have a Material Adverse Effect on the Partnership.

            2.2. Authorization and Binding Obligation. The execution, delivery,
and performance of this Agreement and the consummation of the transactions
contemplated hereby, and each of the agreements contemplated hereby, by Investor
(with respect to such agreements to which it is a party) have been duly
authorized by all necessary corporate action on the part of Investor. The
performance of this Agreement and the consummation of the transactions
contemplated hereby and each of the agreements contemplated hereby by Investor
Sub and each Investor Newco (with respect to such agreements to which it is a
party) will be duly authorized by all necessary corporate action on the part of
such entity. This Agreement has been duly executed and delivered by Investor and
constitutes the legal, valid, and binding obligation of Investor enforceable
against Investor in accordance with its terms, except to the extent limited by
bankruptcy, insolvency, reorganization, moratorium or other laws relating to or
affecting creditors' rights generally and by general equity principles
regardless of whether such enforceability is considered in a proceeding in
equity or at law.

            2.3. Absence of Conflicting Agreements; Consents. Except as set
forth on Schedule 2.3 and except for any filings, notices, applications and
other information as may be required to be made or supplied pursuant to the HSR
Act or the Exchange Act, the execution, delivery, and performance of this
Agreement and the consummation of the transactions contemplated hereby by
Investor, Investor Sub and the Investor Newcos (with or without the giving of
notice, the lapse of time, or both): (a) do not require any notices, reports or
other filings with any 


                                      -11-
   17

public or governmental authority to be made by Investor, Investor Sub, any
Investor Newco or the Partnership; (b) do not require the consent of any third
party (including any governmental or regulatory authority) (other than consents
that would not, if not given, have a Material Adverse Effect on the UT
Contributed Business and the Partnership considered as a whole); (c) will not
conflict with any provision of the Certificate of Incorporation, By-Laws,
Partnership Agreement or other organizational document, as the case may be, of
Investor, Investor Sub, any Investor Newco or the Partnership; (d) will not
violate or result in a breach of, or contravene any law, judgment, order,
ordinance, injunction, decree, rule, regulation, or ruling of any court or
governmental instrumentality applicable to any of Investor, Investor Sub, any
Investor Newco or the Partnership; (e) will not violate, conflict with, or
result in a breach of any terms of, constitute grounds for termination of,
constitute a default under, or result in the acceleration of any performance
required by the terms of, any mortgage, indenture, lease, contract, agreement,
instrument, license, or permit to which any of Investor, Investor Sub, any
Investor Newco or the Partnership is a party or by which any of Investor,
Investor Sub, any Investor Newco or the Partnership or their respective
properties may be bound; and (f) will not create any claim, liability, mortgage,
lien, pledge, condition, charge, encumbrance, or other security interest
(collectively, "Liens") upon any of the assets owned by Investor, Investor Sub,
any Investor Newco or the Partnership, except, in the case of clauses (a), (d),
(e) or (f), for violations, breaches, contraventions, conflicts, termination or
acceleration or Liens which would not have a Material Adverse Effect on the
Partnership and the UT Contributed Business considered as a whole, or would
impair, in any material respect, the ability of Investor to perform its
obligations under this Agreement and the other documents contemplated hereby.

            2.4. Licenses. Schedule 2.4 is a true and complete list as of the
date of this Agreement of all material Licenses of the Partnership and the UT
Contributed Business. Each material License has been validly issued, and the UT
Contributed Business or the Partnership is the authorized legal holder thereof.
The material Licenses are in full force and effect, and the conduct of the
business and operations of the UT Contributed Business and the Partnership is in
accordance therewith in all material respects. As of the date of this Agreement,
there is no proceeding pending or, to Investor's knowledge, threatened, seeking
the revocation or limitation of any material Licenses. Each of the UT
Contributed Business and the Partnership is the holder of all material Licenses
necessary to enable it to continue to conduct its respective business as now
conducted.

            2.5. Real Property. Schedule 2.5 contains a complete and accurate
description of all the Real Property providing individually for annual lease
payments in excess of $1 million (the "Material Real Property") of the UT
Contributed Business and the Partnership, and the respective interests of the UT
Contributed Business and the Partnership therein (including street address,
legal description, owner, and the use thereof). No fee estates are included in
the Material Real Property. Except as set forth on Schedule 2.5, the UT
Contributed Business or the Partnership has good title to all Material Real
Property, free and clear of all Liens or other restrictions on the Material Real
Property, except for Permitted Liens. Except for that portion of the Material
Real Property subject to leases where the Partnership is lessor or sublessor (as
identified on Schedule 2.5), the UT Contributed Business or the Partnership is
in possession of the Material Real Property. As of the date of this Agreement
there are no pending or, to the knowl-


                                      -12-
   18

edge of Investor, threatened condemnation or appropriation proceedings against
any of the Material Real Property. The UT Contributed Business or the
Partnership has full legal and practical access to all Material Real Property.
With respect to each leasehold or subleasehold interest included in the Material
Real Property, the UT Contributed Business or the Partnership has enforceable
rights to nondisturbance and quiet enjoyment, and no third party holds any
interest in the leased premises with the right to foreclose upon the UT
Contributed Business' or the Partnership's leasehold or subleasehold interest.

            2.6. [Intentionally omitted]

            2.7. Contracts. Schedule 2.7 is a true and complete list of all
Contracts of the UT Contributed Business and the Partnership as of the date of
this Agreement, which (i) at the time entered into, were outside the ordinary
course of business as then conducted by the business comprising the UT
Contributed Business or the Partnership, as applicable, or (ii) are (a) cable
television system affiliation agreements ("Affiliation Agreements") or other
Contracts providing for payments to or from the Partnership to cable television
system operators in excess of $1 million in any twelve month period, (b)
Contracts (other than with writer producers) with respect to the production,
development, broadcast, or distribution, of television programs with respect to
which the UT Contributed Business or the Partnership, as applicable, has a
commitment to pay in excess of $10 million ("Programming Agreements"), (c)
agreements with writer producers with respect to which the UT Contributed
Business or the Partnership, as applicable, has a commitment to pay in excess of
$2 million per year, and (d) agreements to buy or sell advertising where the
required payments to or from the UT Contributed Business or the Partnership, as
applicable, are in excess of $10 million (the Contracts described in the
foregoing clauses (i) and (ii), collectively the "Material Contracts"). Investor
has delivered or made available to Parent true and complete copies of all
Material Contracts. Except as disclosed on Schedule 2.7, all of the Material
Contracts are in full force and effect and are valid and binding agreements of
the Investor and, to the knowledge of the Investor, the other parties thereto,
enforceable in accordance with their terms. Except as disclosed on Schedule 2.7,
to the knowledge of Investor, no party is in default in any material respect
under any of the Material Contracts, nor does any condition exist that with
notice or the lapse of time or both would constitute such a default. Except for
the need to obtain the consents listed on Schedule 2.3, the transactions
contemplated hereby will not affect the validity or enforceability of any of the
Material Contracts. Except as disclosed on Schedule 2.7, as of the date of this
Agreement, no party to any Material Contract has informed Investor or, to
Investor's knowledge, its Affiliates or the Partnership, of its intention (a) to
terminate such Material Contract or amend the material terms thereof, (b) to
refuse to renew the Material Contract upon expiration of its term, or (c) to
renew the Material Contract upon expiration only on terms and conditions that
are more onerous to the Partnership or the UT Contributed Business, as the case
may be, than those now existing.

            2.8. Intangible Property. Schedule 2.8 is a list of (a) any
intellectual property asset (other than such property licensed to the UT
Contributed Business or the Partnership, as applicable), with a value, as
reflected on the balance sheet of the UT Contributed Business or the Partnership
of $2.5 million or more and (b) all material patents, trademarks, trade names,
service marks, brand marks, brand names, proprietary computer programs,
proprietary databases, indus-


                                      -13-
   19

trial design, copyrights or any pending application therefor (collectively, (a)
and (b), the "Intangible Property") of the UT Contributed Business and the
Partnership and indicates, with respect to each such item of Intangible
Property, whether it is registered or unregistered, the owner thereof and, if
applicable, the name of the licensor and licensee thereof. Except as set forth
on Schedule 2.8, to the knowledge of Investor, no other person has any claim of
ownership or right of use with respect thereto. The use of such Intangible
Property by the UT Contributed Business or the Partnership does not, and
immediately after the Closing will not, conflict with, infringe upon, violate,
or interfere with or constitute an appropriation of any right, title, interest,
or goodwill, including any intellectual property right, patent, trademark, trade
name, service mark, brand mark, brand name, computer program, database,
industrial design, copyright, or any pending application therefor of any other
Person (except for such conflicts, infringements, violations or appropriations
as would not have a Material Adverse Effect on the Partnership and the UT
Contributed Business considered as a whole), and, to the knowledge of Investor,
there have been no claims made, and the UT Contributed Business or the
Partnership has not received any written notice, that any such item of
Intangible Property is invalid or conflicts with the asserted rights of any
Person (other than such invalidity or conflicts as would not have a Material
Adverse Effect on the Partnership and the UT Contributed Business considered as
whole). Except as set forth on Schedule 2.8, neither the UT Contributed Business
nor the Partnership is party to or bound by any material contract, license, or
other agreements relating to such Intangible Property other than those entered
into in the ordinary course of the business. As of the Closing, none of Investor
or its Affiliates shall have any rights to, or ownership interest in, any of the
trademarks or trade names relating to the "USA Networks," "USA Network,"
"Sci-Fi" and "Sci-Fi Channel" names and the related trade names and trademarks,
logos, brand marks and brandnames, including those listed on Schedule 2.8,
except pursuant to the International Joint Venture Agreement attached hereto as
Exhibit C.4 (or any successor agreement). Prior to the Closing, Investor shall
effect any assignments or other filings in order to satisfy the representation
contained in the preceding sentence.

            2.9. Financial Statements. Investor has furnished Parent with true
and complete copies of unaudited balance sheets and income statements for the
Partnership as at and for the fiscal years ended December 31, 1996 and December
31, 1995, and as at and for the eight months ended August 31, 1997
(collectively, the "Investor Financial Statements"). The Investor Financial
Statements present fairly as of their respective dates, in all material
respects, the consolidated financial position of the Partnership as at the dates
thereof and the consolidated results of its operations and its consolidated cash
flows for each of the respective periods, in conformity with GAAP, except that
the eight-month financial statements referred to above are subject to normal
year-end adjustments, none of which are expected to be material.

            Except as and to the extent expressly set forth in the Investor
Financial Statements, (i) as of August 31, 1997, the Partnership did not have
any material liabilities or obligations (whether absolute, contingent, accrued
or otherwise) and (ii) since the August 31, 1997 balance sheet the Partnership
has not incurred any such material liabilities or obligations other than in the
ordinary course of business.


                                      -14-
   20

            2.10. Personnel. (a) Schedule 2.10 contains a true and complete list
as of the date of this Agreement of all active employees of the UT Contributed
Business and the Partnership who are currently engaged in the respective
businesses and operations of the UT Contributed Business and the Partnership
(including any employee on vacation, leave of absence, short-term disability, or
layoff with recall rights, but excluding retired employees of the UT Contributed
Business and any employee on long-term disability) (collectively, the "Business
Employees"). Schedule 2.10 also contains a true and complete list of all
material employee benefit plans or arrangements that cover any Business Employee
and any material employee benefit plans or arrangements that cover any former
employee of the Partnership, including any employment, severance, or other
similar contract, arrangement, or policy and each plan or arrangement (written
or oral) providing for insurance coverage (including any self-insured
arrangements), workers' compensation, disability benefits, supplemental
unemployment benefits, vacation benefits, or retirement benefits or for deferred
compensation, profit-sharing, bonuses, stock options, stock appreciation rights,
stock purchases, or other forms of incentive compensation or post-retirement
insurance, compensation, or benefits (collectively, "Benefit Arrangements").
Schedule 2.10 denotes all Benefit Arrangements sponsored or maintained by the
Partnership ("Partnership Plans").

            (b) Except as set forth on Schedule 2.10(b), (i) no Benefit
Arrangement is an "employee pension benefit plan," as defined in Section 3(2) of
ERISA (a "Pension Plan"), that is subject to Title IV of ERISA or Section 412 of
the Code, and no Benefit Arrangement provides post-retirement welfare benefits,
except as required by law and (ii) neither Investor nor the Partnership has
incurred or expects to incur any liability or lien under Title IV of ERISA or
Section 412 of the Code, which liability or lien would be reasonably expected to
have a Material Adverse Effect on the Partnership and the UT Contributed
Business considered as a whole.

            (c) Without limiting the generality of Section 2.10(b) and except as
set forth on Schedule 2.10(c), no Benefit Arrangement is a "multiemployer
pension plan," as defined in Section 3(37) of ERISA and neither Investor nor the
Partnership has incurred or expects to incur any liability or lien with respect
to any multiemployer pension plan which liability or lien would be reasonably
expected to have a Material Adverse Effect on the Partnership and the UT
Contributed Business considered as a whole.

            (d) Except as set forth on Schedule 2.10(d), none of Investor, any
of its Affiliates, the Partnership or any entity required to be combined with
any of the foregoing entities under Section 414(b), Section 414(c), Section
414(m), or Section 414(o) of the Code (an "ERISA Affiliate") has incurred, or
expects to incur solely as a result of the consummation of the Transactions
(including any termination of employment in connection therewith), any cost,
fee, expense, liability, claim, suit, obligation, or other damage with respect
to any Pension Plan or any Benefit Arrangement that could give rise to the
imposition of any liability, cost, fee, expense, or obligation on the LLC or any
of its Affiliates, which would be reasonably expected to have a Material Adverse
Effect on the Partnership and the UT Contributed Business considered as a whole,
and, to Investor's knowledge, no facts or circumstances exist that could give
rise to any such cost, fee, expense, liability, claim, suit, obligation, or
other damage, which would be reasonably expected to have a Material Adverse
Effect on the Partnership and the UT Contributed 


                                      -15-
   21

Business considered as a whole. Except as set forth on Schedule 2.10(d), neither
the execution and delivery of this Agreement nor the consummation of the
Transactions (including any terminations of employment in connection therewith)
will (i) increase any benefits otherwise payable under any Benefit Arrangement,
which would be reasonably expected to have a Material Adverse Effect on the
Partnership and the UT Contributed Business considered as a whole or (ii) result
in the acceleration of the time of payment or vesting of any such payment, which
would be reasonably expected to have a Material Adverse Effect on the
Partnership and the UT Contributed Business considered as a whole.

            (e) Investor will deliver or make available to Parent, within ten
days hereafter, true and complete copies of each of the following documents:

                  (i) Each Benefit Arrangement (and, if applicable, related
trust agreements) and all amendments thereto, and (if applicable) each summary
plan description together with any summary of material modifications;

                  (ii) Each written Benefit Arrangement and written descriptions
thereof that have been distributed to Business Employees or any former employee
of the Partnership, (including descriptions of the number and level of employees
covered thereby); and

                  (iii) Each employee handbook or similar document describing
any Benefit Arrangement.

            (f) Except as set forth on Schedule 2.10, no controversies,
disputes, or proceedings are pending or, to Investor's knowledge, threatened,
between Investor, any of its Affiliates, or the Partnership and any Business
Employee or any former employee of the Partnership, which would be reasonably
expected to have a Material Adverse Effect on the Partnership and the UT
Contributed Business considered as a whole. Except as set forth on Schedule
2.10(f), no labor union or other collective bargaining unit represents or, to
Investor's knowledge, claims to represent any of the Business Employees or any
former employees of the Partnership and, to Investor's knowledge, there is no
union campaign being conducted to solicit cards from employees to authorize a
union to request a National Labor Relations Board Certification election with
respect to any of the Business Employees.

            (g) Except where any such failure would not be reasonably expected
to have a Material Adverse Effect on the Partnership and the UT Business
considered as a whole, all Benefit Arrangements (i) comply in all material
respects with applicable law, including but not limited to ERISA and the Code,
and (ii) have been administered in all material respects in accordance with
their terms, and all required contributions have been made to such Benefit
Arrangements. Except as set forth on Schedule 2.10(g), all Partnership Plans
that are intended to be qualified under Section 401(a) of the Code have received
a favorable determination letter from the Internal Revenue Service, and neither
Investor nor the Partnership has knowledge of any events that would cause such
letter to be revoked.

            2.11. Claims and Legal Actions. Except as set forth in Schedule
2.11, there are no judicial, administrative or arbitral actions, suits, claims,
inquiries, investigations or pro-


                                      -16-
   22

ceedings in respect of the UT Contributed Business or the Partnership (whether
of a public or private nature) pending or, to the knowledge of Investor,
threatened against the UT Contributed Business or the Partnership which,
individually or in the aggregate, would have a Material Adverse Effect on the UT
Contributed Business and the Partnership considered as a whole.

            2.12. Compliance with Laws. Each of the UT Contributed Business and
the business of the Partnership has been and is presently being conducted in
compliance with all applicable laws, except for any noncompliance that would not
have a Material Adverse Effect on the UT Contributed Business and the
Partnership considered as a whole, or impair or hinder the ability of Investor,
Investor Sub or any Investor Newco to perform in any material respect their
respective obligations under this Agreement and the documents and agreements
contemplated hereunder.

            2.13. Transactions with Affiliates; Completeness of Assets. (a)
Except as set forth on Schedule 2.13(a) or pursuant to agreements on arms-length
terms, there are no material agreements relating to the business or operations
of the UT Contributed Business or the Partnership between the UT Contributed
Business or the Partnership, on the one hand, and Investor or any of its
Affiliates, on the other hand, and (b) except as set forth on Schedule 2.13(b),
neither the UT Contributed Business nor the Partnership has engaged in any
material business arrangement or relationship with Investor or any of its
Affiliates. With respect to the UT Contributed Business, neither Investor nor
any of its Affiliates owns any right, tangible or intangible, relating to the
shows listed on Schedule 2.13 and related agreements (other than as expressly
contemplated by this Agreement to be entered into between two or more of the
Parties) and, with respect to the Partnership, neither Investor nor any of its
Affiliates owns any asset, property or right, tangible or intangible, that is
primarily used in the business or operations of the Partnership, other than, in
each case, such assets, properties and rights that are being Contributed to the
LLC in accordance with this Agreement.

            2.14. Cable Subscribers. Schedule 2.14 sets forth, with respect to
each cable television system operator with which the Partnership has an
Affiliation Agreement, under the column "Network Subsidiary" the number of cable
system subscribers to such cable television system operator as most recently
reported to the Partnership. Schedule 2.14 also designates those cable
television system operators that, to Investor's knowledge, make the USA Networks
available to subscribers without an Affiliation Agreement.

            2.15. Ownership of the Partnership. Investor owns directly or
indirectly all of the issued and outstanding Owned Partnership Interest and
following Closing of the transactions contemplated by the Partnership Interest
Purchase Agreement (for purposes of this Section 2.15, the term Closing shall
have the meaning set forth in the Partnership Interest Purchase Agreement),
Investor Sub will own, directly or indirectly, all of the issued and outstanding
Acquired Partnership Interest which, together, constitute 100% of the ownership
interest in the Partnership, subject to no Liens. There exist no other
outstanding options, convertible securities or other rights to acquire
partnership or other interests in the Partnership. Immediately upon the Closing,
the LLC will own a 100% ownership interest in the Partnership, subject to no
Liens other than 


                                      -17-
   23

any Liens created by Parent or LLC. Except as set forth on Schedule 2.15, the
Partnership has no subsidiaries and owns no interest in any other entity.

            2.16. Investment. Each of Investor, Investor Sub and each Investor
Newco (a) understands that the LLC Shares and Parent Common Shares to be issued
to it pursuant to this Agreement have not been, and will not be, registered
under the Securities Act or under any state securities laws, and are being
offered and sold in reliance upon federal and state exemptions for transactions
not involving any public offering, and (b) to the extent it or any of its
Affiliates acquires any of the LLC Shares or Parent Common Shares issued
pursuant to this Agreement, it or such Affiliate will be acquiring such shares
solely for its own account for investment purposes, and not with a view to the
distribution thereof.

            2.17. Conduct of Business. Since August 31, 1997, the UT Contributed
Business and the business of the Partnership have been conducted in all material
respects in the ordinary course and there has not occurred any event or
condition having, or that would have, a Material Adverse Effect on the UT
Contributed Business and the business of the Partnership considered as a whole.
Without limiting the generality of the foregoing, other than as is disclosed on
Schedule 2.17 hereto, since August 31, 1997 there has not occurred:

            (a) any change or agreement to change the character or nature of the
business of the UT Contributed Business or the Partnership in any material
respect;

            (b) any purchase, sale, transfer, assignment, conveyance or pledge
of the assets or properties of the UT Contributed Business or the Partnership,
except in the ordinary course of business and except for the purchase of the
Acquired Partnership Interest pursuant to the Partnership Interest Purchase
Agreement;

            (c) any waiver or modification by Investor, the Partnership or any
of their respective Subsidiaries, in respect of the UT Contributed Business or
the Partnership, of any right or rights of substantial value, or any payment,
direct or indirect, in satisfaction of any liability, in each case, having a
Material Adverse Effect on the UT Contributed Business and the Partnership
considered as a whole;

            (d) any loan, advance or capital expenditure by the UT Contributed
Business, the Partnership or any of its Subsidiaries, except for loans, advances
and capital expenditures made in the ordinary course of business;

            (e) any change in the accounting principles, methods, practices or
procedures followed in connection with the UT Contributed Business or the
Partnership or any change in the depreciation or amortization policies or rates
theretofore adopted in connection with the UT Contributed Business or the
Partnership; or

            (f) other than sweeping cash in the ordinary course of business, any
declaration or payment of any dividends, or other distributions in respect of
the outstanding equity interest of the Partnership;


                                      -18-
   24

            (g) any issuance of any equity interest of the Partnership;

            (h) any grant or award of any options, warrants, conversion rights
or other rights to acquire any equity interest of the Partnership by the
Partnership;

            (i) except for any changes made as a result of the consummation of
the purchase pursuant to the Partnership Interest Purchase Agreement, which
changes shall be consistent with the methods employed by other Subsidiaries, any
change in the methods of collecting receivables or paying payables with respect
to the Partnership; or

            (j) any agreement with respect to any of the foregoing.

            2.18. Brokers. No broker, finder or investment banker (other than
Goldman, Sachs & Co., the fees of which shall be the responsibility of Investor)
is entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of Investor or its Affiliates.

                                   ARTICLE 3.
                    REPRESENTATIONS AND WARRANTIES OF PARENT

            Parent represents and warrants to Investor and the LLC and, to the
extent Holder acquires any additional LLC Shares in accordance with this
Agreement, Holder, as follows:

            3.1. Organization and Good Standing. Parent is a corporation duly
organized, validly existing and in good standing under the laws of Delaware, and
is duly qualified to transact business as a foreign corporation and is in good
standing in each jurisdiction in which the nature of the business transacted by
it or the character or location of the properties owned or leased by it requires
such qualification, except where the failure to be so qualified or in good
standing would not have a Material Adverse Effect on Parent and its Subsidiaries
considered as a whole. Each of Parent and Sub has full corporate power and
authority (i) to own, lease and use as now owned, leased and used by it all of
its assets, (ii) to conduct the business and operations of Parent as now
conducted by it, and (iii) to execute and deliver this Agreement and the
documents contemplated hereby (to the extent a party to this Agreement or such
documents), and to perform and comply with all of the terms, covenants and
conditions to be performed and complied with by it 


                                      -19-
   25

hereunder and thereunder. The copies of Parent's certificate of incorporation
(the "Parent Certificate") and by-laws (as amended and/or restated through the
date hereof), heretofore delivered to Investor, are true, complete and correct
copies thereof. Upon formation, the LLC will be a limited liability company duly
organized, validly existing and in good standing under the laws of Delaware and
will be duly qualified to transact business as a foreign corporation and will be
in good standing in each jurisdiction in which the nature of the business
transacted by it or the character or location of the properties owned or leased
by it requires such qualification, except where the failure to be so qualified
or in good standing would not have a Material Adverse Effect on the LLC. The LLC
will have full corporate power and authority to execute and deliver this
Agreement and the documents contemplated hereby, and to perform and comply with
all of the terms, covenants and conditions to be performed and complied with by
it hereunder and thereunder. Except as set forth on Schedule 3.1, each of the
Subsidiaries of Parent is duly organized, validly existing and in good standing
under the laws of its jurisdiction of incorporation or organization and has the
power and authority to own or lease its properties and to conduct its business
as now conducted, except as would not result in any Material Adverse Effect on
Parent and its Subsidiaries considered as a whole. All outstanding shares of the
capital stock of each of Parent's Subsidiaries have been validly issued and are
fully paid and nonassessable. Except as set forth in the Parent Form 10-K or
Schedule 3.1 or as contemplated by this Agreement, there are no outstanding
options, warrants, rights, agreements or commitments of any nature whatsoever of
any third party to subscribe for or purchase any equity security of any of
Parent's Subsidiaries or to cause any of such Subsidiaries to issue any such
equity security.

            3.2. Capitalization. (a) The authorized capitalization of Parent as
of the date hereof consists of: 150,000,000 shares of Common Stock, $.01 par
value per share ("Parent Common Stock"), 30,000,000 shares of Parent Class B
Common Stock, $.01 par value per share ("Parent Class B Stock"), and 15,000,000
shares of preferred stock, $.01 par value per share, of Parent ("Parent
Preferred Stock"), of which, as of August 8, 1997, there were 43,526,372 shares
of Parent Common Stock outstanding, 12,227,647 shares of Parent Class B Stock
outstanding and no shares of Parent Preferred Stock outstanding. All such shares
outstanding on the date hereof are, duly authorized, validly issued and fully
paid and nonassessable. Other than (a) options to purchase an aggregate of
approximately 11,572,649 shares of Parent Common Stock issued pursuant to
employee benefit plans and agreements of Parent as of the date hereof and
options granted by Parent on the date hereof as set forth on Schedule 3.2, (b)
rights to acquire shares of Parent Class B Stock and Parent Common Stock under
this Agreement, (c) Contingent Shares entitling Holder to acquire 589,161 shares
of Parent Class B Stock and Exchange Shares entitling Holder to acquire 399,136
shares of Parent Class B Stock and 7,905,016 shares of Parent Common Stock, each
under agreements (the "Holder Agreements") described in a Joint Proxy
Statement/Prospectus dated November 20, 1996 filed by Parent with the Commission
on Form S-4 (the "Parent Form S-4"), (d) 28,449,846 shares of Parent Common
Stock issuable upon conversion of the Savoy Debentures (each such term as
defined in the Parent Form S-4), and (e) shares of Parent Common Stock issuable
under the Stock Exchange Agreement between Paul Allen and Parent dated May 20,
1997 and the letter agreement by and between Parent and Fred Rosen dated May 20,
1997 (the Stock Exchange Agreement and the letter agreement together, the "TKTM
Agreements"), as of the date hereof, there are no outstanding options, warrants,
rights, puts, calls, commitments, or other contracts, arrangements, or
understandings issued by or binding upon Parent requiring or providing for, and
there are no outstanding debt or equity securities of Parent which upon the
conversion, exchange or exercise thereof would require or provide for, the
issuance by Parent of any new or additional shares of Parent Common Stock (or
any other securities of Parent) which, with notice, lapse of time and/or payment
of monies, are or would be convertible into or exercisable or exchangeable for
Parent Common Shares. There are no preemptive or other similar rights available
to the existing holders of Parent Common Stock or other securities of Parent
except as contemplated by this Agreement.

            (b) As of the Closing Date, the authorized capitalization of the LLC
will consist of a number of LLC Shares, consisting of one or more classes of
interests as set forth in the LLC Operating Agreement. As of the Closing Date,
other than contemplated by this Agreement, 


                                      -20-
   26

there will be no outstanding or authorized options, warrants, rights, puts,
calls, commitments, or other contracts, arrangements, or understandings issued
by or binding upon the LLC requiring or providing for, and there are no
outstanding debt or equity securities of the LLC which upon the conversion,
exchange or exercise thereof would require or provide for, the issuance by the
LLC of any new or additional LLC Shares (or any other securities of LLC, which,
with notice, lapse of time and/or payment of monies, are or would be convertible
into or exercisable or exchangeable for LLC Shares). As of the Closing Date,
there will be no preemptive or other similar rights available to the holders of
LLC Shares or other securities of the LLC except as contemplated by this
Agreement.

            3.3. Due Authorization; Execution and Delivery. The execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by Parent's board of
directors (including such authorization as may be required so that no state
anti-takeover statute or similar statute or regulation including, without
limitation, Section 203 of the Delaware General Corporation Law, is or becomes
operative with respect to this Agreement or the transactions contemplated hereby
or with respect to Investor and its affiliates (as defined in Section 203) as of
October 19, 1997) and, when authorized by the Requisite Stockholder Vote and the
Certificate Amendment is filed with the Delaware Secretary of State, no other
corporate proceedings on the part of Parent are necessary to authorize this
Agreement and to consummate the transactions contemplated hereby. The
performance of this Agreement and the consummation of the transaction
contemplated hereby by LLC (with respect to such agreements to which it is a
party) will be duly authorized by all necessary corporate action on the part of
LLC. This Agreement has been duly executed and delivered by Parent and Sub and
constitutes the legal, valid and binding obligation of Parent and Sub,
enforceable against Parent and Sub in accordance with its terms, except to the
extent limited by bankruptcy, insolvency, reorganization, moratorium or other
laws relating to or affecting creditors' rights generally and by general equity
principles regardless of whether such enforceability is considered in a
proceeding in equity or at law.

            3.4. Absence of Breach; No Conflict. Except as set forth on Schedule
3.4 hereto, the execution, delivery, and performance of this Agreement by
Parent, and the consummation by Parent of the transactions contemplated hereby,
(a) will not require the consent of any third party (including any governmental
or regulatory authority) (other than consents that would not, if not given, have
a Material Adverse Effect on Parent and its Subsidiaries considered as a whole);
(b) will not conflict with any provision of the Certificate of Incorporation,
By-Laws or limited liability company agreement, as the case may be, of Parent,
Sub or the LLC; (c) will not violate or result in a breach of, or contravene any
law, judgment, order, ordinance, injunction, decree, rule, regulation, or ruling
of any court or governmental instrumentality applicable to any of Parent, Sub or
the LLC; (d) will not violate, conflict with, or result in a breach of any terms
of, constitute grounds for termination of, constitute a default under, or result
in the acceleration of any performance required by the terms of, any mortgage,
indenture, lease, contract, agreement, instrument, license, or permit to which
any of Parent, Sub or the LLC is a party or by which any of Parent, Sub or the
LLC or their respective properties may be bound; and (e) will not create any
Liens upon any of the assets owned by any of Parent, Sub or the LLC, except, in
the case of clause (c), (d) or (e), for violations, breaches, contraventions,
conflicts, termination or accelera-


                                      -21-
   27

tion or Liens which would not have a Material Adverse Effect on Parent and its
Subsidiaries considered as a whole, or would impair, in any material respect,
the ability of Parent to perform its obligations under this Agreement and the
other documents contemplated hereby.

            3.5. Shares to Be Issued. The LLC Shares and the Parent Common
Shares to be issued pursuant to the transactions contemplated hereby, when
authorized by the Requisite Stockholder Vote and issued in accordance with
Articles 1 and 6, will be duly authorized and legally and validly issued, fully
paid and nonassessable.

            3.6. Investment Purpose. Parent is acquiring the Partnership solely
for the purpose of investment and not with view to, or for offer or sale in
connection with, any distribution thereof. Parent acknowledges and understands
that the Partnership may not be sold except in compliance with the registration
requirements of the Securities Act, unless an exemption therefrom is available.

            3.7. Brokers. Other than Allen & Company Incorporated, the fees of
which shall be the responsibility of Parent, no broker, finder or investment
banker is entitled to any brokerage, finder's or other fee or commission in
connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of Parent or its Affiliates.

            3.8. Commission Documents; Financial Information. The Parent Form
10-K in respect of the fiscal year ended December 31, 1996 (the "Parent Form
10-K"), and each report, schedule, proxy, information statement or registration
statement (including all exhibits and schedules thereto and documents
incorporated by reference therein) filed by Parent with the Commission following
the date thereof and on or before the Closing Date are collectively referred to
as the "Parent Commission Documents." As of their respective filing dates, the
Parent Commission Documents complied (or will comply) in all material respects
with the requirements of the Exchange Act and the rules and regulations of the
Commission thereunder applicable to such Parent Commission Documents, and as of
their respective dates none of the Parent Commission Documents contained (or
will contain) any untrue statement of a material fact or omitted (or will omit)
to state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading. The financial statements of Parent included in the Parent
Commission Documents comply (or will comply) as of their respective dates as to
form in all material respects with applicable accounting requirements and the
published rules and regulations of the Commission with respect thereto (except
as may be indicated in the notes thereto or, in the case of the unaudited
statements, as permitted by Form 10-Q promulgated by the Commission), and
present fairly (or will present fairly) as of their respective dates, in all
material respects, the consolidated financial position of Parent and its
Subsidiaries as at the dates thereof and the consolidated results of their
operations and their consolidated cash flows for each of the respective periods,
in conformity with GAAP, except that interim financial statements are subject to
normal year-end adjustments, none of which are expected to be material. As used
in this Agreement, the consolidated balance sheet of Parent and its Subsidiaries
at June 30, 1997 included in the Parent Form 10-Q filed with the Commission in
respect of the fiscal quarter ended June 30, 1997 is hereinafter 


                                      -22-
   28

referred to as the "Parent Balance Sheet," and June 30, 1997 is hereinafter
referred to as the "Parent Balance Sheet Date."

            Except as and to the extent expressly set forth in the Parent
Balance Sheet, (i) as of June 30, 1997, Parent did not have any material
liabilities or obligations (whether absolute, contingent, accrued or otherwise)
and (ii) since the date of the Parent Balance Sheet, Parent has not incurred any
material liabilities or obligations other than in the ordinary course of
business or as contemplated by the transactions contemplated hereby.

            3.9. Approvals. Except (a) as set forth on Schedule 3.9(a) hereof,
(b) for any filings, notices, applications and other information as may be
required to be made or supplied pursuant to the HSR Act or the Exchange Act, (c)
for filing of the Certificate Amendment with the Delaware Secretary of State,
and (d) the filing of documents relating to Holder's investment in, and
relationship with, Parent and Mr. Diller, no notices, reports or other filings
are required to be made by Parent, or any of its Subsidiaries (including the
LLC) with, nor are any consents, registrations, applications, approvals,
permits, licenses or authorizations required to be obtained by Parent or any of
its Subsidiaries (including the LLC) from, any public or governmental authority
or other third party in connection with the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby (other
than consents that would not, if not given, have a Material Adverse Effect on
Parent and its Subsidiaries considered as a whole) or impair the ability of
Parent or Sub to perform its respective obligations under this Agreement and the
other documents contemplated hereby.

            3.10. Personnel. (a) Schedule 3.10 contains a true and complete list
of all material employee benefit plans or arrangements that cover any employee
of Parent and its Subsidiaries (the "Parent Employees") including any
employment, severance, or other similar contract, arrangement, or policy and
each plan or arrangement (written or oral) providing for insurance coverage
(including any self-insured arrangements), workers' compensation, disability
benefits, supplemental unemployment benefits, vacation benefits, or retirement
benefits or for deferred compensation, profit-sharing, bonuses, stock options,
stock appreciation rights, stock purchases, or other forms of incentive
compensation or post-retirement insurance, compensation, or benefits
(collectively, "Parent Benefit Arrangements").

            (b) No Parent Benefit Arrangement is an "employee pension benefit
plan," as defined in Section 3(2) of ERISA (a "Parent Pension Plan"), that is
subject to Title IV of ERISA or Section 412 of the Code, and no Parent Benefit
Arrangement provides post-retirement welfare benefits, except as required by
law. Neither Parent nor any of its Subsidiaries has incurred or expects to incur
any liability or lien under Title IV of ERISA or Section 412 of the Code, which
liability or lien would be reasonably expected to have a Material Adverse Effect
on Parent and its Subsidiaries considered as a whole.

            (c) Without limiting the generality of Section 3.10(b) except as set
forth on Schedule 3.10(c), neither Parent nor any of its Subsidiaries nor any
entity required to be combined with Parent or any of its Subsidiaries under
Section 414(b), Section 414(c), Section 414(m), or Section 414(o) of the Code (a
"Parent ERISA Affiliate") is a "multiemployer pension 


                                      -23-
   29

plan," as defined in Section 3(37) of ERISA and neither Parent nor any of its
Subsidiaries has incurred or expects to incur any liability or lien with respect
to any multiemployer pension plan which liability or lien would be reasonably
expected to have a Material Adverse Effect on Parent and its Subsidiaries
considered as a whole.

            (d) Except as set forth on Schedule 3.10(d), none of Parent, any of
its Subsidiaries, or any Parent ERISA Affiliate has incurred, or expects to
incur solely as a result of the consummation of the Transactions (including any
termination of employment in connection therewith), any cost, fee, expense,
liability, claim, suit, obligation, or other damage with respect to any Parent
Pension Plan, or any Parent Benefit Arrangement that could give rise to the
imposition of any liability, cost, fee, expense, or obligation on the LLC or any
of its Affiliates, which would be reasonably expected to have a Material Adverse
Effect on the Parent and its Subsidiaries considered as a whole, and, to
Parent's knowledge, no facts or circumstances exist that could give rise to any
such cost, fee, expense, liability, claim, suit, obligation, or other damage,
which would be reasonably expected to have a Material Adverse Effect on Parent
and its Subsidiaries considered as a whole. Except as set forth on Schedule
3.10(d), neither the execution and delivery of this Agreement nor the
consummation of the Transactions (including any terminations of employment in
connection therewith) will (i) increase any benefits otherwise payable under any
Parent Benefit Arrangement, which would be reasonably expected to have a
Material Adverse Effect on the Parent and its Subsidiaries considered as a whole
or (ii) result in the acceleration of the time of payment or vesting of any such
payment, which would be reasonably expected to have a Material Adverse Effect on
Parent and its Subsidiaries considered as a whole.

            (e) Parent will deliver or make available to Investor, within ten
days hereafter true and complete copies of each of the following documents:

                  (i) Each Parent Benefit Arrangement (and, if applicable,
related trust agreements) and all amendments thereto, and (if applicable) each
summary plan description together with any summary of material modifications;

                  (ii) Each written Parent Benefit Arrangement and written
descriptions thereof that have been distributed to Parent Employees (including
descriptions of the number and level of employees covered thereby); and

                  (iii) Each employee handbook or similar document describing
any Parent Benefit Arrangement applicable to Parent Employees.

            (f) Except as set forth on Schedule 3.10, no controversies,
disputes, or proceedings are pending or, to Parent's knowledge, threatened,
between Parent, any of its Subsidiaries, or any Parent Employee, which would be
reasonably expected to have a Material Adverse Effect on Parent and its
Subsidiaries considered as a whole. Except as set forth on Schedule 3.10(f), no
labor union or other collective bargaining unit represents or, to Parent's
knowledge, claims to represent any of the Parent Employees and, to Parent's
knowledge, there is no union campaign being conducted to solicit cards from
employees to authorize a union to request a National Labor Relations Board
Certification election with respect to any of the Parent Employees.


                                      -24-
   30

            (g) Except where any such failure would not be reasonably expected
to have a Material Adverse Effect on Parent and its Subsidiaries considered as a
whole, all Benefit Arrangements (i) comply in all material respects with
applicable law, including but not limited to ERISA and the Code, and (ii) have
been administered in all material respects in accordance with their terms, and
all required contributions have been made to such Parent Benefit Arrangements.
Except as set forth on Schedule 3.10(g), all Parent Pension Plans that are
intended to be qualified under Section 401(a) of the Code have received a
favorable determination letter from the Internal Revenue Service, and Parent has
no knowledge of any events that would cause such letter to be revoked.

            3.11. Conduct of Business. Except as disclosed in the Parent
Commission Documents, since the Parent Balance Sheet Date, Parent and its
Subsidiaries have, in all material respects, conducted their business operations
in the ordinary course and there has not occurred any event or condition having
or that would have a Material Adverse Effect on Parent and its Subsidiaries
considered as a whole. Without limiting the generality of the foregoing, other
than as is disclosed in the Parent Commission Documents filed prior to the date
hereof or on Schedule 3.11 hereto, since the Parent Balance Sheet Date there has
not occurred:

            (a) any change or agreement to change the character or nature of the
business of Parent or any of its Subsidiaries in any material respects;

            (b) any purchase, sale, transfer, assignment, conveyance or pledge
of the assets or properties of Parent or its Subsidiaries;

            (c) any waiver or modification by Parent or any Parent Subsidiary of
any right or rights of substantial value, or any payment, direct or indirect, in
satisfaction of any liability, in each case, having a Material Adverse Effect on
Parent and its Subsidiaries considered as a whole;

            (d) any loan, advance or capital expenditure by Parent or any of its
Subsidiaries, except for loans, advances and capital expenditures made in the
ordinary course of business;

            (e) any change in the accounting principles, methods, practices or
procedures followed by Parent in connection with the business of Parent or any
change in the depreciation or amortization policies or rates theretofore adopted
by Parent in connection with the business of Parent and its Subsidiaries;

            (f) any declaration or payment of any dividends, or other
distributions in respect of the outstanding shares of capital stock of Parent or
any Parent Subsidiary (other than dividends declared or paid by wholly-owned
Subsidiaries);

            (g) other than pursuant to the Holder Agreements, the TKTM
Agreements or in connection with the exercise of employee stock options or the
conversion of outstanding convertible debt instruments, any issuance of any
shares of capital stock of Parent or any Parent Subsidiary or any other change
in the authorized capitalization of the Company or any Parent Subsidiary, except
as contemplated by this Agreement;


                                      -25-
   31

            (h) any grant or award of any options, warrants, conversion rights
or other rights to acquire any shares of capital stock of Parent or any Parent
Subsidiary, except as contemplated by this Agreement or except pursuant to
employee benefit plans, programs or arrangements in the ordinary course of
business; or

            (i) any agreement with respect to any of the foregoing.

            3.12. Licenses. Except as set forth on Schedule 3.12, each material
License of Parent and its Subsidiaries has been validly issued, and Parent or
its Subsidiaries are the authorized legal holder thereof. The material Licenses
are in full force and effect, and the conduct of the business and operations of
Parent and its Subsidiaries is in accordance therewith in all material respects.
As of the date of this Agreement, there is no proceeding pending or, to Parent's
knowledge, threatened, seeking the revocation or limitation of any material
Licenses. Each of Parent and its Subsidiaries is the holder of all material
Licenses necessary to enable it to continue to conduct its respective business
as now conducted.

            3.13. Claims and Legal Actions. Except as set forth in Schedule
3.13, there are no judicial, administrative or arbitral actions, suits, claims,
inquiries, investigations or proceedings in respect of Parent or its
Subsidiaries (whether of a public or private nature) pending or, to the
knowledge of Parent, threatened against Parent or its Subsidiaries, which,
individually or in the aggregate, would have a Material Adverse Effect on Parent
and its Subsidiaries considered as a whole.

            3.14. Compliance with Laws. Except as set forth on Schedule 3.14,
each of Parent and its Subsidiaries has been and is presently being conducted in
compliance with all applicable laws, except for any noncompliance that would not
have a Material Adverse Effect on Parent and its Subsidiaries considered as a
whole or impair or hinder the ability of Parent and its Subsidiaries to perform
in any material respect their respective obligations under this Agreement and
the documents and agreements contemplated hereunder.

                                   ARTICLE 4.
                    REPRESENTATIONS AND WARRANTIES OF HOLDER

            Holder represents and warrants to Parent, Investor and the LLC as
follows:

            4.1. Organization, Standing, and Authority. Holder is and, upon
formation in accordance with Section 1.5(f) hereof, each Holder Newco will be, a
corporation duly organized, validly existing, and in good standing under the
laws of its jurisdiction of incorporation. Holder has and, upon formation in
accordance with Section 1.5(f) hereof, each Holder Newco will have, all
requisite corporate power and authority (i) to own, lease, and use as now owned,
leased, and used by them all of their respective assets, (ii) to conduct the
business and operations of Holder as now conducted by Holder, and (iii) to
execute and deliver this Agreement and the documents contemplated hereby (to the
extent a party to this Agreement or such documents), and to perform and comply
with all of the terms, covenants, and conditions to be performed and complied
with by them hereunder and thereunder. Holder and each Holder Newco is qualified
to transact busi-


                                      -26-
   32

ness in each jurisdiction in which the nature of their businesses makes such
qualification necessary except where failure to be so qualified would not have a
Material Adverse Effect on Holder and its Subsidiaries considered as a whole.

            4.2. Authorization and Binding Obligation. The execution, delivery,
and performance of this Agreement, and each of the agreements contemplated
hereby, and the consummation of the transactions contemplated hereby by Holder
(with respect to such agreements to which it is a party) has been duly
authorized by all necessary corporate action on the part of Holder. The
performance of this Agreement and each of the Agreements contemplated hereby and
the consummation of the transactions contemplated hereby by each Holder Newco,
if any (with respect to such agreements to which it is a party), will be duly
authorized by all necessary corporate action on the part of each Holder Newco.
This Agreement has been duly executed and delivered by Holder and constitutes
the legal, valid, and binding obligation of Holder, enforceable against Holder
in accordance with its terms, except to the extent limited by bankruptcy,
insolvency, reorganization, moratorium or other laws relating to or affecting
creditors' rights generally and by general equity principles regardless of
whether such enforceability is considered in a proceeding in equity or at law.

            4.3. Absence of Conflicting Agreements; Consents. Subject to
obtaining the consents listed on Schedule 4.3 and for any filings, notices,
applications and other information as may be required to be made or supplied
pursuant to the HSR Act or the Exchange Act, the execution, delivery, and
performance of this Agreement and the documents contemplated hereby by Holder
and the Holder Newcos (with or without the giving of notice, the lapse of time,
or both): (a) do not require any notices, reports or other filings to be made by
Holder or any Holder Newco with any public or governmental authority; (b) do not
require the consent of any third party (including any governmental or regulatory
authority) (c) will not conflict with any provision of the Certificate of
Incorporation or By-Laws of Holder or any Holder Newco, if any; and (d) will not
violate or result in a breach of, or contravene any law, judgment, order,
ordinance, injunction, decree, rule, regulation, or ruling of any court or
governmental instrumentality applicable to Holder or any Holder Newco except, in
the case of clauses (a), (b) and (d), for violations, breaches, contraventions
or conflicts, which would not have a Material Adverse Effect on Holder or would
impair, in any material respect, the ability of Holder to perform its
obligations under this Agreement and the other documents contemplated hereby.

                                   ARTICLE 5.
                         INTERCOMPANY TRANSFER OF FUNDS

            5.1. General. Parent shall cause the LLC to keep records of all
movement of funds between the LLC, on the one hand, and Parent and its
Subsidiaries, on the other hand. Parent shall cause all Excess Cash held by
Parent and its Subsidiaries from time to time (but not less frequently than the
last business day of each month) to be transferred to LLC in accordance with the
terms of this Article 5.

            5.2. Transfers from LLC. Subject to Section 5.4, all transfers of
funds from the LLC to Parent and its Subsidiaries (other than distributions on,
or redemptions of, the LLC 


                                      -27-
   33

Shares or payment of interest on indebtedness owed or assumed by the LLC) shall
either be (i) evidenced by a demand note from the recipient of such funds
payable to LLC or (ii) applied to repay indebtedness owed by LLC to such
recipient.

            5.3. Transfers to LLC. Subject to Section 5.4, all transfers of
funds from Parent and its Subsidiaries (other than contributions of capital in
connection with the acquisition of the LLC Shares or payment of interest on
indebtedness owed to the LLC) shall either be (i) evidenced by a demand note
from the LLC payable to the transferor of such funds or (ii) applied to repay
indebtedness owed by such transferor to the LLC.

            5.4. Other Transactions. The provisions of Sections 5.2 and 5.3
shall not apply to the payment of funds in respect of (i) the acquisition or
disposition of rights, property and interests by or to the LLC, on the one hand,
and by or to Parent and its Subsidiaries, on the other hand, (ii) the rights,
property and interests referred to in clause (i) of this Section 5.4, (iii) the
Beneficial Assets (which shall be contributed to the LLC in accordance with
Section 1.11(b)) or the Excluded Sub (which shall be contributed to the LLC in
accordance with Section 1.3), or (iv) the issuance of Parent Common Shares in
which case additional LLC Shares shall be issued to Parent at the Issue Price.
Parent shall cause any transactions between the LLC, on the one hand, and the
Regulated Subsidiaries, on the other hand, to be on terms, in the aggregate,
which are no less favorable to the LLC than the terms which the LLC would have
received in a transaction with an unaffiliated third party.

            5.5. Interest. The outstanding demand notes referred to in Sections
5.2 and 5.3 shall bear interest at the Interest Rate from time to time and
interest shall be payable monthly in arrears.

                                   ARTICLE 6.
                    INVESTOR EXCHANGE OPTIONS; DISTRIBUTIONS;
                          STOCK DIVIDENDS, SPLITS, ETC.

            6.1 Exchange Options. (a) Subject to the following provisions and,
in the case of Holder, to Section 1.9, Parent hereby grants, effective as of the
Closing, (i) to Investor and Holder the right (the "Exchange Options"),
exercisable from time to time by written notice given to Parent with the number
of Exchange Options to be exercised, to cause the exchange of each outstanding
LLC Share held by Investor Sub, each Investor Newco or Holder or each Holder
Newco, as the case may be, for one Parent Common Share (it being agreed and
understood that as of the Closing Date the Parent Common Shares underlying such
Exchange Options for Investor shall consist of 40 million shares of Parent Class
B Stock (less any shares of Parent Class B Stock issued to Investor pursuant to
Section 1.5(b) and not including any shares of Parent Class B Stock issued to
Investor that are subsequently converted by Investor into shares of Parent
Common Stock in order to acquire additional shares of Parent Common Stock
pursuant to Sections 1.01(b) and (c) of the Governance Agreement or to otherwise
acquire Parent Common Shares permitted to be acquired pursuant to the Governance
Agreement or the Stockholders Agreement), and the remainder in shares of Parent
Common Stock and for Holder shall consist solely of shares of Parent Common
Stock) in accordance with the terms of the Exchange Agree-


                                      -28-
   34

ment, it being understood that the applicable Parties shall negotiate in good
faith and enter into an Exchange Agreement (the "Exchange Agreement") on such
terms and conditions customary to such agreements and with a general view to the
terms of the Holder Exchange Agreement. In lieu of exchanging LLC Shares for
Parent Common Shares, Investor may, at its option, either (a) merge Investor Sub
and/or one or more Investor Newcos with and into Parent (or any wholly owned
Subsidiary) pursuant to which each share of Investor Sub's or each such Investor
Newco's common stock will be converted into a number of Parent Common Shares
equal to the quotient of (i) the number of LLC Shares owned by Investor Sub or
such Investor Newco divided by (ii) the number of shares of common stock of
Investor Sub or such Investor Newco issued and outstanding or (b) cause the
exchange by Parent for each outstanding share of common stock of Investor Sub
and/or one or more Investor Newcos of a number of Parent Common Shares equal to
the quotient of (i) the number of LLC Shares owned by Investor Sub or such
Investor Newco divided by (ii) the number of shares of common stock of Investor
Sub or such Investor Newco issued and outstanding. To the extent applicable,
Holder (and each Holder Newco) shall have the same right described in the
immediately preceding sentence. Exchanges pursuant to the exercise of Exchange
Options shall be consummated within five business days of Parent's reasonable
satisfaction that there have been obtained, received or effected (and all
applicable waiting and termination periods, if any, including any extensions
thereof, under any applicable law, statute, regulation or rule shall have
expired or terminated) all authorizations, consents, approvals, licenses,
franchises, permits and certificates by or of, and shall have made all filings
and effected all notifications, registrations and qualifications with, all
federal, state and local governmental and regulatory authorities necessary for
the consummation of the exchange.

            (b)   (i) Subject to applicable law, each of Investor Sub, the
Investor Newcos and Holder and the Holder Newcos agree to immediately exercise
the Exchange Options in the manner set forth in Section 6.1(a) with respect to
all LLC Shares held by it simultaneously with the consummation of a merger,
consolidation or amalgamation between Parent and another entity (other than an
Affiliate of Parent) in which Parent is acquired by such other entity or a
person who controls such entity, or a sale of all or substantially all of the
assets of Parent to another entity, other than a subsidiary of Parent (a "Sale
Transaction"); provided that if such Sale Transaction can be effected as a
tax-free exchange involving a merger or exchange of shares of Investor Sub, the
Investor Newcos, Holder or Holder Newcos, as the case may be, the Sale
Transaction shall be structured in such manner in lieu of Investor Sub, the
Investor Newcos, Holder or the Holder Newcos, as the case may be, exercising the
Exchange Options and, in lieu of receiving Parent Common Shares upon exercise of
the Exchange Options, such persons shall be entitled to receive the type and
amount of consideration that such persons would have received had they exercised
the Exchange Options immediately prior to the Sale Transaction unless such
structure would materially adversely affect the ability of Parent to consummate
such Sale Transaction.

                  (ii) To the extent that Investor Sub, an Investor Newco,
Holder or a Holder Newco is not permitted by law (including FCC Regulations) to
take the actions described in paragraph (b)(i) above, in connection with a Sale
Transaction, the Exchange Options shall be converted into the right to receive
for each Parent Common Share (the "Exchange Options


                                      -29-
   35
Shares") issuable under the Exchange Options, the same consideration per share
to be received by the holders of Parent Common Stock in the Sale Transaction.

            (c) If a tender offer has been commenced for Parent Common Stock
(other than by Parent or a subsidiary of Parent) and, to the extent permissible
under the terms of the Governance Agreement, either Investor or Holder wishes to
tender their respective LLC Shares or the stock of Investor Sub, the Investor
Newcos or the Holder Newcos, as the case may be, in such tender offer, Investor
or Holder may at its option, either: (i) simultaneously tender its Exchange
Options Shares to the exchange agent in such tender offer and exercise such
Exchange Options in accordance with the provisions of Section 6.1(a) and the
terms of the Exchange Agreement; provided that any such exercise of the Exchange
Options shall be conditioned on, and subject to, the consummation of such tender
offer; provided, further, that in the event that fewer than all tendered
Exchange Options Shares are purchased in the tender offer, the exchange shall
only occur with respect to such Exchange Options Shares that are purchased in
the tender offer and the remaining Exchange Options Shares shall be returned to
Investor or Holder, as the case may be, or (ii) transfer such LLC Shares or the
stock of Investor Sub, the Investor Newcos or the Holder Newcos, as the case may
be, to a person or entity (the "Transferee") which is not considered to be a
foreign owner for purposes of the Communications Act of 1934, as amended, and
the FCC alien ownership rules and who would otherwise be permitted to lawfully
hold the Parent Common Shares underlying the Exchange Option and who agrees to
be bound by the terms of this Agreement and such Transferee shall exercise such
Exchange Option immediately prior to the closing of the tender offer solely for
purposes of participating in such tender offer and pay the proceeds to Investor
or Holder, as the case may be. In the case of clause (ii) above, in the event
that less than all the LLC Shares are purchased in such tender offer or the
tender offer is not consummated, at Parent's election, either (x) Transferee
shall exchange with Parent the portion of the LLC Shares not purchased in the
tender offer for a number of LLC Shares equal to the number of shares not so
purchased and a new exchange option (which shall have the same terms as the
original Exchange Option) for each such LLC Share and Parent shall deliver such
shares and issue such replacement Exchange Options to Transferee and Transferee
shall transfer such LLC Shares and Exchange Option to Investor or Holder, as the
case may be, or (y) permit Investor or Holder, as the case may be, to hold the
portion of the LLC Shares not purchased in the tender offer.

            (d) Except as set forth above and subject to Section 6.1(e), the
Exchange Options shall not be transferable by Investor Sub, any Investor Newco,
Holder or any Holder Newco.

            (e) Without limiting the foregoing, Parent shall cooperate with
Investor Sub, the Investor Newcos and the Holder Newcos to ensure that, by
virtue of holding LLC Shares, neither Investor nor Holder is disadvantaged in
connection with a Sale Transaction or tender or exchange offer.

            6.2. Distributions to LLC Stockholders. Simultaneously with (or in
the case of clause (b)(ii) below, not later than five business days after the
determination of Fair Market Value of the property distributed) the making of
any distributions of cash or property on the 


                                      -30-
   36

shares of Parent Common Stock or consummation of a tender offer by Parent or any
of its Subsidiaries for shares of Parent Common Stock (a "Self Tender Offer"),
the LLC shall make distributions on the LLC Shares in the following manner:

            (a) for each cash dividend paid by Parent on its Parent Common
Shares, LLC shall pay an identical dividend per share on each LLC Share;

            (b) for distributions of property (including, without limitation,
stock, options or other securities of Subsidiaries of Parent), other than cash,
on Parent Common Shares, the LLC shall (i) in the case of distributions of
property other than distributions of stock, options to purchase stock or other
securities in a Regulated Subsidiary, make an equivalent distribution of
property per share on the LLC Shares and (ii) in the case of distributions of
assets, shares, options or other securities of Regulated Subsidiaries,
distribute in cash to the LLC stockholders for each LLC Share an amount equal to
the Fair Market Value per Parent Common Share of the distribution made on Parent
Common Shares or, if the parties agree, an appropriate adjustment to the
exchange ratio; provided that, the distributions on the LLC Shares pursuant to
this clause (b) may be made in the form of a demand note of the LLC.
Notwithstanding the previous sentence, Parent shall use its best efforts to make
such distributions in cash with respect to LLC Shares; and

            (c) in connection with a Self Tender Offer, not later than five
business days after receipt of notice from Parent of a proposed Self Tender
Offer, Investor and Holder shall each give irrevocable written notice of the
number (the "Tender Number") of Exchange Options Shares, if it owned such shares
of Parent Common Stock, it would want to have purchased in such tender offer
(which number shall be no greater than the product of the percentage of the
total outstanding LLC Shares owned by Investor, Investor Sub and the Investor
Newcos or Holder and the Holder Newcos, as the case may be, and the number of
shares of Parent Common Stock offered to be purchased in such Self Tender
Offer), and the LLC shall make a distribution to the Investor or Holder, as the
case may be, on the LLC Shares equal (in the aggregate) to the Tender Number
times the average price per share paid in the Self Tender Offer in redemption of
a number of LLC Shares equal to its respective Tender Number. In connection with
a Self Tender Offer for shares of Parent Common Stock, simultaneously with the
consummation of the tender offer a number of LLC Shares held by Sub or Parent
equal to the number of shares of Parent Common Stock purchased in the tender
offer shall be redeemed at the average price per share paid in the Self Tender
Offer.

            (d) The adjustments described in this section shall take into
account (i) any related distributions to holders of LLC Shares in connection
with a distribution by the LLC to Parent related to such event, and (ii) changes
in the exchange rate for the LLC Shares, with the intention being that a holder
of LLC Shares shall receive or be entitled to receive what such holder would
have received had it exchanged LLC Shares for Parent Common Shares immediately
prior to such event (including any related distributions to holders of LLC
Shares).


                                      -31-
   37

            6.3. Tax Treatment. The Parties intend that LLC be treated as a
partnership for United States federal income tax purposes and agree to take no
actions inconsistent with such treatment.

            6.4. Anti-dilution. If Parent: (i) pays a dividend or makes a
distribution on Parent Common Shares in Parent Common Shares; (ii) subdivides
its outstanding shares of Parent Common Shares into a greater number of shares;
(iii) combines its outstanding Parent Common Shares into a smaller number of
shares; (iv) makes a distribution on Parent Common Shares in shares of its
capital stock, other than Parent Common Shares, or rights, options or warrants
to purchase or acquire Parent Common Shares; (v) issues by reclassification of
its common stock any shares of its capital stock; or (vi) takes any other action
not described above (other than actions pursuant to which Investor or Holder has
rights pursuant to Sections 1.7, 1.8, 6.1 and/or 6.2) which would cause Investor
Sub, each Investor Newco, Holder or each Holder Newco (based on the Assumptions)
not to have an identical percentage equity ownership interest of Parent
following such action, then the LLC simultaneously shall effect a comparable
transaction on the LLC Shares or an appropriate adjustment to the Exchange
Options, in which case appropriate adjustments will be made, mutatis mutandis,
to Article 1 and Section 6.1 as well as any other provision of this Agreement
requiring appropriate adjustments, so that after such transaction, Investor Sub,
each Investor Newco, Holder and each Holder Newco, will have an identical
percentage beneficial equity ownership interest of Parent and the LLC as it had
before such transaction (based on the Assumptions).

                                   ARTICLE 7.
                   TRANSFERABILITY; ISSUANCE TO OTHER PARTIES

            7.1. No Transfer of Shares of the LLC. Except in connection with the
exercise of the Exchange Options (including a transfer pursuant to Section
6.1(b) or 6.1(c)), or the hypothecation, pledge or creation of a lien or
security interest in LLC Shares by Parent, except as specifically contemplated
by this Agreement or the Governance Agreement, none of Parent, Sub, Investor,
Investor Sub, any Investor Newco, Holder or any Holder Newco shall directly or
indirectly transfer, pledge or create a lien or security interest in their
respective LLC Shares to any other person or entity and any attempt to make or
create such transfer, pledge, lien or security interest shall be null and void
and of no force and effect.

            7.2. Transfer by Investor or Holder. Except as permitted pursuant to
Section 6.1 hereof, Investor shall not sell or otherwise transfer any of its
shares in Investor Sub or any Investor Newco and Holder shall not sell or
otherwise transfer any of its shares in any Holder Newco. Parent shall not sell
or otherwise transfer any of its shares in Sub.

                                   ARTICLE 8.
                                   TAX MATTERS

            8.1. Tax Representations. (a) Investor represents and warrants to
Parent and the LLC that all material Returns required to be filed for taxable
periods ending on or prior to the Closing Date by, or with respect to any
activities of the Partnership and the UT Contributed 


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Business have been or will be filed in accordance with all applicable laws, and
all Taxes due have been or will be paid, except where the failure to so file or
so pay would not, in the aggregate, have a Material Adverse Effect on the
Partnership and the UT Contributed Business considered as a whole.

            (b) Parent represents and warrants to Investor, Holder and the LLC
that all material Returns required to be filed for taxable periods ending on or
prior to the Closing Date by Parent and its Subsidiaries have been or will be
filed in accordance with all applicable laws, and all Taxes due have been or
will be paid, except where the failure to so file or so pay would not, in the
aggregate, have a Material Adverse Effect to Parent and its Subsidiaries
considered as a whole.

            8.2. Tax Indemnification by Investor. Investor shall be liable for,
and shall hold Parent and the LLC and any successor thereto or Affiliates
thereof harmless from and against the following Taxes:

            (a) any and all Taxes with respect to the Partnership or the UT
Contributed Business for any taxable period ending (or deemed pursuant to
Section 8.4 to end) on or before the Closing Date; and

            (b) any several liability under Treasury Regulation Section 1.1502-6
or under any comparable or similar provision under state, local or foreign laws
or regulations for periods ending on or prior to the Closing Date.

            8.3. Tax Indemnification by Parent. Parent shall be liable for, and
shall hold Investor harmless from and against, the following Taxes with respect
to the Partnership and the UT Contributed Business: (a) any and all Taxes (other
than Taxes attributable to the transactions contemplated by this Agreement or
the ownership of LLC Shares by Investor or Investor Newco) for any taxable
period beginning (or deemed pursuant to Section 8.4 to begin) on or after the
Closing Date, due or payable with respect to the Partnership or the UT
Contributed Business, and (b) any and all Taxes not incurred in the ordinary
course of business attributable to the acts or omissions of Parent after the
Closing.

            8.4. Allocation of Certain Taxes. (a) The Parties agree that if any
entity transferred to the LLC is permitted but not required under applicable
foreign, state or local Income Tax laws to treat the day before the Closing Date
or the Closing Date as the last day of a taxable period, such day shall be
treated as the last day of a taxable period.

            (b) For purposes hereof, in the case of any Taxes that are imposed
on a periodic basis and are payable for a period that begins before the Closing
Date and ends after the Closing Date, the portion of such Tax that shall be
deemed to be payable for the portion of the period ending on the Closing Date
shall (i) in the case of any Taxes, other than Taxes based upon or related to
income or receipts, be deemed to be the amount of such Taxes for the entire
period (or, in the case of such Taxes determined on an arrears basis, the amount
of such Taxes for the immediately preceding period), whether actually paid
before, during, or after such period, multiplied by a fraction the numerator of
which is the number of calendar days in the period ending on 


                                      -33-
   39

(and including) the Closing Date and the denominator of which is the number of
calendar days in the entire period, and (ii) in the case of any Taxes based upon
or related to income or receipts (including but not limited to withholding
Taxes), be deemed equal to the amount which would be payable if the taxable year
ended on the close of business on the Closing Date. Any credits for such a
period shall be prorated, based upon the fraction employed in clause (i) of the
preceding sentence. Such clause (i) shall be applied with respect to Taxes for
such period relating to capital (including net worth or long-term debt) or
intangibles by reference to the level of such items on the Closing Date. In the
event that Investor or any of its Affiliates has prepaid any Taxes referred to
herein to the extent that such Taxes exceed Investor's share of such Taxes under
this Section 8.4, Parent shall pay Investor the amount of such excess within
thirty (30) days of the Closing Date upon receipt from Investor at the Closing
of a statement detailing such prepayments. Such statement and the calculations
contained therein shall be reviewed within such 30-day period by a nationally
recognized accounting firm selected by and paid for by Parent and the
determination of such accounting firm shall be final.

            8.5. Filing Responsibility. (a) Investor shall prepare and file or
shall cause to be prepared and filed the following Returns (and no other
Returns) with respect to the Partnership and the UT Contributed Business:

                  (i) all Tax Returns for any taxable period ending on or before
the Closing Date other than Returns subject to Section 8.4(b); and

                  (ii) all other Returns required to be filed (taking into
account extensions) prior to the Closing Date.

            (b) With respect to any Income Tax Return for taxable periods
beginning before the Closing Date and ending after the Closing Date, Parent
shall consult with Investor concerning such Return and shall report all items
with respect to the period ending on the Closing Date in accordance with the
instructions of Investor, unless otherwise agreed by Investor and Parent. Parent
shall provide Investor a copy of its proposed Return at least 30 days prior to
the filing of such Return, and Investor may provide comments to Parent, which
comments shall be delivered to Parent within 15 days of receiving such copies
from Parent.

            8.6. Refunds. (a) Investor shall be entitled to any refunds or
credits of Taxes attributable to or arising in taxable periods ending (or deemed
pursuant to Section 8.4 to end) on or before the Closing Date with respect to
the Partnership or the UT Contributed Business.

            (b) Parent shall promptly forward to Investor or reimburse Investor
for any refunds or credits due Investor (pursuant to the terms of this Article)
after receipt thereof, and Investor shall promptly forward to Parent or
reimburse Parent for any refunds or credits due Parent (pursuant to the terms of
this Article) after receipt thereof.

            8.7. Cooperation and Exchange of Information. (a) As soon as
practicable, but in any event within thirty (30) days after Investor's request,
from and after the Closing Date, Parent shall provide Investor with such
cooperation and shall deliver to Investor such information and data concerning
the pre-Closing operations of the Partnership and the UT Contributed 


                                      -34-
   40

Business and make available such knowledgeable employees of the Partnership and
the UT Contributed Business as Investor may reasonably request, in order to
enable Investor to complete and file all Returns which it may be required to
file with respect to the operations and business of the Partnership and the UT
Contributed Business through the Closing Date or to respond to audits by any
Taxing Authorities with respect to such operations and to otherwise enable
Investor to satisfy its internal accounting, tax and other legitimate
requirements. Such cooperation and information shall include provision of powers
of attorney for the purpose of signing Returns and defending audits and promptly
forwarding copies of appropriate notices and forms or other communications
received from or sent to any Taxing Authority which relate to the Partnership
and the UT Contributed Business, and providing copies of all relevant Returns,
together with accompanying schedules and related workpapers, documents relating
to rulings or other determinations by any Taxing Authority and records
concerning the ownership and tax basis of property, which Parent or its
Affiliates may possess. Parent shall make its employees and facilities available
on a mutually convenient basis to provide explanation of any documents or
information provided hereunder.

            (b) For a period of seven (7) years after the Closing Date or such
longer period as may be required by law, Parent shall, and shall cause its
Affiliates to, retain, and neither destroy nor dispose of, all Returns, books
and records (including computer files) of, or with respect to the activities of,
the Partnership and the UT Contributed Business for all taxable periods ending
on or prior to the Closing Date. Thereafter, Parent shall not destroy or dispose
of any such Returns, books or records unless it first offers such Returns, books
and records to Investor in writing at Investor's expense and Investor fails to
accept such offer within sixty (60) days of its being made.

            (c) Parent and Investor and their respective Affiliates shall
cooperate in the preparation of all Returns relating in whole or in part to
taxable periods ending on or before or including the Closing Date that are
required to be filed after such date. Such cooperation shall include, but not be
limited to, furnishing prior years' Returns or return preparation packages
illustrating previous reporting practices or containing historical information
relevant to the preparation of such Returns, and furnishing such other
information within such party's possession requested by the party filing such
Returns as is relevant to their preparation. In the case of any state, local or
foreign joint, consolidated, combined, unitary or group relief system Returns,
such cooperation shall also relate to any other taxable periods in which one
party could reasonably require the assistance of the other party in obtaining
any necessary information.

            (d) Investor shall have the right, at its own expense, to control
any audit or examination by any Taxing Authority ("Tax Audit"), initiate any
claim for refund, contest, resolve and defend against any assessment, notice of
deficiency, or other adjustment or proposed adjustment relating to any and all
Taxes for any taxable period ending on or before the Closing Date with respect
to the Partnership or the UT Contributed Business. Parent shall have the right,
at its own expense, to control any other Tax Audit, initiate any other claim for
refund, and contest, resolve and defend against any other assessment, notice of
deficiency, or other adjustment or proposed adjustment relating to all other
Taxes with respect to the Partnership or the UT Contributed Business. Investor
shall furnish Parent and its Affiliates with its cooperation in a man-


                                      -35-
   41

ner comparable to that described in paragraph (a) of this Section to effect the
purposes of this Section.

            8.8. Section 754 Election. Investor shall cause an appropriate
Investor Newco to make an election for the taxable year of the Partnership that
includes the Closing Date under Section 754 of the Internal Revenue Code of
1986, as amended, and shall not revoke or cause or permit any Investor Newco to
revoke such election.

            8.9. Certificate of Non-Foreign Status. The Investor Sub that sells
the Acquired Partnership Interest to the LLC under Section 1.5(b) shall deliver
to the LLC at or prior to the Closing, a certificate of non-foreign status
meeting the requirements of Treasury Regulation Section 1.1445-2(b)(2).

            8.10. Definitions. For purposes of this Article, the following terms
shall have the meanings ascribed to them below:

            (a) "Income Taxes" means all taxes based upon or measured by income.

            (b) "Returns" means returns, reports and forms required to be filed
with any domestic or foreign taxing authority.

            (c) "Taxes" means (i) all taxes (whether federal, state, local or
foreign) based upon or measured by income and any other tax whatsoever,
including gross receipts, profits, sales, use, occupation, value added, ad
valorem, transfer, franchise, withholding, payroll, employment, excise, or
property taxes, together with any interest or penalties imposed with respect
thereto and (ii) any obligations under any agreements or arrangements with
respect to any Taxes described in clause (i) above.

            (d) "Taxing Authority" means any government authority having
jurisdiction over the assessment, determination, collection, or other imposition
of Tax.

                                   ARTICLE 9.
                              ADDITIONAL COVENANTS

            9.1 Annual or Special Meeting. (a) As soon as practicable following
the execution of this Agreement, Parent shall prepare and file with the
Securities and Exchange Commission (the "Commission") preliminary proxy
materials, in form and substance reasonably satisfactory to Investor, with
respect to the matters described below. Parent agrees to use its reasonable best
efforts, after consultation with the other Parties hereto, to respond promptly
to any comments of the Commission and to cause the proxy materials approved by
the Commission to be mailed to its stockholders at the earliest practicable
time. Parent shall notify Investor promptly of the receipt of any comments from
the Commission or its staff and of any request by the Commission or its staff
for any amendments or supplements to the proxy materials. The proxy materials
shall comply in all material respects with all applicable requirements of law.
Whenever any event occurs which is required to be set forth in an amendment or
supplement to the proxy statement, Parent shall promptly inform Investor and
Holder of such occurrence and 


                                      -36-
   42

cooperate in filing with the Commission or its staff and/or the mailing to
stockholders of Parent, such amendment or supplement. Such proxy materials shall
include the recommendation of the Transactions of the Board of Directors of
Parent.

            (b) Parent shall take all steps necessary in accordance with its
certificate of incorporation and by-laws to call, give notice of, convene and
hold a meeting of its stockholders as soon as practicable after the filing of
definitive proxy materials relating to such meeting, for the purpose of (a)
approving and adopting an amendment to the certificate of incorporation of
Parent (the "Certificate Amendment") reasonably acceptable to Investor to (i)
increase the number of authorized Parent Common Shares necessary to effect the
transactions contemplated hereby, and (ii) avoid the loss or non-renewal of a
broadcast or similar license as a result of shareholder alien ownership in
violation of FCC Regulations or applicable law and (b) authorizing the issuance
of Parent Common Shares in accordance with this Agreement under the Bylaws of
the NASD.

            9.2. HSR Filings. Following the date hereof, Investor and Parent
shall file promptly any forms required under applicable law and take any other
action reasonably necessary in connection with obtaining the expiration or
termination of the waiting periods under the HSR Act applicable to the
Transactions.

            9.3. Related Agreements. Prior to the Closing, the Parties shall in
good faith negotiate, to the extent not already provided for in the attached
definitive agreements and otherwise consistent with the terms therein and in the
stockholders agreement among Investor, Holder and Mr. Diller, dated as of the
date hereof, any additional terms with respect to the Governance Agreement, the
LLC Operating Agreement, the Ancillary Business Agreements, the Stockholders
Agreement and the Exchange Agreement; provided, that the agreements attached
hereto and the stockholders agreement referred to in this sentence shall
otherwise be binding and definitive.

            9.4. Other Businesses. (a) Neither anything contained in this
Agreement, nor the ownership of Parent Common Shares, LLC Shares or Exchange
Options Shares, shall (i) restrict Investor or Holder or any of their respective
Affiliates from engaging in or owning an interest in any business which competes
with Parent, any Subsidiaries of Parent, or the LLC, or (ii) restrict Parent,
any Subsidiaries of Parent, or the LLC from engaging in or owning an interest in
any business which competes with Investor or Holder or any of their respective
Affiliates.

            (b) Following the date hereof, Parent, LLC and Investor shall
negotiate in good faith the terms of a transition services agreement to the
extent not set forth in Exhibit C.5. (the "Transition Services Agreement")
between LLC and Investor or one of its Affiliates to be executed and delivered
on the Closing Date pursuant to which Investor or such Affiliate will agree to
provide LLC with services currently performed by Investor or its Affiliates and
as requested by Parent on behalf of the Partnership or the UT Contributed
Business following the Closing Date (i) until the 6 month anniversary of the
Closing Date, on the basis of fully allocated cost to Investor or such Affiliate
of such services and (ii) following the 6 month anniversary of the Closing Date,
such cost plus 5%, and subject to such termination provisions, all as may be
agreed upon by Parent, LLC and Investor. In the event that the parties cannot
agree on the terms 


                                      -37-
   43

of the Transition Services Agreement prior to the Closing, the Closing shall not
be delayed, the term sheet attached hereto shall be definitive and the parties
shall in their good faith promptly reach agreement with respect to such matters
(and in the interim such term sheet shall govern the provision of any services).

            9.5. Information and Access. (a) From the date hereof and continuing
until the Closing, each of Investor, as to itself and its Subsidiaries and
Affiliates, and Parent, as to itself and its Subsidiaries, agrees that it shall
afford and, with respect to clause (b) below, shall cause its independent
auditors to afford, (a) to the officers, independent auditors, counsel and other
representatives of the other reasonable access to its properties, books, records
(including Tax Returns filed and those in preparation) and personnel in order
that the other may have a full opportunity to make such investigation as it
reasonably desires to make of the other, and (b) to the independent auditors of
the other, reasonable access to the audit work papers and other records of its
independent auditors. No investigation pursuant to this Section 9.5 shall affect
or otherwise obviate or diminish any representations and warranties of any party
or conditions to the obligations of any party. Except as required by law or
stock exchange or NASD regulation, any information furnished pursuant to this
Section 9.5 (including any information furnished to the other prior to the date
hereof) shall be held in confidence (except for such information as has
otherwise been made public (other than by reason of a violation of this Section
9.5)).

            (b) From and after the Closing, each of LLC and Investor, as to
itself and its Subsidiaries and Affiliates, agrees that it shall afford to the
officers, independent auditors, counsel and other representatives of the other
reasonable access to its books, records and personnel for reasonable business
purposes, for example in order that the party requesting access can prepare tax
and other filings with respect to any periods prior to Closing, or respond to,
negotiate, settle or litigate any claims related to the UT Contributed Business
or the Partnership for which the requesting party has any liability hereunder.

            9.6. Reservation. Parent hereby covenants to Investor and Holder
that it shall reserve and keep available out of its authorized but unissued
Parent Common Shares (including any Parent Common Shares held by Parent in its
corporate treasury), such number of its duly authorized Parent Common Shares as
shall be sufficient to issue upon the exercise of all of the Exchange Options,
if any, held by each such party. All Parent Common Shares to be issued pursuant
to this Agreement shall, upon issuance, be duly qualified for quotation for
trading on NASDAQ.

            9.7. Further Action. (a) Each of the parties hereto shall use all
reasonable efforts to take, or cause to be taken, all appropriate action, do or
cause to be done all things necessary, proper or advisable under applicable law,
and execute and deliver such documents and other papers, as may be required to
carry out the provisions of this Agreement and consummate and make effective the
transactions contemplated by this Agreement.

            (b) In the event that at any time or from time to time (whether
prior to or after the Closing), any Party (or its Affiliates), shall receive or
otherwise possess any asset that is intended to be Contributed, assigned or
otherwise transferred at the Closing to another Party 


                                      -38-
   44

hereto, such Party shall promptly use all reasonable efforts (but, with respect
to matters covered by Section 9.17, such efforts shall not include the
expenditure of funds other than for incidental expenses) to transfer, or cause
to be transferred, such asset to the Party so entitled thereto. Prior to any
such transfer, the Party (or its Affiliates) possessing such asset shall hold
such asset (and all earnings generated by such asset from and after the Closing)
in trust for any such other Party.

            9.8. [Intentionally omitted]

            9.9. Employees. (a) Except as otherwise agreed to by Parent and
Investor, the active participation of Business Employees in Benefit Arrangements
that are not Partnership Plans shall cease as of the Closing Date, and no
additional benefits shall accrue thereunder for such Business Employees.

            (b) From the date hereof to the Closing, except in the ordinary
course of business consistent with past practice or as required by law or other
contractual obligations existing on the date hereof, or as set forth in Schedule
9.9(b), neither the UT Contributed Business nor the Partnership shall (i)
increase the base compensation of or enter into any new bonus or incentive
arrangement with any of the Business Employees, (ii) pay or agree to pay any
pension, retirement allowance or similar employee benefit to any Business
Employee or former employees of the Partnership, (iii) enter into any new
employment, severance, consulting, or other compensation agreement with any
Business Employee or (iv) commit itself to any additional employee benefit or
compensation arrangement with respect to Business Employees or former employees
of the Partnership.

            (c) Following the Closing Date, the LLC shall use its reasonable
best efforts to develop or maintain employee benefit plans which, among other
things, treat similarly situated employees of the Contributed Businesses, the
Partnership and the UT Contributed Business on a substantially equivalent basis,
taking into account all relevant factors, including, without limitation, duties,
geographic location, tenure, qualifications and abilities. In view of the
changed nature of the benefit programs which may be applicable to certain of
such employees after the Closing Date, the LLC shall use its reasonable best
efforts to develop equitable transition rules relating to the benefits to be
provided to one or more groups of such employees.

            (d) The parties hereto intend that there shall be continuity of
employment with respect to all of the Business Employees and Parent Employees.
LLC shall offer employment, commencing on the Closing Date, to all Business
Employees (other than employees of the Partnership) and Parent Employees,
including any active employee as of the Closing Date who is hired by Investor
and its Affiliates or Parent and its Affiliates after the date of this
Agreement, and excluding any Business Employee or Parent Employee who is
terminated for any reason from employment with Investor and its Affiliates or
Parent and its Affiliates prior to the Closing Date (any such employee who
accepts such offer is hereinafter referred to as a "Continued Employee"), on
substantially the same terms (including salary, job responsibility and location)
as those provided to such employees immediately prior to the Closing Date.

            (e) LLC will (i) waive all limitations as to preexisting conditions,
exclusions and waiting periods with respect to participation and coverage
requirements applicable to 


                                      -39-
   45

Continued Employees under any welfare plan that such employees may be eligible
to participate in after the Closing Date, to the extent that such conditions
would have been waived under the corresponding welfare plan in which any such
employee participated in immediately prior to the Closing Date, (ii) provide
each Continued Employee with credit for any co-payments and deductibles paid
prior to the Closing Date, for the calendar year in which the Closing Date
occurs, in satisfying any applicable deductible or out-of-pocket requirements
under any welfare plans that such employees are eligible to participate in after
the Closing Date, and (iii) provide each Continued Employee with credit for all
service for purposes of eligibility, vesting and the calculation of severance
benefits (but not for benefit accruals under any other benefit plan) with the
Investor and its affiliates or Parent and its Subsidiaries, as applicable, under
each employee benefit plan, program, or arrangement of the LLC or its affiliates
in which such employees are eligible to participate in after the Closing Date;
provided, however, that in no event shall the employees be entitled to any
credit to the extent that it would result in a duplication of benefits with
respect to the same period of service.

            (f) Parent and Investor agree to cooperate reasonably and in good
faith to lower any costs that may be borne by Parent, Investor or the LLC as a
result of the contemplated Transactions (e.g., severance costs, and
multiemployer withdrawal liability to the extent agreed by Parent and Investor
in good faith) and to cooperate on other transition matters relating to the
Continued Employees and their benefits; provided, however, that nothing in this
provision shall require the LLC to continue to contribute to any benefit plans
or arrangements that existed prior to the Closing Date.

            (g) Notwithstanding anything contained herein to the contrary, from
and after the Closing Date, Investor and its Affiliates shall jointly and
severally indemnify and hold harmless Parent, Parent's Affiliates and the LLC
and its Affiliates (other than Investor and its Affiliates) from any joint and
several "Controlled Group Liability" of Investor or its Affiliates. For this
purpose, "Controlled Group Liability" shall mean any and all claims, losses,
expenses, costs or obligations arising out of or relating to (i) Title IV of
ERISA; (ii) Section 302 of ERISA; (iii) Sections 412 and 4971 of the Code; and
(iv) the continuation coverage requirements of Section 601 et seq. of ERISA and
Section 4980B of the Code, with respect to any plan or program of Investor or
its Affiliates which is not a Benefit Arrangement and which becomes a liability
of Parent, Parent's Affiliates or the LLC solely as a result of the purchase of
the UT Contributed Business pursuant to the Transaction.

            9.10. Investor Give-Back Provision. (a) Within 15 business days
after the preparation of the Statement or, if the accuracy of the Statement is
contested by Investor, within 15 business days after any differences have been
resolved in the manner set forth below, Investor shall pay to the LLC, in the
manner described below, an amount, if positive, equal to (i) $150 million minus
(ii) U-TV's EBITDA for the Determination Period; provided, however, that in no
event shall Investor be required to pay more than $75 million pursuant to this
Section. Any payment required to be made pursuant to this Section shall be made
by wire transfer of same day funds to an account or accounts specified in
writing by the LLC to Investor at least two business days prior to the date of
any such payment.


                                      -40-
   46

            (b) For purposes of this Agreement, "U-TV's EBITDA" shall mean the
sum of (a) the net income of the Current Programs (but excluding Current
Programs that are half-hour situation comedies) and made for television movies
included in the UT Contributed Business (including future made for television
movies) (the "U-TV Assets"), as determined in accordance with generally accepted
accounting principles as applied in the United States as of the date hereof and
consistent with accounting policies and procedures applied historically by
Investor, plus the sum of depreciation, amortization (excluding television
production and distribution amortization) income tax expense and interest
expense related to the U-TV Assets and (b) to the extent not included in the
previous clause, distribution fees received by the LLC pursuant to the
Distribution Agreements. In calculating U-TV's EBITDA, U-TV's EBITDA shall not
be reduced by more than $17 million of marketing costs (which are a "below the
contribution line" cost), $13 million of development costs and $30 million of
selling, general and administrative costs; provided that U-TV's EBITDA shall not
be reduced by any allocated corporate overhead expenses (although selling,
general and administrative costs shall include expenses paid by the corporate
office on behalf of U-TV). For purposes of calculating U-TV's EBITDA, sales by
the LLC to USA Networks, Inc. shall not be eliminated and shall be determined
pursuant to the agreements in effect on the date hereof. U-TV's EBITDA shall be
prepared on a U-TV historical basis excluding the effects of purchase accounting
and any severance costs in connection with the Transactions and shall otherwise
be determined based on the practices and principles used by Investor in the
consolidated audited financial statements as at and for the year ended June 30,
1997. Neither Parent nor the LLC shall (i) amend any Contract existing on the
date of this Agreement relating to the U-TV Assets to cause any revenue that
would otherwise be recognized in the Determination Period to be recognized after
the end of the Determination Period or (ii) prepay, accelerate or incur any
expense that would ordinarily be paid, due or incurred after the end of the
Determination Period to be paid, incurred or accrued during the Determination
Period; provided that in the event that any such Contract were so amended, or
expense so accelerated, for purposes of this Section, U-TV's EBITDA shall
include such revenue as if recognized in such period and shall exclude such
expense or prepayment.

            (c) U-TV's EBITDA for the three year periods ending on December 31,
1998, December 31, 1999 and December 31, 2000 (such three year period, the
"Determination Period") shall be determined annually by Parent and shall be set
forth in a Statement of U-TV's EBITDA (the "Statement"). Each Statement shall be
accompanied by a certificate prepared by Ernst & Young LLP, or another
nationally recognized independent public accountant chosen by Parent, to the
effect that such Statement was prepared in accordance with this Agreement. A
copy of each such Statement and the certificate shall be delivered to Investor
no later than 120 days after the end of such period. Investor shall have the
option, at its expense, to have each Statement reviewed by a different major
independent certified public accounting firm of its choice within 60 calendar
days after receipt thereof. If any material differences exist between such
accounting firms in the determination of the Statement, the items in dispute
shall be submitted to a mutually acceptable third major firm of independent
certified public accountants for its determination, which shall be binding on
Investor and the LLC. The fees of such third accounting firm shall be shared
equally by Investor and the LLC.


                                      -41-
   47

            9.11. Disclosure Schedules. The parties acknowledge that for
business reasons, none of the parties has been able to deliver to the other
party the final schedules referred to in Articles 1, 2 and 3 of this Agreement.
On or before November 10, 1997, Investor shall deliver to Parent and Parent
shall deliver to Investor such final schedules or any additional schedules that
either party determines shall be necessary or appropriate. Each of Parent and
Investor shall have five business days to review such final schedules and to
notify the other party in writing of any objections to the items listed in such
schedules. If either Parent or Investor fails to so notify Investor or Parent of
any objections within such five-business-day period, then such final schedules
shall be deemed to have been accepted by Parent and Investor. After the delivery
by Parent or Investor of notice of objection to the other party, Parent and
Investor shall have five days to consult with each other with respect to any
such objections and, during such period, shall negotiate in good faith to
resolve any disagreements with respect to any such objections. Upon expiration
of such five-day period, either objecting party may terminate this Agreement on
five business days' written notice if the Board of Directors of such objecting
party determines in its reasonable good faith judgment that the net adverse
effect of the total mix of the additional information which was not otherwise
known to it prior to the date of this Agreement, individually or in the
aggregate, would materially decrease the economic benefit of the Transactions to
such party (after giving effect to any increases in value that are attributable
to positive aspects of any additional information made known to such party after
the date of this Agreement).

            9.12. Financing. Parent shall use its best efforts to cause
financing necessary to consummate the transactions contemplated hereby to be
obtained.

            9.13. Representations and Warranties. From the date hereof until the
Closing Date, no Party will take any action that would cause a breach of the
representation and warranty of such Party as set forth in Articles 2 or 3, as
the case may be, under the heading "Conduct of Business." In addition, from the
date hereof through the Closing Date, Parent shall not take any action that
would constitute a Fundamental Change pursuant to the Governance Agreement.

            9.14. Spinoff of Regulated Subsidiaries. Upon the occurrence of the
CEO Termination Date (as defined in the Governance Agreement) or BD becoming
Disabled (as defined in the Governance Agreement) and as long as Investor has
the right to appoint at least two directors of Parent pursuant to the Governance
Agreement (or would, after such time that Mr. Diller has exercised the Diller
Put, as defined in the Stockholders Agreement, beneficially own at least such
amount of Parent Common Shares including shares subject to the Diller Put), at
the request of Investor, Parent shall, subject to applicable law (including FCC
regulations) and subject to the agreement, dated as of October 19, 1997, among
Holder, Investor and Parent, distribute the Regulated Subsidiaries
(collectively, the "Spinoff Company") in a distribution to the stockholders of
Parent (the "Spinoff"). Upon receipt of such notice, Parent shall effect the
Spinoff as promptly as practicable on terms and conditions that are reasonably
satisfactory to Investor. Prior to effecting the Spinoff, Parent shall enter
into ten-year affiliation agreements with the Spinoff Company that will provide
that the Spinoff Company shall broadcast programming produced by Parent on
customary terms and conditions, including arm's-length payment obligations. The
foregoing provisions shall not be deemed to amend the Holder Exchange Agreement
or waive any rights or obligations of Holder under the Holder Exchange
Agreement.


                                      -42-
   48

            9.15. Partnership Interest Purchase Agreement. Investor shall
perform its obligations in all material respects under the terms of the
Partnership Interest Purchase Agreement.

            9.16. USA Network Cash. Notwithstanding any other provision of this
Agreement, following the date hereof, Investor and its Affiliates shall only
sweep cash and shall manage payables and receivables relating to the business of
the Partnership in the ordinary course of business and consistent with past
practices. At the Closing, Investor shall cause to remain in the Partnership as
of the Closing Date $5 million. If, at the end of the 30-day period following
the Closing (the "Post Closing Period"), the cash flow of the Partnership during
the Post Closing Period (adding back cash expenditures for furniture, fixtures
and equipment and extraordinary items) is (a) less than zero, then Investor
shall contribute to the LLC an additional $5 million, (b) between zero and $5
million, then Investor shall contribute an amount equal to $5 million minus the
cash flow or (c) more than $5 million, then Investor shall have no further
obligation to contribute additional cash to the LLC. During the Post Closing
Period, Parent will operate the Partnership in a manner consistent with past
practice for matters relating to cash and shall not intentionally take or fail
to take any action for purposes of affecting the foregoing calculation. In
determining the cash flow during the Post Closing Period, as well as the $5
million to remain in the Partnership as of the Closing, the following rules
shall also govern:

            (i) payments (net of attorneys' fees, accountant's fees and other
related costs, if any) received prior to the Closing by the Partnership relating
to that certain settlement of carriage fees between the Partnership and Comcast
Corporation ("Comcast Payments") shall be divided equally between Investor and
the Partnership, with the Partnership portion remaining in the Partnership at
the Closing but not included for purposes of the initial $5 million;

            (ii) Comcast Payments received after the Closing shall be for the
benefit of the Partnership only and shall not be included in measuring the cash
flow during the Post Closing Period; and

            (iii) payments by the Partnership to the former owners of the Sci-Fi
Channel in respect of deferred purchase price pursuant to agreements in place
prior to the date hereof shall (A) be included (to the extent of 50% of such
payments) in determining the initial $5 million and (B) shall not be deducted in
measuring the cash flow during the Post Closing Period.

            9.17. Consents. Promptly following the date hereof, Investor shall
make diligent efforts to identify those Material Contracts, assets and other
rights that are included in the UT Contributed Business or the Partnership and
the transfer of which to the LLC pursuant to this Agreement may in the
reasonable judgment of Investor require the consent, approval, waiver or other
action by a third party or otherwise would have been required to have been
included as an exception to Section 2.3(a) ("Consents"). Parent in consultation
with Investor shall thereafter identify those Consents which Parent elects to
attempt to obtain prior to the Closing Date. Investor shall use all reasonable
best efforts to obtain (but shall not be obligated to expend any funds in
connection therewith other than incidental expenses) such Consents.


                                      -43-
   49

            9.18. Viacom Non-Competition Covenant. Investor shall take all
reasonable efforts to enforce Article 7 ("Article 7") of the Partnership
Interest Purchase Agreement for the benefit of the LLC, including, without
limitation, promptly providing to Viacom Inc., at the written request of Parent
or the LLC, a notice of violation in accordance with Section 7.1(f) thereof, and
shall not amend, reduce, modify or waive any rights of Investor under Article 7
without the prior written consent of Parent. Investor shall promptly advise
Parent of any knowledge it may have of breaches of Article 7 and shall consult
closely with Parent regarding any actions to be taken in connection therewith.
Investor and Parent shall enter into appropriate agreements regarding the
conduct of any disputes relating to Article 7, including with respect to
reimbursement of expenses and management of the dispute, all of which shall be
consistent with the terms of Article 7 and Investor's rights thereunder. In the
event that Investor merges, consolidates or otherwise effects a transaction with
a third party that results in such party succeeding to Investor's rights under
Article 7, Investor shall obtain the written agreement of such party that it
will comply with Investor's obligations under this Section.

            9.19. Ownership of Licenses. Parent agrees that, so long as FCC
Regulations or other applicable law prohibits or limits the foreign ownership of
entities that directly hold broadcast licenses (in a manner that differs from
such prohibitions or limitations if held indirectly), it will not directly hold
such licenses and shall do so through subsidiaries or other controlled
affiliates.

                                   ARTICLE 10.
                                   CONDITIONS

            10.1. Conditions to Investor's Obligations. The obligations
hereunder of Investor to consummate the Transactions, are subject to the
satisfaction, at or before the Closing, of each of the following conditions.
These conditions are for the sole benefit of Investor and may be waived by
Investor (in whole or in part) at any time in its sole discretion.

            (a) Subject to the final disclosure schedules delivered pursuant to
Section 9.11, the representations and warranties of Parent contained in Article
3 which are not qualified as to materiality shall be true and correct in all
material respects and the representations and warranties contained in Article 3
which are qualified as to materiality shall be true and correct, in each case,
as of the date when made and as of the Closing Date, as though made on such date
(except that representations and warranties made as of a specific date need be
true and correct only as of such date), and Investor shall have received a
certificate attesting thereto signed by a duly authorized officer or agent of
Parent.

            (b) Each of Parent, Sub and LLC shall have performed, satisfied and
complied with, in all material respects, all covenants, agreements, and
conditions required by this Agreement to be performed, satisfied or complied
with by it on or prior to the Closing Date, and Investor shall have received a
certificate attesting thereto signed by a duly authorized officer or agent of
Parent, Sub and LLC.


                                      -44-
   50

            (c) The waiting periods under the HSR Act applicable to the
Transactions shall have expired or have been terminated.

            (d) No temporary, preliminary or permanent injunction or any order
by any federal or state court of competent jurisdiction shall have been issued
which prohibits or otherwise seeks to prohibit, restrain, enjoin or delay the
consummation of any of the transactions contemplated by this Agreement.

            (e) Parent stockholders shall have approved the transactions
contemplated hereunder by the Requisite Stockholder Vote and the Certificate
Amendment shall have been duly filed and become effective.

            (f) There shall be no action, suit, investigation or proceeding
pending with, or to the knowledge of Investor, threatened by, any public or
governmental authority, against or affecting Parent or Investor or their
respective properties or rights, before any court, arbitrator or administrative
or governmental body which (a) seeks to restrain, enjoin or prevent the
consummation of the transactions contemplated by this Agreement, or (b)
challenges the validity or legality of any transactions contemplated by this
Agreement or seeks to recover damages or to obtain other relief in connection
with any such transactions.

            (g) BD shall not have ceased serving Parent as its Chief Executive
Officer.

            (h) Parent shall have duly obtained, received or effected (and all
applicable waiting and termination periods, if any, including any extensions
thereof, under any applicable law, statute, regulation or rule shall have
expired or terminated) all authorizations, consents, approvals, licenses,
franchises, permits and certificates by or of, and shall have made all filings
and effected all notifications, registrations and qualifications with, all
federal, state and local governmental and regulatory authorities necessary for
the consummation of the transactions contemplated hereby.

            (i) All corporate and other proceedings to be taken by Parent and
Sub in connection with the transactions contemplated by this Agreement and all
documents reflecting or evidencing such proceedings shall be reasonably
satisfactory in scope, form and substance to Investor and its legal counsel, and
Investor and its legal counsel shall have received all such duly executed
counterpart originals or certified or other copies of such documents and
instruments as they may reasonably request.

            (j) Investor Sub shall have acquired the Acquired Partnership
Interest in accordance with the terms of the Partnership Interest Purchase
Agreement.

            10.2. Conditions to Parent's Obligations. The obligations of Parent
and Sub hereunder to consummate the Transactions are subject to the
satisfaction, at or before the Closing, of each of the following conditions.
These conditions are for the sole benefit of Parent and Subsidiary and may be
waived (in whole or in part) at any time in their sole discretion.


                                      -45-
   51

            (a) Subject to the final disclosure schedules delivered pursuant to
Section 9.11, the representations and warranties of Investor and the Investor
Newcos contained in Article 2 hereof shall be true and correct in all material
respects and the representations and warranties contained in Article 2 which are
qualified as to materiality shall be true and correct, in each case, as of the
date when made and as of the Closing Date, as though made on such date (except
that representations and warranties made as of a specific date need be true and
correct only as of such date), and Parent shall have received a certificate
attesting thereto signed by Investor.

            (b) Each of Investor and each Investor Newco shall have performed,
satisfied and complied with, in all material respects, all covenants, agreements
and conditions required by this Agreement to be performed, satisfied or complied
with on or prior to the Closing Date, and Parent shall have received a
certificate attesting thereto signed by Investor and Investor Newco.

            (c) There shall be no action, suit, investigation or proceeding
pending with, or to the knowledge of Parent, threatened by, any public or
governmental authority, against or affecting the UT Contributed Business or the
Partnership or their respective properties or rights, before any court,
arbitrator or administrative or governmental body which (a) seeks to restrain,
enjoin or prevent the consummation of the transactions contemplated by this
Agreement, or (b) challenges the validity or legality of any transactions
contemplated by this Agreement or seeks to recover damages or to obtain other
relief in connection with any such transactions.

            (d) No temporary, preliminary or permanent injunction or any order
by any federal or state court of competent jurisdiction shall have been issued
which prohibits or otherwise seeks to prohibit, restrain, enjoin or delay the
consummation of any of the transactions contemplated by this Agreement.

            (e) Investor and its Subsidiaries and the Partnership, as
applicable, shall have duly obtained, received or effected (and all applicable
waiting and termination periods, if any, including any extensions thereof, under
any applicable law, statute, regulation or rule, shall have expired or
terminated) all authorizations, consents, approvals, licenses, franchises,
permits and certificates by or of, and shall have made all filings and effected
all notifications, registrations and qualifications with, all federal, state and
local governmental and regulatory authorities necessary for the consummation of
the transactions.

            (f) The waiting periods under the HSR Act applicable to the
Transactions shall have expired or have been terminated.

            (g) Parent's stockholders shall have approved the transactions
contemplated hereunder by the Requisite Stockholder Vote and the Certificate
Amendment shall have been duly filed and become effective.

            (h) All corporate and other proceedings to be taken by Investor and
the Investor Newcos in connection with the transactions contemplated by this
Agreement and all documents reflecting or evidencing such proceedings shall be
reasonably satisfactory in scope, form and substance to Parent and its legal
counsel, and Parent and its legal counsel shall have 


                                      -46-
   52

received all such duly executed counterpart originals or certified or other
copies of such documents and instruments as they may reasonably request.

            (i) Debt or equity financing shall have been obtained, on terms
reasonably acceptable to Parent, sufficient to pay the Cash Amount.

            10.3. Conditions to Holder's Obligations and Option. Subject to the
provisions of Section 1.5(f)(i)(A) (which specifies the only conditions
applicable to a purchase by Holder of LLC Shares for cash), Holder's obligation
to contribute assets at the Holder Closing shall be subject to the satisfaction,
at or before the closing, of appropriate conditions, to be mutually agreed upon
and based on Sections 10.1 (other than Sections 10.1(a)) and 10.2.

                                   ARTICLE 11.
                          SURVIVAL AND INDEMNIFICATION

            11.1. Survival. All representations, warranties and covenants and
agreements (other than those described in the penultimate sentence of this
paragraph) of the parties contained in this Agreement, including indemnity or
indemnification agreements contained herein, or in any Schedule hereto, or any
certificate, document or other instrument delivered in connection herewith shall
survive the Closing until March 31, 1999. No Action or proceeding may be brought
with respect to any of the representations and warranties, or any of the
covenants or agreements which survive until March 31, 1999 unless written notice
thereof, setting forth in reasonable detail the claimed misrepresentation or
breach of warranty or breach of covenant or agreement, shall have been delivered
to the party alleged to have breached such representation or warranty or such
covenant or agreement prior to March 31, 1999. Notwithstanding the foregoing,
Investor's indemnification obligations in respect of any breach of the
representations and warranties set forth in Article 8 hereof, or any related
Schedule, or other certificate, document or instrument delivered in connection
therewith, shall survive the Closing until the sixth anniversary of the Closing.
Those covenants or agreements that contemplate or may involve actions to be
taken or obligations in effect after the Closing shall survive in accordance
with their terms. Other than as set forth herein, indemnification pursuant to
this Article shall be the exclusive remedy for any breach of representations and
warranties in this Agreement by either party.

            11.2. Indemnification by Investor, Holder or Parent. (a) From and
after the Closing Date, Investor and its Subsidiaries shall jointly and
severally indemnify and hold harmless (i) Parent, Parent's Affiliates, each of
their respective directors, officers, employees and agents, and each of the
heirs, executors, successors and assigns of any of the foregoing (collectively,
the "Parent Indemnified Parties") from and against any and all damages, claims,
losses, expenses, costs, obligations, and liabilities including, without
limiting the generality of the foregoing, liabilities for all reasonable
attorneys' fees and expenses (including, but not limited to, attorney and expert
fees and expenses incurred to enforce the terms of this Agreement) net of tax
benefits and any recovery from any third party including, without limitation,
insurance proceeds and taking into account tax costs (collectively, "Loss and
Expenses") suffered, directly or indirectly (other than through any equity
interest in the LLC) by any Parent Indemnified Party, and (ii) the LLC and its
managers, officers, employees and agents, and each of the heirs, execu-


                                      -47-
   53

tors, successors and assigns of any of the foregoing (collectively, the "LLC
Indemnified Parties") from and against any and all Loss and Expenses suffered,
directly or indirectly by any LLC Indemnified Party by reason of, or arising out
of, (x) any breach of representation or warranty (without regard to any
materiality standard contained therein) made by Investor or any Investor Newco
pursuant to this Agreement (but excluding a breach of the representation
contained in Section 2.3(b) relating to a Consent), (y) any failure by Investor
or any Investor Newco to perform or fulfill any of its covenants or agreements
set forth in this Agreement (other than Sections 9.10 and 9.16), or (z) any
failure by Investor and its Subsidiaries to comply with the covenant contained
in Section 9.16 or to pay, perform or discharge any liabilities of the UT
Contributed Business other than the Assumed UT Liabilities but only (with
respect to items described in Sections 11.2(a)(x) and 11.2(a)(y)) to the extent
that the aggregate amount of all such Loss and Expenses of all such Parent
Indemnified Parties exceeds $50 million.

            (b) From and after the Closing Date, Holder and its Subsidiaries
shall jointly and severally indemnify and hold harmless (i) the Parent
Indemnified Parties from and against any and all Loss and Expenses suffered,
directly or indirectly (other than through any equity interest in the LLC) by
any Parent Indemnified Party, and (ii) the LLC Indemnified Parties from and
against any and all Loss and Expenses suffered, directly or indirectly by any
LLC Indemnified Party, by reason of, or arising out of, (x) any breach of
representation or warranty (without regard to any materiality standard contained
therein) made by Holder pursuant to this Agreement, or (y) any failure by Holder
to perform or fulfill any of its covenants or agreements set forth in this
Agreement but only to the extent that the aggregate amount of all such Loss and
Expenses of all such Parent Indemnified Parties exceeds $50 million.

            (c) From and after the Closing Date, Parent and its Subsidiaries
shall jointly and severally indemnify and hold harmless (i) Investor, Investor's
Affiliates, each of their respective directors, officers, employees and agents,
and each of the heirs, executors, successors and assigns of any of the foregoing
(collectively, the "Investor Indemnified Parties"), and (ii) Holder, Holder's
Affiliates, each of their respective directors, officers, employees and agents
and each of the heirs, executors, successors and assigns of any of the
foregoing, (collectively, the "Holder Indemnified Parties") from and against any
and all Loss and Expenses suffered, directly or indirectly by any Investor
Indemnified Parties, and (ii) the Holder Indemnified Parties from and against
any and all Loss and Expenses suffered, directly or indirectly by any Holder
Indemnified Party, by reason of, or arising out of, (x) any breach of
representation or warranty (without regard to any materiality standard contained
therein) made by Parent pursuant to this Agreement, (y) any failure by Parent to
perform or fulfill any of its covenants or agreements set forth in this
Agreement, or (z) any failure by Parent and its Subsidiaries to pay, perform or
discharge any liabilities (I) of the Contributed Businesses other than the
Assumed Liabilities or (II) of the Regulated Subsidiaries, but only (with
respect to items described in Sections 11.2(c)(x) and 11.2(c)(y)) to the extent
that the aggregate amount of all such Loss and Expenses of all such Investor
Indemnified Parties and Holder Indemnified Parties exceeds $50 million.

            (d) Except with respect to third-party claims being defended in good
faith or claims for indemnification with respect to which there exists a good
faith dispute, the indemni-


                                      -48-
   54

fying party shall satisfy its obligations hereunder within 30 days of receipt of
the indemnified party's notice of a claim under this Article 11.

            (e) The provisions of this Section 11.2 shall not affect the
obligations and benefits of the parties set forth in Sections 8.2 and 8.3 of
this Agreement.

            11.3. Third-Party Claims. If a claim by a third party is made
against an indemnified party (i.e., a Parent Indemnified Party, Investor
Indemnified Party, Holder Indemnified Party or LLC Indemnified Party), and if
such indemnified party intends to seek indemnity with respect thereto under this
Article, such indemnified party shall promptly notify the indemnifying party in
writing of such claims setting forth such claims in reasonable detail. The
indemnifying party shall have twenty (20) days after receipt of such notice to
undertake, through counsel of its own choosing and at its own expense, the
settlement or defense thereof, and the indemnified party shall cooperate with it
in connection therewith; provided, however, that the indemnified party may
participate in such settlement or defense through counsel chosen by such
indemnified party, provided that the fees and expenses of such counsel shall be
borne by such indemnified party unless the indemnified party shall have
reasonably determined that representation by the same counsel would be
inappropriate under the applicable standards of appropriate conduct due to
actual or potential differing interests between them, and in that event, the
fees and expenses of such counsel shall be paid by the indemnifying party. If
the indemnifying party assumes such defense, the indemnified party shall have
the right to participate in the defense thereof and to employ counsel, at its
own expense, separate from the counsel employed by the indemnifying party, it
being understood that the indemnifying party shall control such defense. In the
event that the indemnifying party assumes such defense, the indemnified party
shall cooperate with the indemnifying party in such defense and make available
to the indemnifying party, at the indemnifying party's expense, all pertinent
records, materials and information in its possession or under its control
relating thereto as is reasonably required by the indemnifying party. The
indemnified party shall not pay or settle any claim which the indemnifying party
is contesting without the prior written consent of the indemnifying party, which
consent shall not be unreasonably withheld. The indemnifying party shall not
settle any claim unless it contains an unconditional release of the indemnified
party from any and all liability with respect to such third party claim without
the prior written consent of the indemnifying party, which consent shall not be
unreasonably withheld. Notwithstanding the foregoing, the indemnified party
shall have the right to pay or settle any such claim, provided that in such
event it shall waive any right to indemnity therefor by the indemnifying party.
If the indemnifying party does not notify the indemnified party within twenty
(20) days after the receipt of the indemnified party's notice of a claim of
indemnity hereunder that it elects to undertake the defense thereof, the
indemnified party shall have the right to contest, settle or compromise the
claim but shall not thereby waive any right to indemnity therefor pursuant to
this Agreement.


                                      -49-
   55

                                   ARTICLE 12.
                            TERMINATION; LIQUIDATION

            12.1. Termination by Mutual Written Consent. This Agreement may be
terminated and the transactions contemplated hereby may be abandoned, for any
reason, at any time prior to the Closing Date, by the mutual written consent of
the Parties.

            12.2. Termination by Parent or Investor. This Agreement may be
terminated and the transactions contemplated hereby may be abandoned by action
of Parent or Investor if and to the extent that (a) the Closing shall not have
occurred at or prior to 5:00 p.m., Eastern time, on June 30, 1998; provided,
however, that the right to terminate this Agreement under this Section 12.2
shall not be available to any party whose failure to fulfill any obligation
under this Agreement has been the cause of, or resulted in, the failure of the
Closing Date to occur on or before such date; or (b) any court or governmental
authority of competent jurisdiction shall have issued an order, decree, writ or
ruling or taken any other action, or there shall be in effect any statute, rule
or regulation permanently restraining, enjoining or otherwise prohibiting the
Transactions.

            12.3. Termination by Parent. This Agreement may be terminated and
the transactions contemplated hereby may be abandoned by action of Parent, at
any time prior to the Closing Date, if (a) Investor or its Affiliates shall have
failed to comply in any material respect with any of the covenants or agreements
contained in this Agreement to be complied with or performed by Investor and its
Affiliates at or prior to such date of termination, and Investor shall not,
within a reasonable period of time after notice of such failure, have cured or
commenced prompt and diligent measures which would promptly cure such failure,
(b) there shall have been a misrepresentation or breach by Investor with respect
to any representation or warranty made by it in this Agreement which would
entitle Parent not to consummate the Transactions and such misrepresentation or
breach cannot be cured prior to the Closing Date or (c) on or before the close
of business on November 17, 1997 if Parent shall not be reasonably satisfied
with the results of its due diligence investigation of the Partnership and the
UT Contributed Business and shall have determined, in its reasonable good faith
judgment, that the net adverse effect of the total mix of the additional
information not otherwise known to it prior to the date of this Agreement,
individually or in the aggregate, would materially decrease the economic benefit
of the Transactions to Parent (after giving effect to any increases in value
that are attributable to positive aspects of any additional information first
made known to Parent after the date of this Agreement).

            12.4. Termination by Investor. This Agreement may be terminated and
the transactions contemplated hereby may be abandoned by action of Investor, at
any time prior to the Closing Date, if (a) Parent or its Subsidiaries shall have
failed to comply in any material respect with any of the covenants or agreements
contained in this Agreement to be complied with or performed by Parent and its
Affiliates at or prior to such date of termination and Parent shall not, within
a reasonable period of time after notice of such failure, have cured or
commenced prompt and diligent measures which would promptly cure such failure,
(b) there shall have been a misrepresentation or breach by Parent with respect
to any representation or warranty made by it


                                      -50-
   56

in this Agreement which would entitle Investor not to consummate the
Transactions and such misrepresentation or breach cannot be cured prior to the
Closing Date, (c) BD shall have ceased serving Parent as its Chief Executive
Officer, (d) the Fair Market Value (as defined in the Stock Exchange Agreement,
dated May 20, 1997, between Paul Allen ("Allen") and Parent) during any seven
out of the nine consecutive trading days ending on the third trading day
immediately prior to the Closing Date would not have resulted in the
extinguishment of Parent's obligation to issue additional Parent Common Stock to
Allen or (e) on or before the close of business on November 17, 1997 if Investor
shall not be reasonably satisfied with the results of its due diligence
investigation of the Contributed Businesses and shall have determined, in its
reasonable good faith judgment, that the net adverse effect of the total mix of
the additional information not otherwise known to it prior to the date of this
Agreement, individually or in the aggregate, would materially decrease the
economic benefit of the Transactions to Investor (after giving effect to any
increases in value that are attributable to positive aspects of any additional
information first made known to Investor after the date of this Agreement).

            12.5. Termination Following Closing. If not earlier terminated, the
provisions of this Agreement (other than Sections 1.6(a), 1.7, 1.8, 1.9, Article
8, Sections 9.4, 9.5, 9.6, 9.7, 9.9(c), (e), (f), (g), 9.10, 9.14, 9.18 and 9.19
and Articles 11 and 13 (other than Sections 13.2 and 13.3)) shall terminate on
the date all of the Exchange Options are exercised.

            12.6. Effect of Termination. In the event of termination of this
Agreement as provided herein prior to the Closing, this Agreement shall be of no
further force or effect, except (a) as provided in the last sentence of Section
9.5, this Section 12.6 and Article 13, each of which shall survive termination
of this Agreement, and (b) nothing herein shall relieve any party from liability
for any breach of this Agreement.

                                   ARTICLE 13.
                                     GENERAL

            13.1. Definitions. The capitalized terms used herein shall have the
respective meanings assigned to such terms set forth below (such definitions to
be equally applicable to both the singular and plural forms of the terms
defined):

            (a) "Acquired LLC Amount" shall mean a number of LLC Shares (if any)
equal to 35.75 million less the quotient obtained by dividing the amount of cash
(if any) payable pursuant to Section 1.5(b)(i)(A) by 40;

            (b) "Acquired Partnership Interest" shall mean that certain 50%
partnership interest in the Partnership acquired by Investor Sub pursuant to the
Partnership Interest Purchase Agreement;

            (c) "Additional Issuance" shall have the meaning set forth in
Section 1.7(a)(i);

            (d) "Additional Shares" shall have the meaning set forth in Section
1.7(a)(i);


                                      -51-
   57

            (e) "Affiliate" shall mean, with respect to any person, any direct
or indirect subsidiary of such person, and any other person that directly, or
through one or more intermediaries, is controlled by or is under common control
with such first person, and, if such a person is an individual, any member of
the immediate family (including parents, spouse and children) of such individual
and any trust whose principal beneficiary is such individual or one or more
members of such immediate family and any person who is controlled by any such
member or trust. As used in this definition, "control" (including, with
correlative meanings, "controlled by" and "under common control with") shall
mean possession, directly or indirectly, of power to direct or cause the
direction of management or policies (whether through ownership of securities or
partnership or other ownership interests, by contract or otherwise);

            (f) "Affiliation Agreements" shall have the meaning set forth in
Section 2.7;

            (g) "Agreement" shall have the meaning set forth in the Preamble;

            (h) "Allen" shall have the meaning set forth in Section 12.4;

            (i) "Ancillary Business Agreements" shall mean the agreements
attached as Exhibit C hereto (or any successor agreements);

            (j) "Assumed Liabilities" shall have the meaning set forth in
Section 1.4;

            (k) "Assumed UT Liabilities" shall have the meaning set forth in
Section 1.5;

            (l) "Assumptions" shall have the meaning set forth in Section
1.7(a)(i);

            (m) "Available Parent Amount" shall mean, as of a given date of
determination, the number equal to the difference between (x) the Holder Limit,
and (y) the number of Parent Common Shares then Owned (for purposes of the FCC
Regulations) by such holder of LLC Shares, giving effect to the voting power of
the stock Owned or to be Owned by such holder (and including, with respect to
Holder, all Parent Common Shares, held by the entities known as "BDTV
Entities");

            (n) "BD" shall mean Barry Diller;

            (o) "Beneficial Asset" shall have the meaning set forth in Section
1.11;

            (p) "Benefit Arrangements" shall have the meaning set forth in
Section 2.10(a);

            (q) "Business Employees" shall have the meaning set forth in Section
2.10(a);

            (r) "Cash Amount" shall mean a dollar amount equal to the difference
between (i) $4,075,000,000 and (ii) the product of (x) $40 and (y) the Stock
Amount;

            (s) "Certificate Amendment" shall have the meaning set forth in
Section 9.1(b);


                                      -52-
   58

            (t) "Closing" shall have the meaning set forth in Section 1.5;

            (u) "Closing Date" shall have the meaning set forth in Section 1.5;

            (v) "Code" shall mean the Internal Revenue Code of 1986, as amended;

            (w) "Consent Asset" shall have the meaning set forth in Section
1.11;

            (x) "Consents" shall have the meaning set forth in Section 9.17;

            (y) "Contingent Shares" shall have the meaning set forth in the
Holder Exchange Agreement;

            (z) "Continued Employee" shall have the meaning set forth in Section
9.9(d);

            (aa) "Contracts" shall mean all executory written agreements,
contracts, commitments, understandings and other instruments or arrangements;

            (bb) "Contribute" shall have the meaning set forth in Section 1.3;

            (cc) "Contributed Businesses" shall have the meaning set forth in
Section 1.3;

            (dd) "Current Programs" shall mean the "Current Programs" as defined
in Schedule 1.5 and, for purposes of Section 9.10, shall include all other
programming included in the UT Contributed Business produced during the
Determination Period (other than half-hour situation comedies) and derived from,
or which continues, a "Current Program" for purposes of Section 9.10;

            (ee) "Determination Period" shall have the meaning set forth in
Section 9.10(c);

            (ff) "disabled" shall have the meaning as to be defined in the
definitive Governance Agreement;

            (gg) "ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended;

            (hh) "ERISA Affiliate" shall have the meaning set forth in Section
2.10(d);

            (ii) "Excess Cash" shall mean cash held by an entity (including from
the proceeds of borrowings) on the last business day of each month which is
reasonably determined by such entity not to be needed by such entity to fund its
operations or repay indebtedness owed by such entity during the immediately
succeeding month;

            (jj) "Exchange Act" shall mean the Securities Exchange Act of 1934
and the regulations promulgated thereunder, each as amended;


                                      -53-
   59

            (kk) "Exchange Agreement" shall have the meaning set forth in
Section 6.1(a);

            (ll) "Exchange Options" shall have the meaning set forth in Section
6.1(a);

            (mm) "Exchange Options Shares" shall have the meaning set forth in
Section 6.1(b)(ii);

            (nn) "Exchange Shares" shall mean the Silver King Exchange Shares as
defined in the Holder Exchange Agreement;

            (oo) "Excluded Businesses" shall mean, at any time, the businesses
of Parent and its Subsidiaries other than the Contributed Businesses;

            (pp) "Excluded Issuance" shall mean any issuance of Parent Common
Stock (i) in a Sale Transaction, or (ii) which is "restricted stock" or the
ownership of which is otherwise subject to forfeiture ("Restricted Stock"),
provided that for purposes of this definition any stock covered by the
provisions of clause (ii) shall be deemed to have been issued on the date (the
"Lapse Date") the restrictions on such stock lapse or on which the stock is no
longer subject to forfeiture;

            (qq) "Excluded Sub" shall have the meaning set forth in Section 1.3;

            (rr) "Fair Market Value" for a security publicly traded in the
over-the-counter market (on either NASDAQ-NMS or NASDAQ) or on a recognized
exchange shall be the average closing price of such security for the three
trading days ending on the applicable day (or, if such day is not a trading day,
the trading day immediately preceding the applicable day), and for all other
securities or property "Fair Market Value" shall be determined, by a nationally
recognized investment banking firm which has not been engaged by Parent,
Investor, Holder (if Holder or a Holder Newco then holds LLC Shares), the holder
of stock of any Investor Newco (or Holder Newco, if applicable) or their
Affiliates for the prior three years selected by (i) Parent and (ii) Investor
and Holder (to the extent Holder at such time holds LLC Shares); provided that,
if Parent and Investor (or Investor and Holder, if applicable) cannot agree on
such an investment banking firm within 10 business days, such investment banking
firm shall be selected by a panel designated in accordance with the rules of the
American Arbitration Association. The fees, costs and expenses of the American
Arbitration Association and the investment banking firm so selected shall be
borne equally by the LLC and Investor (or Investor and Holder, if applicable);

            (ss) "FCC" shall mean the U.S. Federal Communications Commission;

            (tt) "FCC Regulations" shall have the meaning set forth in the
Holder Exchange Agreement;

            (uu) "GAAP" shall mean United States generally accepted accounting
principles;


                                      -54-
   60

            (vv) "Governance Agreement" shall have the meaning set forth in
Section 9.3;

            (ww) "Holder" shall have the meaning set forth in the Preamble;

            (xx) "Holder Agreements" shall have the meaning set forth in Section
3.2;

            (yy) "Holder Exchange Agreement" shall mean the Exchange Agreement,
dated as of December 20, 1996, by and between Parent and Holder;

            (zz) "Holder Indemnified Parties" shall have the meaning set forth
in Section 11.2(c);

            (aaa) "Holder Limit" shall mean the maximum number of Parent Common
Shares which the holder of the LLC Shares would, under the FCC Regulations then
in effect, then be permitted to Own (in accordance with FCC Regulations);

            (bbb) "Holder Mandatory Exchange" shall have the meaning set forth
in Section 1.9;

            (ccc) "HSR Act" shall mean the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the regulations promulgated
thereunder;

            (ddd) "Intangible Property" shall have the meaning set forth in
Section 2.8;

            (eee) "Interest Rate" shall mean (i) with respect to demand notes
representing loans which were funded from the proceeds of indebtedness owed to
entities other than Parent, its Subsidiaries and the LLC, the interest rate on
such indebtedness, (ii) with respect to demand notes representing loans the
proceeds of which are invested in interest bearing instruments issued by
entities other than Parent, its Subsidiaries and the LLC, the blended rate on
such instruments and (iii) with respect to demand notes representing all other
loans, 30-day LIBOR from time to time as determined on the first business day of
each month in accordance with the credit agreement of Parent in effect from time
to time (or if none is in effect, the last effective credit agreement) plus the
applicable margin set forth in such credit agreement;

            (fff) "Investor" shall have the meaning set forth in the Preamble;

            (ggg) "Investor Financial Statements" shall have the meaning set
forth in Section 2.9;

            (hhh) "Investor Indemnified Parties" shall have the meaning set
forth in Section 11.2(c);

            (iii) "Investor Newco" shall have the meaning set forth in Section
1.2;

            (jjj) "Investor Sub" shall have the meaning set forth in Section
1.5;


                                      -55-
   61

            (kkk) "Issue Price" shall mean the price per share equal to (i)
except as otherwise provided in clause (iii) below, in connection with an
underwritten offering of shares of Parent Common Shares, the initial price at
which the stock is offered to the public or other investors, (ii) in connection
with other sales of Parent Common Shares for cash (other than sales covered by
clause (iii) below), the cash price paid for such stock, (iii) in connection
with the issuance of Parent Common Shares for cash within 4 months of the
Closing, $40 per share, (iv) in connection with the deemed issuances of
Restricted Stock, the Fair Market Value of the stock on the Lapse Date (as
defined in the definition of "Excluded Issuance" below), (v) in connection with
the issuance of Parent Common Shares as consideration in an acquisition by
Parent (other than a Merger Transaction), the average of the Fair Market Value
of the stock for the five trading days ending on the third trading day
immediately preceding the closing of the acquisition and in case of a Merger
Transaction, $40 per share, (vi) in connection with a compensatory issuance of
shares of Parent Common Stock, in the case of Parent and its Affiliates, the
amount received per share by Parent, and with respect to Investor and Holder and
their respective Affiliates, the Fair Market Value of the Parent Common Stock,
and (vii) in all other cases, including, without limitation, in connection with
the issuance of Parent Common Shares pursuant to an option, warrant or
convertible security (other than in connection with the conversion of the Sub
Convertible Debt, in which case the Issue Price shall be $40 per share, or in
connection with issuances described in clause (vi) above), the Fair Market Value
of the Parent Common Shares on the date of issuance;

            (lll) "LLC" shall have the meaning set forth in Section 1.1;

            (mmm) "LLC Indemnified Parties" shall have the meaning set forth in
Section 11.2(a);

            (nnn) "LLC Operating Agreement" shall mean the LLC Operating
Agreement attached as Exhibit B hereto (or any successor agreement);

            (ooo) "LLC Shares" shall mean shares representing a proportionate
interest in the capital and profits and losses of the LLC;

            (ppp) "Licenses" means all licenses, permits, construction permits,
registrations, and other authorizations issued by any federal, state, or local
governmental authorities for use in connection with the conduct of the business
or operations of the relevant business, and all applications therefor, together
with any renewals, extensions, modifications, or additions thereto between the
date of this Agreement and the Closing Date;

            (qqq) "Liens" shall have the meaning set forth in Section 2.3;

            (rrr) "Loss and Expenses" shall have the meaning set forth in
Section 11.2(a);

            (sss) "Mandatory Purchase Event" shall have the meaning set forth in
Section 1.7(a)(ii);


                                      -56-
   62

            (ttt) "Mandatory Purchase Notice" shall have the meaning set forth
in Section 1.7(a)(ii);

            (uuu) "Material Adverse Effect" shall mean any event, occurrence,
fact, condition, change or effect that is materially adverse to the business,
operations, results of operations, prospects, condition (financial or
otherwise), properties (including intangible properties), assets (including
intangible assets) or liabilities of the relevant business, taken as a whole;

            (vvv) "Material Contracts" shall have the meaning set forth in
Section 2.7;

            (www) "Material Real Property" shall have the meaning set forth in
Section 2.5;

            (xxx) "Merger Transaction" shall have the meaning set forth in
Section 1.7(a)(iii);

            (yyy) "NASD" shall mean the National Association of Securities
Dealers;

            (zzz) "Owned LLC Amount" shall mean a number of LLC Shares equal to
the difference between (i) the Stock Amount and (ii) 6.75 million plus the
Acquired LLC Amount;

            (aaaa) "Owned Partnership Interest" shall mean that certain
partnership interest in the Partnership owned by Investor since the inception of
the Partnership;

            (bbbb) "Parent" shall have the meaning set forth in the Preamble;

            (cccc) "Parent Balance Sheet" shall have the meaning set forth in
Section 3.8;

            (dddd) "Parent Balance Sheet Date" shall have the meaning set forth
in Section 3.8;

            (eeee) "Parent Benefit Arrangements" shall have the meaning set
forth in Section 3.10;

            (ffff) "Parent Certificate" shall have the meaning set forth in
Section 3.1;

            (gggg) "Parent Class B Stock" shall have the meaning set forth in
Section 3.2;

            (hhhh) "Parent Commission Documents" shall have the meaning set
forth in Section 3.8;

            (iiii) "Parent Common Shares" shall mean shares of Parent Common
Stock and Parent Class B Stock;

            (jjjj) "Parent Common Stock" shall have the meaning set forth in
Section 3.2;


                                      -57-
   63

            (kkkk) "Parent Employees" shall have the meaning set forth in
Section 3.10(a);

            (llll) "Parent ERISA Affiliate" shall have the meaning set forth in
Section 3.10(c);

            (mmmm) "Parent Form S-4" shall have the meaning set forth in Section
3.2;

            (nnnn) "Parent Form 10-K" shall have the meaning set forth in
Section 3.8;

            (oooo) "Parent Indemnified Parties" shall have the meaning set forth
in Section 11.2(a); 

            (pppp) "Parent LLC Shares Number" shall mean the aggregate number of
outstanding Parent Common Shares as of the fifth business day prior to the
Closing Date (assuming that all Parent Common Shares issuable pursuant to the
Contingent Shares and Exchange Shares have been issued and any Parent Common
Shares issued pursuant to a public offering consummated between the fifth
business day prior to Closing Date and the Closing Date are outstanding) less
8.25 million;

            (qqqq) "Parent Pension Plan" shall have the meaning set forth in
Section 3.10(b);

            (rrrr) "Parent Preferred Stock" shall have the meaning set forth in
Section 3.2;

            (ssss) "Parent Securities" shall mean Parent Common Shares and LLC
Shares;

            (tttt) "Parent Stock Number" shall mean 6.75 million;

            (uuuu) "Parties" shall have the meaning set forth in the Preamble;

            (vvvv) "Partnership" shall mean USA Networks, a New York
partnership;

            (wwww) "Partnership Agreement" shall have the meaning set forth in
Section 2.1;

            (xxxx) "Partnership Interest Purchase Agreement" shall mean the
Partnership Interest Purchase Agreement by and among Universal Studios, Inc.,
Universal City Studios, Inc., Viacom, Inc. and Eighth Century Corporation, dated
as of September 22, 1997;

            (yyyy) "Partnership Plans" shall have the meaning set forth in
Section 2.10(a);

            (zzzz) "Pension Plan" shall have the meaning set forth in Section
2.10(b);

            (aaaaa) "Permitted Liens" shall mean, collectively, (1) all
statutory or other liens for taxes or assessments which are not yet due or the
validity of which is being contested in 


                                      -58-
   64

good faith by appropriate proceedings, (2) all mechanics', materialmen's,
carriers', workers' and repairers' liens, and other similar liens imposed by
law, incurred in the ordinary course of business, which allege unpaid amounts
that are less than 30 days delinquent or which are being contested in good faith
by appropriate proceedings, and (3) all other Liens which do not materially
detract from or materially interfere with the marketability, value or present
use of the asset subject thereto or affected thereby;

            (bbbbb) "Post Closing Period" shall have the meaning set forth in
Section 9.16;

            (ccccc) "Programming Agreements" shall have the meaning set forth in
Section 2.7;

            (ddddd) "Real Property" shall mean real estate and buildings and
other improvements thereon and leases and leasehold interests, leasehold
improvements, fixtures and trade fixtures;

            (eeeee) "Redemption Price" shall have the meaning set forth in
Section 1.7(b);

            (fffff) "Regulated Subsidiaries" shall have the meaning set forth in
Section 1.11;

            (ggggg) "Requisite Stockholder Vote" shall mean the affirmative vote
of (x) the holders of a majority of the outstanding shares of Parent Common
Stock and Parent Class B Stock, voting as separate classes, to the amendment to
Parent's certificate of incorporation increasing the authorized capital stock,
and (y) the holders of a majority of the voting power represented by the
outstanding Parent Common Shares, voting together as a single class, voting at
the special meeting (provided a quorum is present under the NASD by-laws) for
the issuance of shares of Parent Common Stock in accordance with this Agreement;

            (hhhhh) "Sale Transaction" shall have the meaning set forth in
Section 6.1(b);

            (iiiii) "Securities Act" shall mean the Securities Act of 1933 and
the regulations promulgated thereunder, each as amended;

            (jjjjj) "Self Tender Offer" shall have the meaning set forth in
Section 6.2;

            (kkkkk) "Spinoff" shall have the meaning set forth in Section 9.14;

            (lllll) "Spinoff Company" shall have the meaning set forth in
Section 9.14;

            (mmmmm) "Statement" shall have the meaning set forth in Section
9.10;

            (nnnnn) "Stock Amount" shall mean an amount equal to 45% of the sum
of (i) the aggregate number of Parent Common Shares outstanding as of the fifth
business day prior to the Closing Date (assuming that all Parent Common Shares
issuable pursuant to the Contingent 


                                      -59-
   65

Shares and Exchange Shares have been issued), (ii) any shares issued pursuant to
a public offering consummated between the fifth business day prior to the
Closing Date and the Closing Date, (iii) 7.5 million and (iv) the Stock Amount;

            (ooooo) "Sub" shall have the meaning set forth in the Preamble;

            (ppppp) "Sub Convertible Debt" shall have the meaning set forth in
Section 1.7(a)(ii);

            (qqqqq) "Subsidiaries" shall mean, with respect to any person, each
of the direct or indirect subsidiary of such person;

            (rrrrr) "Tax Audit" shall have the meaning set forth in Section 8.7;

            (sssss) "Tender Number" shall have the meaning set forth in Section
6.2(c);

            (ttttt) "TKTM Agreements" shall have the meaning set forth in
Section 3.2;

            (uuuuu) "Transactions" shall have the meaning set forth in the
Preamble;

            (vvvvv) "Transferee" shall have the meaning set forth in Section
6.1;

            (wwwww) "Transition Services Agreement" shall have the meaning set
forth in Section 9.4;

            (xxxxx) "Unit" shall mean one LLC Share and one Preferred Share;

            (yyyyy) "UT Contributed Business" shall have the meaning set forth
in Section 1.5;

            (zzzzz) "U-TV Assets" shall have the meaning set forth in Section
9.10(b);

            (aaaaaa) "U-TV's EBITDA" shall have the meaning set forth in Section
9.10(b).

            13.2. Efforts to Proceed Promptly. Each of the Parties agrees to use
their respective reasonable best efforts to take all such action (including,
without limitation, executing such other agreements and instruments, and making
such filings, including filings required under the HSR Act) as may be necessary
or appropriate in order to effectuate the Transactions as promptly as
practicable. Each Party to this Agreement agrees to execute, acknowledge,
deliver, file and record such further certificates, amendments, instruments,
agreements and documents and to do all such other acts and things, as may be
required by law or as, in the opinion of the Parties, may be necessary or
advisable to carry out the intent and purposes of this Agreement. Each Party
agrees that it will act diligently and in good faith to carry out its respective
obligations under this Agreement.


                                      -60-
   66

            13.3. Maintenance of Business. Between the date of this Agreement
and the Closing, Parent and Sub agree that they shall continue to operate their
businesses in the customary and ordinary manner. Between the date of this
Agreement and the Closing, Investor agrees to operate the UT Contributed
Business in the customary and ordinary manner and to cause the Partnership to
operate its business in the customary and ordinary manner.

            13.4. Notices. Any notices, requests, demands or other
communications to be given by a Party hereunder shall be in writing and shall be
deemed to have been duly given when delivered personally or by facsimile
transmission, in either case with receipt acknowledged, or three days after
being sent by registered or certified mail, return receipt requested, postage
prepaid, addressed (until another address is supplied by notice duly given
hereunder) as follows:

            If given to Parent or Sub:

                  HSN, Inc.
                  1 HSN Drive
                  St. Petersburg, Florida 33729
                  Attention: General Counsel
                  Telephone: (813) 572-8585
                  Facsimile: (813) 573-0866

            with a copy to:

                  Wachtell, Lipton, Rosen & Katz
                  51 West 52nd Street
                  New York, New York 10019
                  Attention: Pamela S. Seymon, Esq.
                  Telephone: (212) 403-1000
                  Facsimile: (212) 403-2000

            If given to the Holder:

                  Liberty Media Corporation
                  8101 East Prentice Avenue
                  Suite 500
                  Englewood, Colorado 80111
                  Attention: President
                  Telephone: (303) 721-5400
                  Facsimile: (303) 841-7344


                                      -61-
   67

            with a copy to:

                  Baker & Botts, L.L.P.
                  599 Lexington Avenue
                  Suite 2900
                  New York, New York  10022-6030
                  Attention: Frederick H. McGrath, Esq.
                  Telephone: (212) 705-5000
                  Facsimile: (212) 705-5125

            If given to Investor or the Investor Newcos:

                  Universal Studios, Inc.
                  100 Universal City Plaza
                  Universal City, California  91608
                  Attention: Karen Randall, Esq.
                  Telephone: (818) 777-7100
                  Facsimile: (818) 866-3444

            with a copy to:

                  Simpson Thacher & Bartlett
                  425 Lexington Avenue
                  New York, New York  10017
                  Attention: John Finley, Esq.
                  Telephone: (212) 455-2000
                  Facsimile: (212) 455-2502

            13.5. Specific Enforcement. The Parties hereto recognize and agree
that, in the event that any of the provisions of this Agreement are not
performed in accordance with their specific terms or otherwise are breached,
immediate irreparable injury would be caused for which there is no adequate
remedy at law. It is accordingly agreed that in the event of a failure by a
party to perform its obligations under this Agreement, the nonbreaching party
shall be entitled to specific performance through injunctive relief to prevent
breaches of the provisions of this Agreement and to enforce specifically the
provisions of this Agreement in any action instituted in any court having
subject matter jurisdiction, in addition to any other remedy to which such party
may be entitled, at law or in equity.

            13.6. Severability. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable. The exercise of any rights or obligations
hereunder shall be subject to such rea-


                                      -62-
   68

sonable delay as may be required to prevent a party from incurring any liability
under the federal securities laws, and the parties agree to cooperate in good
faith in respect thereof.

            13.7. Entire Agreement. This Agreement, the schedules and exhibits
hereto and any documents delivered hereunder constitute the entire agreement
between the parties and supersede any prior agreement or understanding between
the parties with respect to the subject matter hereof. Except as specifically
set forth herein, nothing in this Agreement shall constitute a waiver, amendment
or termination of the terms of any Holder Agreement.

            13.8. Amendment; Waiver. Except as provided otherwise herein, this
Agreement may not be amended nor may any rights hereunder be waived except by an
instrument in writing signed by Investor and Parent, and Holder (but only to the
extent that any such amendment would adversely affect the rights and obligations
of Holder). Parent hereby agrees with Holder that it will not enter into or
permit any material amendment to, or waiver or modification of material rights
or obligations under, this Agreement (including the exhibits attached hereto)
without the prior written consent of Holder, which shall not be unreasonably
withheld.

            13.9. Headings; References. Article headings are inserted for
convenience and reference purposes only, and are not and shall not be deemed to
be a part of this Agreement or affect any meaning or interpretation hereof.
References herein to "the date hereof," "the date of this Agreement," and
similar references are to October 19, 1997.

            13.10. Expenses. Each Party shall pay all of its own legal and
accounting fees and other expenses incurred in connection with the negotiation,
preparation and execution of the Transactions and any agreements associated
therewith.

            13.11. Counterparts. This Agreement may be executed in one or more
counterpart copies and by facsimile; each of which shall be considered an
original, but together shall constitute one agreement.

            13.12. Governing Law. This Agreement and all matters collateral
hereto shall be governed by and construed in accordance with the laws of the
State of New York except as and to the extent such laws are superseded by the
Federal laws of the United States, including the rules, regulations and
published policies of the FCC. 

            13.13. Public Announcement. So long as this Agreement is in effect,
each of Parent and Investor agree to consult with the others before issuing any
press release or otherwise making any public statement with respect to the
Transactions; and neither Parent nor Investor (or their respective Affiliates)
will issue any press release or make any such public statement with respect to
the Transactions without the consent of the other Party, except as may be
required by law (including, without limitation, disclosure required in public
filings required to be made by Parent or any Affiliates of Investor) or the
requirements of any securities exchange.


                                      -63-
   69

            13.14. No Third Party Beneficiaries. Nothing contained in this
Agreement is intended to or shall confer upon any person other than the Parties
any rights or remedies hereunder.

                                   * * * * * *


                                      -64-
   70

            IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their proper and duly authorized officers as
of the day and year first above written.

                                       HSN, INC.


                                          /s/ Barry Diller           
                                       -----------------------------------------
                                       By:    Barry Diller
                                       Title: Chairman of the Board and
                                              Chief Executive Officer


                                       HOME SHOPPING NETWORK, INC.


                                          /s/ James G. Held        
                                       -----------------------------------------
                                       By:    James G. Held
                                       Title: President and Chief Executive 
                                              Officer


                                       UNIVERSAL STUDIOS, INC.,
                                       for itself and on behalf of certain of 
                                       its Subsidiaries


                                          /s/ Brian C. Mulligan        
                                       -----------------------------------------
                                       By:    Brian C. Mulligan
                                       Title: Senior Vice President


                                       LIBERTY MEDIA CORPORATION


                                          /s/ Robert R. Bennett
                                       -----------------------------------------
                                       By:    Robert R. Bennett
                                       Title: President


                                      -65-

   1
                                                                   Exhibit 99.33
                                                                   
                                                                [CONFORMED COPY]

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




                              GOVERNANCE AGREEMENT

                                      among

                                   HSN, Inc.,

                            Universal Studios, Inc.,

                            Liberty Media Corporation

                                       and

                                  Barry Diller

                          dated as of October 19, 1997




- --------------------------------------------------------------------------------
   2

                                TABLE OF CONTENTS

                                                                            Page
                                                                            ----

ARTICLE I         STANDSTILL AND VOTING..................................      2
                                                                              
Section 1.01       Acquisition of Voting Securities.......................     2
                                                                              
Section 1.02.      Restrictions on Transfer...............................     6
                                                                              
Section 1.03.      Further Restrictions on Conduct........................     9
                                                                              
Section 1.04.      Reports................................................    11
                                                                              
Section 1.05.      Transferees............................................    11
                                                                              
ARTICLE II        BOARD OF DIRECTORS AND RELATED MATTERS.................     12
                                                                              
Section 2.01.      Initial Composition of Board of Directors..............    12
                                                                              
Section 2.02.      Proportionate Representation...........................    12
                                                                              
Section 2.03.      Management of the Business.............................    16
                                                                              
Section 2.04.      Fundamental Changes....................................    16
                                                                              
Section 2.05.      Notice of Events.......................................    20
                                                                              
ARTICLE III       REPRESENTATIONS AND WARRANTIES.........................     21
                                                                              
Section 3.01.      Representations and Warranties of the Company..........    21
                                                                              
Section 3.02.      Representations and Warranties of the Stockholders.....    22
                                                                              
ARTICLE IV        DEFINITIONS............................................     23
                                                                              
Section 4.01.      "Affiliate"............................................    23
                                                                              
Section 4.02.      "Assumptions"..........................................     3
                                                                              
Section 4.03       "BDTV Entities"........................................     2
                                                                              
Section 4.04.      "Beneficial Ownership or Beneficially Own"...... ......    23
                                                                              
Section 4.05.      "CEO"..................................................    24
                                                                              
Section 4.06       "CEO Termination Date".................................     2
                                                                              
Section 4.07.      "Commission"...........................................    24
                                                                              
   3

Section 4.08.      "Consenting Party".....................................     2
                                                                              
Section 4.09.      "Demand Registration"..................................    25
                                                                              
Section 4.10.     "Disabled".............................................     25
                                                                              
Section 4.11.     "Equity Securities"....................................     25
                                                                              
Section 4.12.     "Exchange Act".........................................     25
                                                                              
Section 4.13.     "Exchange Agreement"...................................     25
                                                                              
Section 4.14      "FCC Regulations"......................................     26
                                                                              
Section 4.15.     "Independent Director".................................     26
                                                                              
Section 4.16.     "Liberty Director".....................................     26
                                                                              
Section 4.17.     "Ownership Percentage".................................     26
                                                                              
Section 4.18.     "Permitted Business Combination".......................     27
                                                                              
Section 4.19.     "Permitted Investment Percentage"......................     27
                                                                              
Section 4.20.     "Permitted Transferee".................................     27
                                                                              
Section 4.21.     "Person"...............................................     27
                                                                              
Section 4.22.     "Public Stockholder"...................................     27
                                                                              
Section 4.23.     "Right of First Refusal"...............................     28
                                                                              
Section 4.24.     "Satisfactory Nominee".................................     29
                                                                              
Section 4.25.     "Seagram"..............................................     29
                                                                              
Section 4.26.     "Securities Act".......................................     29
                                                                              
Section 4.27.     "Shares"...............................................     29
                                                                              

                                      -ii-
   4

Section 4.28.     "Stockholders Agreement"...............................     29
                                                                              
Section 4.29.     "Stockholders Group"...................................     30
                                                                              
Section 4.30.     "Subsidiary"...........................................     30
                                                                              
Section 4.31.     "Third Party Transferee"...............................     30
                                                                              
Section 4.32.     "13D Group"............................................     30
                                                                              
Section 4.33.     "Total Equity Securities"..............................     30
                                                                              
Section 4.34.     "Transfer".............................................     31
                                                                              
Section 4.35.     "Universal Director"...................................     31
                                                                              
ARTICLE V         MISCELLANEOUS..........................................     32
                                                                              
Section 4.39.     Amendments; No Waivers.................................     34
                                                                              
Section 5.3.      Successors and Assigns.................................     34
                                                                              
Section 5.4.      Governing Law; Consent to Jurisdiction.................     35
                                                                              
Section 5.5.      Counterparts; Effectiveness............................     36
                                                                              
Section 5.6.      Specific Performance...................................     36
                                                                              
Section 5.7.      Registration Rights....................................     36
                                                                              
Section 5.8.      Termination............................................     38
                                                                              
Section 5.10.     Severability...........................................     38
                                                                              
Section 5.11.     Cooperation............................................     38
                                                                              
Section 5.12.     Entire Agreement.......................................     38


                                     -iii-
   5

                              GOVERNANCE AGREEMENT

            Agreement dated as of October 19, 1997 among HSN, Inc., a Delaware
corporation ("HSNi" or the "Company"), Universal Studios, Inc., for itself and
on behalf of the members of its Stockholders Group ("Universal"), Liberty Media
Corporation, for itself and on behalf of the members of its Stockholders Group
("Liberty"), and Mr. Barry Diller ("Mr. Diller") for himself and on behalf of
the members of his Stockholders Group. Capitalized terms used herein without
definition have the meanings ascribed to such terms in the Transaction Agreement
(as hereinafter defined).

            WHEREAS, HSNi, Universal and Liberty are parties to an Investment
Agreement dated as of the date hereof (the "Transaction Agreement") pursuant to
which, among other things, subject to the terms and conditions contained in the
Transaction Agreement, Universal will acquire Beneficial Ownership (as defined
in Article IV hereof) of Parent Common Shares and LLC Shares (together, the
"Shares"), representing 45% (or such greater percentage as may result under
Section 1.5(e) or 1.5(f) of the Transaction Agreement) of the Total Equity
Securities immediately following the Closing (such percentage, the "Initial
Percentage") (the Initial Percentage or such Ownership Percentage as may be
permitted under the terms of this Agreement to be Beneficially Owned by
Universal from time to time being referred to herein as the "Permitted
Investment Percentage"), in exchange for the transfer of the UT Contributed
Business and the Partnership;

            WHEREAS, under the terms of the Transaction Agreement, Liberty may
at the Closing (or from time to time thereafter) acquire additional LLC Shares
and/or Parent Common Stock; and
   6

            WHEREAS, HSNi, Universal, Liberty and Mr. Diller desire to establish
in this Agreement certain terms and conditions concerning the acquisition and
disposition of securities of the Company by Universal, and certain additional
provisions concerning Universal's, Liberty's and Mr. Diller's relationships with
the Company, none of which shall become effective until the Closing.

            NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements contained herein, and intending to be legally bound
hereby, the Company, Universal, Liberty and Mr. Diller hereby agree, effective
as of the Closing, as follows:

                                    ARTICLE I

                              STANDSTILL AND VOTING

            Section 1.01. Acquisition of Voting Securities. (a) Until the fourth
anniversary of the Closing (the "Standstill Termination Date"), Universal
covenants and agrees that, except with the prior approval of the HSNi Board of
Directors (or the CEO so long as Mr. Diller is the CEO), neither Universal nor
its Affiliates will Beneficially Own any Equity Securities except for (i) the
Shares and (ii) additional Equity Securities of the Company acquired in
accordance with Article 1 of the Transaction Agreement. Notwithstanding anything
to the contrary contained in this Agreement (including the definition of
Permitted Investment Percentage), any Equity Securities purchased from Liberty
and Mr. Diller not in violation of the Stockholders Agreement shall be excluded
from the calculation of Universal's Ownership Percentage for purposes of
determining whether the Permitted Investment Percentage has been exceeded.

            (b) Following the Standstill Termination Date, subject to applicable
law (including FCC Regulations), the Permitted Investment Percentage shall be
increased to 50.1 


                                      -2-
   7

percent, and Universal may acquire Beneficial Ownership of an additional amount
of Equity Securities so long as its Ownership Percentage does not exceed the
Permitted Investment Percentage as so increased.

            (c) In addition to the foregoing, subject to compliance with
applicable law (including FCC Regulations), (i) on the first anniversary of the
Standstill Termination Date, the Permitted Investment Percentage shall be
increased to 57.5 percent, and Universal may acquire Beneficial Ownership of an
additional amount of Equity Securities so long as its Ownership Percentage does
not exceed the Permitted Investment Percentage as so increased (but in no event
shall Universal acquire more than 1.5 percent of the Total Equity Securities in
any 12-month period) and (ii) at any time following the CEO Termination Date,
Universal may propose to the Company's Board of Directors (and, subject to
Section 2.04, thereafter effect) the acquisition by Universal or its Affiliates
of the then outstanding Equity Securities not owned by Universal in a Permitted
Business Combination.

            (d) Except as expressly provided herein, neither Universal nor any
Affiliate thereof shall permit any entity in which it Beneficially Owns,
directly or indirectly, in excess of 50% of the outstanding voting securities
(regardless of whether Universal or such Affiliate acquires Beneficial Ownership
of such entity after the date of this Agreement) to Beneficially Own any Equity
Securities. Notwithstanding the foregoing, the acquisition (whether by merger,
consolidation or otherwise) by Universal or an Affiliate thereof of any entity
that Beneficially Owns Equity Securities shall not constitute a violation of the
Permitted Investment Percentage; provided that a significant purpose of any such
transaction is not to avoid the provisions of this Agreement; and provided
further that the provisions of paragraph (e) below are complied with.


                                      -3-
   8

            (e) Except as set forth in the next sentence, if at any time
Universal becomes aware that it and its Affiliates Beneficially Own more than
the Permitted Investment Percentage (including by virtue of acquisitions
referred to in paragraph (d) above), then Universal shall as soon as is
reasonably practicable (but in no manner that would require Universal to incur
liability under Section 16(b) of the Exchange Act) take all action necessary to
reduce the amount of Equity Securities Beneficially Owned by such Persons to an
amount not greater than the Permitted Investment Percentage. If the Ownership
Percentage of Universal and its Affiliates exceeds the Permitted Investment
Percentage solely by reason of repurchases of Equity Securities by the Company,
then, subject to the provisions of the Transaction Agreement, Universal shall
not be required to reduce the amount of Equity Securities Beneficially Owned by
such Persons.

            (f) If prior to the Standstill Termination Date, Mr. Diller no
longer serves as CEO (provided that if Mr. Diller no longer serves as CEO but
continues to hold a proxy from Universal in respect of Parent Common Shares
under the Stockholders Agreement, Mr. Diller shall not be deemed to no longer
serve as CEO until the later of (i) such time as he no longer serves as CEO and
(ii) such time as Mr. Diller no longer holds the Universal proxy, with the later
of such times being referred to as the "CEO Termination Date") or becomes
Disabled, the Standstill Termination Date shall be deemed to occur effective as
of the CEO Termination Date or such date that Mr. Diller becomes Disabled.

            (g) The restrictions on additional purchases of Equity Securities
described in this Section 1.01 shall terminate: (i) if any Person or group
(other than Universal or its Affiliates) Beneficially Owns more than 33-1/3% of
the outstanding Total Equity Securities; provided that this clause (i) shall not
apply (x) to Beneficial Ownership by Liberty and its Affiliates, if 


                                      -4-
   9

Universal amends, modifies or waives the standstill obligations of Liberty under
Section 2.1 of the Stockholders Agreement in a manner that would cause such
Beneficial Ownership by Liberty and its Affiliates not to be a violation of
Liberty's standstill obligations under Section 2.1 of the Stockholders Agreement
or Universal does not attempt in good faith to enforce such standstill
provisions, (y) to any Equity Securities Beneficially Owned by Mr. Diller but in
which he does not have a pecuniary interest or (z) if such Equity Securities
were acquired from the Company; and provided, however, that in calculating the
33-1/3% of the Total Equity Securities of any Person or group, any Equity
Securities transferred to such Person or group by Universal, Liberty or Mr.
Diller in accordance with the terms of the Stockholders Agreement shall be
disregarded if Universal elected not to purchase such Equity Securities after
being provided a reasonable opportunity to buy such Equity Securities or (ii) if
any Person or group (other than the Company, Universal or its Affiliates)
commences a tender or exchange offer for more than a majority of the outstanding
Total Equity Securities, provided that such termination of the foregoing
restriction shall only occur if (x) the Company's Board of Directors does not
recommend against the tender or exchange offer within the time frame under the
Exchange Act that the Board of Directors must legally respond and (y) in the
case of a tender or exchange offer by Liberty or its Affiliates in breach of its
or their standstill obligations under Section 2.1 of the Stockholders Agreement,
in addition to (x) above, Universal is unsuccessful after good faith efforts in
enforcing its rights against Liberty under Section 2.1 of the Stockholders
Agreement and, then, the foregoing restriction shall terminate only to the
extent necessary to permit Universal to commence a competing tender or exchange
offer; provided that if Universal has used such good faith efforts, such
restriction shall terminate no later than six business days prior to the
expiration date of a tender offer or exchange offer that has a reasonable
possibility of being consummated.


                                      -5-
   10

            (h) The Company agrees that to the extent that regulatory
restrictions prevent Universal from acquiring the levels of ownership permitted
under Article I of this Agreement, the Company will cooperate in good faith with
Universal in order to permit Universal to increase its Ownership Percentage.
Such cooperation may include without limitation exchanging additional LLC Shares
with Universal for Parent Common Shares. Notwithstanding the foregoing, the
Company shall not be required to take any action that would or could reasonably
be expected to have substantial adverse tax, accounting or financial
consequences to the Company or its Subsidiaries (including the LLC).

            Section 1.02. Restrictions on Transfer. (a) Prior to the Standstill
Termination Date, subject to the terms of the Stockholders Agreement, Universal
will not Transfer any Equity Securities except for: (i) Transfers of Parent
Common Stock in a widely dispersed public offering pursuant to exercise of the
registration rights set forth in Section 5.07 hereof; (ii) Transfers of Parent
Common Stock pursuant to Rule 144 under the Securities Act, provided that no
such Transfers under this clause (ii) are made to any Person (including its
Affiliates and any Person or entities which are, to Universal's knowledge after
inquiry of the Company, part of any 13D Group that includes such transferee or
any of its Affiliates) that, after giving effect to such Transfer, would, to the
knowledge of Universal, Beneficially Own Equity Securities representing more
than 5% of the Total Equity Securities (other than a Permitted Transferee);
(iii) Transfers of Equity Securities and/or LLC Shares (x) in accordance with
Sections 6.1(c) and 6.1(e) of the Transaction Agreement or the terms of the
Exchange Agreement pursuant to any tender or exchange offer to acquire Parent
Common Stock that the Company's Board of Directors does not recommend against
within the time frame under the Exchange Act that the Board of Directors must
le-


                                      -6-
   11

gally respond or (y) as contemplated by Section 6.1(b) of the Transaction
Agreement or the terms of the Exchange Agreement; (iv) Transfers of Parent
Common Stock to Matsushita Electric Industrial Co., Ltd. and to the public
stockholders of Seagram by means of a pro rata dividend or other pro rata
distribution; (v) Transfers of Parent Common Stock to any Permitted Transferee;
(vi) Transfers of Parent Common Stock in an aggregate amount up to 5% of the
Total Equity Securities to any institutional or financial investors, not
exercisable more often than on two occasions in any six-month period, under an
exemption from the Securities Act or pursuant to registration rights from the
Company; (vii) Transfers of Equity Securities and/or LLC Shares to the Company
or a Subsidiary of the Company pursuant to a self tender offer or otherwise by
the Company; (viii) pledges of (or granting security interests in) Parent Common
Stock in connection with bona fide financings with a financial institution
(provided that such financial institution agrees that, upon exercise of its
rights, the Parent Common Stock would continue to be subject to the restrictions
on transfer contained herein); and (ix) Transfers of Equity Securities and/or
LLC Shares by Universal to any of its controlled Affiliates, provided that such
Affiliate becomes a signatory to this Agreement.

            (b) If the CEO Termination Date has occurred or Mr. Diller becomes
Disabled, the Universal transfer restrictions set forth in paragraph (a) of this
Section 1.02 shall terminate immediately, subject to a Right of First Refusal in
favor of the Company (which Right of First Refusal shall apply so long as
Universal Beneficially Owns, directly or indirectly, Equity Securities
representing 20% or more of the Total Equity Securities irrespective of the
occurrence of the Standstill Termination Date and Mr. Diller's status with the
Company but secondary to the rights of first refusal provided for in the
Stockholders Agreement), provided that the Right of First Re-


                                      -7-
   12

fusal shall not be applicable to any Transfers that would be permitted prior to
the Standstill Termination Date.

            (c) No Transfers of the LLC Shares by Universal or Liberty to
non-Affiliates thereof shall be permitted, except as permitted pursuant to
Section 6.1 of the Transaction Agreement and the Exchange Agreement or between
each other and their respective Affiliates (subject to the terms of the
Stockholders Agreement). Universal and Liberty, as the case may be, must
exchange LLC Shares for Parent Common Shares prior to permitted Transfers,
except (i) as permitted pursuant to Section 6.1 of the Transaction Agreement and
the terms of the Exchange Agreement and (ii) for Transfers between Liberty and
Universal and their respective Affiliates not in violation of the Stockholders
Agreement to the extent that the applicable Transferee could not in accordance
with applicable law directly own the Parent Common Shares into which such LLC
Shares are exchangeable. To the extent provided for by the Stockholders
Agreement, (x) so long as the CEO Termination Date has not occurred and Mr.
Diller has not become Disabled, prior to permitted Transfers, Universal and
Liberty must offer Mr. Diller (or his designee) the opportunity to exchange
Parent Class B Stock owned by Universal or Liberty, as the case may be, for
Parent Common Stock, and (y) to the extent that, in accordance with the
Stockholders Agreement or otherwise, Mr. Diller (or his designee) does not
exchange Parent Common Stock for Parent Class B Stock (or if the CEO Termination
Date has occurred or Mr. Diller is Disabled), Parent Class B Stock to be
transferred by Universal must be converted into Parent Common Stock unless the
transferee agrees to be bound by the restrictions contained in Article I herein
then applicable to Universal to the extent that the transferee Beneficially Owns
at least 10% of the voting power of the outstanding Voting Securities.


                                      -8-
   13

            Section 1.3. Further Restrictions on Conduct. Universal covenants
and agrees that until the CEO Termination Date or such time as Mr. Diller
becomes Disabled:

            (a) except by virtue of Universal's representation on the Board of
      Directors of the Company and as otherwise contemplated under this
      Agreement and the other agreements contemplated by the Transaction
      Agreement or as otherwise permitted by the Board of Directors of the
      Company or the CEO so long as Mr. Diller is CEO, neither Universal nor any
      Affiliate thereof will otherwise act, alone or in concert with others, to
      seek to affect or influence the control of the management or Board of
      Directors of the Company or the business, operations or policies of the
      Company (it being agreed that this paragraph shall not prohibit Universal,
      its Affiliates and their respective employees from engaging in ordinary
      course business activities with the Company);

            (b) other than to a Permitted Transferee, neither Universal nor any
      Affiliate thereof shall deposit any Equity Securities or LLC Shares in a
      voting trust or subject any Equity Securities or LLC Shares to any proxy,
      arrangement or agreement with respect to the voting of such securities or
      other agreement having similar effect, except for agreements or
      arrangements with a Permitted Designee reasonably acceptable to the other
      Stockholders and not inconsistent with or for the purpose of evading the
      terms of this Agreement or the Stockholders Agreement;

            (c) other than as is permitted by this Agreement, neither Universal
      nor any Affiliate thereof shall propose any merger, tender offer or other
      business combination involving the Company or any of its Affiliates
      (including the LLC); provided, that discus-


                                      -9-
   14

      sions relating to the possibility of such a proposal in which Mr. Diller
      participates shall not be deemed to be a breach of this covenant;

            (d) neither Universal nor any Affiliate thereof shall initiate or
      propose any stockholder proposal or make, or in any way participate in,
      directly or indirectly, any "solicitation" of "proxies" to vote, or seek
      to influence any Person with respect to the voting of, any Equity
      Securities, or became a "participant" in a "solicitation" (as such terms
      are defined in Regulation 14A under the Exchange Act) in opposition to the
      recommendation of the majority of the directors of the Company with
      respect to any matter except (i) in response to a solicitation by a third
      party and (ii) to facilitate a tender or exchange offer by Universal or an
      Affiliate permitted under Section 1.01(g)(ii) of this Agreement;

            (e) other than as is contemplated by this Agreement, the Transaction
      Agreement, the Stockholders Agreement and the other agreements
      contemplated by the Transaction Agreement, neither Universal nor any
      Affiliate thereof shall join a partnership, limited partnership, syndicate
      or other group, or otherwise act in concert with any other Person (other
      than a Permitted Transferee), for the purpose of acquiring, holding,
      voting or disposing of Equity Securities or LLC Shares, or otherwise
      become a "person" within the meaning of Section 13(d)(3) of the Exchange
      Act; and

            (f) neither Universal nor any Affiliate thereof shall, directly or
      indirectly, request that the Company or its Board of Directors amend or
      waive any of the provisions of this Section 1.03.


                                      -10-
   15

            Section 1.04. Reports. Universal shall deliver to the Company,
promptly after any acquisition or Transfer of Equity Securities representing
more than a 1% change in the Ownership Percentage, an accurate written report
specifying the amount and class of Equity Securities acquired or Transferred in
such transaction and the amount of each class of Equity Securities owned by
Universal and its Affiliates after giving effect to such transaction; provided,
however, that no such report need be delivered with respect to any such
acquisition or Transfer of Equity Securities by Universal or its Affiliates that
is reported in a statement on Schedule 13D filed with the Commission and
delivered to the Company by Universal in accordance with Section 13(d) of the
Exchange Act. The Company shall be entitled to rely on such reports and
statements on Schedule 13D for all purposes of this Agreement.

            Section 1.05. Transferees. No Third Party Transferee shall have any
rights or obligations under this Agreement, except as specifically provided for
in this Agreement and except that if such Third Party Transferee shall acquire
Beneficial Ownership of more than 5% of the outstanding Total Equity Securities
upon consummation of any Transfer or series of related Transfers from a
Stockholder, to the extent such Stockholder assigns such right in connection
with a Transfer, such Third Party Transferee shall have the right to initiate
one or more Demand Registrations pursuant to Section 5.07 or any registration
rights agreement that replaces or supersedes Section 5.07 (and shall be entitled
to such other rights that a Stockholder would have applicable to such Demand
Registration), subject to the obligations of such Stockholder applicable to such
demand (and the number of Demand Registrations to which such Stockholder is
entitled under Section 5.07 hereof shall be correspondingly decreased).


                                      -11-
   16

                                   ARTICLE II

                     BOARD OF DIRECTORS AND RELATED MATTERS

                                

            Section 2.01. Initial Composition of Board of Directors. Prior to 
the Closing, the HSNi Board of Directors shall take such action as is required 
under applicable law to cause to be elected to the HSNi Board of Directors, 
effective upon the Closing, four Satisfactory Nominees, of whom no more than 
one shall be an Independent Director proposed by Universal and the remainder 
of whom shall be Universal Directors, each of whom shall be identified by 
Universal prior to the mailing of the proxy statement referred to in Section 
9.1 of the Transaction Agreement.

            Section 2.02. Proportionate Representation. (a) Following the
Closing, the Company shall use its best efforts to cause the composition of the
HSNi Board to continue to reflect the proportionate representation of Universal
Directors and Independent Director set forth in Section 2.02(b).

            (b) Following the Closing, the Company shall take such action as may
be required under applicable law to include in the slate of nominees recommended
by the HSNi Board of Directors and to otherwise cause to be elected to the HSNi
Board of Directors the number of Satisfactory Nominees that Universal shall be
entitled to nominate pursuant to this paragraph (b). The number of Satisfactory
Nominees which Universal shall be entitled to nominate at any annual meeting of
the Company's stockholders following the Closing shall be as follows:

                  (i)   X =   the amount of Equity Securities Beneficially
                              Owned by Universal and its controlled Affiliates
                              as of the record date for such annual meeting 


                                      -12-
   17

                        Y =   Total Equity Securities as of such date



                                                                     Number of
                                                                    Satisfactory
                                                                      Nominees
                                                                   
                        If X is equal to or more
                        than .40Y                            =           4
                        If X is less than .40Y but
                        equal to or more than .30Y           =           3
                        If X is less than .30Y but
                        equal to or more than .20Y           =           2
                        If X is less than .20Y but
                        equal to or more than .10Y           =           1
                        If X is less than .10Y               =           0


; provided, that following the CEO Termination Date or such time as Mr. Diller
becomes Disabled, the number of Satisfactory Nominees (without regard to the
proviso in the definition thereof) that Universal shall have the right to
nominate at any meeting of the Company's stockholders at which directors are to
be elected shall be at least the number of Satisfactory Nominees (without regard
to the proviso in the definition thereof) resulting from the provisions set
forth above.

            Whenever necessary to maintain the proportionality required by the
formulas set forth above, one or more, as appropriate, Satisfactory Nominees who
would otherwise stand for election at the next annual meeting of the Company's
stockholders (as agreed to by Universal and HSNi) shall not be included as a
nominee on the HSNi Board of Directors' slate of directors.

            (c) Other than as set forth in paragraph (b) above, the Company
shall cause each Satisfactory Nominee to be included in the slate of nominees
recommended by the Board of Directors to the Company's stockholders for election
as directors at each annual meeting of the 


                                      -13-
   18

stockholders of the Company and shall use all reasonable efforts to cause the
election of each such Satisfactory Nominee, including soliciting proxies in
favor of the election of such persons. Within a reasonable time prior to the
filing with the Commission of its proxy statement or information statement with
respect to each meeting of stockholders at which directors are to be elected,
the Company shall, to the extent such Person is entitled to representation on
the Company's Board of Directors in accordance with this Agreement, provide
Universal and Liberty, as applicable, with the opportunity to review and comment
on the information contained in such proxy or information statement applicable
to the director nominees designated by such Person.

            (d) In the event that a vacancy is created at any time by the death,
disability, retirement, resignation or removal (with or without cause) of any
Satisfactory Nominee or Liberty Director, Universal or Liberty, as the case may
be, shall have the right to designate a replacement Satisfactory Nominee or
Liberty Director to fill such vacancy, and the Company agrees to use its best
efforts to cause such vacancy to be filled with the replacement Satisfactory
Nominee or Liberty Director so designated. Upon the written request of Universal
or Liberty, each Stockholder shall vote (and cause each of the members of its
Stockholders Group (as defined in the Stockholders Agreement) to vote, if
applicable), or act by written consent with respect to, all Equity Securities
Beneficially Owned by it and otherwise take or cause to be taken all actions
necessary to remove the director designated by such requesting party and to
elect any replacement director designated by such party as provided in the first
sentence of this Section 2.02(d).

            (e) Except as permitted by the HSNi Board of Directors, the parties
agree that the HSNi directors who are Satisfactory Nominees shall not
participate in any action taken by the HSNi Board of Directors or the Company
relating to any business transaction between the Com-


                                      -14-
   19

pany and Universal (including its Affiliates), or relating to this Agreement or
the Transaction Agreement, including, without limitation, any amendment,
modification or waiver hereof or thereof.

            (f) Following the Closing, the parties agree that, at such time as
representation on the HSNi Board of Directors by representatives of Liberty is
not prohibited, the Company shall take such action as may be required under
applicable law and the HSNi Certificate of Incorporation and By-laws to include
two Liberty Directors in the slate of nominees recommended by the Board of
Directors and to otherwise cause to be elected to the HSNi Board of Directors
two Liberty Directors and, thereafter, to use all reasonable efforts to cause
the election of two Liberty Directors, with the provisions of paragraphs (c) and
(d) of this Section 2.02 applicable to Universal to apply, mutatis mutandis, to
Liberty. Liberty shall have the right to nominate up to two Liberty Directors so
long as the number of Equity Securities Beneficially Owned by Liberty is at
least equal to 100% of the number of Equity Securities Beneficially Owned by
Liberty immediately prior to the Closing (appropriately adjusted to reflect any
stock splits and the like) (so long as the Ownership Percentage of Liberty is at
least equal to the lesser of (x) 17% of the Total Equity Securities and (y) the
percentage that is five percentage points less than the percentage of the Total
Equity Securities Beneficially owned by Liberty immediately following the
Closing). Liberty shall have the right to nominate one Liberty Director so long
as Liberty Beneficially Owns a number of Equity Securities at least equal to
two-thirds of the number of Equity Securities Beneficially Owned by it
immediately prior to the Closing (appropriately adjusted to reflect any stock
splits and the like) (so long as Liberty's Ownership Percentage is at least
equal to 5% of the Total Equity Securities).


                                      -15-
   20

            Section 2.03. Management of the Business. Following the Closing and
except as indicated in Section 2.04 below, as required by Delaware law or the
Certificate of Incorporation of the Company and the By-Laws or as contemplated
by the Transaction Agreement and the agreements contemplated thereby, Mr.
Diller, so long as he is CEO and has not become Disabled, will continue to have
full authority to operate the day-to-day business affairs of the Company to the
same extent as prior to the Closing. The Executive Committee (or any similar
committee) of the Board will not be used in a manner that usurps the overall
responsibility of the Company's Board of Directors under Delaware law to manage
or direct the business and affairs of the Company.

            Section 2.04. Fundamental Changes. So long as (a) in the case of
Universal, the Ownership Percentage of Universal is at least 20 percent (or, in
the event that Universal has not transferred to a non-Affiliate Equity
Securities representing more than one-half of the Initial Percentage, 15
percent), (b) in the case of Liberty, Liberty Beneficially Owns at least
two-thirds of the number of Equity Securities Beneficially Owned by it
(including the Contingent Shares, the Exchange Shares and through its equity
ownership of BDTV Entities) immediately prior to the Closing (appropriately
adjusted to reflect any stock splits and the like) (so long as such Ownership
Percentage equals at least 5% of the Total Equity Securities), and (c) in the
case of Mr. Diller, Mr. Diller Beneficially Owns at least five million Parent
Common Shares with respect to which he has a pecuniary interest (appropriately
adjusted to reflect any stock splits and the like) and the CEO Termination Date
has not occurred and Mr. Diller has not become Disabled, neither the Company nor
any Subsidiary (including the LLC) shall take any of the actions set forth be-


                                      -16-
   21

low without the prior approval of Mr. Diller, Universal and/or Liberty (each, a
"Stockholder"), as applicable:

            (i) Any transaction not in the ordinary course of business,
      launching new or additional channels or engaging in any new field of
      business, in any case, which will result in, or will have a reasonable
      likelihood of resulting in, such Stockholder or any Affiliate thereof
      being required under law to divest itself of all or any part of its Equity
      Securities or LLC Shares, or interests therein, or any other material
      assets of such Person, or which will render such Person's continued
      ownership of such securities, shares, interests or assets illegal or
      subject to the imposition of a fine or penalty or which will impose
      material additional restrictions or limitations on such Person's full
      rights of ownership (including, without limitation, voting) thereof or
      therein.

            (ii) Acquisition or disposition (including pledges), directly or
      indirectly, by the Company or any of its Subsidiaries (including the LLC)
      of any assets (including debt and/or equity securities) or business (by
      merger, consolidation or otherwise), provided that the transactions
      contemplated by the Transaction Agreement, including the matters
      contemplated by Section 9.14 thereof (to the extent conducted in all
      material respects in accordance with the letter agreement relating to such
      matters dated as of the date hereof among Liberty, Universal and the
      Company, as such agreement may be amended or modified), shall not require
      the prior approval of Liberty pursuant to this Section 2.04, the grant or
      issuance of any debt or equity securities of the Company or any of its
      Subsidiaries (including the LLC, other than, in any of the foregoing, as
      contemplated by the Transaction Agreement and the Exchange Agreement or
      the Contingent Shares and the Ex-


                                      -17-
   22

      change Shares), the redemption, repurchase or reacquisition of any debt or
      equity securities of the Company or any of its Subsidiaries (including the
      LLC, other than as contemplated by the Transaction Agreement and the
      Exchange Agreement or the Contingent Shares and the Exchange Shares) by
      the Company or any such Subsidiary (including the LLC), or the incurrence
      of any indebtedness, or any combination of the foregoing, in any such
      case, in one transaction or a series of transactions in a six-month
      period, with a value of 10% or more of the market value of the Total
      Equity Securities at the time of such transaction, provided that the
      prepayment, redemption, repurchase or conversion of prepayable, callable,
      redeemable or convertible securities (including LLC Shares) in accordance
      with the terms thereof shall not be a transaction subject to this
      paragraph.

            (iii) For a five-year period following the Closing, disposition of
      any interest in the Partnership or, other than in the ordinary course of
      business, its assets, directly or indirectly (by merger, consolidation or
      otherwise), provided that matters set forth in this clause (iii) will not
      constitute a "Fundamental Change" with respect to Liberty and shall not
      require its approval unless it otherwise would constitute a "Fundamental
      Change" under one of the other items of this Section 2.04 with respect to
      which Liberty's consent is required.

            (iv) Disposition or issuance (including pledges), directly or
      indirectly, by the Company of any LLC Shares except as contemplated by the
      Transaction Agreement, the Governance Agreement, the Stockholders
      Agreement and the Exchange Agreement or pledges in connection with
      financings.


                                      -18-
   23

            (v) Voluntarily commencing any liquidation, dissolution or winding
      up of the Company or any material Subsidiary (including the LLC).

            (vi) Any material amendments (other than as contemplated by the
      Transaction Agreement and the Stockholders Agreement) to the Certificate
      of Incorporation or Bylaws of the Company (including the issuance of blank
      check preferred stock containing super voting rights or class votes on any
      matter (except to the extent such class vote is required by Delaware law
      or to the extent the holder of such preferred stock may have the right to
      elect directors upon the occurrence of a default in payment of dividends
      or a redemption price)) or to the operating agreement or bylaws of the
      LLC.

            (vii) Engagement by the Company or the LLC in any line of business
      other than media, communications and entertainment products, services and
      programming, and electronic retailing, or other businesses engaged in by
      the Company as of the date hereof or as contemplated by the Transaction
      Agreement, provided, that neither the Company nor the LLC shall engage in
      theme park, arcade or film exhibition businesses so long as Universal is
      restricted from competing in such lines of business under non-compete or
      similar agreements in effect on the date hereof and such agreements would
      be applicable to the Company and/or the LLC, as the case may be, by virtue
      of Universal's ownership therein, provided that the matters set forth in
      the foregoing proviso shall not constitute a "Fundamental Change" with
      respect to Liberty and shall not require its approval.

            (viii) Settlement of any litigation, arbitration or other proceeding
      which is other than in the ordinary course of business and which involves
      any material restriction on the 


                                      -19-
   24

      conduct of business by the Company or such Stockholder or any of their
      respective Affiliates or the continued ownership of assets by the Company
      or such Stockholder or any of their respective Affiliates.

            (ix) Engagement in any transaction (other than those contemplated by
      the Transaction Agreement) between the Company and its Affiliates
      (excluding Mr. Diller, Universal and Liberty), on the one hand, and 
      Mr. Diller, Universal or Liberty, and their respective Affiliates, on the
      other hand, subject to exceptions relating to the size of the proposed
      transaction and except for those transactions which are otherwise on an
      arm's-length basis.

            (x) Adopting any stockholder rights plan (or any other plan or
      arrangement that could reasonably be expected to disadvantage any
      stockholder on the basis of the size or voting power of its shareholding)
      that would adversely affect such Stockholder.

            (xi) Entering into any agreement with any holder of Equity
      Securities or LLC Shares in such stockholder's or interest holder's
      capacity as such, as the case may be, which grants such stockholder
      approval rights similar in type and magnitude to those set forth in this
      Section 2.04.

            (xii) Entering into any transaction that could reasonably be
      expected to impede the Company's ability to engage in the Spinoff or cause
      it to be taxable.

            Section 2.05. Notice of Events. In the event that (a) the Company
intends to engage in a transaction of a type that is described in any of
paragraphs (i) through (xii) of Section 


                                      -20-
   25

2.04, and (b) the Company does not intend to seek consent from those parties
that are required to consent to a Fundamental Change (a "Consenting Party") due
to the Company's good faith belief that the specific provisions of such
paragraphs do not require such consent but that reasonable people acting in good
faith could differ as to whether consent is required pursuant to such
paragraphs, the Company shall notify the Consenting Parties as to the material
terms of the transaction (including the Company's estimate of the timing
thereof) by written notice delivered as far in advance of engaging in such
transaction as is reasonably practicable unless such transaction was previously
publicly disclosed.

                                   ARTICLE III

                         REPRESENTATIONS AND WARRANTIES

            Section 3.01. Representations and Warranties of the Company. The
Company represents and warrants to Mr. Diller, Universal and Liberty that 
(a) the Company is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has the corporate power and
authority to enter into this Agreement and to carry out its obligations
hereunder, (b) the execution and delivery of this Agreement by the Company and
the consummation by the Company of the transactions contemplated hereby have
been duly authorized by all necessary corporate action on the part of the
Company and no other corporate proceedings on the part of the Company are
necessary to authorize this Agreement or any of the transactions contemplated
hereby, (c) this Agreement has been duly executed and delivered by the Company
and constitutes a valid and binding obligation of the Company, and, assuming
this Agreement constitutes a valid and binding obligation of each Stockholder,
is enforceable against the Company in accordance with its terms, (d) neither the
execution, delivery or performance of


                                      -21-
   26

this Agreement by the Company constitutes a breach or violation of or conflicts
with the Company's Certificate of Incorporation or By-laws or any material
agreement to which the Company is a party and (e) none of such material
agreements would impair in any material respect the ability of the Company to
perform its obligations hereunder.

            Section 3.02. Representations and Warranties of the Stockholders.
Each Stockholder, as to itself (and, in the case of Mr. Diller, as applicable),
represents and warrants to the Company and the other Stockholders that (a) it is
a corporation duly organized, validly existing and in good standing under the
laws of its jurisdiction of organization and he or it, as the case may be, has
the power and authority (corporate or otherwise) to enter into this Agreement
and to carry out his or its obligations hereunder, (b) the execution and
delivery of this Agreement by such Stockholder and the consummation by such
Stockholder of the transactions contemplated hereby have been duly authorized by
all necessary action on the part of such Stockholder and no other proceedings on
the part of such Stockholder are necessary to authorize this Agreement or any of
the transactions contemplated hereby, (c) this Agreement has been duly executed
and delivered by the Stockholder and constitutes a valid and binding obligation
of the Stockholder, and, assuming this Agreement constitutes a valid and binding
obligation of the Company, is enforceable against the Stockholder in accordance
with its terms, (d) neither the execution, delivery or performance of this
Agreement by such Stockholder constitutes a breach or violation of or conflicts
with its certificate of incorporation or by-laws (or similar governing
documents) or any material agreement to which such Stockholder is a party and
(e) none of such material agreements would impair in any material respect the
ability of such Stockholder to perform its obligations hereunder.


                                      -22-
   27

                                   ARTICLE IV

                                   DEFINITIONS

                                  
            For purposes of this Agreement, the following terms shall have the
following meanings:

            Section 4.01. "Affiliate" shall have the meaning set forth in Rule
12b-2 under the Exchange Act (as in effect on the date of this Agreement). For
purposes of this definition, Matsushita Electric Industrial Co., Ltd. ("MEI")
shall not be considered an Affiliate of Universal or any Subsidiary of Universal
so long as MEI does not materially increase its influence over Universal
following the date hereof, and natural persons (other than, in the case of
Universal, any descendant of Samuel Bronfman who is a director or executive
officer of Seagram) shall not be deemed to be Affiliates.

            Section 4.02. "Assumptions" shall have the meaning set forth in the
definition of Total Equity Securities.

            Section 4.03. "BDTV Entities" shall have the meaning specified in
the Stockholders Agreement.                                   

            Section 4.04. "Beneficial Ownership" or "Beneficially Own" shall
have the meaning given such term in Rule 13d-3 under the Exchange Act and a
Person's Beneficial Ownership of Parent Common Shares or LLC Shares shall be
calculated in accordance with the provisions of such Rule; provided, however,
that for purposes of determining Beneficial Ownership, (a) a Person shall be
deemed to be the Beneficial Owner of any Equity Securities (including any
Contingent Shares or Exchange Shares) which may be acquired by such Person
(disregarding any 
                                                                               

                                      -23-
   28

legal impediments to such Beneficial Ownership), whether within 60 days or
thereafter, upon the conversion, exchange or exercise of any warrants, options
(which options held by Mr. Diller shall be deemed to be exercisable), rights or
other securities (including LLC Shares) issued by the Company or any Subsidiary
thereof, (b) no Person shall be deemed to Beneficially Own any Equity Securities
solely as a result of such Person's execution of this Agreement (including by
virtue of holding a proxy with respect to such Equity Securities), the
Transaction Agreement or the Stockholders Agreement, or with respect to which
such Person does not have a pecuniary interest, and (c) Liberty shall be deemed
to be the Beneficial Owner of the proportionate number of Parent Common Shares
represented by Liberty's equity interest in a BDTV Entity (as defined in the
Stockholders Agreement); provided, further, that for purposes of calculating
Beneficial Ownership, the number of outstanding Parent Common Shares shall be
deemed to include the number of Parent Common Shares that would be outstanding
if all outstanding LLC Shares were exchanged for Parent Common Shares pursuant
to the Exchange Agreement and all Contingent Shares and Exchange Shares were
issued.

            Section 4.05. "CEO" shall mean the Chief Executive Officer of HSNi 
or any successor entity.

            Section 4.06. "CEO Termination Date" shall have the meaning 
specified in Section 1.01(f) of this Agreement.

            Section 4.07. "Commission" shall mean the Securities and Exchange
Commission.

            Section 4.08. "Consenting Party" shall have the meaning set forth in
Section 2.05 of this Agreement.


                                      -24-
   29

            Section 4.09. "Demand Registration" shall have the meaning set forth
in Section 5.07(b) of this Agreement.

            Section 4.10. "Disabled" shall mean the disability of Mr. Diller
after the expiration of more than 180 consecutive days after its commencement
which is determined to be total and permanent by a physician selected by
Universal (or, if the Universal Termination Date has occurred, by Liberty) and
reasonably acceptable to Mr. Diller, provided that Mr. Diller shall be deemed to
be disabled only following the expiration of 90 days following receipt of a
written notice from the Company and such physician specifying that a disability
has occurred if within such 90-day period he fails to return to managing the
business affairs of the Company. Total disability shall mean mental or physical
incapacity that prevents Mr. Diller from managing the business affairs of the
Company.

            Section 4.11. "Equity Securities" shall mean the equity securities
of the Company calculated on a Parent Common Stock equivalent basis, including
the Parent Common Shares, the Contingent Shares and the Exchange Shares and
those shares issuable upon exchange of the LLC Shares and upon exercise,
conversion or redemption of other securities of the Company not otherwise
included in this definition.

            Section 4.12. "Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended, and the rules and regulations of the Commission promulgated
thereunder.

            Section 4.13. "Exchange Agreement" shall mean the Exchange Agreement
dated as of October 19, 1997 by and among the Company, Universal and Liberty.


                                      -25-
   30

            Section 4.14. "FCC Regulations" shall mean as of any date, all
applicable federal communications statutes and all rules, regulations, orders,
decrees and written policies (including opinions and orders of the Federal
Communications Commission applicable to the stockholder or the Company and its
subsidiaries) as then in effect, and any interpretations or waivers thereof or
modifications thereto.

            Section 4.15. "Independent Director" shall mean a person independent
of and not an affiliate of Universal or Seagram, who is not an officer or
director of Universal or Seagram. No person proposed as an Independent Director
shall serve as a director unless such individual has such business or technical
experience, stature and character as is commensurate with service on the board
of a publicly held enterprise.

            Section 4.16. "Liberty Director" shall mean (a) any officer or
director of either Telecommunications, Inc. ("TCI") or Liberty designated by
Liberty to serve on the Company's Board of Directors, provided that the
Company's Board of Directors is not unable, in the exercise of its fiduciary
responsibilities, to recommend that the Company's stockholders elect such
individual to serve on the Company's Board of Directors, or (b) any other Person
designated by Liberty who is reasonably acceptable to the Company.

            Section 4.17. "Ownership Percentage" means, with respect to any
Stockholder, at any time, the ratio, expressed as a percentage, of (i) the Total
Equity Securities Beneficially Owned by such Stockholder (disregarding any legal
impediments to such Beneficial Ownership) and its Affiliates to (ii) the sum of
(x) the Total Equity Securities and (y) with respect to such Stockholder, any
Parent Common Shares included in clause (i) that are issuable upon conversion,
exchange or exercise of Equity Securities that are not included in clause (x).


                                      -26-
   31

            Section 4.18. "Permitted Business Combination" shall mean (x) a
tender or exchange offer by Universal or an Affiliate for all Parent Common
Shares that is accepted by a majority of the Company's Public Stockholders or
(y) a merger (other than a merger following a tender or exchange offer complying
with (x) above) involving the Company and Universal or any Affiliate thereof or
successor thereto that is approved, in addition to any vote required by law, by
a majority of the Company's Public Stockholders so long as, in the case of (x)
and (y) above, a committee of HSNi directors (excluding any Persons who are
Satisfactory Nominees and Liberty Directors pursuant to the terms of this
Agreement, as it may be amended, modified or waived from time to time, and any
other directors who have a conflict of interest) determines that the tender
offer, exchange offer or merger, as the case may be, is fair to the Company's
stockholders (other than Universal and its Affiliates).

            Section 4.19. "Permitted Investment Percentage" shall have the
meaning set forth in the preambles to this Agreement.

            Section 4.20. "Permitted Transferee" shall mean Liberty or Mr.
Diller and the members of their respective Stockholder Groups.

            Section 4.21. "Person" shall mean any individual, partnership, joint
venture, corporation, trust, unincorporated organization, government or
department or agency of a government.

            Section 4.22. "Public Stockholder" shall mean any stockholder of the
Company that, together with its Affiliates (a) has sole or shared voting power
with respect to Voting Securities representing no more than 10% of the voting
power on the applicable vote or (b) has sole or shared power to dispose of
Equity Securities representing no more than 10% of the Equity 


                                      -27-
   32

Securities to be tendered or exchanged in any applicable tender or exchange
offer, as the case may be.

            Section 4.23. "Right of First Refusal" shall mean the right of the
Company (or its designee) to purchase Equity Securities Beneficially Owned by
Universal under the circumstances and upon the terms described below and in
Section 1.02(b) of this Agreement. In the event that Universal desires to sell
Equity Securities Beneficially Owned by it to which the Right of First Refusal
applies and it has received a bona fide offer from a third party to purchase
such Equity Securities, Universal shall provide the Company with written notice
(the "Sales Notice") of the terms of such third party offer (including price,
conditions, the identity of such third party and the written contract providing
for such sale). The Company (or its designee) shall be entitled to, by written
notice delivered by the Company to Universal within 10 business days following
receipt of the Sales Notice (or in the case of a third party tender offer or
exchange offer, not later than five business days prior to the expiration date
of such offer, provided that all conditions to such offer (other than with
respect to the number of Equity Securities tendered) shall have been satisfied
or waived and the Sales Notice shall have been provided at least ten business
days prior to the expiration date of such offer), agree to purchase the Equity
Securities that are the subject of the Sales Notice for cash on the terms of the
third party offer if such offer is for cash or, if not for cash, the Fair Market
Value of the consideration to be paid pursuant to such third party offer, which
notice shall include the date scheduled for the closing of such purchase, which
date shall be no later than 60 days following delivery of such election notice.
If the Company does not deliver to Universal the written notice required
hereunder, agreeing to the purchase of the Equity Securities subject to the
Sales Notice, Universal shall be entitled to consummate the sale to the 


                                      -28-
   33

third party identified in, and on the terms and subject to the conditions set
forth in, the Sales Notice, provided such sale is consummated within 90 days
after the latest of (a) the expiration of the foregoing response time periods or
(b) the receipt by Universal of the election notice or, in the case of (a) or
(b), if later (i) five business days following receipt of all required
regulatory approvals; provided that the closing shall only be delayed pending
receipt of required regulatory approvals if (x) Universal and the proposed third
party transferee are using all reasonable efforts to obtain the required
regulatory approvals and (y) there is a reasonable prospect of receiving such
regulatory approvals or (ii) the expiration or termination of a third party
tender or exchange offer if the intended method of sale set forth in the Sales
Notice were such third party tender or exchange offer.

            Section 4.24. "Satisfactory Nominee" shall mean each person who is
either a Universal Director or an Independent Director proposed by Universal,
provided that in no case shall there be more than one Independent Director.

            Section 4.25. "Seagram" shall mean The Seagram Company Ltd.

            Section 4.26. "Securities Act" shall mean the Securities Act of
1933, as amended, and the rules and regulations of the Commission promulgated
thereunder.

            Section 4.27. "Shares" shall have the meaning set forth in the
preambles to this Agreement.

            Section 4.28. "Stockholders Agreement" shall mean the stockholders
agreement dated as of the date hereof among Liberty, Universal and Mr. Diller.


                                      -29-
   34

            Section 4.29. "Stockholders Group" shall mean (a) in respect of
Universal, the Universal Stockholders Group (as defined in the Stockholders
Agreement), (b) in respect of Liberty, the Liberty Stockholders Group (as
defined in the Stockholders Agreement) and (c) in respect of Diller, the Diller
Stockholders Group (as defined in the Stockholders Agreement).

            Section 4.30. "Subsidiary" shall mean, as to any Person, any
corporation at least a majority of the shares of stock of which having general
voting power under ordinary circumstances to elect a majority of the Board of
Directors of such corporation (irrespective of whether or not at the time stock
of any other class or classes shall have or might have voting power by reason of
the happening of any contingency) is, at the time as of which the determination
is being made, owned by such Person, or one or more of its Subsidiaries or by
such Person and one or more of its Subsidiaries.

            Section 4.31. "Third Party Transferee" shall have the meaning
ascribed to such term in the Stockholders Agreement.

            Section 4.32. "13D Group" shall mean any group of Persons acquiring,
holding, voting or disposing of Voting Securities which would be required under
Section 13(d) of the Exchange Act and the rules and regulations thereunder (as
in effect, and based on legal interpretations thereof existing, on the date
hereof) to file a statement on Schedule 13D with the Commission as a "person"
within the meaning of Section 13(d)(3) of the Exchange Act if such group
Beneficially Owned Voting Securities representing more than 5% of any class of
Voting Securities then outstanding.

            Section 4.33. "Total Equity Securities" at any time shall mean,
subject to the next sentence, the total number of the Company's outstanding
equity securities calculated on a 


                                      -30-
   35

Parent Common Stock equivalent basis (assuming (the "Assumptions") that all
Contingent Shares, Exchange Shares and Parent Common Shares issuable in respect
of the LLC Shares have been issued). Any Equity Securities Beneficially Owned by
a Person that are not outstanding Voting Securities but that, upon exercise,
conversion or exchange, would become Voting Securities (other than the
Contingent Shares, the Exchange Shares and the LLC Shares, which shall be deemed
to be outstanding Equity Securities for all purposes), shall be deemed to be
outstanding for the purpose of computing Total Equity Securities and the
percentage of the Equity Securities owned by such Person but shall not be deemed
to be outstanding for the purpose of computing Total Equity Securities and the
percentage of the Equity Securities owned by any other Person.

            Section 4.34. "Transfer" shall mean, directly or indirectly, to
sell, transfer, assign, pledge, encumber, hypothecate or similarly dispose of,
either voluntarily or involuntarily, or to enter into any contract, option or
other arrangement or understanding with respect to the sale, transfer,
assignment, pledge, encumbrance, hypothecation or similar disposition of, any
Parent Common Shares Beneficially Owned by such Stockholder or any interest in
any Parent Common Shares Beneficially Owned by such Stockholder, provided,
however, that, a merger or consolidation in which a Stockholder is a constituent
corporation shall not be deemed to be the Transfer of any Parent Common Shares
Beneficially Owned by such Stockholder (provided, that a significant purpose of
any such transaction is not to avoid the provisions of this Agreement). For
purposes of this Agreement, the conversion of Parent Class B Stock into Parent
Common Stock shall not be deemed to be a Transfer.

            Section 4.35. "Universal Director" shall mean any officer or
director of Universal or Seagram designated by Universal to 


                                      -31-
   36

serve on the Company's Board of Directors, provided that the Company's Board of
Directors is not unable, in the exercise of its fiduciary responsibilities to
the Company's stockholders, to recommend that the Company's stockholders elect
such individual to serve on the Company's Board of Directors.

            Section 4.36. "Voting Securities" shall mean at any particular time
the shares of any class of capital stock of the Company which are then entitled
to vote generally in the election of directors.

                                    ARTICLE V

                                  MISCELLANEOUS


            Section 5.01. Notices. All notices, requests and other
communications to any party hereunder shall be in writing (including telecopy)
and shall be given,                                              

            if to Universal, to:

                  Universal Studios, Inc.
                  100 Universal City Plaza
                  Universal City, California  91608
                  Attention: Karen Randall
                  Telephone: (818) 777-7100
                  Facsimile: (818) 866-3444

            with a copy to:

                  Simpson Thacher & Bartlett
                  425 Lexington Avenue
                  New York, New York  10017
                  Attention: John G. Finley
                  Telephone: (212) 455-2000
                  Facsimile: (212) 455-2502


                                      -32-
   37

            if to Liberty, to:

                  Liberty Media Corporation
                  8101 East Prentice Avenue
                  Suite 500
                  Englewood, Colorado  80111
                  Attention: President
                  Telephone: (303) 721-5400
                  Facsimile: (303) 841-7344

            with a copy to:

                  Baker & Botts, L.L.P.
                  599 Lexington Avenue
                  Suite 2900
                  New York, New York  10022-6030
                  Attention: Frederick H. McGrath
                  Telephone: (212) 705-5000
                  Facsimile: (212) 705-5125

                  if to Mr. Diller, to:

                  Barry Diller
                  1940 Coldwater Canyon Drive
                  Beverly Hills, California  90210
                  Telephone: (310) 246-1411
                  Facsimile: (310) 247-9153

                  if to the Company, to:

                  HSN, Inc.
                  1 HSN Drive
                  St. Petersburg, Florida  33729
                  Attention: General Counsel
                  Telephone: (813) 572-8585
                  Facsimile: (813) 573-0866

                  with a copy to:

                  Wachtell, Lipton, Rosen & Katz
                  51 West 52nd Street
                  New York, New York  10019
                  Attention: Pamela S. Seymon
                  Telephone: (212) 403-1000
                  Facsimile: (212) 403-2000

or such address or facsimile number as such party may hereafter specify for the
purpose by notice to the other parties hereto. Each such notice, request or
other communication shall be effec-


                                      -33-
   38

tive when delivered personally, telegraphed, or telecopied, or, if mailed, five
business days after the date of the mailing.

            Section 5.02. Amendments; No Waivers. (a) Any provision of this
Agreement may be amended or waived if, and only if, such amendment or waiver is
in writing and signed, in the case of an amendment, by the party whose rights or
obligations hereunder are affected by such amendment, or in the case of a
waiver, by the party or parties against whom the waiver is to be effective.
Approval by Liberty of any amendment to this Agreement (or any waiver of any
provision hereof) shall be required only if it relates to Section 1.05, Article
II or, provided Liberty Beneficially Owns at least 12 1/2% of the Total Equity
Securities, Sections 1.01 and 1.03(c) of this Agreement, or if such amendment or
waiver would adversely affect any rights of Liberty provided hereunder or under
the Stockholders Agreement. Any amendment or waiver by the Company shall be
authorized by a majority of the Board of Directors (excluding for this purpose
any director who is a Satisfactory Nominee or Liberty Director as provided for
in this Agreement).

            (b) No failure or delay by any party in exercising any right, power
or privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.

            Section 5.03. Successors and Assigns. Except as provided in Section
1.05, neither this Agreement nor any of the rights or obligations under this
Agreement shall be assigned, in whole or in part (except by operation of law
pursuant to a merger of Universal or Lib-


                                      -34-
   39

erty with another Person a significant purpose of which is not to avoid the
provisions of this Agreement), by any party without the prior written consent of
the other parties hereto. Subject to the foregoing, the provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and permitted assigns.

            Section 5.04. Governing Law; Consent to Jurisdiction. This Agreement
shall be construed in accordance with and governed by the internal laws of the
State of Delaware, without giving effect to the principles of conflicts of laws.
Each of the parties hereto hereby irrevocably and unconditionally consents to
submit to the non-exclusive jurisdiction of the courts of the State of Delaware,
for any action, proceeding or investigation in any court or before any
governmental authority ("Litigation") arising out of or relating to this
Agreement and the transactions contemplated hereby and further agrees that
service of any process, summons, notice or document by U.S. mail to its
respective address set forth in this Agreement shall be effective service of
process for any Litigation brought against it in any such court. Each of the
parties hereto hereby irrevocably and unconditionally waives any objection to
the laying of venue of any Litigation arising out of this Agreement or the
transactions contemplated hereby in the courts of the State of Delaware, and
hereby further irrevocably and unconditionally waives and agrees not to plead or
claim in any such court that any such Litigation brought in any such court has
been brought in an inconvenient forum. Each of the parties irrevocably and
unconditionally waives, to the fullest extent permitted by applicable law, any
and all rights to trial by jury in connection with any Litigation arising out of
or relating to this Agreement or the transactions contemplated hereby.


                                      -35-
   40

            Section 5.05. Counterparts; Effectiveness. This Agreement may be
signed in any number of counterparts, each of which shall be an original, with
the same effect as if the signatures thereto and hereto were upon the same
instrument. This Agreement shall become effective when each party hereto shall
have received counterparts thereof signed by the other parties hereto.

            Section 5.06. Specific Performance. The Company, Mr. Diller,
Universal and Liberty each acknowledges and agrees that the parties' respective
remedies at law for a breach or threatened breach of any of the provisions of
this Agreement would be inadequate and, in recognition of that fact, agrees
that, in the event of a breach or threatened breach by the Company, Universal or
Liberty of the provisions of this Agreement, in addition to any remedies at law,
Mr. Diller, Universal, Liberty and the Company, respectively, without posting
any bond shall be entitled to obtain equitable relief in the form of specific
performance, a temporary restraining order, a temporary or permanent injunction
or any other equitable remedy which may then be available.

            Section 5.07. Registration Rights. (a) Universal, Liberty and Mr.
Diller shall be entitled to customary registration rights relating to Parent
Common Stock (including the ability to transfer registration rights in
connection with the sale or other disposition of Parent Common Stock as set
forth in this Agreement).

            (b) If requested by a Stockholder, the Company shall be required
promptly to cause the Parent Common Stock owned by such Stockholder or its
Affiliates to be registered under the Securities Act in order to permit such
Stockholder or such Affiliate to sell such shares in one or more (but not more
than (i) in the case of Universal, six, (ii) in the case of Liberty, four 


                                      -36-
   41

and (iii) in the case of Mr. Diller, two) registered public offerings (each, a
"Demand Registration"). Each Stockholder shall also be entitled to customary
piggyback registration rights. If the amount of shares sought to be registered
by a Stockholder and its Affiliates pursuant to any Demand Registration is
reduced by more than 25% pursuant to any underwriters' cutback, then such
Stockholder may elect to request the Company to withdraw such registration, in
which case, such registration shall not count as one of such Stockholder's
Demand Registrations. If a Stockholder requests that any Demand Registration be
an underwritten offering, then such Stockholder shall select the underwriter(s)
to administer the offering, provided that such underwriter(s) shall be
reasonably satisfactory to the Company. If a Demand Registration is an
underwritten offering and the managing underwriter advises the Stockholder
initiating the Demand Registration in writing that in its opinion the total
number or dollar amount of securities proposed to be sold in such offering is
such as to materially and adversely affect the success of such offering, then
the Company will include in such registration, first, the securities of the
initiating Stockholder, and, thereafter, any securities to be sold for the
account of others who are participating in such registration (as determined on a
fair and equitable basis by the Company). In connection with any Demand
Registration or inclusion of a Stockholder's or its Affiliate's shares in a
piggyback registration, the Company, such Stockholder and/or its Affiliates
shall enter into an agreement containing terms (including representations,
covenants and indemnities by the Company and such Stockholder), and shall be
subject to limitations, conditions, and blackout periods, customary for a
secondary offering by a selling stockholder. The costs of the registration
(other than underwriting discounts, fees and commissions) shall be paid by the
Company. The Company shall not be required to register such shares if a
Stockholder would be permitted to sell the Parent Com-


                                      -37-
   42

mon Stock in the quantities proposed to be sold and at such time within a
three-month period under Rule 144 of the Securities Act or under another
comparable exemption therefrom.

            (c) If the Company and a Stockholder cannot agree as to what
constitutes customary terms within 10 days of such Stockholder's request for
registration (whether in a Demand Registration or a piggyback registration),
then such determination shall be made by a law firm of national reputation
mutually acceptable to the Company and such Stockholder.

            Section 5.9. Termination. Except as otherwise provided in this
Section, this Agreement shall terminate (a) prior to the Closing upon any
termination of the Transaction Agreement in accordance with its terms and (b)
thereafter, (i) as to Universal, at such time that Universal Beneficially Owns
Equity Securities representing less than 10% of the Total Equity Securities,
(ii) as to Liberty, at such time that Liberty Beneficially Owns Equity
Securities representing less than 5% of the Total Equity Securities and (iii) as
to Mr. Diller, at such time that the CEO Termination Date has occurred or at
such time as he becomes Disabled. In respect of "Fundamental Changes," such
provisions shall terminate as to Mr. Diller, Universal and Liberty as set forth
therein, and a Stockholder's registration rights shall terminate when such
Stockholder can sell all its shares under Rule 144 under the Securities Act,
except as provided in Section 1.05 of this Agreement.

            Section 5.10. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to be
invalid, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, provided that
the 


                                      -38-
   43

parties hereto shall negotiate in good faith to attempt to place the parties in
the same position as they would have been in had such provision not been held to
be invalid, void or unenforceable.

            Section 5.11. Cooperation. Each of Universal, Liberty and Mr. Diller
covenants and agrees with the other to use its reasonable best efforts to cause
the Company to fulfill the Company's obligations under this Agreement.

            Section 5.12. Entire Agreement. Except as otherwise expressly set
forth herein, this Agreement, the Stockholders Agreement, the Liberty Exchange
Agreement, the agreement relating to the Contingent Shares, the Transaction
Agreement and each of the other agreements contemplated by the Transaction
Agreement (including the letter agreement referenced in Section 2.04 hereof)
embody the complete agreement and understanding among the parties hereto with
respect to the subject matter hereof and supersede and preempt any prior
understandings, agreements or representations by or among the parties, written
or oral, that may have related to the subject matter hereof in any way
(including, without limitation, effective upon the Closing, all stockholders
agreements relating to HSNi (other than the Stockholders Agreement) between
Liberty and Mr. Diller). Without limiting the generality of the foregoing, to
the extent that any of the terms hereof are inconsistent with the rights or
obligations of any party under any other agreement with any other party, the
terms of this Agreement shall govern.


                                      -39-
   44

            IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.

                                       HSN, INC.


                                       By: /s/ Victor  A. Kaufman 
                                          -------------------------------------
                                          Title:  Office of the Chairman 


                                       UNIVERSAL STUDIOS, INC.


                                       By: /s/ Brian C. Mulligan 
                                          -------------------------------------
                                          Title: Senior Vice President


                                       LIBERTY MEDIA CORPORATION


                                       By: Robert R. Bennett 
                                          -------------------------------------
                                          Title: President and CEO


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


                                      -40-

   1
                                                                   Exhibit 99.34
                                                                [CONFORMED COPY]
- --------------------------------------------------------------------------------

                             STOCKHOLDERS AGREEMENT


                                      AMONG


                            UNIVERSAL STUDIOS, INC.,
                           LIBERTY MEDIA CORPORATION,
                                  BARRY DILLER,
                                    HSN, INC.
                                       AND
                            THE SEAGRAM COMPANY LTD.







                          DATED AS OF OCTOBER 19, 1997

- --------------------------------------------------------------------------------
   2
                                TABLE OF CONTENTS

                                                                            Page
                                                                            ----

                                    ARTICLE I

                                   DEFINITIONS

SECTION 1.1  Certain Defined Terms.........................................   1
SECTION 1.2  Other Defined Terms...........................................   9
SECTION 1.3  Other Definitional Provisions.................................  11
                                                                             
                                   ARTICLE II
                                                                             
                                   STANDSTILL

SECTION 2.1  Liberty Standstill with Universal.............................  11
                                                                             
                                   ARTICLE III
                                                                             
                              CORPORATE GOVERNANCE

SECTION 3.1  Liberty Board Representation..................................  12
SECTION 3.2  Certain Restrictions..........................................  12
SECTION 3.3  Voting on Certain Matters.....................................  13
SECTION 3.4  Restrictions on Other Agreements..............................  15
SECTION 3.5  Irrevocable Proxy of Universal................................  16
SECTION 3.6  Irrevocable Proxy of Liberty..................................  16
SECTION 3.7  Cooperation...................................................  17
                                                                             
                                   ARTICLE IV
                                                                             
                            TRANSFER OF COMMON SHARES

SECTION 4.1  Restrictions on Transfer by Liberty and Diller................  18
SECTION 4.2  Universal Purchase of Liberty Equity..........................  20
SECTION 4.3  Going-Private Transaction.....................................  24
SECTION 4.4  Diller Right to Put Shares....................................  25
SECTION 4.5  Tag-Along for Diller and Liberty for Transfers by Universal ..  29
SECTION 4.6  Tag-Along for Liberty for Transfers by Diller to Universal....  30
SECTION 4.7  Tag-Along for Liberty for Transfers by Diller to a Third Party  32
SECTION 4.8  Right of First Refusal between Universal and Diller...........  33
SECTION 4.9  Right of First Refusal between Liberty and Diller.............  35
SECTION 4.10  Right of First Refusal of Universal..........................  38
SECTION 4.11  Transfers of Class B Shares..................................  38
SECTION 4.12  Transferees..................................................  39
SECTION 4.13  Notice of Transfer...........................................  41
SECTION 4.14  Compliance with Transfer Provisions..........................  41
                                                                          
                                    ARTICLE V


                                       -i-
   3
                                                                         Page
                            BDTV ENTITY ARRANGEMENTS

SECTION 5.1  Management.................................................  41
SECTION 5.2  Treatment of Contingent Shares and Exchange Shares.........  42
SECTION 5.3  Changes to BDTV Structures.................................  42
SECTION 5.4  Transfers of BDTV Interests................................  42
                                                                          
                                   ARTICLE VI
                                                                          
                                  MISCELLANEOUS
                                                                          
SECTION 6.1  Conflicting Agreements.....................................  43
SECTION 6.2  Duration of Agreement......................................  43
SECTION 6.3  Further Assurances.........................................  44
SECTION 6.4  SCL Agreement to Cooperate.................................  44
SECTION 6.5  Amendment and Waiver.......................................  44
SECTION 6.6  Severability...............................................  45
SECTION 6.7  Effective Date.............................................  45
SECTION 6.8  Entire Agreement...........................................  45
SECTION 6.9  Successors and Assigns.....................................  45
SECTION 6.10  Counterparts..............................................  45
SECTION 6.11  Liabilities Under Federal Securities Laws.................  45
SECTION 6.12  Remedies..................................................  46
SECTION 6.13  Notices...................................................  46
SECTION 6.14  Governing Law; Consent to Jurisdiction....................  48
SECTION 6.15  Interpretation............................................  48
                                                                         

                                      -ii-
   4
                             STOCKHOLDERS AGREEMENT


            STOCKHOLDERS AGREEMENT dated as of October 19, 1997 among Universal
Studios, Inc., a Delaware corporation ("Universal"), for itself and on behalf of
the members of the Universal Stockholders Group, Liberty Media Corporation, a
Delaware corporation ("Liberty"), for itself and on behalf of the members of the
Liberty Stockholders Group, Barry Diller ("Diller"), for himself and on behalf
of the members of the Diller Stockholders Group, HSN, Inc., a Delaware
corporation (the "Company") (solely for purposes of Sections 4.4(g), 4.5(d) and
6.3) and The Seagram Company Ltd., a Canadian corporation ("SCL") (solely for
purposes of Sections 4.2(f) and 6.4). Capitalized terms used herein without
definition have the meanings ascribed to such terms in the Investment Agreement.

            WHEREAS, Universal, Liberty, the Company and Home Shopping Network,
Inc. have entered into an Investment Agreement, dated as of October 19, 1997 (as
amended and restated, as of December 18, 1997, the "Investment Agreement"),
pursuant to which (i) Universal will contribute certain domestic production and
distribution television production assets, and certain other television assets
to a newly formed subsidiary of the Company (the "LLC") in exchange for cash and
securities of the Company and the LLC, (ii) Liberty has the right under certain
circumstances to contribute assets to the LLC in exchange for securities of the
Company or the LLC and/or to purchase additional securities of the Company
and/or the LLC for cash, and (iii) Universal, Liberty, Diller and the Company
will enter into certain other agreements and arrangements referred to in the
Investment Agreement (collectively, the "Transactions");

            WHEREAS, the parties under the Investment Agreement have agreed that
Universal, Liberty, Diller, the Company (solely for purposes of Sections 4.4(g),
4.5(d) and 6.3) and SCL (solely for purposes of Sections 4.2(f) and 6.4) shall
enter into this Agreement in order to specify certain of their respective rights
and obligations; and

            WHEREAS, the parties hereto desire to enter into certain
arrangements relating to the Company, to be effective as of the Closing, except
that the agreements in Section 3.3(e) shall be effective as of the date hereof.

            NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and obligations hereinafter set forth, the parties hereto hereby agree
as follows:


                                    ARTICLE I

                                   DEFINITIONS

            SECTION 1.1 Certain Defined Terms. As used herein, the following
terms shall have the following meanings:

            "Affiliate" means, with respect to any Person, any other Person that
directly, or indirectly through one or more intermediaries, controls, is
controlled by or is under common
   5
                                                                               2


control with, such specified Person, for so long as such Person remains so
associated to the specified Person. For purposes of this definition, (i)
Matsushita Electric Industrial Co., Ltd. ("MEI") shall not be considered an
Affiliate of Universal or any Subsidiary of Universal so long as MEI does not
materially increase its influence over Universal or any such Subsidiary
following the date hereof and (ii) natural persons shall not be deemed to be
Affiliates (other than, in the case of Universal, any descendant of Samuel
Bronfman who is a director or executive officer of SCL).

            "Agreement" means this Stockholders Agreement as it may be amended,
supplemented, restated or modified from time to time.

            "Approved Shares" has the meaning ascribed to such term in Exhibit A
to the Merger Agreement.

            "beneficial owner" or "beneficially own" has the meaning given such
term in Rule 13d-3 under the Exchange Act and a Person's beneficial ownership of
Common Shares, LLC Shares or Voting Securities shall be calculated in accordance
with the provisions of such Rule; provided, however, that for purposes of
determining beneficial ownership, (i) a Person shall be deemed to be the
beneficial owner of any equity (including all Contingent Shares and Exchange
Shares) which may be acquired by such Person (disregarding any legal impediments
to such beneficial ownership), whether within 60 days or thereafter, upon the
conversion, exchange or exercise of any warrants, options (which options held by
Diller shall be deemed to be exercisable, other than with respect to the Diller
Put), rights or other securities (including LLC Shares) issued by the Company or
any Subsidiary thereof, (ii) no Person shall be deemed to beneficially own any
equity solely as a result of such Person's execution of this Agreement
(including by virtue of holding a proxy with respect to any shares or having a
put obligation or call right with respect to any shares) or any other
Transaction Agreement, (iii) Liberty shall be deemed to be the beneficial owner
of the proportionate number of Common Shares represented by Liberty's equity
interest in a BDTV Entity, other than for purposes of Articles III and V of this
Agreement and (iv) Universal shall be deemed to be the beneficial owner of any
shares subject to an option pursuant to Section 4.1(d); provided, further, that
for purposes of calculating beneficial ownership, the number of outstanding
Common Shares of the Company shall be deemed to include the number of Common
Shares that would be outstanding if all outstanding LLC Shares were exchanged
for Common Shares pursuant to the Exchange Agreement and all Contingent Shares
and Exchange Shares were issued. Notwithstanding the foregoing, for purposes of
calculating the Minimum Stockholder Amount, a person shall be deemed to be the
beneficial owner only of outstanding Common Shares.

            "BDTV I" means BDTV, Inc., a Delaware corporation.

            "BDTV II" means BDTV II, Inc., a Delaware corporation.

            "BDTV III" means BDTV III, Inc., a Delaware corporation.
   6
                                                                               3


            "BDTV Entities" means, collectively, the BDTV Limited Entities and
the BDTV Unrestricted Entities.

            "BDTV Limited Entities" means, collectively, BDTV I and BDTV II.

            "BDTV Unrestricted Entities" means BDTV III and each other BDTV
Entity that may be formed subsequent to the date hereof; provided that each of
Liberty and Diller acknowledges and agrees that any corporation, partnership,
limited liability company or other business association hereafter formed by
Diller and Liberty to hold Common Shares will be a BDTV Unrestricted Entity and
will be a corporation, partnership, limited liability company or other business
association having a capital structure and governance rights substantially
similar to that of BDTV III.

            "Board" means the Board of Directors of the Company.

            "Business Day" shall mean any day that is not a Saturday, a Sunday
or other day on which banks are required or authorized by law to be closed in
The City of New York.

            "Capital Stock" means, with respect to any Person at any time, any
and all shares, interests, participations or other equivalents (however
designated, whether voting or non-voting) of capital stock, partnership
interests (whether general or limited) or equivalent ownership interests in or
issued by such Person.

            "Cause" means (i) the conviction of, or pleading guilty to, any
felony, or (ii) the wilful, continued and complete failure to attend to managing
the business affairs of the Company, after written notice of such failure from
the Board and reasonable opportunity to cure.

            "CEO" means the Chief Executive Officer of the Company.

            "CEO Termination Date" means the later of (i) such time as Diller no
longer serves as CEO and (ii) such time as Diller no longer holds the Universal
Proxy.

            "Class B Common Stock" means the Class B common stock, par value
$.01 per share, of the Company and any securities issued in respect thereof, or
in substitution therefor, in connection with any stock split, dividend or
combination, or any reclassification, recapitalization, merger, consolidation,
exchange or other similar reorganization (other than Common Stock).

            "Closing" has the meaning ascribed to such term in the Investment
Agreement.

            "Commission" means the Securities and Exchange Commission, and any
successor commission or agency having similar powers.

            "Common Shares" means, collectively, the Common Stock and the Class
B Common Stock.
   7
                                                                               4


            "Common Stock" means the common stock, par value $.01 per share, of
the Company and any securities issued in respect thereof, or in substitution
therefor, in connection with any stock split, dividend or combination, or any
reclassification, recapitalization, merger, consolidation, exchange or other
similar reorganization.

            "Contingent Right" means the right of Liberty HSN to receive the
Contingent Shares pursuant to the Merger Agreement.

            "Contingent Shares" means the shares of Class B Common Stock (or
other securities) which the Company is obligated to issue to Liberty HSN
following the Effective Time (as defined in the Merger Agreement) pursuant to
Exhibit A to the Merger Agreement.

            "control" (including the terms "controlled by" and "under common
control with"), with respect to the relationship between or among two or more
Persons, means the possession, directly or indirectly, of the power to direct or
cause the direction of the affairs or management of a Person, whether through
the ownership of voting securities, as trustee or executor, by contract or
otherwise.

            "Current Market Value" means, with respect to any security, the
average of the daily closing prices on the Nasdaq National Market (or the
principal exchange or market on which such security may be listed or may trade)
for such security for the 20 consecutive trading days commencing on the 22nd
trading day prior to the date as of which the Current Market Value is being
determined. The closing price for each day shall be the closing price, if
reported, or, if the closing price is not reported, the average of the closing
bid and asked prices as reported by the Nasdaq National Market (or such
principal exchange or market) or a similar source selected from time to time by
the Company for such purpose. In the event such closing prices are unavailable,
the Current Market Value shall be the Fair Market Value of such security
established by independent investment banking firms in accordance with the
procedures specified in Section 4.2(d). For purposes of this Agreement, the
Current Market Value of a share of Class B Common Stock shall be equal to the
Current Market Value of a share of Common Stock.

            "Diller Interest Purchase Price" means the cash amount (or cash
value of equity) invested by Diller in a BDTV Entity plus interest, from the
date of such contribution to the date of purchase, on such amount at the rate of
interest per annum in effect from time to time and publicly announced by The
Bank of New York as its prime rate of interest, compounded annually. For
purposes of BDTV I, BDTV II and BDTV III, the cash amount (or cash value of
equity) invested by Diller is $100.

            "Diller Note" means the promissory note by Diller in favor of the
Company, dated as of August 24, 1995.

            "Diller Stockholder Group" means Diller and Diller's 90% owned and
controlled Affiliates.

            "Director" means any member of the Board.
   8
                                                                               5


            "Disabled" means the disability of Diller after the expiration of
more than 180 consecutive days after its commencement which is determined to be
total and permanent by a physician selected by Universal (or if the Universal
Termination Date has occurred, Liberty) and reasonably acceptable to Diller;
provided that Diller shall be deemed to be disabled only following the
expiration of 90 days following receipt of a written notice from the Company and
such physician specifying that a disability has occurred if within such 90-day
period he fails to return to managing the business affairs of the Company. A
total disability shall mean mental or physical incapacity that prevents Diller
from managing the business affairs of the Company.

            "Eligible Stockholder Amount" means, in the case of Diller, the
equivalent of 1,100,000 Common Shares and, in the case of Liberty (including, in
the case of Liberty, the proportionate number of Common Shares represented by
Liberty's equity interest in any BDTV Entity and Common Shares issuable to
Liberty or a member of the Liberty Stockholder Group pursuant to the Contingent
Rights and the Holder Exchange Agreement), 1,000,000 shares of Common Stock, in
each case determined on a fully diluted basis (taking into account, in the case
of Diller, all unexercised Options, whether or not then exercisable).

            "Equity" means any and all shares of Capital Stock of the Company,
securities of the Company convertible into, or exchangeable for, such shares
(including, without limitation, the Contingent Shares, the Exchange Shares and
the LLC Shares), and options, warrants or other rights to acquire such shares.

            "Exchange Act" means the Securities Exchange Act of 1934, as
amended.

            "Exchange Agreement" means the exchange agreement, of even date
herewith, among Universal, Liberty and the Company, as it may be amended,
supplemented, restated or modified from time to time.

            "Exchange Shares" means the Silver King Exchange Shares as defined
in the Holder Exchange Agreement.

            "Fair Market Value" means, as to any securities or other property,
the cash price at which a willing seller would sell and a willing buyer would
buy such securities or property in an arm's-length negotiated transaction
without time constraints.

            "FCC" means the Federal Communications Commission or its successor.

            "FCC Regulations" means, as of any date, all federal communications
statutes and all rules, regulations, orders, decrees and policies of the FCC as
then in effect, and any interpretations or waivers thereof or modifications
thereto.

            "Fundamental Changes" shall have the meaning ascribed to such term
in the Governance Agreement.
   9
                                                                               6


            "Governance Agreement" means the Governance Agreement, among the
Company, Diller, Universal and Liberty, dated as of even date herewith, as it
may be amended, supplemented, restated or modified from time to time.

            "Group" shall have the meaning assigned to it in Section 13(d)(3) of
the Exchange Act.

            "Holder Exchange Agreement" means the Exchange Agreement, dated as
of December 20, 1996, by and between the Company and Liberty.

            "HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.

            "Independent Investment Banking Firm" means an investment banking
firm of nationally recognized standing that is, in the reasonable judgment of
the Person engaging such firm, qualified to perform the task for which it has
been engaged.

            "Initial Interest" means, with respect to any Stockholder, all of
the Common Shares beneficially owned by such Stockholder and its Permitted
Transferees immediately following the Closing.

            "Liberty HSN" means Liberty HSN, Inc., a Colorado corporation.

            "Liberty Stockholder Group" means Liberty and those Subsidiaries of
Liberty or TCI that, from time to time, hold Equity subject to this Agreement.

            "Liquid Securities" means (i) common equity securities of the
Universal Parent Company which are publicly traded on a national securities
exchange or quoted on the Nasdaq National Market of the class or series with the
largest public float of any class or series of such securities or (ii)
securities of Universal (or any holding company of Universal that directly or
indirectly beneficially owns 100% of the equity of Universal (Universal or any
such holding company being hereinafter referred to as the "Issuer")) which are
publicly traded on a national securities exchange or quoted on the Nasdaq
National Market; provided that the aggregate market value of the Universal
Liquid Securities received by Liberty pursuant to Section 4.2 or 4.3 shall, on
the date of receipt, represent not more than one-third of the aggregate market
value of all such outstanding securities on such date (other than the securities
beneficially owned by any Affiliate of the Issuer or Liberty) (such securities
of the Issuer, the "Universal Liquid Securities").

            "LLC" means USANi, LLC, a Delaware limited liability company and a
subsidiary of the Company, and any of its successors.

            "LLC Shares" means shares representing a proportionate interest in
the capital and profits and losses of the LLC.
   10
                                                                               7


            "Market Sale" means a "brokers' transaction" within the meaning of
Section 4(4) of the Securities Act.

            "Merger Agreement" means the Agreement and Plan of Exchange and
Merger, dated as of August 25, 1996, among the Company (formerly Silver King
Communications, Inc.), House Acquisition Corp., Liberty HSN and Home Shopping
Network, Inc.

            "Minimum Stockholder Amount" means Common Shares representing at
least 50.1% of the outstanding voting power of the outstanding Common Shares.

            "Non-Liquid Securities" means securities of the Issuer other than
Liquid Securities.

            "Options" means options to acquire capital stock of the Company
granted by the Company to Diller and outstanding from time to time.

            "Permitted Business Combination" shall mean (x) a tender or exchange
offer by Universal or an Affiliate for all the Common Shares of the Company that
is accepted by a majority of the Company's Public Stockholders or (y) a merger
(other than a merger following a tender or exchange offer complying with (x)
above) involving the Company and Universal or an Affiliate that is approved, in
addition to any vote required by law, by a majority of the Company's Public
Stockholders so long as, in the case of (x) and (y) above, a committee of the
Directors (excluding any Directors designated by Universal or Liberty pursuant
to the terms of the Governance Agreement, as it may be amended, modified or
waived from time to time, and any other directors who have a conflict of
interest) determines that the tender offer, exchange offer or merger, as the
case may be, is fair to the Company's stockholders (other than Universal and its
Affiliates).

            "Permitted Designee" means any Person designated by a Stockholder,
who shall be reasonably acceptable to the other Stockholders, to exercise such
Stockholder's rights pursuant to Section 4.2, 4.4, 4.8 or 4.9.

            "Permitted Transferee" means (i) with respect to Liberty, any of its
Subsidiaries or any Subsidiary of TCI, (ii) with respect to Universal, the
Universal Parent Company and any Subsidiary of the Universal Parent Company, and
(iii) with respect to Diller, any of his 90% owned and controlled Affiliates. In
addition, each of Liberty, Universal and Diller shall each be a Permitted
Transferee of its respective Permitted Transferees.

            "Person" means any individual, corporation, limited liability
company, limited or general partnership, joint venture, association, joint-stock
company, trust, unincorporated organization, government or any agency or
political subdivisions thereof or any Group comprised of two or more of the
foregoing.

            "Public Stockholders" means any stockholder of the Company that,
together with its Affiliates (a) has sole or shared voting power with respect to
Voting Securities representing no more than 10% of the voting power on the
applicable vote or (b) has sole or
   11
                                                                               8


shared power to dispose of Equity representing no more than 10% of the Equity to
be tendered or exchanged in any applicable tender or exchange offer, as the case
may be.

            "Put Provision" means the right of Liberty to cause Universal to
purchase Non-Liquid Securities described in Section 4.2(f).

            "Reference Rate" means, for any day, a fixed rate per annum equal to
the yield, expressed as a percentage per annum, obtained at the official auction
of 90-day United States Treasury Bills most recently preceding the date thereof
plus 100 basis points.

            "Securities Act" means the Securities Act of 1933, as amended.

            "Spin-Off Agreement" means the agreement, dated as of October 19,
1997, among Universal, Liberty and the Company relating to the disposition of
certain businesses of the Company in certain circumstances, as it may be
amended, supplemented, restated or modified from time to time.

            "Stockholder" means each of Universal, Liberty and Diller.

            "Stockholder Group" means one or more of the Diller Stockholder
Group, the Liberty Stockholder Group and the Universal Stockholder Group. For
purposes of this Agreement, (i) prior to the time that Liberty acquires Diller's
interest in a BDTV Entity, each BDTV Entity shall be deemed to be a member of
the Liberty Stockholder Group except as otherwise expressly set forth herein and
(ii) a Permitted Designee shall be deemed to be a member of a Stockholder's
Stockholder Group (other than for purposes of Section 4.1(a)(x)).

            "Subsidiary" means, with respect to any Person, any corporation or
other entity of which at least a majority of the voting power of the voting
equity securities or equity interest is owned, directly or indirectly, by such
Person.

            "TCI" means Tele-Communications, Inc., a Delaware corporation and
the parent of Liberty.

            "Third Party Transferee" means any Person to whom a Stockholder
(including a Third Party Transferee subject to this Agreement pursuant to
Sections 4.12(b) and 4.12(c)) or a Permitted Transferee Transfers Common Shares,
other than a Permitted Transferee of such Stockholder or a member of another
Stockholder Group.

            "Transaction Agreements" means each of the agreements specified in
or contemplated by Sections 9.3 and 9.4(b) of the Investment Agreement.

            "Transfer" means, directly or indirectly, to sell, transfer, assign,
pledge, encumber, hypothecate or similarly dispose of, either voluntarily or
involuntarily, or to enter into any contract, option or other arrangement or
understanding with respect to the sale, transfer, assignment, pledge,
encumbrance, hypothecation or similar disposition of, any Common Shares
beneficially owned by a Stockholder or any interest in any Common Shares
   12
                                                                               9


beneficially owned by a Stockholder, provided, however, that a merger or
consolidation in which a Stockholder is a constituent corporation shall not be
deemed to be the Transfer of any Common Shares beneficially owned by such
Stockholder (provided, that a significant purpose of any such transaction is not
to avoid the provisions of this Agreement). For purposes of this Agreement, the
conversion of shares of Class B Common Stock into shares of Common Stock shall
not be deemed to be a Transfer.

            "Universal Parent Company" means SCL and any of its successors.

            "Universal Standstill Termination Date" means the Standstill
Termination Date as defined in the Governance Agreement.

            "Universal Stockholder Group" means Universal, together with the
Universal Parent Company and any Subsidiary of the Universal Parent Company
that, from time to time, hold Equity subject to this Agreement.

            "Voting Securities" means at any time shares of any class of capital
stock of the Company which are then entitled to vote generally in the election
of Directors.

            SECTION 1.2 Other Defined Terms. The following terms shall have the
meanings defined for such terms in the Sections set forth below:

            Term                                            Section
            ----                                            -------

            Aggrieved Stockholder                           Section 6.11(c)
            Appraisal                                       Section 4.2(d)
            Appraised Value                                 Section 4.2(c)
            Call Notice                                     Section 4.2(a)
            Call Right                                      Section 4.2(a)
            Cash Consideration                              Section 4.2(g)
            Company                                         Preamble
            Covered Market Sale                             Section 4.8(a)
            Diller                                          Preamble
            Diller Departure                                Section 4.2(c)
            Diller Loan Amount                              Section 4.1(f)
            Diller Put                                      Section 4.4(a)
            Diller Put Closing Date                         Section 4.4(d)
            Diller Put Event                                Section 4.4(a)
            Diller Put Event Date                           Section 4.4(a)
            Diller Put Event Shares                         Section 4.4(a)
            Diller Put Notice                               Section 4.4(a)
            Diller Put Shares                               Section 4.4(a)
            Diller Share Put Price                          Section 4.4(b)
            Diller Tag-Along Notice                         Section 4.7(a)
            Diller Tag-Along Sale                           Section 4.7(a)
            Diller Tag-Along Shares                         Section 4.7(a)
   13
                                                                              10


            Diller Termination Date                         Section 6.2(a)
            Escrow                                          Section 4.4(f)
            Excess Interest                                 Section 4.3
            Exchange Notice                                 Section 4.11(a)
            Investment Agreement                            Recitals
            L/D Offer Notice                                Section 4.9(b)
            L/D Offer Price                                 Section 4.9(c)
            L/D Other Party                                 Section 4.9(b)
            L/D Transferring Party                          Section 4.9(a)
            Liberty                                         Preamble
            Liberty Proxy                                   Section 3.6(a)
            Liberty Proxy Shares                            Section 3.6(a)
            Liberty Purchase Price                          Section 4.2(c)
            Liberty Put Right                               Section 4.2(b)
            Liberty Termination Date                        Section 6.2(b)
            Litigation                                      Section 6.12
            Market Value                                    Section 4.2(f)
            Net Proceeds                                    Section 4.2(g)
            Non-Liquid Purchase Price                       Section 4.2(f)
            Non-Transferring Stockholder                    Section 4.11(a)
            Offer Notice                                    Section 4.8(b)
            Offer Price                                     Section 4.8(c)
            Other Stockholder                               Section 4.8(b)
            Ownership Percentage                            Section 2.1
            Permitted Ownership Percentage                  Section 2.1
            Prime Rate                                      Section 4.4(f)
            Publicly Traded                                 Section 4.2(f)
            Put Notice                                      Section 4.2(b)
            Put Provision                                   Section 4.2(f)
            Put Provision Notice                            Section 4.2(f)
            Sale Period                                     Section 4.2(g)
            SCL Threshhold                                  Section 4.2(f)
            Shortfall Amount                                Section 4.2(g)
            Shortfall Provisions                            Section 4.2(g)
            Specified Votes                                 Section 4.1(c)
            Standstill Termination Date                     Section 2.1
            Stockholder Tag-Along Notice                    Section 4.6(b)
            Stockholder Tag-Along Sale                      Section 4.6(b)
            Stockholder Tag-Along Shares                    Section 4.6(b)
            Tag-Along Offeree                               Section 4.5(a)
            Transactions                                    Preamble
            Transferring Party                              Section 4.8(a)
            Transferring Stockholders                       Section 4.11(a)
            Universal                                       Preamble
            Universal Proxy                                 Section 3.5(a)
            Universal Proxy Shares                          Section 3.5(a)
   14
                                                                              11


            Universal Tag-Along Notice                      Section 4.5(a)
            Universal Tag-Along Sale                        Section 4.5(a)
            Universal Tag-Along Shares                      Section 4.5(a)
            Universal Termination Date                      Section 6.2(a)
            Weighted Average Market Price                   Section 4.4(b)

            SECTION 1.3 Other Definitional Provisions. (a) The words "hereof",
"herein" and "hereunder" and words of similar import when used in this Agreement
shall refer to this Agreement as a whole and not to any particular provision of
this Agreement, and Article and Section references are to this Agreement unless
otherwise specified.

            (b) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.

            (c) For purposes of calculating the amount of outstanding Common
Shares or Equity as of any date and the number of Common Shares or Equity
beneficially owned by any Person as of any date, (i) any Common Shares held in
the Company's treasury or owned by any Subsidiaries of the Company shall be
disregarded, (ii) all LLC Shares beneficially owned by Universal and Liberty
shall be assumed to have been converted into Common Shares in accordance with
the provisions of the Exchange Agreement and (iii) all Contingent Shares and
Exchange Shares and any other securities of the Company issued to Liberty or
Universal in accordance with the exercise of its respective preemptive rights
pursuant to Section 1.8 or 1.7 of the Investment Agreement, respectively, shall
be assumed to have been converted into Common Shares. Notwithstanding the
foregoing, for purposes of calculating the Minimum Stockholder Amount and the
voting power for purposes of Section 4.4(f) (other than clause (B)(x) thereof)
and 4.5(a) (other than clause (ii)(x) thereof), only the number of Common Shares
actually outstanding shall be included in such calculation.

                                   ARTICLE II

                                   STANDSTILL

            SECTION 2.1 Liberty Standstill with Universal. Liberty covenants and
agrees with Universal that, from and after the Closing and until the earlier to
occur of (i) the Liberty Termination Date and (ii) such date as Universal
beneficially owns fewer Common Shares than Liberty beneficially owns (the
"Standstill Termination Date"):

            (a) neither Liberty nor any of its Affiliates will (x) acquire,
directly or indirectly, the beneficial ownership of any additional Equity of the
Company such that the Common Shares beneficially owned by Liberty and its
Affiliates (the "Ownership Percentage") following such acquisition would
represent in the aggregate more than the greater of (A) 20% and (B) the
percentage of Common Shares beneficially owned by Liberty following any Holder
Closing (as defined in Section 1.5(f) of the Investment Agreement) up to 25%
(the "Permitted Ownership Percentage") of all outstanding Common Shares;
provided that if Liberty (i) fails to elect to exercise its preemptive rights
pursuant to Section 1.8 of the Investment Agreement or (ii) prior to the
Universal Standstill Termination Date, Transfers any
   15
                                                                              12


Equity, the Permitted Ownership Percentage shall be reduced to reflect such
lower Ownership Percentage of Liberty following such failure to elect or such
Transfer (provided, that if Liberty's initial Ownership Percentage is less than
20%, such reduction shall be calculated as if Liberty's initial Ownership
Percentage were 20%) or (y) propose to the Board the acquisition by Liberty and
its Affiliates of the then outstanding Equity not owned by Liberty in a merger,
tender offer or other business combination.

            (b) Notwithstanding anything to the contrary herein, (i) except as
expressly provided herein, neither Liberty nor any Affiliate thereof shall
permit any entity in which it beneficially owns, directly or indirectly, in
excess of 50% of the outstanding voting securities (regardless of whether
Liberty or such Affiliate acquires beneficial ownership of such entity after the
date of this Agreement) to beneficially own any Common Shares. Notwithstanding
the foregoing, the acquisition (whether by merger, consolidation or otherwise)
by Liberty or any Affiliate thereof of any entity that beneficially owns Common
Shares shall not constitute a violation of the Permitted Ownership Percentage;
provided that a significant purpose of any such transaction is not to avoid the
provisions of this Agreement; and provided, further that the provisions of
clause (ii) below are complied with and (ii) except as set forth in the next
sentence, if at any time Liberty becomes aware that it and its Affiliates
beneficially own more than the Permitted Ownership Percentage (including by
virtue of acquisitions referred to in clause (i) above), then Liberty, subject
to the next sentence, shall as soon as is reasonably practicable (but in no
manner that would require Liberty to incur liability under Section 16(b) of the
Exchange Act) take all action necessary to reduce the amount of Common Shares
beneficially owned by such Persons to an amount not greater than the Permitted
Ownership Percentage. If the Ownership Percentage of Liberty and its Affiliates
exceeds the Permitted Ownership Percentage solely by reason of repurchases of
Common Shares by the Company, then Liberty shall not be required to reduce the
amount of the Common Shares beneficially owned by such Persons (except that
Liberty shall not exercise its preemptive rights under the Investment Agreement
to maintain such higher Ownership Percentage).

                                   ARTICLE III

                              CORPORATE GOVERNANCE

            SECTION 3.1 Liberty Board Representation. From and after the Closing
and until the Standstill Termination Date, Liberty shall not be entitled to
designate for nomination more than two directors for election to the Board,
subject to applicable law, including FCC Regulations.

            SECTION 3.2 Certain Restrictions. Except as set forth in the
Investment Agreement and the Transaction Agreements, without the prior written
consent of Universal, prior to the earlier of the Liberty Termination Date and
the Standstill Termination Date, Liberty agrees not to, and to cause each of its
Affiliates not to, directly or indirectly, alone or in concert with others:

            (a) seek election to, seek to place a representative on, or seek the
removal (other than for cause) of any member of, the Board, act alone or in
concert with others to
   16
                                                                              13


seek to affect or influence the control of the management or Board or the
business, operations or policies of the Company except by virtue of Liberty's
representation on the Board of the Company or LLC Board pursuant to Section
2.02(e) of the Governance Agreement and as otherwise contemplated by the
Governance Agreement (including the right to consent to Fundamental Changes
pursuant to Section 2.04 of the Governance Agreement) and the other Transaction
Agreements (it being agreed that this paragraph shall not prohibit Liberty, its
Affiliates and their respective employees from engaging in ordinary course
business activities with the Company);

            (b) other than to a Permitted Transferee or pursuant to this
Agreement, deposit any Equity in a voting trust or subject any Equity to any
proxy, arrangement or agreement with respect to the voting of such securities or
other agreement having a similar effect, except for agreements or arrangements
with a Permitted Designee reasonably acceptable to the other Stockholders and
not inconsistent with or for the purpose of evading the terms of this Agreement;

            (c) other than as is permitted by this Agreement, propose any
acquisition of the Company (whether by merger, tender offer or otherwise);

            (d) except as permitted by Section 4.3, initiate or propose any
stockholder proposal or make, or in any way participate in, directly or
indirectly, any "solicitation" of "proxies" to vote, or seek to influence any
Person with respect to the voting of, any Equity, or become a "participant" in a
"solicitation" (as such terms are defined in Regulation 14A under the Exchange
Act) in opposition to the recommendation of the majority of the Directors with
respect to any matter except (x) in response to a solicitation by a third party
and (y) to facilitate a tender or exchange offer by Liberty or an Affiliate
permitted under the Governance Agreement in response to a third party tender or
exchange offer for more than a majority of the outstanding Common Shares,
provided such third party tender or exchange offer is being recommended against
by the Board;

            (e) other than as is contemplated by this Agreement, the Governance
Agreement, the Investment Agreement and the Transaction Agreements, join a
partnership, limited partnership, syndicate or other Group, or otherwise act in
concert with any other Person (other than a Permitted Transferee or Universal or
Diller), for the purpose of acquiring, holding, voting or disposing of Equity,
or otherwise become a "person" within the meaning of Section 13(d)(3) of the
Exchange Act; or

            (f) request that the Company or the Board amend or waive any of the
provisions of this Section 3.2;

provided, that Liberty will not be deemed to be in violation of this Section 3.2
as a result of any action by Diller (including by a BDTV Entity as a result of
an action by Diller) that is not within Liberty's control.

            SECTION 3.3 Voting on Certain Matters. (a) In connection with any
vote or action by written consent of the stockholders of the Company relating to
any matter that
   17
                                                                              14


constitutes a Fundamental Change, subject to Section 4.2 hereof, each
Stockholder agrees (and agrees to cause each member of its Stockholders Group,
if applicable), with respect to any Common Shares with respect to which it or he
has the power to vote (whether by proxy, the ownership of voting securities of a
BDTV Entity or otherwise) (including all shares held by any BDTV Entity), to
vote against (and not act by written consent to approve) such Fundamental Change
(including not voting or not executing a written consent with respect to the
Common Shares beneficially owned by a BDTV Entity) if any Stockholder has not
consented to such Fundamental Change in accordance with the provisions of the
Governance Agreement and to take or cause to be taken all other reasonable
actions required, to the extent permitted by law, to prevent the taking of any
action by the Company with respect to a Fundamental Change without the consent
of each such Stockholder who has the right to consent to such Fundamental Change
pursuant to the terms of the Governance Agreement.

            (b) Each of Liberty and Diller agrees to vote (and cause each member
of its or his Stockholder Group to vote, if applicable), or act by written
consent with respect to any Common Shares with respect to which it or he has the
power to vote (whether by proxy, the ownership of voting securities of a BDTV
Entity or otherwise) (including all shares held by any BDTV Entity) in favor of
each of the designees of Universal which Universal has a right to designate
pursuant to the Governance Agreement. At such time as Liberty shall be entitled
to designate directors to the Board pursuant to the terms of the Governance
Agreement, each of Universal and Diller agrees to vote (and cause each member of
its or his Stockholders Group to vote, if applicable), or act by written consent
with respect to, any Common Shares with respect to which it or he has the power
to vote (whether by proxy, the ownership of voting securities of a BDTV Entity
or otherwise) (including all shares held by any BDTV Entity) in favor of each of
the designees of Liberty.

            (c) Upon the written request of Universal or Liberty, each
Stockholder, in such Stockholder's capacity as a stockholder only, agrees to
vote (and cause each member of its Stockholders Group to vote, if applicable),
or act by written consent with respect to any Common Shares with respect to
which it or he has the power to vote (whether by proxy, the ownership of voting
securities of a BDTV Entity or otherwise) (including all shares held by any BDTV
Entity) and otherwise take or cause to be taken all actions necessary to remove
any Director designated by such requesting party and to elect any replacement
Director designated by such party as provided in the Governance Agreement.
Unless all the Stockholders otherwise agree, no Stockholder or any member of its
Stockholders Group shall take any action to cause the removal of any Director
designated by Universal or any Director designated by Liberty except (i) in the
case of a Director designated by Universal, upon the written request of
Universal, and (ii) in the case of a Director designated by Liberty, upon the
written request of Liberty; provided, however, that any required approval of the
FCC shall have been obtained prior to so doing.

            (d) Subject to applicable law, Universal and Diller agree that
following the CEO Termination Date or such date that Diller becomes Disabled and
so long as Diller beneficially owns Voting Securities representing at least 7.5%
of the outstanding Voting Securities (excluding Voting Securities beneficially
owned by Liberty and Universal), Diller shall vote (and cause each member of his
Stockholders Group to vote, if applicable), or act by
   18
                                                                              15


written consent with respect to any Common Shares beneficially owned by him or
with respect to which he has the power to vote (whether by proxy, ownership of
voting securities of a BDTV Entity or otherwise), at Universal's option
exercised by written notice to Diller delivered at least 5 Business Days prior
to the date of the meeting applicable to the vote or the date by which consents
in writing must be delivered, either (i) in his own discretion or (ii) in the
same proportion as the Public Stockholders vote their shares of Common Stock. In
the event that Universal elects clause (ii) of this paragraph (d), it shall be
Universal's responsibility to coordinate with the Company's tabulation agent so
that Diller's vote in accordance with such clause shall be given effect. The
rights and obligations of Universal and Diller under this Section 3.3(d) shall
terminate when Universal is no longer entitled to designate at least two
Directors. In addition to the foregoing, Diller agrees, subject to his
Disability, to use his reasonable efforts to facilitate any FCC approvals
required in connection with the transactions or events contemplated by the
Spin-Off Agreement or this Agreement in the event of the CEO Termination Date or
his Disability.

            (e) For purposes of Sections 3.3 and 3.6 and Article V of this
Agreement as well as the stockholders agreement in effect as of the date hereof
between Liberty and Diller, each of Liberty and Diller hereby consents and
agrees to the taking of any action by any of Diller, a BDTV Entity or Liberty,
which action is reasonably necessary or appropriate to approve and consummate
the transactions pursuant to the Investment Agreement (other than a spin-off in
accordance with Section 9.14 of the Investment Agreement) and the Transaction
Agreements (and including the additional incentive compensation arrangements
relating to Diller). Neither Diller nor Liberty shall enter into, or permit any
material amendment to, or waiver or modification of material rights or
obligations under the Investment Agreement or the Transaction Agreements
(including by the Company) without the prior written consent of the other
Stockholder. The consent granted by the first sentence of this paragraph is
intended to be specifically limited by the foregoing sentence.

            (f) Liberty will not be deemed to be in violation of paragraphs (a),
(b) or (c) of this Section 3.3 as a result of any action by Diller (including by
a BDTV Entity as a result of an action by Diller) that is not within Liberty's
control.

            SECTION 3.4 Restrictions on Other Agreements. No Stockholder or any
of its or his Permitted Transferees shall enter into or agree to be bound by any
stockholder agreements or arrangements of any kind with any Person with respect
to any Equity (including, without limitation, the deposit of any Common Shares
in a voting trust or forming, joining or in any way participating in or
assisting in the formation of a Group with respect to any Common Shares, other
than any such Group consisting exclusively of Liberty, Universal and Diller and
any of their respective Affiliates and Permitted Transferees) and no Stockholder
(other than Universal or Liberty or any of their respective Permitted
Transferees) or any of its or his Permitted Transferees shall enter into or
agree to be bound by any agreements or arrangements of any kind with any Person
to incur indebtedness for purposes of purchasing Equity (other than to exercise
Options or to purchase Common Shares pursuant to Section 4.8 or 4.9 of this
Agreement), except (i) for such agreements or arrangements as are now in effect
or as are contemplated by the Transaction Agreements, (ii) as contemplated by or
in connection with the Stock Exchange Agreement, dated May 20, 1997, between
Paul
   19
                                                                              16


G. Allen and the Company, (iii) in connection with a proposed sale of BDTV
Entity securities or Common Shares otherwise permitted hereunder or (iv) for
such agreements or arrangements with a Permitted Designee reasonably acceptable
to the other Stockholders and not inconsistent with or for the purpose of
evading the terms of this Agreement.

            SECTION 3.5 Irrevocable Proxy of Universal. (a) Subject to
paragraphs (b) and (c) below, until the earlier of the date that (x) Diller is
no longer CEO or (y) Diller is Disabled, Diller shall be entitled to exercise
voting authority and authority to act by written consent over all Common Shares
beneficially owned by each member of the Universal Stockholder Group (the
"Universal Proxy Shares") on all matters submitted to a vote of the Company's
stockholders or by which the Company's stockholders may act by written consent
pursuant to a conditional proxy (which proxy is irrevocable and coupled with an
interest for purposes of Section 212 of the Delaware General Corporation Law)
(the "Universal Proxy"); provided, that in the event that Diller is removed by
the Board as CEO for any reason other than Cause, Diller shall be deemed to
continue to be CEO hereunder and shall be entitled to exercise the Universal
Proxy set forth herein until the earlier of (A) such time as he has abandoned
efforts to cause his reinstatement as CEO and (B) the next stockholders meeting
of the Company at which he had an adequate opportunity to nominate and elect his
slate of directors (unless at such stockholders meeting Diller's slate of
directors is elected and Diller is promptly thereafter reinstated as CEO).

            (b) Notwithstanding the foregoing, the Universal Proxy shall not be
valid with respect to any of the Universal Proxy Shares in connection with any
vote for (or consent to approve) any matter that is a Fundamental Change which
Universal has the right to consent to pursuant to the terms of the Governance
Agreement and with respect to which Universal has not consented.

            (c) The Universal Proxy shall terminate as provided for in Section
3.5(a) or, if earlier, (i) immediately upon a material breach by Diller of the
terms of Section 3.3(a), the first sentence of Section 3.3(b), Section 3.3(c)
(as applicable to Universal) or Section 3.5(b) of this Agreement, (ii) at such
time as Diller has been convicted of, or has pleaded guilty to, any felony
involving moral turpitude or (iii) at such time as Diller ceases to beneficially
own 5,000,000 Common Shares with respect to which he has a pecuniary interest;
provided, in the case of clauses (ii) and (iii) above, that Universal sends
notice of such termination to Diller within 30 days after the event giving rise
to such termination, in which case the Universal Proxy shall terminate
immediately upon the receipt of such notice.

            (d) Notwithstanding anything to the contrary set forth in this
Agreement, the Universal Proxy is personal to Diller and may not be assigned by
Diller by operation of law or otherwise and shall not inure to Diller's
successors without the prior written consent of Universal.

            SECTION 3.6 Irrevocable Proxy of Liberty. (a) Until the earlier of
such time as Diller ceases to be entitled to exercise rights under this Section
3.6 pursuant to Section 6.2(c) or the Liberty Termination Date, Diller shall be
entitled to exercise voting authority and authority to act by written consent
over all Common Shares beneficially owned by each
   20
                                                                              17


member of the Liberty Stockholder Group (the "Liberty Proxy Shares"), on all
matters submitted to a vote of the Company's stockholders or by which the
Company's stockholders may act by written consent pursuant to a conditional
proxy (which proxy is irrevocable and coupled with an interest for purposes of
Section 212 of the Delaware General Corporation Law) (the "Liberty Proxy");
provided, that in the event that Diller is removed by the Board as CEO for any
reason other than Cause, Diller shall be deemed to continue to be CEO hereunder
and shall be entitled to exercise the Liberty Proxy set forth herein until the
earlier of (A) such time as he has abandoned efforts to cause his reinstatement
as CEO and (B) the next stockholders meeting of the Company at which he had an
adequate opportunity to nominate and elect his slate of directors (unless at
such stockholders meeting Diller's slate of directors is elected and Diller is
promptly thereafter reinstated as CEO).

            (b) Notwithstanding the foregoing, the Liberty Proxy shall not be
valid with respect to any of the Liberty Proxy Shares in connection with any
vote for (or consent to approve) any matter that is a Fundamental Change which
Liberty has the right to consent to pursuant to the terms of the Governance
Agreement with respect to which Liberty has not consented.

            (c) Notwithstanding the foregoing, so long as Liberty holds its
Eligible Stockholder Amount and after termination of Liberty's consent right
with respect to Fundamental Changes as provided in the Governance Agreement,
Diller, with respect to matters that constitute Fundamental Changes, will vote
the Liberty Proxy Shares in the manner directed by Liberty.

            (d) The Liberty Proxy shall terminate as provided for in Section
3.6(a) or, if earlier, (i) immediately upon a material breach by Diller of the
terms of Section 3.3(a), the second sentence of Section 3.3(b), Section 3.3(c)
(as applicable to Liberty) or Section 3.6(b) of this Agreement, (ii) at such
time as Diller has been convicted of, or has pleaded guilty to, any felony
involving moral turpitude or (iii) at such time as Diller ceases to beneficially
own 5,000,000 Common Shares with respect to which he has a pecuniary interest;
provided, in the case of clauses (ii) and (iii) above, that Liberty sends notice
of such termination to Diller within 30 days after receiving notice of the event
giving rise to such termination, in which case the Liberty Proxy shall terminate
immediately upon the receipt of such notice.

            (e) Notwithstanding anything to the contrary set forth herein, the
Liberty Proxy is personal to Diller and may not be assigned by Diller and shall
not inure to Diller's successors without the prior written consent of Liberty.

            SECTION 3.7 Cooperation. Each Stockholder shall vote (or act or not
act by written consent with respect to) all of its Common Shares (and any Common
Shares with respect to which it has the power to vote (whether by proxy or
otherwise) and shall, as necessary or desirable, attend all meetings in person
or by proxy for purposes of obtaining a quorum, and execute all written consents
in lieu of meetings, as applicable, to effectuate the provisions of this Article
III.
   21
                                                                              18

                                   ARTICLE IV

                            TRANSFER OF COMMON SHARES

            SECTION 4.1 Restrictions on Transfer by Liberty and Diller. (a)
Until the CEO Termination Date or such time as Diller becomes Disabled, subject
to the other provisions of this Agreement, neither Liberty nor Diller shall
Transfer or otherwise dispose of (including pledges), directly or indirectly,
any Common Shares beneficially owned by its Stockholder Group other than (w)
Transfers of Common Shares by Diller in order to pay taxes arising from the
granting, vesting and/or exercise of the Options and/or the payment of bonuses
on repayment of the Diller Note, (x) Transfers of Common Shares by Liberty to
members of the Liberty Stockholder Group or by Diller to members of the Diller
Stockholder Group, (y) a pledge or grant of a security interest in vested Common
Shares (other than the pledge of certain Common Shares pursuant to prior
arrangements between Diller and the Company) or pledges by a member of the
Liberty Stockholder Group of securities of a BDTV Entity that Liberty is
entitled to Transfer under (b)(iii) below in connection with bona fide
indebtedness in which the pledgee of the applicable Common Shares (or securities
of such BDTV Entity) agrees that, upon any default or exercise of its rights
under such pledge or security arrangement, it will offer to sell the pledged
Common Shares (or securities of such BDTV Entity) to the non-pledging
Stockholder(s) (or its or his designee) for an amount equal to the lesser of the
applicable amount of such indebtedness and the fair market value of such pledged
Common Shares (or securities of such BDTV Entity), and (z) Transfers of Options
or Common Shares to the Company by Diller or his Affiliates in connection with a
"cashless" exercise of the Options (including Options granted to Diller on the
date hereof or in the future).

            (b) Notwithstanding the restrictions contained in subsection (a)
above (and in addition to the foregoing exceptions, but subject to the right of
first refusal described in Section 4.9 on behalf of Diller (or his designee)
with respect to Transfers by members of the Liberty Stockholder Group and to a
right of first refusal on behalf of Liberty (or its designee) with respect to
Transfers by members of the Diller Stockholder Group (which rights shall be
assignable)): (i) following August 24, 2000 either Liberty or Diller may
Transfer all or any portion of the Common Shares beneficially owned by its
Stockholder Group (and, in the case of Liberty only, its entire interest in the
BDTV Entities) to an unaffiliated third party, provided, however, that a
Transfer by Diller to a third party or to Universal (other than in connection
with the Diller Put) shall be subject to the Diller Tag-Along Right pursuant to
Section 4.7, (ii) following the CEO Termination Date or such time as Diller
becomes Disabled, Diller may, Transfer all or any portion of the Common Shares
held by his Stockholder Group to an unaffiliated third party, and (iii) either
Liberty or Diller may Transfer any portion of the Common Shares (including, in
the case of Liberty, all or a portion of a BDTV Entity interest) held by its
Stockholder Group to an unaffiliated third party, provided that, (a) following
such Transfer such Stockholder Group retains its Eligible Stockholder Amount of
Common Shares and (b) in the case of the Transfer of an interest in or Common
Shares held by a BDTV Limited Entity as of the date hereof, following such
Transfer, Liberty, Diller and Universal and each of their respective Stockholder
Groups collectively beneficially own the Minimum Stockholder Amount.
Notwithstanding the previous sentence and the restrictions contained in
paragraph (a) above and subject to the requirement, with respect to a Transfer
by Liberty of an interest in or Common Shares held
   22
                                                                              19


by a BDTV Limited Entity as of the date hereof, that the Stockholders and their
respective Stockholder Groups collectively beneficially own the Minimum
Stockholder Amount, either Liberty or Diller may transfer any of its Common
Shares in one or more transactions that comply with the requirements of Rule 144
or 145 (as applicable) under the Securities Act.

            (c) Until August 24, 2000, Universal shall not voluntarily Transfer
any Common Shares or convert any shares of Class B Common Stock into shares of
Common Stock such that it directly or indirectly owns a number of Common Shares
having an aggregate number of votes that is less than the number of votes
represented by the Common Shares it so owns immediately following the Closing
(the "Specified Votes"); provided that this restriction shall not prohibit
Universal from converting any shares of Class B Common Stock into shares of
Common Stock so long as, within 60 days of such conversion, Universal purchases
a number of shares of Common Stock such that it directly or indirectly owns a
number of Common Shares having the Specified Votes; provided, further, that this
restriction shall not be applicable to a Transfer of all Common Shares that
Universal beneficially owns.

            (d) With respect to any Transfer by Liberty with respect to which
Diller would have a right pursuant to Section 4.9 that would result, after
giving effect to such Transfer, in the Stockholders and their respective
Stockholder Groups beneficially owning less than the Minimum Stockholder Amount,
and with respect to which Diller does not elect to exercise his right to
purchase the Liberty Common Shares proposed to be Transferred, Diller shall not
fail to respond to the L/D Offer Notice or elect not to exercise his rights
under such Section prior to offering Universal the opportunity to cause Diller
to purchase such shares, subject to the terms and conditions described below. If
Universal (or, at Universal's option, a member of its Stockholder Group) shall
elect to cause Diller to purchase the Liberty Common Shares proposed to be
Transferred, Universal shall loan Diller an amount of cash equal to the purchase
price for the Liberty Common Shares proposed to be Transferred and Diller shall
purchase such Common Shares in accordance with the terms of Section 4.9. Such
loan shall be represented by a non-recourse note which shall be secured by the
Liberty Common Shares to be purchased and shall contain such other terms and
conditions as shall be reasonably satisfactory to Diller and Universal. Diller
shall grant to Universal an option to acquire such Common Shares, exercisable at
Universal's option at any time at an exercise price equal to the purchase price
for such shares, which exercise price may be satisfied by the cancellation of
the note referred to above and which option shall be transferable to the same
extent as the Common Shares underlying the option would be transferable;
provided that Universal shall not Transfer the option so long as Diller retains
the Universal Proxy if it is necessary to retain such shares in order to
maintain the Minimum Stockholder Amount (except that Universal may Transfer the
option or the underlying Common Shares in connection with a Transfer of all
Common Shares that Universal beneficially owns). Diller shall vote such shares
as if they were subject to the Universal Proxy. To the extent that applicable
law prohibits Universal and Diller from entering into the arrangements described
above, Diller and Universal shall cooperate in good faith and use commercially
reasonable efforts to enter into alternative arrangements to maintain the
Minimum Stockholder Amount in a manner that provides for minimal disruption to
the existing governance arrangements and fairly balances each Stockholder's
interest.
   23
                                                                              20


            SECTION 4.2 Universal Purchase of Liberty Equity. (a) Universal, or,
at Universal's option, its Permitted Designee, may elect to purchase from
Liberty all (but not less than all) of Liberty's Equity (it being understood
that, for purposes of this Section 4.2, Liberty's Equity shall not include the
Contingent Rights) (the "Call Right") (i) prior to the CEO Termination Date or
such time as Diller becomes Disabled, if (x) Diller and Universal consent to the
taking of any action by the Company which would constitute a Fundamental Change
described in Section 2.04(ii) of the Governance Agreement, and (y) Liberty has
the right to consent to but does not consent to such Fundamental Change pursuant
to the terms of the Governance Agreement (other than a merger or similar
business combination between the Company and Universal or any of their
respective Affiliates so long as the Liberty Stockholder Group collectively
beneficially owns more than 12.5% of the outstanding Common Shares) and (ii) at
any time on or after the CEO Termination Date or such time as Diller becomes
Disabled. Universal may exercise the Call Right by, in the case of clause
(a)(i), requesting Diller to, and Diller shall, upon Universal's request,
deliver written notice (a "Call Notice") to Liberty or, in the case of clause
(a)(ii), by delivering a Call Notice to Liberty. Such Call Notice shall state
that Universal has elected to exercise its Call Right and, subject to paragraph
(e) below, shall set forth the form of consideration proposed to be used by
Universal to pay the Liberty Purchase Price. Universal's right to use a
Permitted Designee shall be subject to Universal's obligations under the first
sentence of paragraphs (e) and (f) hereof.

            (b) In the event that the CEO Termination Date has occurred or
Diller has become Disabled, Liberty may elect to require Universal or, at
Universal's option, its designee, to purchase all (but not less than all) of
Liberty's Equity (except for the Contingent Rights) (the "Liberty Put Right") at
any time, by delivering a written notice (a "Put Notice") to Universal stating
that Liberty elects to exercise the Liberty Put Right.

            (c) The purchase price (the "Liberty Purchase Price") to be paid by
Universal to Liberty for Liberty's Equity pursuant to paragraph (a) or (b) above
shall equal the Appraised Value (plus, in the event the closing is delayed
pursuant to the second sentence of paragraph (h), accrued interest at the
Reference Rate from the date that is 20 Business Days following the date of the
Put Notice or the Call Notice through the date of the closing), determined as of
the date of that the Call Notice or the Put Notice is delivered, and shall be
payable in the form of consideration specified in paragraphs (e) or (f), as
applicable, below. The "Appraised Value" shall be determined on the basis of the
private market value of the Company and shall take into account Liberty's
significant influence in the Company at the time of such purchase, including
consent rights on Fundamental Changes pursuant to the Governance Agreement
(regardless of whether such rights have terminated under Section 4.3 or clause
(e)(ii) below), entitlement to representation on the LLC Board of Directors and
the Board and similar governance rights; provided that such basis shall not
assume (and the Independent Investment Banking Firms described in paragraph (d)
making the Appraisal will be instructed not to consider) the value of the
Company in an "auction" proceeding; provided, further that the Appraised Value
shall be modified to reflect any consideration received or receivable in respect
of any distribution to Liberty in connection with a spin-off contemplated by
Section 9.14 of the Investment Agreement. If such payment occurs in connection
with the CEO Termination Date or Diller becoming Disabled (the "Diller
Departure"), the impact of
   24
                                                                              21


the Diller Departure shall be taken into account by the Independent Investment
Banking Firms.

            (d) Promptly upon receipt by Universal of the Put Notice or by
Liberty of the Call Notice, each of Universal and Liberty shall select an
Independent Investment Banking Firm each of which shall promptly make a
determination (each such determination, an "Appraisal") of the Appraised Value
of Liberty's Equity in accordance with the provisions of paragraph (c) above. If
the higher of such Appraisals is less than or equal to 110% of the lower of such
Appraisals, then the Appraised Value shall be equal to the average of such
Appraisals. If the higher of such Appraisals is greater than 110% of the lower
of such Appraisals, then a third Independent Investment Banking Firm (which
shall be an Independent Investment Banking Firm that shall not have been engaged
by the Company, Liberty or Universal for the three years prior to the date of
such selection) shall be selected by the first two Independent Investment
Banking Firms, which third Independent Investment Banking Firm shall promptly
make a determination of the Appraised Value. The Appraised Value shall equal the
average of the two of such three Appraisals closest in value (or if there are no
such two, then of all three Appraisals).

            (e) If Universal elects to exercise its Call Right, Universal shall
use its best efforts to make tax-free consideration consisting of Liquid
Securities available to Liberty in a tax-free transaction; provided that
Universal may provide, in lieu of Liquid Securities, Non-Liquid Securities the
receipt of which constitutes tax-free consideration and that are subject to the
Put Provision described in Section 4.2(f). If, notwithstanding Universal's best
efforts, such a tax-free transaction is not available, (i) Universal shall not
be entitled to exercise the Call Right, (ii) Liberty shall cease to have any
right to consent to any action that constitutes a Fundamental Change described
in Section 2.04(ii) of the Governance Agreement (other than a merger or similar
business combination between the Company and Universal or any of their
respective Affiliates so long as the Liberty Stockholder Group collectively
beneficially owns more than 12.5% of the outstanding Common Shares) and if any
such failure to consent to any such Fundamental Change (other than a Fundamental
Change described in the parenthetical in clause (ii) above) triggered
Universal's Call Right pursuant to clause (a)(i) of this Section 4.2, Liberty
shall be deemed to have consented to the Fundamental Change, and (iii) Liberty
shall be entitled to exercise the Liberty Put Right on the terms described in
paragraph (b) above, notwithstanding whether or not the CEO Termination Date has
occurred or Diller has become Disabled.

            (f) In the event that Universal provides Non-Liquid Securities to
Liberty, Liberty may at any time or from time to time elect to require Universal
(or, if Universal is not the Issuer of such securities, the Issuer) to purchase
all or a portion of such Non-Liquid Securities (the "Put Provision") at any time
by delivering a written notice (a "Put Provision Notice") to Universal stating
that Liberty elects to exercise the Put Provision; provided that Universal shall
guarantee any obligation of the Issuer hereunder but shall not be relieved of
any of its obligations hereunder as a result of any Issuer being required to
purchase such Non-Liquid Securities; provided, further, that in no event shall
Liberty be entitled to exercise the Put Provision on more than two occasions.
The purchase price (the "Non-Liquid Purchase Price") to be paid by Universal to
Liberty for Liberty's Non-Liquid Securities shall equal the
   25
                                                                              22


Market Value, determined as of the date that the Put Provision Notice is
delivered, and shall be payable in cash. The "Market Value" shall be determined
on the basis of (i) if the Non-Liquid Securities are publicly traded on a
national securities exchange or quoted on the Nasdaq National Market ("Publicly
Traded"), the average of the daily closing prices for such securities on the
principal exchanges or market on which such securities may be listed or may be
traded at such time for the five trading days prior to the date of the Put
Provision Notice or (ii) if the Non-Liquid Securities are not Publicly Traded,
the appraised value of such securities determined in accordance with the
procedures set forth in Section 4.2(d) on the basis of what a willing buyer
would pay for such securities in an arm's length transaction with a willing
seller, taking into account, among other factors, an appropriate minority
discount. In the event that the Non-Liquid Securities are Publicly Traded and
Liberty has delivered the Put Provision Notice, Universal may elect, in lieu of
satisfying all or a portion of the Put Provision, to have Liberty sell the
Non-Liquid Securities over a reasonable period to be mutually agreed upon by
Universal and Liberty and otherwise in accordance with the Shortfall Provisions,
with the term "Market Value" substituted for the term "Liberty Purchase Price"
for such purposes. In the event that Universal lacks sufficient funds (or is
otherwise unable) to satisfy the Put Provision, SCL agrees, subject to the
existing MEI arrangements and applicable law, that so long as SCL beneficially
owns, directly or indirectly, at least 66- 2/3% of the Equity of Universal
(excluding any Equity beneficially owned by Liberty or its Affiliates) (the "SCL
Threshhold"), SCL shall provide funds to Universal (for debt or equity
securities of Universal on commercially reasonable terms) in an amount
sufficient to satisfy the Non-Liquid Purchase Price or, at SCL's option,
purchase from Liberty (on terms and conditions reasonably satisfactory to the
parties) the applicable Non-Liquid Securities in exchange for the Non-Liquid
Purchase Price; provided that if neither Universal nor SCL satisfies the Put
Provision and the Issuer of the Non-Liquid Securities has outstanding a class of
Publicly Traded securities, Liberty may cause the Issuer to register the
Non-Liquid Securities to be sold over a reasonable period to be mutually agreed
upon by Universal and Liberty and otherwise in accordance with the Shortfall
Provisions, with the term "Market Value" substituted for the term "Liberty
Purchase Price" for such purposes. In lieu of providing all or a portion of the
cash to Universal or to Liberty, SCL may substitute a number of Liquid
Securities of SCL determined in the manner set forth in paragraph 4.2(h) and
subject to sale by Liberty in accordance with the Shortfall Provisions, with the
term "Market Value" substituted for the term "Liberty Purchase Price" for such
purposes. The obligation of SCL set forth in the preceding sentence with respect
to any outstanding Non-Liquid Securities shall terminate upon 10 Business Days'
notice to Liberty that SCL's beneficial ownership of the Equity of Universal
will decrease below the SCL Threshhold, which notice shall include reasonable
detail of the transaction which will cause such decrease.

            (g) If Liberty exercises the Liberty Put Right, Universal shall use
its reasonable best efforts to make tax-free consideration consisting of Liquid
Securities available to Liberty in a tax-free transaction; provided that
Universal may provide, in lieu of Liquid Securities, Non-Liquid Securities that
are subject to the Put Provision described in Section 4.2(f). If,
notwithstanding Universal's reasonable best efforts, such consideration cannot
be made available, the consideration payable in respect of the Liberty Purchase
Price shall consist solely of cash ("Cash Consideration") and/or Liquid
Securities in respect of which Liberty shall receive customary registration
rights. If Liberty receives Liquid Securities
   26
                                                                              23


pursuant to this paragraph (f) in connection with a taxable transaction, and,
within three months of the receipt of such Liquid Securities (or within such
shorter period as Liberty shall elect by giving written notice of such election
to Universal pursuant to the final sentence of this paragraph (f)) (any such
period, the "Sale Period"), Liberty shall sell such Liquid Securities and shall
receive in consideration therefor aggregate cash proceeds on a per share basis
(net of any underwriting discounts or commissions or other reasonable
out-of-pocket selling expenses) (the "Net Proceeds") which, together with any
Cash Consideration, are less on a per share basis than the Liberty Purchase
Price, Universal shall pay to Liberty, within ten Business Days of the receipt
by Universal of written notice from Liberty of the amount of such Net Proceeds,
at Universal's option, an amount of cash by wire transfer of same day funds
and/or additional Liquid Securities equal to the difference between (x) the
Liberty Purchase Price on a per share basis and (y) the sum of the Net Proceeds
and the Cash Consideration on a per share basis (such difference, the "Shortfall
Amount"). Liberty shall in good faith seek to minimize the Shortfall Amount. If
Universal elects to pay all or any part of the Shortfall Amount with Liquid
Securities, Liberty shall have the rights with respect to such Liquid Securities
set forth in the immediately preceding sentence to the extent that the Net
Proceeds from the sale of such Liquid Securities within the Sale Period
applicable thereto, together with any cash received in respect of the Shortfall
Amount, do not equal the Shortfall Amount. If the Net Proceeds from the sale of
any Liquid Securities during the applicable Sale Period (including any Liquid
Securities received in respect of the Shortfall Amount) received by Liberty
pursuant to this paragraph (f) are greater than the Liberty Purchase Price on a
per share basis, Liberty shall promptly pay to Universal, by wire transfer of
same day funds, an amount equal to the difference between the Net Proceeds and
the Liberty Purchase Price. To the extent Liberty only sells a portion of the
Liquid Securities during any applicable Sale Period, the provisions of this
paragraph (f) with respect to Liquid Securities shall be applied on a pro rata
basis to the portion of the Liquid Securities that are so sold. Notwithstanding
the foregoing, Liberty shall be entitled by written notice to Universal on the
date Liberty receives the Liquid Securities to terminate the Sale Period as to
any or all Liquid Securities received by Liberty pursuant to this paragraph (f)
in which event neither Liberty nor Universal shall have any obligation to the
other under this paragraph (f) to the extent that the Net Proceeds on a per
share basis from the sale of any such Liquid Securities as to which Liberty has
so terminated the Sale Period is greater or less than the applicable Liberty
Purchase Price on a per share basis. The provisions of this paragraph (g) (other
than the first two sentences are referred to herein as the "Shortfall
Provisions."

            (h) Subject to the next succeeding sentence, the closing of any
purchase of Liberty's Equity pursuant to the Call Right or the Liberty Put Right
shall occur no later than two Business Days following the later to occur of (i)
the determination of the Appraised Value and (ii) the receipt of any necessary
approvals (including, without limitation, any required approval of the
stockholders of Universal or the Universal Parent Company or any applicable
regulatory approvals) with respect to the purchase of Liberty's Equity or the
issuance of Liquid Securities or the purchase thereof by Liberty. If Liberty
exercises the Liberty Put Right or Universal exercises the Call Right during the
60-day period described in Section 2 of the Spin-Off Agreement (and Universal
elects to require the Company to effect the spin-off within such period) or
following Universal's election within such period to effect the spin-off but
prior to the consummation of such spin-off, then, notwithstanding anything to
   27
                                                                              24



the contrary set forth herein, Universal may delay the closing of such purchase
until the earlier to occur of (i) the fourteen month anniversary of the CEO
Termination Date and (ii) consummation of such spin-off. The number of Liquid
Securities or publicly traded Non-Liquid Securities to be delivered to Liberty
at the closing of the Call Right or the Liberty Put Right shall be determined
based upon weighted average daily closing prices of such securities on the
principal exchange or market on which such shares may be listed or may be traded
at such time for the 60 trading days immediately prior to the second trading day
prior to such closing date. For purposes of determining such weighted average
market price, the closing price for each day shall be the closing price, if
reported, or, if the closing price is not reported, the average of the high and
low sales prices as reported by such principal exchange or market or a similar
source selected from time to time by the Company for such purpose. In the case
of Non-Liquid Securities which are not Publicly Traded, the number of securities
to be delivered shall be the appraised value of such securities determined in
accordance with the procedures set forth in Section 4.2(d) on the basis of what
a willing buyer would pay for such securities in an arm's length transaction
with a willing seller, taking into account, among other factors, an appropriate
minority discount

                  (i) Universal shall only be required to purchase shares of a
BDTV Entity or any other Person holding Equity in connection with the exercise
of the Call Right or the Liberty Put Right if such BDTV Entity or such other
Person is a wholly-owned Subsidiary of Liberty (or its applicable Affiliate) and
Universal receives representations and warranties, reasonably satisfactory in
form and substance to Universal, that such BDTV Entity or such other Person does
not own assets or liabilities other than the Equity and customary indemnities
with respect thereto.

                  SECTION 4.3 Going-Private Transaction. If Universal (i)
proposes to purchase all of the shares of Common Stock held by the Public
Stockholders of the Company in a Permitted Business Combination, (ii) agrees to
acquire all of Liberty's Equity in exchange for the Liberty Purchase Price
described in Section 4.2(c) and calculated in the manner described in Section
4.2(d) and (iii) shall have used its best efforts to make tax-free consideration
consisting of Liquid Securities available to pay the Liberty Purchase Price in a
tax-free transaction to Liberty (provided that Universal may provide, in lieu of
Liquid Securities, Non-Liquid Securities that are subject to the Put Provision
described in Section 4.2(f), mutatis mutandis), then Liberty shall consent to
such transaction if such transaction constitutes a Fundamental Change and shall
not dissent from, abstain from voting with respect to or vote its Common Shares
against the proposed transaction; provided in the event that Liberty's stock
ownership were such as to qualify Liberty as a Public Stockholder, for purposes
of the vote required under the definition of Permitted Business Combination,
Liberty's vote shall be disregarded for the Public Stockholder vote required
pursuant thereto. If, notwithstanding Universal's best efforts, such a tax-free
transaction is not available, Liberty shall be permitted to retain its Equity in
the Company (or the surviving entity of such Permitted Business Combination) and
its rights under the Governance Agreement (other than the right described in
Section 2.04(ii) thereof (other than with respect to a merger or similar
business combination between the Company and Universal or any of their
respective Affiliates so long as the Liberty Stockholder Group collectively
beneficially owns more than 12.5% of the outstanding Common Shares)) in
connection with such Permitted Business
   28
                                                                              25



Combination; provided that, if Liberty would beneficially own 20% or more of the
outstanding Equity (such excess being the "Excess Interest")) after giving
effect to such Permitted Business Combination, then Universal shall purchase,
and Liberty shall sell to Universal, the Excess Interest on terms and conditions
reasonably acceptable to Liberty and which shall be no less favorable to Liberty
than the price paid to the Public Stockholders in such Permitted Business
Combination; provided, further, that Universal shall reimburse Liberty for 50%
of any actual tax liability incurred or payable (including to TCI under
Liberty's tax-sharing agreement with TCI) by Liberty in connection with
Universal's acquisition of the Excess Interest. To the extent that Liberty would
own 20% or less of the outstanding Equity representing a greater percentage of
voting power, Liberty shall convert such number of shares of Class B Common
Stock into shares of Common Stock in order to reduce its voting power to an
equivalent percentage of the outstanding Equity. Universal shall continue to
have the rights described in Section 4.2(a) (mutatis mutandis) and Liberty shall
continue to have the rights described in Section 4.2(b) (mutatis mutandis) with
respect to any Equity in the Company (or such surviving entity) that is retained
by Liberty following any such Permitted Business Combination and Universal's
purchase of any Excess Interest; provided that Universal makes tax-free
consideration consisting of Liquid Securities available to Liberty in a tax-free
transaction.

                  SECTION 4.4 Diller Right to Put Shares. (a) Following the CEO
Termination Date or such time as Diller becomes Disabled (each such event, a
"Diller Put Event"), Diller shall have the right (the "Diller Put") to require
Universal or, at Universal's option, its designee, to purchase for cash all (but
not less than all) of the Common Shares beneficially owned by Diller that were
acquired from the Company (other than securities of any BDTV Entity) in which he
has a pecuniary interest (the "Diller Put Shares"), for the Diller Share Put
Price as is specified in paragraphs (b) and (c) below. Diller may exercise the
Diller Put by delivering a written notice (the "Diller Put Notice") at any time
following the date of the applicable Diller Put Event (the "Diller Put Event
Date") and on or prior to the first anniversary of the Diller Put Event Date to
Universal stating that Diller elects to exercise the Diller Put, and upon
receipt of such Diller Put Notice, Universal, or at Universal's option, its
designee, shall purchase such Diller Put Shares, subject to the terms of this
Section 4.4. So long as Diller is not disadvantaged as determined in his good
faith judgment, with respect to any options to be exercise by Diller in
connection with his exercise of the Diller Put, Universal shall be permitted to
determine whether Diller shall exercise such options through "cashless" exercise
option.

                  (b) If the Diller Put Event occurs at any time prior to the
fourth anniversary of the Closing, the purchase price per Diller Put Share (the
"Diller Share Put Price") shall be equal to the weighted average daily closing
prices of a share of the Common Stock on the Nasdaq National Market (or such
principal exchange or market on which such shares may be listed or may be traded
at such time) (the "Weighted Average Market Price") for the five trading days
immediately following the date on which a public announcement of the Diller Put
Event is made. For purposes of determining the Weighted Average Market Price,
the closing price for each day shall be the closing price, if reported, or, if
the closing price is not reported, the average of the high and low sales prices
as reported by the Nasdaq National Market (or such principal exchange or market)
or a similar source selected from time to time
   29
                                                                              26



by the Company for such purpose. In the event such prices are unavailable, the
Weighted Average Market Price shall be the Fair Market Value of such security
established by Independent Investment Banking Firms in accordance with the
procedures specified in Section 4.2(d) (with Diller having the rights of Liberty
in such Section, mutatis mutandis).

                  (c) If the Diller Put Event occurs at any time on or after the
fourth anniversary of the Closing, the Diller Share Put Price shall be equal to
(i) if the Diller Put is exercised no later than 10 Business Days after the
Diller Put Event Date, the Weighted Average Market Price for the five trading
days immediately preceding public announcement of the Diller Put Event or (ii)
if the Diller Put is exercised after the tenth Business Day following the Diller
Put Event Date and on or prior to the first anniversary of the Diller Put Event
Date, the Weighted Average Market Price for the five trading days immediately
prior to the exercise of the Diller Put.

                  (d) Subject to the receipt of applicable regulatory approvals
and subject to paragraph (f) below, the closing of the sale of the Diller Put
Shares shall occur as soon as reasonably practicable, and in any case no later
than 20 Business Days following receipt of the Diller Put Notice (such date or
such later date as set forth in paragraph (f) below, the "Diller Put Closing
Date"). The aggregate Diller Share Put Price shall be payable by wire transfer
of same day funds to an account specified by Diller no less than two Business
Days prior to the Diller Put Closing Date. Prior to the Diller Put Closing Date,
Diller shall exercise any Options (whether on a cashless exercise basis or
otherwise) necessary in order to deliver Common Shares to Universal (or such any
other transferee pursuant to paragraph (f) below) in connection with the Diller
Put. In the event of any stock split, stock dividend or similar distribution
following the date of determination of the Diller Share Put Price, the Diller
Share Put Price shall be appropriately adjusted.

                  (e) In the case, prior to the Diller Put Event Date, Universal
or a Permitted Transferee of Universal Transfers to a Third Party Transferee (A)
more than 50% of Universal's Initial Interest or (B) an amount of Equity such
that (x) the percentage voting power of the Common Shares beneficially owned by
the Third Party Transferee and its Affiliates after giving effect to such
transaction or transactions would be greater than that beneficially owned by
Universal and its Stockholder Group after giving effect to such transaction or
transactions, (y) the percentage voting power of the Common Shares beneficially
owned by the Third Party Transferee and its Affiliates after giving effect to
such transaction or transactions would be greater than that beneficially owned
by Liberty and the members of its Stockholder Group or any other stockholder and
(z) the percentage voting power of the Common Shares beneficially owned by the
applicable transferee and its Affiliates after giving effect to such transaction
would be greater than 15% of the voting power of the outstanding Common Shares
of the Company, such Third Party Transferee shall have, and such Transfer shall
be conditioned upon such Third Party Transferee expressly assuming in writing
(which shall be reasonably satisfactory to Diller), the obligations of Universal
set forth in Section 4.4 and Universal shall cease to have any obligations
pursuant to Section 4.4. Notwithstanding the foregoing, Universal shall cease to
have any obligation pursuant to Section 4.4 if, prior to the Diller Put Event
Date, it ceases to beneficially own more than 10% of the Common Shares.
Transfers of Common Shares by Universal or its
   30
                                                                              27



Permitted Transferees on or after the Diller Put Event Date shall not affect the
obligations of such parties pursuant to this Section.

                  (f) In the event that regulatory restrictions prevent or could
be reasonably expected to prevent Universal from acquiring Diller Put Shares at
such time as Diller exercises the Diller Put, Universal and Diller each agrees
as follows:

                           (i) Upon receipt of the Diller Put Notice, Universal
                  shall use its reasonable best efforts, including promptly
                  making all required regulatory filings, so that the Diller Put
                  can be consummated as promptly as reasonably practicable.

                           (ii) Upon receipt of the Diller Put Notice, Universal
                  shall use its best efforts to enter into an escrow arrangement
                  (the "Escrow") (subject to applicable law and the availability
                  of a suitable escrow agent on commercially reasonable terms
                  and conditions) pursuant to which Diller would deposit the
                  Diller Put Shares in an escrow account and title to the Diller
                  Put Shares would be transferred to the escrow agent, for the
                  benefit of Universal (provided that such shares would continue
                  to be subject to the Universal Proxy in accordance with
                  Section 3.5). The escrow arrangements shall further provide
                  that the Diller Put Shares shall be released to Universal, at
                  the option of Universal, at any time and subject to applicable
                  law, without the consent of Diller, whether for sale to a
                  third party or otherwise. Any dividends or distributions on
                  the Diller Put Shares from and after the time that the Diller
                  Put Shares are deposited in the escrow account shall be
                  similarly held for the benefit of Universal. At the time the
                  Diller Put Shares are deposited in an escrow account,
                  Universal shall pay to Diller the aggregate Diller Share Put
                  Price in the manner set forth in paragraph (d) above). Diller
                  agrees to cooperate in good faith with Universal to the extent
                  necessary to facilitate the escrow arrangements described
                  herein.

                           (iii) In the event that Universal is not able to
                  arrange the Escrow in accordance with clause (ii) above within
                  20 Business Days of the date of the Diller Put Notice (which
                  period may be extended at Diller's option), (x) Universal
                  shall, subject to applicable law, use its reasonable best
                  efforts to make a non-recourse loan (the "Diller Loan Amount")
                  to Diller in an aggregate amount not to exceed 45% of the
                  aggregate Diller Share Put Price, which loan shall be secured
                  by the Diller Put Shares (including any distributions with
                  respect thereto) and which shall contain other terms and
                  conditions subject to applicable law and otherwise reasonably
                  satisfactory to Universal and Diller and (y) Universal shall
                  begin to pay to Diller interest on the amount equal to the
                  difference between the aggregate Diller Share Put Price and
                  the Diller Loan Amount at the prime rate in effect from time
                  to time as announced by The Chase Manhattan Bank (the "Prime
                  Rate") which interest rate shall be increased by 100 basis
                  points on each of the six month and one year anniversary of
                  the date of the Diller Put Notice; provided that such interest
                  rate shall not exceed
   31
                                                                              28



                  the greater of (x) the Prime Rate and (y) 10%. Interest shall
                  cease to accrue and become payable at any such time as
                  Universal is able to either consummate the Escrow (including
                  paying Diller the remainder of the Diller Share Put Price) or
                  otherwise pays to Diller the remainder of the Diller Share Put
                  Price. Interest shall be paid monthly, on each monthly
                  anniversary of the date on which interest begins to accrue,
                  with any remaining accrued interest paid at the closing. The
                  Diller Share Put Price payable at the closing shall be reduced
                  by the amount of any loan pursuant to this paragraph (iii).

                           (iv) To the extent that Universal is unable to
                  consummate the Diller Put within eighteen months of the date
                  of the Diller Put Notice, Universal shall make arrangements
                  for a financial institution to sell the Diller Put Shares to a
                  third party, within 10 trading days following such
                  eighteen-month period, with the net proceeds thereof to be
                  paid to Diller; provided that if such net proceeds are less
                  than the Diller Put Price (including any interest accrued but
                  unpaid to the date of payment to Diller), Universal shall pay
                  to Diller, in cash, an amount equal to such deficiency;
                  provided, further, that if such net proceeds are greater than
                  the Diller Put Price (including any interest accrued but
                  unpaid to the date of payment to Diller), Diller shall pay to
                  Universal, in cash, an amount equal to such excess.

                           (v) If the Escrow is not effected and the spin-off
                  occurs, Diller and Universal shall cooperate in good faith to
                  enter into appropriate arrangements to ensure that the Diller
                  Put Price reflects the value of the shares of the regulated
                  subsidiary being spun off and any other dividend or
                  distribution, as appropriate, without Diller taking market
                  risk on the spun-off shares (and without having the benefit of
                  any increase in the value of the spun-off shares). Diller and
                  Universal will cooperate in good faith to enter into any
                  agreement with respect to such arrangements and voting
                  arrangements with respect to the spun-off shares prior to the
                  Closing.

                           (vi) Diller shall in good faith cooperate with
                  Universal to consummate the Diller Put and, subject to the
                  foregoing obligations of Universal, to provide a means of
                  consummating the Diller Put which, to the extent reasonably
                  practicable, would permit Universal to own and vote the Diller
                  Put Shares to the extent permitted by law.

In connection with the foregoing, the Company agrees to cooperate in good faith
with Universal in order to permit Universal to acquire beneficial ownership of
the Diller Put Shares which may include, without limitation, exchanging
additional LLC Shares with Universal for the Diller Put Shares or granting an
option to purchase shares of Common Stock in a number equal to the number of
Diller Put Shares; provided that the Company shall not be required to take any
action that would or could reasonably be expected to have substantial adverse
tax, accounting or financial consequences to the Company or its Subsidiaries
(including the LLC)). In addition, each of Diller and the Company agree that, so
long as there would not be any substantial adverse tax or accounting
consequences to the
   32
                                                                              29



Company or Diller, at Universal's option, they will use their reasonable best
efforts to transfer options to Universal in lieu of Common Shares.

                  (g) Liberty acknowledges and agrees that Transfers by Diller
to Universal pursuant to this Section 4.4 shall not result in any right of first
refusal by Liberty pursuant to Section 4.9.

                  SECTION 4.5 Tag-Along for Diller and Liberty for Transfers by
Universal. (a) Subject to prior compliance by Universal with Section 4.8, if
Universal or any members of its Stockholder Group shall desire to Transfer in
one transaction or a series of related transactions either

                  (i) more than 50% of Universal's Initial Interest or

                  (ii) an amount of Equity such that (x) the percentage voting
                  power of the Common Shares beneficially owned by the
                  applicable transferee and its Affiliates after giving effect
                  to such transaction or transactions would be greater than that
                  beneficially owned by Universal and its Affiliates after
                  giving effect to such transaction or transactions, (y) the
                  percentage voting power of the Common Shares beneficially
                  owned by the applicable transferee and its Affiliates after
                  giving effect to such transaction or transactions would be
                  greater than that held by Liberty and its Stockholder Group or
                  any other stockholder and (z) the percentage voting power of
                  the Common Shares beneficially owned by the applicable
                  transferee and its Affiliates after giving effect to such
                  transaction would be greater than 25% of the voting power of
                  the outstanding Equity of the Company

to any Person (including any Group), other than to a Person that was a Permitted
Transferee of Universal prior to the occurrence of such transaction and other
than pursuant to Section 4.8 to the extent that Liberty previously received a
Universal Tag-Along Notice pursuant to this Section 4.5 (with respect to the
transaction which gave rise to the proposed transaction pursuant to Section 4.8)
and did not exercise its rights thereunder (either such transaction or series of
related transactions, a "Universal Tag-Along Sale"), Universal shall give prior
written notice of such intended Transfer to Liberty and Diller (each, a
"Tag-Along Offeree") no later than the date on which Universal gives the Offer
Notice to Diller pursuant to Section 4.8(b). Such notice (the "Universal
Tag-Along Notice") shall set forth the terms and conditions of such proposed
Transfer, including the name of the proposed transferee, the amount of Equity
proposed to be Transferred (including the number of securities previously or
proposed to be Transferred to the applicable transferee or its Affiliates in a
related transaction) (the "Universal Tag-Along Shares"), the purchase price per
Common Share on an equivalent basis proposed to be paid therefor and the payment
terms and type of Transfer to be effectuated.

                  (b) Within 10 Business Days after delivery of the Universal
Tag-Along Notice by Universal to the Tag-Along Offerees, each Tag-Along Offeree
shall, by written notice to Universal, each have the opportunity and right to
sell to the transferee in such proposed
   33
                                                                              30



Transfer (upon the same terms and conditions as Universal or the most favorable
terms and conditions to Universal provided for in any one of a series of related
transactions) up to that number of Common Shares beneficially owned by such
Tag-Along Offeree as shall equal the product of (x) a fraction, the numerator of
which is the number of Universal Tag-Along Shares and the denominator of which
is the aggregate number of Common Shares beneficially owned as of the date of
the Universal Tag-Along Notice by Universal and its Stockholder Group,
multiplied by (y) the number of Common Shares beneficially owned by such Tag-
Along Offeree and its Stockholder Group as of the date of the Universal
Tag-Along Notice. In the event that the proposed transferee is unwilling to
purchase all of the Common Shares that Universal, Diller and Liberty propose to
Transfer hereunder, the number of Common Shares that a Stockholder, including
Universal, may sell pursuant to Section 4.5(a) shall be determined by
multiplying the maximum number of Common Shares that the proposed transferee of
the Universal Tag-Along Shares is willing to purchase on the terms set forth in
the Universal Tag-Along Notice by a fraction, the numerator of which is the
number of Common Shares that such Stockholder and its Stockholder Group proposes
to sell hereunder (subject to the maximum amount for each Stockholder calculated
pursuant to the preceding sentence) and the denominator of which is the
aggregate number of Common Shares that all Stockholders exercising rights under
this Section 4.5, including Universal, and the members of their respective
Stockholder Groups propose to sell hereunder.

                  (c) At the closing of any proposed Transfer in respect of
which a Universal Tag-Along Notice has been delivered, each Tag-Along Offeree
shall deliver, free and clear of all liens, to the proposed transferee
certificates evidencing the Common Shares to be sold thereto duly endorsed with
Transfer powers and shall receive in exchange therefore the consideration to be
paid by the proposed transferee in respect of such Common Shares. No transferee
shall be required to purchase shares of a BDTV Entity (or any form of Equity
other than Common Shares) in connection with the Universal Tag-Along Sale and
each of Liberty and Diller shall cooperate so that any transferor will be able
to purchase directly any Common Shares held by a BDTV Entity and not the shares
of any BDTV Entity.

                  (d) The Company shall cooperate with Universal and Liberty to
deliver Common Shares upon exchange by Universal or Liberty or any member of
their respective Stockholder Groups of LLC Shares or Exchange Shares in
connection with any such Transfer.

                  (e) This Section 4.5 shall not be applicable to any Transfer
pursuant to Section 4.8 to the extent that Liberty previously received a
Universal Tag-Along Notice pursuant to this Section 4.5 (with respect to the
transaction which gave rise to the proposed transaction pursuant to Section 4.8)
and did not exercise its rights thereunder.

                  (f) No Transfer or Transfers by Universal or any member of its
Stockholder Group constituting a Universal Tag-Along Sale shall be effected
absent compliance with this Section 4.5.

                  SECTION 4.6 Tag-Along for Liberty for Transfers by Diller to
Universal. (a) If Universal or any member of its Stockholder Group shall desire
to purchase from Diller or any member of his Stockholder Group, and Diller or
any member of his Stockholder Group
   34
                                                                              31



shall desire to Transfer to Universal or any member of its Stockholder Group,
any Common Shares beneficially owned by him , other than as set forth in
paragraph (e) below, (a "Stockholder Tag-Along Sale"), Universal shall give not
less than 10 Business Days' prior written notice to Liberty of such intended
Transfer. Such notice (the "Stockholder Tag-Along Notice") shall set forth the
terms and conditions of such proposed Transfer, including the number of Common
Shares proposed to be Transferred (the "Stockholder Tag-Along Shares"), the
purchase price per Common Share proposed to be paid therefor and the payment
terms and type of Transfer to be effectuated.

                  (b) Within 10 days after delivery of the Stockholder Tag-Along
Notice by Universal to Liberty, Liberty shall, by written notice to Universal,
have the opportunity and right to sell to Universal or its designee in such
proposed Transfer (upon the same terms and conditions as Diller) up to that
number of Common Shares beneficially owned by Liberty (including Liberty's pro
rata portion of any shares held by a BDTV Entity) as shall equal the product of
(x) a fraction, the numerator of which is the number of Stockholder Tag-Along
Shares and the denominator of which is the aggregate number of Common Shares
beneficially owned as of the date of the Stockholder Tag-Along Notice by Diller
and his Stockholder Group (excluding shares held by any BDTV Entity that were
not contributed by Diller), multiplied by (y) the number of Common Shares
beneficially owned by Liberty and its Stockholder Group (including Liberty's pro
rata portion of any shares held by a BDTV Entity) as of the date of the
Stockholder Tag-Along Notice. The number of Common Shares that Diller or Liberty
may sell to Universal pursuant to Section 4.6(a) shall be determined by
multiplying the maximum number of Stockholder Tag-Along Shares that Universal is
willing to purchase on the terms set forth in the Stockholder Tag-Along Notice
by a fraction, the numerator of which is the number of Common Shares that such
Stockholder and its Stockholder group proposes to sell hereunder (subject to the
maximum amount for Liberty calculated pursuant to the preceding sentence) and
the denominator of which is the aggregate number of Common Shares that Diller
and Liberty and their respective Stockholder Groups propose to sell hereunder.

                  (c) At the closing of any proposed Transfer in respect of
which a Stockholder Tag-Along Notice has been delivered, Liberty shall deliver,
free and clear of all liens, to Universal certificates evidencing the Common
Shares to be sold thereto duly endorsed with Transfer powers and shall receive
in exchange therefore the consideration to be paid by Universal in respect of
such Common Shares as described in the Stockholder Tag-Along Notice. Neither
Universal nor any member of its Stockholder Group shall be required to purchase
shares of a BDTV Entity in connection with the Universal Tag-Along Sale and each
of Liberty and Diller shall cooperate so that any transferee will be able to
purchase directly any Common Shares held by a BDTV Entity and not the shares of
any BDTV Entity.

                  (d) Diller and the members of his Stockholders Group shall not
effect any Transfer or Transfers constituting a Stockholder Tag-Along Sale
absent compliance with this Section 4.6.

                  (e) This Section 4.6 shall not be applicable to (i) any
Transfer by Diller to Universal pursuant to the exercise of the Diller Put
Right, (ii) any Transfer by Diller to
   35
                                                                              32



Universal of an aggregate of not more than 1,000,000 Common Shares within any
rolling twelve-month period (including any shares Transferred pursuant to
Section 4.7(e)(i)), (iii) any Transfer by Diller to Universal in connection with
Section 4.8 to the extent that Liberty received a Diller Tag-Along Notice
pursuant to Section 4.7 and did not exercise its rights thereunder, (iv) any
Transfer by Diller to Universal of any Common Shares acquired by Diller from
Liberty or (v) pursuant to Section 4.1(a)(w) or 4.1(a)(z).

                  SECTION 4.7 Tag-Along for Liberty for Transfers by Diller to a
Third Party. (a) If Diller shall desire to Transfer to any third party other
than Universal and the members of its Stockholder Group any of the Common Shares
beneficially owned by him or any member of his Stockholder Group (other than as
set forth in paragraph (e) below or other than as covered by Section 4.6), in
one transaction or a series of related transactions (the "Diller Tag-Along
Sale"), Diller shall give prior written notice to Liberty of such intended
Transfer no later than the date on which Diller gives the Offer Notice to
Universal pursuant to Section 4.8(b). Such notice (the "Diller Tag-Along
Notice") shall set forth the terms and conditions of such proposed Transfer,
including the number of Common Shares proposed to be Transferred (the "Diller
Tag-Along Shares"), the purchase price per Common Share proposed to be paid
therefor and the payment terms and type of Transfer to be effectuated.

                  (b) Within 10 days after delivery of the Diller Tag-Along
Notice by Diller to Liberty, Liberty shall, by written notice to Diller, have
the opportunity and right to sell to such third party in such proposed Transfer
(upon the same terms and conditions as Diller) up to that number of Common
Shares beneficially owned by Liberty (including Liberty's pro rata portion of
any shares held by a BDTV Entity) as shall equal the product of (x) a fraction,
the numerator of which is the number of Diller Tag-Along Shares and the
denominator of which is the aggregate number of Common Shares beneficially owned
as of the date of the Diller Tag-Along Notice by Diller and his Affiliates
(excluding shares held by any BDTV Entity that were not contributed by Diller),
multiplied by (y) the number of Common Shares beneficially owned by Liberty
(including Liberty's pro rata portion of any shares held by a BDTV Entity) as of
the date of the Diller Tag-Along Notice. The number of Common Shares that Diller
or Liberty may sell to a third party pursuant to Section 4.7(a) shall be
determined by multiplying the maximum number of Diller Tag-Along Shares that
such third party is willing to purchase on the terms set forth in the Diller
Tag-Along Notice by a fraction, the numerator of which is the number of Common
Shares that such Stockholder proposes to sell hereunder (subject to the maximum
amount for Liberty calculated pursuant to the preceding sentence) and the
denominator of which is the aggregate number of Common Shares that Diller and
Liberty propose to sell hereunder.

                  (c) At the closing of any proposed Transfer in respect of
which a Diller Tag-Along Notice has been delivered, Liberty shall deliver, free
and clear of all liens, to such third party certificates evidencing the Common
Shares to be sold thereto duly endorsed with Transfer powers and shall receive
in exchange therefore the consideration to be paid by such third party in
respect of such Common Shares as described in the Diller Tag-Along Notice. No
transferee shall be required to purchase shares of a BDTV Entity in connection
with the Diller Tag-Along Sale and each of Liberty and Diller shall cooperate so
that any transferee
   36
                                                                              33



will be able to purchase directly any Common Shares held by a BDTV Entity and
not the shares of any BDTV Entity.

                  (d) Diller and the members of his Stockholders Group shall not
effect any Transfer or Transfers constituting a Diller Tag-Along Sale absent
compliance with this Section 4.7.

                  (e) This Section 4.7 shall not be applicable to the Transfer
by Diller or any member of his Stockholder Group (i) of an aggregate of not more
than 1,000,000 Common Shares within any rolling twelve-month period (including
any shares Transferred pursuant to Section 4.6(e)(ii)), (ii) pursuant to Section
4.1(a)(w) or 4.1(a)(z), (iii) in a Market Sale or (iv) following such time as
Diller is no longer CEO other than any Transfer made in connection with Diller
ceasing to be CEO.

                  SECTION 4.8 Right of First Refusal between Universal and
Diller. (a) Any Transfer of Common Shares by Universal or Diller or members of
each of their respective Stockholder Groups (the "Transferring Party") will be
subject to the right of first refusal provisions of this Section 4.8 other than
a Transfer (i) between Universal and any member of the Universal Stockholder
Group or between members of the Universal Stockholder Group, (ii) by Diller
permitted by Section 4.1(a) hereof, (iii) in connection with any Market Sale
(other than any Market Sale (a "Covered Market Sale") involving the Transfer of
250,000 or more Common Shares in any rolling twelve month period) or (iv) a
Transfer of an aggregate of not more than 1,000,000 Common Shares within any
rolling twelve-month period (including any shares Transferred pursuant to
Section 4.6(e)(ii) and Section 4.7(e)(i).

                  (b) Prior to effecting any Transfer described in Section
4.8(a), the Transferring Party shall deliver a written notice (the "Offer
Notice") to Diller, if the Transferring Party is Universal or an Affiliate
thereof, or to Universal, if the Transferring Party is Diller or an Affiliate
thereof (the recipient of such notice, the "Other Stockholder"), which Offer
Notice shall specify (i) the Person to whom the Transferring Party proposes to
make such Transfer or the proposed manner of Transfer in the case of a public
offering or a Covered Market Sale, (ii) the number or amount and description of
the Common Shares to be Transferred, (iii) except in the case of a public
offering or a Covered Market Sale, the Offer Price (as defined below), and (iv)
all other material terms and conditions of the proposed Transfer, including a
description of any non-cash consideration sufficiently detailed to permit
valuation thereof, and which Offer Notice shall be accompanied by any written
offer from the prospective transferee to purchase such Common Shares, if
available and permitted pursuant to the terms thereof. The Offer Notice shall
constitute an irrevocable offer to the Other Stockholder or its designee, for
the period of time described below, to purchase all (but not less than all) of
such Common Shares upon the same terms specified in the Offer Notice, subject to
Section 4.8(g) and as otherwise set forth in this Section 4.8. The Other
Stockholder may elect to purchase all (but not less than all) of the Common
Shares at the Offer Price (or, if the Offer Price includes property other than
cash, the equivalent in cash of such property as determined in accordance with
Section 4.8(g)) and upon the other terms and conditions specified in the Offer
Notice.
   37
                                                                              34



                  (c) For purposes of this Section 4.8, "Offer Price" shall be
defined to mean on a per share or other amount of Common Shares basis (i) in the
case of a third party tender offer or exchange offer, the tender offer or
exchange offer price per Common Share taking into account any provisions thereof
with respect to proration and any proposed second step or "back-end"
transaction, (ii) in the case of a public offering or a Covered Market Sale, the
Current Market Value per Common Share as of the date the election notice of the
Other Stockholder hereinafter described is delivered and (iii) in the case of a
privately-negotiated transaction, the proposed sale price per Common Share.

                  (d) If the Other Stockholder elects to purchase the offered
Common Shares, it shall give notice to the Transferring Party within 10 Business
Days of its receipt of the Offer Notice of its election (or in the case of a
third party tender offer or exchange offer, not later than five Business Days
prior to the expiration date of such offer, provided that all conditions to such
offer (other than with respect to the number of Common Shares tendered) shall
have been satisfied or waived and the Offer Notice shall have been provided at
least ten Business Days prior to the expiration date of such offer), which shall
constitute a binding obligation, subject to standard terms and conditions for a
stock purchase contract between two significant stockholders of an issuer
(provided that the Transferring Party shall not be required to make any
representations or warranties regarding the business of the Company), to
purchase the offered Common Shares, which notice shall include the date set for
the closing of such purchase, which date shall be no later than 20 Business Days
following the delivery of such election notice, or, if later, five Business Days
after receipt of all required regulatory approvals; provided that the closing
shall only be delayed pending receipt of required regulatory approvals if (i)
the Other Stockholder is using reasonable efforts to obtain the required
regulatory approvals, (ii) there is a reasonable prospect of receiving such
regulatory approvals and (iii) if such closing is delayed more than 90 days
after the date of the Other Stockholder's notice of election to purchase, then
the Other Stockholder agrees to pay interest at the Reference Rate to the
Transferring Party from such date to the closing date. Notwithstanding the
foregoing, such time periods shall not be deemed to commence with respect to any
purported notice that does not comply in all material respects with the
requirements of this Section 4.8(d). The Other Stockholder may assign its rights
to purchase under this Section 4.8 to any Person who is a Permitted Designee.

                  (e) Subject to Section 4.8(f) in the case of a Covered Market
Sale, if the Other Stockholder does not respond to the Offer Notice within the
required response time period or elects not to purchase the offered Common
Shares, the Transferring Party shall be free to complete the proposed Transfer
(to the same proposed transferee, in the case of privately- negotiated
transaction) on terms no less favorable to the Transferring Party or its
Affiliate, as the case may be, than those set forth in the Offer Notice,
provided that (x) such Transfer is closed within (I) 90 days after the latest of
(A) the expiration of the foregoing required response time periods, or (B) the
receipt by the Transferring Party of the foregoing election notice or, in the
case of (A) or (B), if later, five Business Days following receipt of all
required regulatory approvals; provided that the closing shall only be delayed
pending receipt of required regulatory approvals if (i) the Transferring
Stockholder is using reasonable efforts to obtain the required regulatory
approvals and (ii) there is a reasonable prospect of receiving such regulatory
approvals or, (II) in the case of a public offering, within 20 days of the
   38
                                                                              35



declaration by the Commission of the effectiveness of a registration statement
filed with the Commission pursuant to this Agreement, and (y) the price at which
the Common Shares are transferred must be equal to or higher than the Offer
Price (except in the case of a public offering, in which case the price at which
the Common Shares are sold (before deducting such approvals underwriting
discounts and commissions) shall be equal to at least 90% of the Offer Price).

                  (f) If the Other Stockholder does not respond to the Offer
Notice with respect to a Covered Market Sale within the required response time
period or elects not to purchase the offered Common Shares, the Transferring
Party shall be free to complete the proposed Covered Market Sale in one or more
transactions during the 90-day period commencing on the latest of (i) the
expiration of the required response time period described in Section 4.8(d) or
(ii) receipt by the Transferring Party of the election notice described in
Section 4.8(d), provided that the price at which each Common Share is
transferred (excluding brokerage commissions) shall be at least equal to 90% of
the Offer Price.

                  (g) If (i) the consideration specified in the Offer Notice
consists of, or includes, consideration other than cash or a publicly traded
security for which a closing market price is published for each Business Day, or
(ii) any property other than Common Shares is proposed to be transferred in
connection with the transaction to which the Offer Notice relates, then the
price payable by the Other Stockholder under this Section 4.8 for the Common
Shares being transferred shall be equal to the Fair Market Value of such
consideration which shall be determined in the manner set forth in Section
4.2(d) (with Diller or Universal having the rights of Liberty in such Section,
mutatis mutandis). Notwithstanding anything to the contrary contained in this
Section 4.8, the time periods applicable to an election by the Other Stockholder
to purchase the offered securities set forth in Section 4.8(a) shall not be
deemed to commence until the Fair Market Value has been determined, provided
that, in the case of a third party tender offer or exchange offer, in no event
shall any such election be permitted later than five Business Days prior to the
latest time by which Common Shares shall be tendered in order to be accepted
pursuant to such offer or to qualify for any proration applicable to such offer
if all conditions to such offer (other than the number of shares tendered) have
been satisfied or waived. Each of Diller and Universal agrees to use its best
efforts to cause the Fair Market Value to be determined as promptly as
practicable but in no event later than 10 Business Days after the receipt by the
Other Stockholder of the Offer Notice.

                  (h) Liberty acknowledges and agrees that Transfers by Diller
to Universal pursuant to this Section 4.8 shall not result in any right of first
refusal by Liberty pursuant to Section 4.9.

                  SECTION 4.9 Right of First Refusal between Liberty and Diller.
(a) Any Transfer of Common Shares by a member of the Liberty Stockholder Group
or a member of the Diller Stockholder Group (the "L/D Transferring Party") will
be subject to the right of first refusal provisions of this Section 4.9, other
than a Transfer by a member of the Liberty Stockholder Group or the Diller
Stockholder Group permitted by Section 4.1(a) hereof, a Transfer by Liberty
pursuant to Section 4.2, 4.3, 4.5 hereof, a Transfer by Diller with respect
   39
                                                                              36



to which Liberty has a right pursuant to Section 4.6, a Transfer that is a sale
described in Sections 4.6(e)(ii) and 4.7(e)(i) or a Market Sale that is not a
Covered Market Sale.

                  (b) Prior to effecting any Transfer referred to in Section
4.9(a), the L/D Transferring Party shall deliver written notice (the "L/D Offer
Notice") to Diller, if the L/D Transferring Party is a member of the Liberty
Stockholder Group, or to Liberty, if the L/D Transferring Party is a member of
the Diller Stockholder Group (the recipient of such notice, the "L/D Other
Party"), which Offer Notice shall specify (i) the Person to whom the L/D
Transferring Party proposes to make such Transfer or the proposed manner of
Transfer in the case of a public offering or a Covered Market Sale, (ii) the
number or amount and description of the Common Shares to be Transferred, (iii)
except in the case of a public offering or a Covered Market Sale, the L/D Offer
Price (as defined below), and (iv) all other material terms and conditions of
the proposed Transfer, including a description of any non-cash consideration
sufficiently detailed to permit valuation thereof, and which Offer Notice shall
be accompanied by any written offer from the prospective transferee to purchase
such Common Shares, if available and permitted pursuant to the terms thereof.
The L/D Offer Notice shall constitute an irrevocable offer to the L/D Other
Party, for the period of time described below, to purchase all (but not less
than all) of such Common Shares.

                  (c) For purposes of this Section 4.9, "L/D Offer Price" shall
mean the purchase price per Common Share to be paid to the L/D Transferring
Party in the proposed transaction (as it may be adjusted in order to determine
the net economic value thereof). In the event that the consideration payable to
the L/D Transferring Party in a proposed transaction consists of securities, the
purchase price per share shall equal the fair market value of such securities
divided by the number of Common Shares to be Transferred. Such fair market value
shall be the market price of any publicly traded security and, if such security
is not publicly traded, the fair market value shall be equal to the appraised
value (calculated in accordance with the method described in Section 4.2(d)) of
such security.

                  (d) If the L/D Other Party elects to purchase the offered
Common Shares, it shall give notice to the L/D Transferring Party within ten
Business Days after receipt of the L/D Offer Notice of its election (or in the
case of a third party tender offer or exchange offer, not later than five
Business Days prior to the expiration date of such offer, provided that all
conditions to such offer (other than with respect to the number of Common Shares
tendered) shall have been satisfied or waived and the L/D Offer Notice shall
have been provided at least ten Business Days prior to the expiration date of
such offer), which shall constitute a binding obligation, subject to standard
terms and conditions for a stock purchase contract between two significant
stockholders of an issuer (provided that the L/D Transferring Party shall not be
required to make any representations or warranties regarding the business of the
Company), to purchase the offered Common Shares, which notice shall include the
date set for the closing of such purchase, which date shall be no later than 20
Business Days following the delivery of such election notice, or, if later, five
Business Days after receipt of all required regulatory approvals; provided that
the closing shall only be delayed pending receipt of required regulatory
approvals if (i) the L/D Other Party is using reasonable efforts to obtain the
required regulatory approvals, (ii) there is a reasonable prospect of receiving
such regulatory approvals and (iii) if such closing is delayed more than 90 days
after the date
   40
                                                                              37



of the L/D Other Party's notice of election to purchase, then the L/D Other
Party agrees to pay interest at the Reference Rate to the L/D Transferring Party
from such date to the closing date. Notwithstanding the foregoing, such time
periods shall not be deemed to commence with respect to any purported notice
that does not comply in all material respects with the requirements of this
Section 4.9(d). Liberty and Diller may assign their respective rights to
purchase under this Section 4.9 to any Person who is a Permitted Designee.

                  (e) Subject to Section 4.9(f) in the case of a Covered Market
Sale, if the L/D Other Stockholder does not respond to the L/D Offer Notice
within the required response time period or elects not to purchase the offered
Common Shares, the L/D Transferring Party shall be free to complete the proposed
Transfer (to the same proposed transferee, in the case of a privately-negotiated
transaction) on terms no less favorable to the L/D Transferring Party or its
Affiliate, as the case may be, than those set forth in the L/D Offer Notice,
provided that (x) such Transfer is closed within (I) 90 days after the latest of
(A) the expiration of the foregoing required response time periods, or (B) the
receipt by the L/D Transferring Party of the foregoing election notice or, in
the case of (A) or (B), if later, five Business Days following receipt of all
required regulatory approvals; provided that the closing shall only be delayed
pending receipt of required regulatory approvals if (i) the L/D Transferring
Stockholder is using reasonable efforts to obtain the required regulatory
approvals and (ii) there is a reasonable prospect of receiving such regulatory
approvals, or (II) in the case of a public offering, within 20 days of the
declaration by the Commission of the effectiveness of a registration statement
filed with the Commission pursuant to this Agreement, and (y) the price at which
the Common Shares are transferred must be equal to or higher than the L/D Offer
Price (except in the case of a public offering, in which case the price at which
the Common Shares are sold (before deducting underwriting discounts and
commissions) shall be equal to at least 90% of the L/D Offer Price).

                  (f) If the L/D Other Stockholder does not respond to the L/D
Offer Notice with respect to a Covered Market Sale within the required response
time period or elects not to purchase the offered Common Shares, the L/D
Transferring Party shall be free to complete the proposed Covered Market Sale in
one or more transactions during the 90-day period commencing on the latest of
(i) the expiration of the required response time period described in Section
4.9(d) or (ii) receipt by the L/D Transferring Party of the election notice
described in Section 4.9(d), provided that the price at which each Common Share
is transferred (excluding brokerage commissions) shall be at least equal to 90%
of the L/D Offer Price.

                  (g) If the L/D Other Party elects to exercise its right of
first refusal under this Section 4.9, the L/D Other Party shall pay the L/D
Offer Price in cash (by wire transfer of immediately available funds) or by the
delivery of marketable securities having an aggregate fair market value equal to
the L/D Offer Price, provided, that if the securities to be so delivered by the
L/D Other Party would not, in the L/D Transferring Party's possession, have at
least the same general degree of liquidity as the securities the L/D
Transferring Party was to receive in such proposed transaction (determined by
reference to the L/D Transferring Party's ability to dispose of such securities
(including, without limitation, the trading volume of such securities and the
L/D Other Party's percentage ownership of the issuer of such securities)), then
the L/D Other Party shall be required to deliver securities having an
   41
                                                                              38



appraised value (calculated in accordance with the method described in Section
4.2(d)) equal to the L/D Offer Price. If the L/D Other Party delivers securities
in payment of the L/D Offer Price, it will cause the issuer of such securities
to provide the L/D Transferring Party with customary registration rights related
thereto (if, in the other transaction, the L/D Transferring Party would have
received cash, cash equivalents, registered securities or registration rights).
Each of Diller and Liberty agrees to use his or its commercially reasonable
efforts (but not to expend any money) to preserve for the other Stockholder, to
the extent possible, the tax benefits available to it in such proposed
transaction, and to otherwise seek to structure such transaction in the most tax
efficient method available. Notwithstanding the foregoing, if Diller pays the
L/D Offer Price in securities, such securities must be securities that Liberty
is permitted to own under applicable FCC Regulations.

                  (h) Notwithstanding anything to the contrary contained in this
Section 4.9, the time periods applicable to an election by the L/D Other Party
to purchase the offered securities shall not be deemed to commence until the
fair market value has been determined, provided that, in the case of a third
party tender offer or exchange offer, in no event shall any such election be
permitted later than five Business Days prior to the latest time by which Common
Shares shall be tendered in such offer if all conditions to such offer (other
than the number of shares tendered) have been satisfied or waived. Each of
Diller and Liberty agrees to use his and its best efforts to cause the fair
market value to be determined as promptly as practicable, but in no event later
than ten Business Days after the receipt by the L/D Other Stockholder of the L/D
Offer Notice.

                  SECTION 4.10 Right of First Refusal of Universal. (a) Subject
to the right of first refusal of Diller pursuant to Section 4.9, any direct or
indirect Transfer of Common Shares by a member of the Liberty Stockholder Group
prior to August 24, 2000 with respect to which Diller would have a right of
first refusal pursuant to Section 4.9 will be subject to a right of first
refusal by Universal on the same terms and conditions as are applicable to
Diller pursuant to Section 4.9, mutatis mutandis.

                  (b) Universal acknowledges and agrees that its right of first
refusal pursuant to this Section 4.10 is subject to the right of first refusal
by Diller pursuant to Section 4.9.

                  (c) This Section 4.10 shall only be applicable to the initial
Transfer by Liberty of a number of Common Shares having an aggregate number of
votes equal to the Specified Votes.

                  SECTION 4.11 Transfers of Class B Shares. (a) Subject to the
rights of first refusal pursuant to Sections 4.8, 4.9 and 4.10 and subject to
paragraph (c) below, in the event that any Stockholder (the "Transferring
Stockholder") proposes to Transfer any shares of Class B Common Stock, such
Stockholder shall send a written notice (which obligation may be satisfied by
the delivery of the applicable Offer Notice) (the "Exchange Notice") to each
other Stockholder (the "Non-Transferring Stockholders"), that such Transferring
Stockholder intends to Transfer shares of Class B Common Stock, including the
number of such shares proposed to be Transferred. Each Non-Transferring
Stockholder shall give notice to the Transferring Stockholder within 20 days of
its receipt of the Exchange Notice of its desire to
   42
                                                                              39



exchange some or all of such shares of Class B Common Stock proposed to be
Transferred for an equivalent number of shares of Common Stock. If each of the
Non-Transferring Stockholders desires to exchange some or all of such shares and
to the extent that such shares are not otherwise Transferred to any Stockholder
(or its Permitted Designee) pursuant to Section 4.8, 4.9 or 4.10, such shares of
Class B Common Stock shall be exchanged (i) if the Transferring Stockholder is
other than Diller, first with Diller (to the extent he elects to exchange),
second, with respect to any remaining shares, with Universal (to the extent that
Universal elects to exchange) (if Universal is not the Transferring Stockholder)
and third, with Liberty and (ii) if the Transferring Stockholder is Diller, then
with Universal (to the extent that Universal elects to exchange), with any
remaining shares of Class B Common Stock exchanged with Liberty (to the extent
that Liberty elects to exchange). Except to the extent necessary to avoid
liability under Section 16(b) of the Exchange Act and subject to applicable law,
any such exchange shall be consummated immediately prior to the consummation of
any such Transfer.

                  (b) If any shares of Class B Common Stock proposed to be
Transferred are not exchanged pursuant to the provisions of paragraph (a) above,
prior to any such Transfer, the Transferring Stockholder shall convert, or cause
to be converted, such shares of Class B Common Stock into shares of Common Stock
(or such other securities of the Company into which such shares are then
convertible).

                  (c) The provisions of Section 4.11(a) and 4.11(b) shall not be
applicable to any Transfers (i) to a member of such Stockholder's Stockholder
Group, (ii) by Universal to a Permitted Designee of Universal; provided that (x)
Universal and all members of its Stockholder Group were precluded by FCC
Regulations from purchasing the shares purchased by such Permitted Designee and
(y) such Permitted Designee is reasonably satisfactory to Diller, (iii) pursuant
to a pledge or grant of a security interest in compliance with clause (y) of
Section 4.1(a), (iv) from one Stockholder or its Stockholder Group to the other
Stockholder or its Stockholder Group subject to the terms of this Agreement, (v)
any sale by Universal that would constitute a Universal Tag-Along Sale, (vi) any
sale by Liberty in connection with a Universal Tag-Along Sale or following the
Standstill Termination Date or (vii) by Universal following the CEO Termination
Date.

                  SECTION 4.12 Transferees. (a) Any Permitted Transferee or
Permitted Designee of a Stockholder shall be subject to the terms and conditions
of this Agreement as if such Permitted Transferee or Permitted Designee were
Universal (if Universal or a Permitted Transferee of Universal is the
transferor), Liberty (if Liberty or a Permitted Transferee of Liberty is the
transferor) or Diller (if Diller or a Permitted Transferee of Diller is the
transferor). Prior to the initial acquisition of beneficial ownership of any
Common Shares by any Permitted Transferee (or a Permitted Designee), and as a
condition thereto, each Stockholder agrees (i) to cause its respective Permitted
Transferees or Permitted Designees to agree in writing with the other parties
hereto to be bound by the terms and conditions of this Agreement to the extent
described in the preceding sentence and (ii) that such Stockholder shall remain
directly liable for the performance by its respective Permitted Transferees or
Permitted Designees of all obligations of such Permitted Transferees or
Permitted Designees under this Agreement. Except as otherwise contemplated by
this Agreement (i) each of
   43
                                                                              40



Universal, Diller and Liberty agrees not to cause or permit any of its
respective Permitted Transferees to cease to qualify as a member of such
Stockholder's Stockholders Group so long as such Permitted Transferee
beneficially owns any Common Shares, and if any such Permitted Transferee shall
cease to be so qualified, such Permitted Transferee shall automatically upon the
occurrence of such event cease to be a "Permitted Transferee" for any purpose
under this Agreement and (ii) each Stockholder agrees not to Transfer any Common
Shares to any Affiliate other than a Permitted Transferee of such Stockholder.

                  (b) No Third Party Transferee shall have any rights or
obligations under this Agreement, except:

                           (i) in the case of a Third Party Transferee of
                  Liberty (or any member of the Liberty Stockholder Group) who
                  acquires shares of Common Stock and who (together with its
                  Affiliates) would not be a Public Stockholder if at such time
                  Universal proposed a Permitted Business Combination (provided
                  that for purposes of this clause, the percentage referred to
                  in the definition of Public Stockholder shall be 15% in lieu
                  of 10%), such Third Party Transferee shall be subject to the
                  obligations of Liberty (but subject to the other terms and
                  conditions of this Agreement) pursuant to Article II (but only
                  for 18 months following the acquisition of such shares),
                  Section 3.2 (but only for 18 months following the acquisition
                  of such shares), Section 3.3(a) (but shall not have the right
                  to consent to any Fundamental Changes), the first sentence of
                  Section 3.3(b), Section 3.3(c), Section 3.7, as applicable,
                  this Section 4.12 and Article VI; provided that
                  notwithstanding any time periods set forth above, such Third
                  Party Transferee shall only be subject to such obligations for
                  so long as it would not be a Public Stockholder determined in
                  the manner set forth above;

                           (ii) in the case of a Third Party Transferee of
                  Universal (or any member of the Universal Stockholder Group)
                  who (together with its Affiliates) upon consummation of any
                  Transfer would not be a Public Stockholder if at such time
                  Universal proposed a Permitted Business Combination (provided
                  that for purposes of this clause, the percentage referred to
                  in the definition of Public Stockholder shall be 15% in lieu
                  of 10%), such Third Party Transferee shall be subject to the
                  obligations of Universal (but subject to the other terms and
                  conditions of this Agreement) pursuant to Section 3.3(a) (but
                  shall not have the right to consent to any Fundamental
                  Changes), Section 3.3(c), Section 3.4 (but only for 18 months
                  following the acquisition of such shares), Section 3.7,
                  Section 4.4 (to the extent provided in Section 4.4(f), this
                  Section 4.12 and Article VI; provided that notwithstanding any
                  time periods set forth above, such Third Party Transferee
                  shall only be subject to such obligations for so long as it
                  would not be a Public Stockholder determined in the manner set
                  forth above; and

                           (iii) in the case of a Third Party Transferee of
                  Diller (or any member of the Diller Stockholder Group) who
                  (together with its Affiliates) upon consummation of any
                  Transfer would not be a Public Stockholder if at such
   44
                                                                              41



                  time Universal proposed a Permitted Business Combination
                  (provided that for purposes of this clause, the percentage
                  referred to in the definition of Public Stockholder shall be
                  15% in lieu of 10%), such Third Party Transferee shall be
                  subject to the obligations of Diller (but subject to the other
                  terms and conditions of this Agreement) pursuant to Section
                  3.3(a) (but shall not have the right to consent to any
                  Fundamental Changes), the first sentence of Section 3.3(b),
                  Section 3.3(c), Section 3.7, this Section 4.12 and Article VI
                  and the obligations under Article II as if Diller had the
                  obligations of Liberty under such Article (but only for 18
                  months following the acquisition of such shares) and the
                  obligations under Section 3.2 as if Diller had the obligations
                  of Liberty under such Section (but only for 18 months
                  following the acquisition of such shares); provided that
                  notwithstanding any time periods set forth above, such Third
                  Party Transferee shall only be subject to such obligations for
                  so long as it would not be a Public Stockholder determined in
                  the manner set forth above.

                  (c) Prior to the consummation of a Transfer described in
Section 4.12(b) to the extent rights and obligations are to be assigned, and as
a condition thereto, the applicable Third Party Transferee shall agree in
writing with the other parties hereto to be bound by the terms and conditions of
this Agreement to the extent described in Section 4.12(b). To the extent the
Third Party Transferee is not an "ultimate parent entity" (as defined in the HSR
Act), the ultimate parent entity of such Third Party Transferee shall agree in
writing to be directly liable for the performance of the Third Party Transferee
to the same extent Universal or Liberty would be liable for their respective
Permitted Transferees.

                  SECTION 4.13 Notice of Transfer. To the extent any Stockholder
and its Permitted Transferees shall Transfer any Common Shares, such Stockholder
shall, within three Business Days following consummation of such Transfer,
deliver notice thereof to the Company and the other Stockholders, provided,
however, that no such notice shall be required to be delivered unless the
aggregate Common Shares transferred by such Stockholder and its Permitted
Transferees since the date of the last notice delivered by such Stockholder
pursuant to this Section 4.13 exceeds 1% of the outstanding Common Shares.

                  SECTION 4.14 Compliance with Transfer Provisions. Any Transfer
or attempted Transfer of Common Shares in violation of any provision of this
Agreement shall be void.

                                    ARTICLE V

                            BDTV ENTITY ARRANGEMENTS

                  SECTION 5.1 Management. The business and affairs of each BDTV
Entity will be managed by a Board of Directors elected by the holders of a
majority of the voting equity interests in such BDTV Entity. Notwithstanding the
foregoing, the taking of any action by a BDTV Entity with respect to (i) to the
extent permitted by applicable law, any Fundamental Change (as applied to such
BDTV Entity, mutatis mutandis) or (ii) any acquisition or disposition (including
pledges) of any Common Shares held by such BDTV
   45
                                                                              42



Entity, in either case, will require the unanimous approval of the holders of
all voting and non-voting equity interests in such BDTV Entity.

                  SECTION 5.2 Treatment of Contingent Shares and Exchange
Shares. If as a result of any issuance of shares of Class B Common Stock to
Liberty HSN pursuant to its Contingent Right, Liberty HSN would otherwise Own
(for purpose of the FCC Regulations) Common Shares (other than any such shares
held by a BDTV Limited Entity or, to the extent Liberty HSN is not deemed to
have an "attributable interest" therein, a BDTV Unrestricted Entity) which would
represent an "attributable interest" in the Company under applicable FCC
Regulations, (i) Liberty HSN will contribute to a newly-formed BDTV Unrestricted
Entity all such Contingent Shares in exchange for non-voting equity securities
of such BDTV Entity (in an amount based on the market price of the Common Stock
as of the date of such contribution) and (ii) Diller will contribute to such
BDTV Unrestricted Entity a number of whole shares of Common Stock equal to (A)
$100, divided by (B) the market price of the Common Stock as of the date of such
contribution, rounded up to the nearest whole number.

                  In the event that a holder of Exchange Securities would be
entitled to hold directly shares of Class B Common Stock issuable upon an
exchange of shares of Liberty Surviving Class B Stock but for the limitation
imposed by the FCC Regulations relating to a person's aggregate voting power in
the Company, and if such person would, under the FCC Regulations, be permitted
to hold directly a number of shares of Common Stock equal to the number of
shares of Class B Common Stock so issuable, then in connection with such
exchange, such holder will be required to offer to exchange such shares of Class
B Common Stock so receivable by it for Class B Common Stock owned by the Diller
Stockholder Group and, if Diller does not accept such offer to exchange, or if
such exchange with the Diller Stockholder Group cannot be accomplished on a
tax-free basis (and the exchange of such Exchange Securities for Common Shares
would not otherwise be taxable), then such holder shall be entitled to exchange
such Exchange Securities for shares of Class B Common Stock and thereafter
convert such shares of Class B Common Stock into shares of Common Stock.

                  Nothing in this Agreement shall obligate Liberty HSN to
contribute any Common Shares received pursuant to the Investment Agreement, the
Holder Exchange Agreement or upon exchange or other conversion of LLC Shares
pursuant to the Investment Agreement to a BDTV Entity.

                  SECTION 5.3 Changes to BDTV Structures. Liberty and Diller
agree, subject to applicable law and FCC Regulations, to take such actions as
may be reasonably necessary, including but not limited to amending the
certificate of incorporation of the BDTV Entities, in order to provide Liberty
with the ability to transfer, directly or indirectly, such amounts of Common
Shares Liberty is permitted to sell pursuant to Section 4.1(b)(iii).

                  SECTION 5.4 Transfers of BDTV Interests. Except as otherwise
specifically provided in this Agreement (including Section 4.1(b)), no transfers
or other dispositions (including pledges), directly or indirectly, of any
interest in (a) any BDTV Limited Entity by Liberty or (b) any BDTV Entity by
Diller will be permitted without the consent of the other; provided, that (i)
Liberty shall be entitled to transfer all or part of its interest in a BDTV
   46
                                                                              43



Entity to members of the Liberty Stockholder Group, (ii) at such time Liberty
becomes the owner of any voting securities of any BDTV Limited Entity, such BDTV
Limited Entity shall be deemed to be a BDTV Unrestricted Entity, and (iii) in
connection with any sale by Universal or Diller entitling Liberty to a right
pursuant to Section 4.5, 4.6 or 4.7, an exercise of the Liberty Put Right or the
Call Right by Universal, to the extent Liberty elects to exercise its right
pursuant to such Section or is otherwise selling Common Shares to Universal
pursuant to Section 4.2, Liberty and Diller shall take such reasonable action as
may be required in order for such interest in a BDTV Limited Entity to be sold
in any such transaction. Without the prior written consent of Liberty, Diller
shall not Transfer any interest in a BDTV Entity (other than to Liberty or,
subject to Liberty's reasonable consent, a member of the Diller Stockholder
Group).

                  For purposes of determining whether Liberty is permitted to
transfer the Common Shares held by a BDTV Unrestricted Entity, (i) such BDTV
Unrestricted Entity shall be deemed to be a member of the Liberty Stockholder
Group and the restrictions on transfers of interests in BDTV Entities shall not
apply to Liberty (subject, however, to the other restrictions on transfer of
Common Shares set forth herein, including the Right of First Refusal) and (ii)
in connection with any proposed sale by Liberty HSN of the Common Shares held by
a BDTV Entity (or its equity interest in such BDTV Entity), Liberty shall be
entitled to purchase Diller's entire interest in such BDTV Entity for an amount
in cash equal to the Diller Interest Purchase Price (formerly the "Dodgers
Interest Purchase Price") or, at its election, require Diller to sell his
interest in such BDTV Entity to any such transferee for a pro rata portion of
the consideration to be paid by the applicable transferee in such transaction.

                  At such time as (i) the CEO Termination Date has occurred or
Diller becomes Disabled or (ii) the Diller Stockholder Group ceases to own its
Eligible Stockholder Amount of Common Shares, Diller shall be required to sell
his entire interest in the BDTV Entities to Liberty (or Liberty's designee) at a
price equal to the Diller Interest Purchase Price.

                                   ARTICLE VI

                                  MISCELLANEOUS

                  SECTION 6.1 Conflicting Agreements. Each of the Stockholders
and the Company represents and warrants that such party has not granted and is
not a party to any proxy, voting trust or other agreement that is inconsistent
with or conflicts with any provision of this Agreement.

                  SECTION 6.2 Duration of Agreement. Except as otherwise
provided in this Agreement, the rights and obligations of a Stockholder under
this Agreement shall terminate as follows:

                  (a) Universal shall cease to be entitled to exercise any
rights and shall cease to have any obligations under this Agreement as of the
date that it ceases to have the right under
   47
                                                                              44



the Governance Agreement to designate any directors to the Board (the "Universal
Termination Date").

                  (b) Subject to Section 4.4 which shall survive until the
termination of the period for exercise (and, if exercised, until consummation)
of the Diller Put specified in Section 4.4, each of Liberty and Diller shall
cease to be entitled to exercise any rights and shall cease to have any
obligations under this Agreement as of the date that its Stockholder Group
collectively ceases to own its Eligible Stockholder Amount of Common Shares;
provided that Liberty shall cease to be entitled to exercise any rights and
shall cease to have any obligations under Sections 4.2, 4.3, 4.5, 4.6 and 4.7 at
such time as the Liberty Stockholder Group ceases to beneficially owns at least
5% of the outstanding Common Shares (the "Liberty Termination Date").

                  (c) Diller and each member of his Stockholder Group shall
cease to be entitled to exercise any rights (other than the Diller Put Right)
under this Agreement if the CEO Termination Date has occurred or Diller has
become Disabled (the "Diller Termination Date").

                  In addition, at such time as the CEO Termination Date has
occurred or Diller has become Disabled, neither the Diller Stockholder Group nor
the Liberty Stockholder Group shall have any obligation under this Agreement
with respect to the matters covered under Sections 3.6, 4.1 and 4.9.

                  SECTION 6.3 Further Assurances. At any time or from time to
time after the date hereof, the parties agree to cooperate with each other, and
at the request of any other party, to execute and deliver any further
instruments or documents and to take all such further action as the other party
may reasonably request in order to evidence or effectuate the consummation of
the transactions contemplated hereby and to otherwise carry out the intent of
the parties hereunder. Without limiting the generality of the foregoing, if, in
connection with the purchase of any Equity by Universal or Liberty pursuant to
Article IV, to the extent that Universal shall be restricted by FCC Regulations
from owning Common Shares, the Stockholders agree to cooperate, and cause the
Company to cooperate, and the Company agrees to cooperate in structuring the
purchase so that Universal shall acquire LLC Shares (in lieu of Common Shares)
in the transaction; provided that the transferee shall not be required to suffer
adverse tax consequences as a result of the foregoing.

                  SECTION 6.4 SCL Agreement to Cooperate. SCL agrees to
cooperate in good faith with Universal to satisfy Universal's obligation with
respect to providing Liquid Securities to Liberty pursuant to Sections 4.2 and
4.3 with SCL common stock, subject to (i) SCL continuing to beneficially own,
directly or indirectly, at least 80% of the Equity of Universal, (ii) existing
MEI arrangements, and (iii) fiduciary duties of SCL directors.

                  SECTION 6.5 Amendment and Waiver. Except as otherwise provided
herein, no modification, amendment or waiver of any provision of this Agreement
shall be effective against any Stockholder unless such modification, amendment
or waiver is approved in writing by each Stockholder; provided that with respect
to any provision containing an
   48
                                                                              45



agreement between only two Stockholders, such provision may be modified or
waived by approval in writing by such Stockholders, without the consent of the
third Stockholder unless such modification or waiver adversely affects the
rights of such third Stockholder as provided under this Agreement or the
Governance Agreement; provided, further, each amendment, modification or waiver
of the provisions of Section 2.1 by Universal without the consent of the Company
shall be subject to the terms and conditions of the Governance Agreement. The
failure of any party to enforce any of the provisions of this Agreement shall in
no way be construed as a waiver of such provisions and shall not affect the
right of such party thereafter to enforce each and every provision of this
Agreement in accordance with its terms.

                  SECTION 6.6 Severability. Whenever possible, each provision of
this Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement is held to be
invalid, illegal or unenforceable in any respect under any applicable law or
rule in any jurisdiction, such invalidity, illegality or unenforceability shall
not affect any other provision or any other jurisdiction, but this Agreement
shall be reformed, construed and enforced in such jurisdiction as if such
invalid, illegal or unenforceable provision had never been contained herein.

                  SECTION 6.7 Effective Date. Other than with respect to Section
3.3(e) which shall be effective as of the date hereof, this Agreement shall
become effective immediately upon the Closing.

                  SECTION 6.8 Entire Agreement. Except as otherwise expressly
set forth herein, this document and the Transaction Agreements embody the
complete agreement and understanding among the parties hereto with respect to
the subject matter hereof and supersede and preempt any prior understandings,
agreements or representations by or among the parties, written or oral, that may
have related to the subject matter hereof in any way. Without limiting the
generality of the foregoing, to the extent that any of the terms hereof are
inconsistent with the rights or obligations of any Stockholder under any other
agreement with any other Stockholder or the Company, the terms of this Agreement
shall govern. Upon the Closing, the stockholders agreements between Liberty and
Diller, dated as of August 24, 1995 and August 25, 1996 shall terminate and
shall be superseded by this Agreement.

                  SECTION 6.9 Successors and Assigns. Neither this Agreement nor
any of the rights or obligations under this Agreement shall be assigned, in
whole or in part (except by operation of law pursuant to a merger whose purpose
is not to avoid the provisions of this Agreement), by any party without the
prior written consent of the other parties hereto. Subject to the foregoing,
this Agreement shall bind and inure to the benefit of and be enforceable by the
parties hereto and their respective successors and assigns.

                  SECTION 6.10 Counterparts. This Agreement may be executed in
separate counterparts each of which shall be an original and all of which taken
together shall constitute one and the same agreement.

                  SECTION 6.11 Liabilities Under Federal Securities Laws. The
exercise by any Stockholder (or its Affiliates or Stockholder Group, if
applicable) (and including, in the case
   49
                                                                              46



of the Liberty Stockholder Group, its exercise of the rights relating to the
Contingent Right or the Holder Exchange Agreement) of any rights under this
Agreement shall be subject to such reasonable delay as may be required to
prevent any Stockholder or its respective Stockholder Group from incurring any
liability under the federal securities laws and the parties agree to cooperate
in good faith in respect thereof.

                  SECTION 6.12 Remedies. (a) Each party hereto acknowledges that
money damages would not be an adequate remedy in the event that any of the
covenants or agreements in this Agreement are not performed in accordance with
its terms, and it is therefore agreed that in addition to and without limiting
any other remedy or right it may have, the non-breaching party will have the
right to an injunction, temporary restraining order or other equitable relief in
any court of competent jurisdiction enjoining any such breach and enforcing
specifically the terms and provisions hereof.

                  (b) All rights, powers and remedies provided under this
Agreement or otherwise available in respect hereof at law or in equity shall be
cumulative and not alternative, and the exercise or beginning of the exercise of
any thereof by any party shall not preclude the simultaneous or later exercise
of any other such right, power or remedy by such party.

                  SECTION 6.13 Notices. Any notice, request, claim, demand or
other communication under this Agreement shall be in writing, shall be either
personally delivered, delivered by facsimile transmission, or sent by reputable
overnight courier service (charges prepaid) to the address for such Person set
forth below or such other address as the recipient party has specified by prior
written notice to the other parties hereto and shall be deemed to have been
given hereunder when receipt is acknowledged for personal delivery or facsimile
transmission or one day after deposit with a reputable overnight courier
service.


                  If to Universal:                     
                  
                  Universal Studios, Inc.
                  100 Universal City Plaza
                  Universal City, CA  91608
                  Attention:  Karen Randall, Esq.
                  Telephone:  (818) 777-1000
                  Facsimile:  (818) 866-3444
                  
                  with a copy to:
                  
                  Simpson Thacher & Bartlett
                  425 Lexington Avenue
                  New York, NY  10017-3909
                  Attention:  John G. Finley, Esq.
                  Telephone:  (212) 455-2000
                  Facsimile:  (212) 455-2502
   50
                                                                              47




                  If to Liberty:                                              
                  
                  Liberty Media Corporation
                  8101 East Prentice Avenue
                  Suite 500
                  Englewood, Colorado 80111
                  Attention:  President
                  Telephone:  (303) 721-5400
                  Facsimile:  (303) 841-7344
                  
                  with a copy to:
                  
                  Baker & Botts LLP
                  599 Lexington Avenue
                  Suite 2900
                  New York, New York 10022-6030
                  Attention:  Frederick H. McGrath, Esq.
                  Telephone:  (212) 705-5000
                  Facsimile:  (212) 705-5125
                  
                  If to Diller:
                  
                  c/o HSN, Inc.
                  1 HSN Drive
                  St. Petersburg, Florida 33729
                  Attention: General Counsel
                  Telephone:  (813) 572-8585
                  Facsimile:  (813) 573-0866
                  
                  with a copy to:
                  
                  Wachtell, Lipton, Rosen & Katz
                  51 West 52nd Street
                  New York, New York 10019
                  Attention: Pamela S. Seymon, Esq.
                  Telephone:  (212) 403-1000
                  Facsimile:  (212) 403-2000
                  
                  If to SCL:
                  
                  The Seagram Company Ltd.
                  1430 Peel Street
                  Montreal, Quebec
                  H3A 1S9 Canada
                  Attention:  Vice President, Legal and Environmental Affairs
                  Telephone:  (514) 987-5000
   51
                                                                              48



                  Facsimile:  (514) 987-5232

                  with copies to:

                  Joseph E. Seagram & Sons, Inc.
                  375 Park Avenue
                  New York, NY  10152
                  Attention:  Vice President--Legal Affairs, General Counsel
                  Telephone:  (212) 572-7000
                  Facsimile:  (212) 572-1398

                  Simpson Thacher & Bartlett
                  425 Lexington Avenue
                  New York, NY  10017-3909
                  Attention:  John G. Finley, Esq.
                  Telephone:  (212) 455-2000
                  Facsimile:  (212) 455-2502

                  SECTION 6.14 Governing Law; Consent to Jurisdiction. This
Agreement shall be governed by and construed in accordance with the laws of the
State of Delaware without giving effect to the principles of conflicts of law.
Each of the parties hereto hereby irrevocably and unconditionally consents to
submit to the non-exclusive jurisdiction of the courts of the State of Delaware
for any action, proceeding or investigation in any court or before any
governmental authority ("Litigation") arising out of or relating to this
Agreement and the transactions contemplated hereby and further agrees that
service of any process, summons, notice or document by U.S. mail to its
respective address set forth in this Agreement shall be effective service of
process for any Litigation brought against it in any such court. Each of the
parties hereto hereby irrevocably and unconditionally waives any objection to
the laying of venue of any Litigation arising out of this Agreement or the
transactions contemplated hereby in the courts of the State of Delaware, and
hereby further irrevocably and unconditionally waives and agrees not to plead or
claim in any such court that any such Litigation brought in any such court has
been brought in an inconvenient forum. Each of the parties irrevocably and
unconditionally waives, to the fullest extent permitted by applicable law, any
and all rights to trial by jury in connection with any Litigation arising out of
or relating to this Agreement or the transactions contemplated hereby.

                  SECTION 6.15 Interpretation. The table of contents and
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement. Whenever
the words "include", "includes" or "including" are used in this Agreement, they
shall be deemed to be followed by the words "without limitation". Whenever it is
necessary for purposes of this Agreement to determine whether an exchange is
tax-free or taxable, such determination shall be made without regard to any
interest imputed pursuant to Section 483 of the Code.
   52
                                                                              49



                  IN WITNESS WHEREOF, the parties hereto have executed this
Stockholders Agreement as of the date first written above.


                            UNIVERSAL STUDIOS, INC.


                            By:/s/ Brian C. Mulligan
                               ------------------------------------
                               Name:  Brian C. Mulligan
                               Title: Senior Vice President



                            LIBERTY MEDIA CORPORATION


                            By:/s/ Robert R. Bennett
                               ------------------------------------
                               Name:  Robert R. Bennett
                               Title: President and CEO


                            BARRY DILLER

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



                            HSN, INC. (with respect to Sections 4.4(g), 4.5(d)
                            and 6.3)

                            By:/s/ Victor A. Kaufman  
                               ------------------------------------
                               Name:  Victor A. Kaufman
                               Title: Office of Chairman



                            THE SEAGRAM COMPANY LTD. (with respect to
                            Sections 4.2(f) and 6.4)


                            By:/s/ Robert W. Matschullat
                               ------------------------------------
                               Name:  Robert W. Matschullat
                               Title: Vice Chairman and Chief Financial Officer

   1
                                                                   Exhibit 99.35
                                                                [CONFORMED COPY]

                                    AGREEMENT

         AGREEMENT, dated as of October 19, 1997, between Liberty Media
Corporation, a Delaware corporation ("Liberty") and Universal Studios, Inc., a
Delaware corporation ("Universal"). Capitalized terms used herein without
definition have the meanings ascribed to such terms in the Stockholders
Agreement (as defined below).

         WHEREAS, Liberty and Universal are parties to that certain Investment
Agreement, dated as of October 19, 1997 (as amended and restated as of December
18, 1997, the "Investment Agreement"), among Universal, Liberty, HSN, Inc. (the
"Company") and Home Shopping Network, Inc., the Governance Agreement, dated as
of October 19, 1997 (the "Governance Agreement"), among Universal, Liberty,
Barry Diller ("Diller") and the Company, and the Stockholders Agreement, dated
as of October 19, 1997 (the "Stockholders Agreement"), among Universal, Liberty,
Diller and the Company;

         WHEREAS, pursuant to the Investment Agreement, the Governance
Agreement, the Stockholders Agreement and the other agreements contemplated by
the Investment Agreement, Liberty and Universal have specified certain of their
respective rights and obligations with respect to the Company and each other;
and

         WHEREAS, in furtherance of the foregoing, and consistent with FCC
requirements, Liberty and Universal desire to confirm certain agreements
relating to the Company to become effective at such time as Diller is no longer
Chief Executive Officer ("CEO") of the Company or has become Disabled (as
defined in the Governance Agreement);


         NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and obligations hereinafter set forth, the parties hereto hereby agree
as follows:

         1.  Interim Arrangements. Following the CEO Termination Date or such
time as Diller becomes Disabled, subject to any required FCC approvals, Liberty
and Universal shall cooperate in good faith and use their respective reasonable
best efforts to appoint an interim CEO (the "Interim CEO") of the Company who
shall be mutually acceptable to them and shall be independent of each of Liberty
and Universal. If Universal elects, within the time period set forth in Section
2 below, to effect the Station Divestiture pursuant to Section 2 below, subject
to the receipt of any required FCC approvals, Liberty shall grant such interim
CEO a proxy to vote its Common Shares pending the completion of the Station
Divestiture (whereupon such proxy would be automatically revoked). Liberty shall
cause the Interim CEO to vote its Common Shares, at Universal's option (or, if
Liberty Beneficially Owns (as defined in the Governance Agreement) a greater
percentage of the Total Equity Securities (as defined in the Governance
Agreement) than Universal, at Liberty's option), (i) at his discretion or (ii)
in the same proportion as the public stockholders. Liberty and Universal shall
cooperate to cause the Company not to present any matters for a vote of
stockholders (or request its stockholders to vote by written consent) pending
completion of the Station Divestiture, except as may be necessary to complete
the Station Divestiture in accordance with paragraph 2 below.
   2
                                                                               2


         2.  Station Divestiture. Following the CEO Termination Date or such
time as Diller becomes Disabled, if Universal so elects by written notice (the
"Divestiture Notice") to the Company and Liberty within 60 days following the
first to occur of either such date, subject to applicable law, the Company shall
cause a divestiture of the Company's television stations (the "Station
Divestiture") to occur as promptly as practicable as provided under Section 9.14
of the Investment Agreement. In such event, the Company, Liberty and Universal
agree to use their respective best efforts to cause the Station Divestiture to
be structured as a pro rata distribution (the "Spin-Off") of 100% of the common
equity interests in the Regulated Subsidiary (as defined in the Investment
Agreement) to the holders of the Common Shares as of the record date for such
distribution which would be tax-free to the stockholders of the Company and in
which the stockholders of the Company would receive, subject to applicable law,
common equity securities having equivalent voting rights to their respective
shares of the Parent Common Stock and the Parent Class B Stock. If
notwithstanding such best efforts such distribution cannot be accomplished on a
tax-free basis to the stockholders of the Company, the Company will use its best
efforts to sell the Regulated Subsidiary; provided that if the Board of
Directors of the Company (other than any directors who are nominees of Universal
or Liberty) determines that a taxable Spin-Off of the Regulated Subsidiary, when
compared with a sale, would represent a superior alternative based upon, among
other factors, the advice from an independent investment banking firm that a
taxable Spin-Off would represent a superior alternative from a financial point
of view, the Company shall consummate a taxable Spin-Off. In connection with any
taxable Spin-Off, (i) Universal agrees to reimburse Liberty for any actual tax
liability incurred or payable by Liberty (including to TCI under Liberty's tax
sharing agreement with TCI) as a result of the Spin-Off with respect to the
equity interest in the Regulated Subsidiary received by Liberty held by Liberty
in an amount not to exceed $50 million and (ii) the Company, Universal and
Liberty will use their reasonable best efforts to minimize the tax liability
incurred by stockholders of the Company as a result of such Spin-Off. In
connection with the Station Divestiture, the Company will enter into a ten-year
affiliation agreement with the Regulated Subsidiary which, subject to clause
(ii) of the preceding sentence, will provide that the Regulated Subsidiary will
broadcast programming produced by the Company on customary terms and conditions,
including arms' length payment obligations. If required in order to accomplish
the Station Divestiture as a Spin-Off, Liberty agrees to, at its election, do
one or more of the following in order to facilitate such distribution: (i)
accept regular voting common equity securities of the Regulated Subsidiary in
respect of its shares of the Parent Class B Stock, (ii) grant a proxy to the CEO
of the Regulated Subsidiary to vote its shares of the Regulated Subsidiary, or
(iii) contribute all or part of its shares of the Regulated Subsidiary to an
entity similar to a BDTV Unrestricted Entity of which the CEO of the Regulated
Subsidiary would have voting control; provided that if Liberty takes any of the
actions specified in clauses (i), (ii) or (iii) of this Section 2, the CEO of
the Regulated Subsidiary shall be mutually acceptable to Liberty and Universal,
notwithstanding Section 4(i) to the contrary. In making its selection among the
actions described in clauses (i), (ii) and (iii) of the preceding sentence,
Liberty shall balance in good faith the benefits and burdens of such action or
inaction to Liberty, the Company and Universal.

         3.  Transfer. If Universal elects to effect the Station Divestiture
within the time period set forth in Section 2, Liberty agrees not to Transfer,
directly or indirectly, any Common Shares for fourteen months following the CEO
Termination Date or such date as
   3
                                                                               3


Diller becomes Disabled if such Transfer would result in Universal and Liberty
(and their respective Stockholder Groups) ceasing to own the Minimum Stockholder
Amount so long as Universal does not voluntarily Transfer at any time following
the Closing in one or more transactions an aggregate of more than 3% of the
outstanding Common Shares (determined as of the date of the consummation of the
closing pursuant to Section 1.5(f) of the Investment Agreement).

         4.  Post-Spin-Off Arrangements with Respect to the Regulated
Subsidiary. Following the Spin-Off, there will be no voting agreement, rights or
obligations between Universal and Liberty with respect to the Regulated
Subsidiary except Universal and Liberty agree that: (i) they will cooperate in
good faith and use their reasonable best efforts to select the person who shall
initially become the CEO of the Regulated Subsidiary immediately following the
Spin-Off and who shall be mutually acceptable to them; provided that if (x) one
party Beneficially Owns less than 15% of the Total Equity Securities and (y) the
other party Beneficially Owns (a) more than 15% of the Total Equity Securities
and (b) at least 5% more of Total Equity Securities than the party described in
(x), then the party described in (y) shall select the CEO who shall be
reasonably satisfactory to the party described in (x), (ii) the veto rights with
respect to the Regulated Subsidiary shall be substantially similar to the
Fundamental Changes contained in the Governance Agreement, provided that if
either party's Beneficial Ownership of equity in the Regulated Subsidiary is
less than 10%, such party will cease to have veto rights; (iii) they will each
have the right to nominate directors of the Regulated Subsidiary on a pro rata
basis with their equity ownership, subject to applicable law, provided that if
either party's Beneficial Ownership of equity in the Regulated Subsidiary is
less than 5%, such party will cease to have the right to nominate any directors,
(iv) they will each have registration rights with respect to the equity
securities of the Regulated Subsidiary that they receive in the Spin-Off on a
basis consistent with the registration rights that they have with respect to the
Common Stock of the Company in Section 5.07 of the Governance Agreement and (v)
they will each have preemptive rights with respect to the equity securities of
the Regulated Subsidiary on a consistent basis with the preemptive rights set
forth in the Investment Agreement. Calculations of all Beneficial Ownership
amounts in Section 4(i) and in Sections 8 and 9 below shall be determined in
accordance with the terms of the Governance Agreement. The rights specified in
clauses (ii), (iii) and (v) shall not be transferable. Calculations of all
Beneficial Ownership amounts in Section 4.(ii) and (iii) shall be determined in
accordance with Rule 13d-3 under the Exchange Act, except that Universal or
Liberty, as the case may be, shall be deemed to be the beneficial owner of any
equity securities which may be acquired by it, whether within 60 days or
thereafter, upon the conversion, exchange or exercise of any warrants, options,
rights or other securities issued by the Company or any Subsidiary thereof.

         5.  Post-Spin-Off Arrangements with Respect to the Company. Following
the Spin-Off, Liberty and Universal agree that they shall continue to have the
same respective rights and obligations under the Stockholders Agreement, subject
to Section 6.2 thereof. In addition, each of Liberty and Universal shall
continue to be entitled to the same number of Board seats as they are entitled
to under the Governance Agreement from time to time following the CEO
Termination Date.
   4
                                                                               4


         6.  Preservation of FCC Licenses. Each of Liberty and Universal agree
that they will not take any action pursuant to this Agreement that would not be
permitted by applicable law or would cause the loss or termination of the
Company's FCC licenses or cause the FCC to fail to renew such licenses; provided
that Liberty and Universal will use their commercially reasonable efforts to
enter into alternative arrangements to preserve such licenses for the Company.

         7.  Arrangements Absent Station Divestiture. If Universal has not given
the Divestiture Notice within the 60-day period set forth in Section 2, that it
intends to effect the Station Divestiture, Liberty and Universal shall, at the
request of Universal, negotiate in good faith, based on their respective equity
interests and with a view toward their respective rights under the Stockholders
Agreement and the Governance Agreement, mutually satisfactory arrangements and
agreements with respect to each other and the Company, consistent with FCC
requirements, it being understood that, the party with a greater equity interest
in the Company shall be entitled to relatively more influence with respect to
the business and affairs of the Company.

         8.  Reasonable Best Efforts by the Company. Subject to Section 2 and
the Company's obligations under the Investment Agreement, so long as either (i)
Universal and the members of its Stockholder Group Beneficially Own at least 40%
of the Total Equity Securities of the Company and no other stockholder of the
Company Beneficially Owns a greater percentage of the Total Equity Securities of
the Company than Universal or (ii) Liberty and Universal and the respective
members of their Stockholder Groups collectively Beneficially Own at least 50.1%
of the Total Equity Securities of the Company, the Company agrees to use its
reasonable best efforts to enable the parties to achieve the purposes of this
Agreement.

         9.  Duration of Agreement. (a) Universal shall cease to be entitled to
any rights and shall cease to have any obligations under this Agreement upon the
earlier to occur of (i) such time as Universal no longer has rights under
Section 9.14 of the Investment Agreement or (ii) such time as Universal shall
cease to Beneficially Own Equity Securities representing at least 7.5% of the
voting power of the Total Equity Securities.

         (b)  Liberty shall cease to be entitled to any rights and shall cease
to have any obligations under this Agreement upon the earlier to occur of (i)
the Liberty Termination Date or (ii) such time as Liberty shall cease to
Beneficially Own Equity Securities representing at least 7.5% of the voting
power of the Total Equity Securities.

         (c)  The Company shall cease to have any obligations under this
Agreement at such time as Universal and Liberty no longer have any rights or
obligations under this Agreement in accordance with (a) and (b) above.

         10.  Definitive Agreements. Universal, Liberty and the Company agree
that, in connection with implementing the Spin-Off, they will cooperate in good
faith to prepare definitive documents containing the terms set forth herein and
other terms as they may mutually agree to the extent not inconsistent with the
terms set forth herein; provided that if definitive agreements are not executed,
this Agreement shall continue to be binding in all respects.
   5
                                                                               5



         11.  Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision or any other jurisdiction, but this Agreement shall be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.

         12.  Counterparts. This Agreement may be executed in separate
counterparts each of which shall be an original and all of which taken together
shall constitute one and the same agreement.

         13.  Remedies. Each party hereto acknowledges that money damages would
not be an adequate remedy in the event that any of the covenants or agreements
in this Agreement are not performed in accordance with its terms, and it is
therefore agreed that in addition to and without limiting any other remedy or
right it may have, the non-breaching party will have the right to an injunction,
temporary restraining order or other equitable relief in any court of competent
jurisdiction enjoining any such breach and enforcing specifically the terms and
provisions hereof. All rights, powers and remedies provided under this Agreement
or otherwise available in respect hereof at law or in equity shall be cumulative
and not alternative, and the exercise or beginning of the exercise of any
thereof by any party shall not preclude the simultaneous or later exercise of
any other such right, power or remedy by such party.

         14.  Notices. Any notice, request, claim, demand or other communication
under this Agreement shall be in writing, shall be either personally delivered,
delivered by facsimile transmission, or sent by reputable overnight courier
service (charges prepaid) to the address for such Person set forth below or such
other address as the recipient party has specified by prior written notice to
the other parties hereto and shall be deemed to have been given hereunder when
receipt is acknowledged for personal delivery or facsimile transmission or one
day after deposit with a reputable overnight courier service.

         If to Universal:

         Universal Studios, Inc.
         100 Universal City Plaza
         Universal City, CA  91608
         Attention:  Karen Randall, Esq.
         Telephone:  (818) 777-1000
         Facsimile:  (818) 866-3444

         with a copy to:

         Simpson Thacher & Bartlett
         425 Lexington Avenue
         New York, NY  10017-3909
         Attention:  John G. Finley, Esq.
   6
                                                                               6


         Telephone:  (212) 455-2000
         Facsimile:  (212) 455-2502

         If to Liberty:

         Liberty Media Corporation
         8101 East Prentice Avenue
         Suite 500
         Englewood, Colorado 80111
         Attention:  President
         Telephone:  (303) 721-5400
         Facsimile:  (303) 841-7344

         with a copy to:

         Baker & Botts LLP
         599 Lexington Avenue
         Suite 2900
         New York, New York 10022-6030
         Attention:  Frederick H. McGrath, Esq.
         Telephone:  (212) 705-5000
         Facsimile:  (212) 705-5125

         If to the Company:

         c/o HSN, Inc.
         1 HSN Drive
         St. Petersburg, Florida 33729
         Attention: General Counsel
         Telephone:  (813) 572-8585
         Facsimile:  (813) 573-0866

         with a copy to:

         Wachtell, Lipton, Rosen & Katz
         51 West 52nd Street
         New York, New York 10019
         Attention: Pamela S. Seymon, Esq.
         Telephone:  (212) 403-1000
         Facsimile:  (212) 403-2000

         15.  Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware without giving effect to
the principles of conflicts of law.
   7
                                                                               7

         IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.


                                  UNIVERSAL STUDIOS, INC.


                                  By:/s/ Brian C. Mulligan
                                     -------------------------------
                                     Name:  Brian C. Mulligan
                                     Title:  Senior Vice President


                                  LIBERTY MEDIA CORPORATION


                                  By:/s/ Robert R. Bennett
                                     -------------------------------
                                     Name:  Robert R. Bennett
                                     Title: President and CEO


                                  HSN, INC. (with respect to Sections 2 and 8)


                                  By:/s/ Victor A. Kaufman
                                     -------------------------------
                                     Name:  Victor A. Kaufman
                                     Title: Office of the Chairman

   1
                                                                   Exhibit 99.36

                                                                [CONFORMED COPY]


                               EXCHANGE AGREEMENT

                          DATED AS OF OCTOBER 19, 1997

                                  BY AND AMONG

                                   HSN, INC.,
                                 (to be renamed
                               USA Networks, Inc.)

                             UNIVERSAL STUDIOS, INC.
                        (and certain of its subsidiaries)

                                       AND

                            LIBERTY MEDIA CORPORATION
                        (and certain of its subsidiaries)
   2

                                TABLE OF CONTENTS

                                                                            Page
                                                                            ----

ARTICLE 1            DEFINITIONS...........................................    1

      SECTION 1.1       Defined Terms......................................    1
      SECTION 1.2       Additional Defined Terms...........................    6

ARTICLE 2            EXCHANGE OF SHARES; TRANSFER OF SHARES................    7

      SECTION 2.1       Right to Exchange the LLC Shares...................    7
      SECTION 2.2       Disputes Concerning Occurrence of an Issuance 
                        Event and Available HSN Amount....................    10
      SECTION 2.3       Mechanics of the Exchange.........................    10
      SECTION 2.4       Sale Transaction..................................    12
      SECTION 2.5       Transfer Restrictions.............................    14
    
ARTICLE 3            EXCHANGE RATE ADJUSTMENTS............................    15

      SECTION 3.1       Exchange Rate Adjustments.........................    15
      SECTION 3.2       Notice of Adjustment..............................    19
      SECTION 3.3       Notice of Certain Transactions....................    19
      SECTION 3.4       Exchange Rate Adjustments for Actions of the LLC..    20
      SECTION 3.5       Limitation on Adjustments to Exchange Rate........    20

ARTICLE 4            GENERAL REPRESENTATIONS AND WARRANTIES OF HSN AND 
                     EACH HOLDER..........................................    20

      SECTION 4.1       Representations and Warranties of HSN.............    20
      SECTION 4.2       Representations and Warranties of Universal and 
                        Liberty...........................................    21

ARTICLE 5            REPRESENTATIONS AND WARRANTIES OF HSN WITH RESPECT 
                     TO EACH EXCHANGE.....................................    22

      SECTION 5.1       Organization and Qualification....................    22
      SECTION 5.2       Authorization of the Exchange.....................    22
      SECTION 5.3       Validity of HSN Shares, etc.......................    22
      SECTION 5.4       No Approvals or Notices Required; No Conflict 
                        with Instruments..................................    23


                                      -i-
   3

                                                                            Page
                                                                            ----

ARTICLE 6            REPRESENTATIONS AND WARRANTIES OF THE HOLDER WITH 
                     RESPECT TO EACH EXCHANGE.............................    24

      SECTION 6.5       Ownership and Validity of LLC Shares..............    24
      SECTION 6.6       No Approvals or Notices Required; No Conflict 
                        with Instruments..................................    25
      SECTION 6.3       No Liabilities of Universal Sub and Group Newco...    25

ARTICLE 7            COVENANTS AND OTHER AGREEMENTS.......................    26

      SECTION 7.1       Notification of Issuance Event....................    26
      SECTION 7.2       Reservation of HSN Stock..........................    26
      SECTION 7.3       Certain Obligations Upon Insolvency or Bankruptcy 
                        of LLC............................................    26
      SECTION 7.4       Reasonable Efforts................................    27
      SECTION 7.5       Notification of Certain Matters...................    28
      SECTION 7.6       Additional Covenants..............................    28

ARTICLE 8            MISCELLANEOUS........................................    30

      SECTION 8.1       Further Assurances................................    30
      SECTION 8.2       Expenses..........................................    30
      SECTION 8.3       Notices...........................................    30
      SECTION 8.4       Entire Agreement..................................    31
      SECTION 8.5       Assignment; Binding Effect; Benefit...............    31
      SECTION 8.6       Amendment ........................................    32
      SECTION 8.7       Extension; Waiver.................................    32
      SECTION 8.8       Survival .........................................    32
      SECTION 8.9       Tax Interpretation ...............................    32
      SECTION 8.10      General Interpretation ...........................    32
      SECTION 8.11      Severability .....................................    33
      SECTION 8.12      Counterparts .....................................    33
      SECTION 8.13      Applicable Law ...................................    33


                                      -ii-
   4

                               EXCHANGE AGREEMENT

            EXCHANGE AGREEMENT, dated as of October 19, 1997, by and among HSN,
INC., a Delaware corporation ("HSN"), UNIVERSAL STUDIOS, INC. (for itself and on
behalf of Universal Sub and the Universal Newcos), a Delaware corporation
("Universal"), and LIBERTY MEDIA CORPORATION (for itself and on behalf of the
Liberty Newcos), a Delaware corporation ("Liberty").

                                    RECITALS

            WHEREAS, HSN, Universal and Liberty have entered into an Investment
Agreement, dated as of the date hereof (the "Investment Agreement"), pursuant to
which, among other things, subject to the terms and conditions contained
therein, Universal will acquire (i) shares of HSN Common Stock, par value $.01
per share ("HSN Common Stock"), and/or HSN Class B Common Stock, par value $.01
per share ("HSN Class B Stock" and, together with the HSN Common Stock, "HSN
Stock"), and (ii) Class B shares of USAN LLC, a Delaware limited liability
company to be formed in connection with consummation of the transactions
contemplated by the Investment Agreement ("LLC", and such shares, "Class B LLC
Shares"), which may be exchanged from time to time pursuant to the terms hereof
and of the Investment Agreement for shares of HSN Common Stock or HSN Class B
Common Stock;

            WHEREAS, pursuant to the Investment Agreement (or any amendment
thereto), Liberty will, at the Holder Closing (as defined in the Investment
Agreement), contribute cash or other assets to HSN or the LLC in exchange for
shares of HSN Common Stock and/or Class C shares of the LLC ("Class C LLC
Shares" and, together with the Class B LLC Shares, the "LLC Shares"), which
shares will be mandatorily exchangeable, subject to the terms and conditions
hereof, into shares of HSN Common Stock;

            WHEREAS, the parties hereto desire to establish in this Agreement
certain rights and obligations relating to the exchange of LLC Shares for shares
of HSN Stock (as described in Article 6 of the Investment Agreement) and other
matters relating to the LLC Shares; and

            WHEREAS, the parties have entered into this Agreement in connection
with the execution and delivery of the Investment Agreement;

            NOW, THEREFORE, in consideration of the premises and the respective
representations, warranties, covenants and agreements set forth herein, the
parties hereto agree, effective, with respect to Universal and HSN, upon the
Closing Date and, with respect to Liberty, upon the Holder Closing (as defined
in the Investment Agreement), as follows:

                                    ARTICLE 1

                                   DEFINITIONS

            Section 1.1 Defined Terms. The definitions set forth in this Article
shall apply to the following terms when used with initial capital letters in
this Agreement.
   5

            "Agreement to Transfer" shall mean an agreement by a holder of LLC
Shares to transfer, directly or indirectly, the HSN Stock to be issued upon an
Exchange to one or more third parties who are entitled or otherwise permitted to
Own (in accordance with the Governance Agreement, Stockholders Agreement and FCC
Regulations) such HSN Stock (including in connection with a public offering of
HSN Stock effected pursuant to a Group's demand and piggyback registration
rights under the Stockholders Agreement).

            "Available HSN Amount" shall mean, as of the date of determination,
the number equal to the difference between (i) the maximum number of shares of
HSN Stock which a holder of LLC Shares would, under the FCC Regulations then in
effect, then be permitted to Own (in accordance with FCC Regulations), and (ii)
the number of shares of HSN Stock then Owned (for purposes of the FCC
Regulations) by such holder of LLC Shares, giving effect to the voting power of
the stock Owned or to be Owned by such holder (and including all shares of HSN
Stock held by the entities known as "BDTV Entities").

            "Business Day" shall mean any day other than a Saturday, Sunday or a
day on which banking institutions in the City of New York, New York are
authorized or obligated by law or executive order to remain closed.

            "Closing Date" shall mean the date of closing of the transactions
with Universal contemplated by the Investment Agreement.

            "Closing Price" shall mean, on any Trading Day, (i) the last sale
price (or, if no sale price is reported on that Trading Day, the average of the
closing bid and asked prices) of a share of HSN Common Stock on the Nasdaq
National Market on such Trading Day, or (ii) if the primary trading market for
the HSN Common Stock is not the Nasdaq National Market, then the closing sale
price regular way on such Trading Day, or, in case no such sale takes place on
such Trading Day, the reported closing bid price regular way on such Trading
Day, in each case on the principal exchange on which such stock is traded, or
(iii) if the Closing Price on such Trading Day is not available pursuant to one
of the methods specified above, then the average of the bid and asked prices for
the HSN Common Stock on such Trading Day as furnished by any New York Stock
Exchange member firm selected from time to time by the HSN Board of Directors
for that purpose.

            "Contingent Shares" shall mean the shares of HSN Class B Stock (or
other securities) which HSN is obligated to issue to Liberty HSN, Inc. pursuant
to Section 2(d) and Exhibit A of the Agreement and Plan of Exchange and Merger,
dated as of August 25, 1996, by and among House Acquisition Corp., Home Shopping
Network, Inc. and Liberty HSN.

            "Convertible Securities" shall mean rights, options, warrants and
other securities which are exercisable or exchangeable for or convertible into
shares of capital stock of any Person at the option of the holder thereof;
provided, however, that the term Convertible Securities shall not include the
HSN Class B Stock.

            "Current Market Price" on the Determination Date for any issuance of
rights, warrants or options or any distribution in respect of which the Current
Market Price is being calculated, shall mean the average of the daily Closing
Prices of the HSN Common Stock for the shortest of:


                                      -2-
   6

            (a) the period of 20 consecutive Trading Days commencing 30 Trading
      Days before such Determination Date,

            (b) the period commencing on the date next succeeding the first
      public announcement of the issuance of rights, warrants or options or the
      distribution in respect of which the Current Market Price is being
      calculated and ending on the last full Trading Day before such
      Determination Date, and

            (c) the period, if any, commencing on the date next succeeding the
      Ex-Dividend Date with respect to the next preceding issuance of rights,
      warrants or options or distribution for which an adjustment is required by
      the provisions of Section 3.1(a)(i)(4), 3.1(b) or 3.1(c), and ending on
      the last full Trading Day before such Determination Date.

            If the record date for an issuance of rights, warrants or options or
a distribution for which an adjustment is required by the provisions of Section
3.1(a)(i)(4), or Section 3.1(b) or (c) (the "preceding adjustment event")
precedes the record date for the issuance or distribution in respect of which
the Current Market Price is being calculated and the Ex-Dividend Date for such
preceding adjustment event is on or after the Determination Date for the
issuance or distribution in respect of which the Current Market Price is being
calculated, then the Current Market Price shall be adjusted by deducting
therefrom the fair market value (on the record date for the issuance or
distribution in respect of which the Current Market Price is being calculated),
as determined in good faith by the HSN Board of Directors, of the capital stock,
rights, warrants or options, assets or debt securities issued or distributed in
respect of each share of HSN Common Stock in such preceding adjustment event.
Further, in the event that the Ex-Dividend Date (or in the case of a
subdivision, combination or reclassification, the effective date with respect
thereto) with respect to a dividend, subdivision, combination or
reclassification to which Section 3.1(a)(i)(1), Section 3.1(a)(i)(2), Section
3.1(a)(i)(3) or Section 3.1(a)(i)(5) applies occurs during the period applicable
for calculating the Current Market Price, then the Current Market Price shall be
calculated for such period in a manner determined in good faith by the HSN Board
of Directors to reflect the impact of such dividend, subdivision, combination or
reclassification on the Closing Prices of the HSN Common Stock during such
period.

            "Determination Date" for any issuance of rights, warrants or options
or any dividend or distribution to which Section 3.1(b) or (c) applies shall
mean the earlier of (i) the record date for the determination of stockholders
entitled to receive the rights, warrants or options or the dividend or
distribution to which such paragraph applies and (ii) the Ex-Dividend Date for
such rights, warrants or options or dividend or distribution.

            "Exchange" shall mean an exchange of LLC Shares for shares of HSN
Stock pursuant to Section 2.1, including a merger or exchange described in
Section 2.1(a)(iii).

            "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations thereunder.

            "Exchange Notice" shall mean the written notice required to be
delivered to notify HSN or an Eligible Holder, as the case may be, of the
exercise of an Exchange Right.


                                      -3-
   7

            "Exchange Rate" shall mean the kind and amount of securities, assets
or other property that as of any date are issuable or deliverable upon exchange
of a Class B LLC Share or Class C LLC Share, as the case may be. The Exchange
Rate shall initially be one share of HSN Common Stock (or, in the case of
Universal, one share of HSN Common Stock or HSN Class B Stock as determined in
accordance with the Investment Agreement) per LLC Share. The Exchange Rate shall
be subject to adjustment, from time to time, as set forth in Article 3 of this
Agreement. In the event that pursuant to Article 3, the LLC Shares become
exchangeable for more than one class or series of capital stock of HSN or
another Person, the term "Exchange Rate," when used with respect to any such
class or series, shall mean the number or fraction of shares or other units of
such capital stock that as of any date would be issuable upon exchange of an LLC
Share.

            "Exchange Right" shall mean the right of a Group or HSN, as the case
may be, to effect an Exchange pursuant to Section 2.1.

            "Ex-Dividend Date" shall mean the date on which "ex-dividend"
trading commences for a dividend, an issuance of rights, warrants or options or
a distribution to which any of Section 3.1(a), (b), or (c) applies, in the
Nasdaq National Market or on the principal exchange on which the HSN Common
Stock is then quoted or traded.

            "FCC" shall mean the Federal Communications Commission or any
successor regulatory agency.

            "FCC Regulations" shall mean as of the applicable date,
collectively, all federal communications statutes and all rules, regulations,
orders, decrees and policies (including the FCC's Memorandum Opinion and Order
released March 11, 1996 and its Memorandum Opinion and Order released June 14,
1996) of the FCC as then in effect, and any interpretations or waivers thereof
or modifications thereto.

            "Foreign Ownership Limitation" shall mean the maximum aggregate
percentage of the capital stock of HSN that may be Owned or voted by or for the
account of Non-U.S. Persons under Section 310(b) of the Communications Act of
1934, as amended, to the extent and for so long as such section (or any
successor provision) is applicable.

            "Governance Agreement" shall mean the governance agreement among
HSN, Universal, Liberty and Mr. Diller, dated as of the date hereof (or any
successor agreement).

            "Group" shall mean the Universal Group or the Liberty Group.

            "Holder Closing" shall have the meaning provided in the Investment
Agreement.

            "HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended, and the rules and regulations thereunder.

            "Issuance Event" shall mean the occurrence of any event or the
existence of any fact or circumstance which would permit, under applicable FCC
Regulations, a Group (together with any affiliates, to the extent applicable
under law) to Own a greater number of shares of HSN Stock than such Group
(together with any affiliates, to the extent applicable under law) Owns as of
the date of such determination. For purposes of this Agreement, an 


                                      -4-
   8

Issuance Event which occurs (i) as a result of an order of the FCC, shall be
deemed to occur on the date that any such order becomes final and
non-appealable, or (ii) as a result of a change in law or regulation of the FCC,
shall be deemed to occur on the date such law or regulation was promulgated,
enacted or adopted or, if later, the date such law or regulation becomes
effective.

            "Liberty Group" shall mean, collectively, Liberty and the Liberty
Newcos, if any.

            "Liberty HSN" shall mean Liberty HSN, Inc., a Colorado corporation
and a wholly-owned subsidiary of Liberty.

            "Liberty HSN Exchange Shares" shall mean the shares of HSN Common
Stock and HSN Class B Common Stock issuable in connection with that certain
exchange agreement, dated as of December 20, 1996, by and between HSN and
Liberty HSN (the "Liberty Exchange Agreement").

            "Liberty Newco" shall mean each wholly-owned subsidiary of Liberty
or of an Affiliate of Liberty formed solely for the purpose of acquiring an
equity interest in the LLC, which entity shall not, so long as it holds LLC
Shares, engage in any other business other than the transactions contemplated by
the Investment Agreement, the Stockholders Agreement and related agreements
(including this Agreement); provided that prior to the Holder Closing, Liberty
and HSN shall agree in good faith as to the appropriate number of Liberty Newcos
in order to permit HSN to exercise its rights under Section 2.1(b) from time to
time.

            "Newco" shall mean a Universal Newco or a Liberty Newco.

            "Non-U.S. Persons or Entities" shall mean any foreign government or
the representative thereof, any alien or the representative of any alien or any
corporation organized under the laws of any foreign country or a foreign
government or a representative thereof, as those terms are used in 47 U.S.C. ss.
310(b) (or any successor provision).

            "Other Property" shall mean any security (other than HSN Common
Stock or HSN Class B Stock), assets or other property deliverable upon the
surrender of LLC Shares for Exchange in accordance with this Agreement.

            "Own" shall mean record, beneficial or other ownership, direct or
indirect, of securities which are attributable to a Person or otherwise owned by
a Person in accordance with applicable FCC Regulations. The terms "Ownership"
and "Owner" shall have correlative meanings.

            "Person" shall mean any individual, corporation, partnership, joint
venture, association, joint stock company, limited liability company, trust,
unincorporated organization, government or agency or political subdivision
thereof, or other entity, whether acting in an individual, fiduciary or other
capacity.

            "Redemption Securities" shall mean securities of an issuer other
than HSN that are distributed by HSN in payment, in whole or in part, of the
call, redemption, exchange or other acquisition price for Redeemable Capital
Stock.


                                      -5-
   9

            "Restrictive Condition" means any limitation or restriction imposed
on a Person as a result of such Person's acquisition of HSN Stock upon an
Exchange, or the imposition of any restriction or limitation of the type
referred to in clause (i) of Section 7.6(a) or any requirement that such Person
dispose or divest of any HSN Stock or interest therein (including any interest
in the entities known as the BDTV Entities) in connection with or as a result of
such Exchange.

            "SEC" shall mean the Securities and Exchange Commission.

            "Securities Act" shall mean the Securities Act of 1933, as amended,
and the rules and regulations thereunder.

            "Stockholders Agreement" shall mean the stockholders agreement among
HSN, The Seagram Company Ltd., Universal, Liberty and Mr. Diller, dated as of
the date hereof (or any successor agreement).

            "Trading Day" shall mean a day on which the primary trading market
for the HSN Common Stock is open for the transaction of business.

            "Universal Group" shall mean Universal, Universal Sub and the
Universal Newcos.

            "Universal Newco" shall mean each wholly-owned subsidiary of
Universal or of an Affiliate of Universal formed solely for the purpose of
acquiring an equity interest in the LLC, which entity shall not, so long as it
holds LLC Shares, engage in any other business other than the transactions
contemplated by the Investment Agreement, the Stockholders Agreement and related
agreements (including this Agreement).

            "Universal Sub" shall mean the entity described in Section 1.5 of
the Investment Agreement and otherwise complying with the requirements of the
definition of Universal Newco.

            SECTION 1.2 Additional Defined Terms. The following additional terms
listed below shall have the meanings ascribed thereto in the Section (or other
provisions hereof) indicated opposite such term:

      Term                                           Section
      ----                                           -------
      Additional Contingent Right                    7.3
      Adjustment Event                               3.2
      Class B LLC Shares                             Recitals
      Class C LLC Shares                             Recitals
      Contract                                       5.4(d)
      Contract Consent                               5.4(c)
      Contract Notice                                5.4(c)
      Exchange Date                                  2.3(d)
      Governmental Consent                           5.4(b)
      Governmental Entity                            5.4(b)
      Governmental Filing                            5.4(b)
      HSN                                            Introduction


                                      -6-
   10

      HSN Bylaws                                     5.1
      HSN Charter                                    5.1
      HSN Class B Stock                              Recitals
      HSN Common Stock                               Recitals
      HSN Preferred Stock                            4.1(a)
      HSN Stock                                      Recitals
      Investment Agreement                           Recitals
      Liberty                                        Introduction
      Liberty Exchange Agreement                     2.1(a)
      Liberty HSN Exchange Shares                    2.1(a)
      LLC                                            Recitals
      LLC Shares                                     Recitals
      NASD                                           5.3
      Redeemable Capital Stock                       3.1(a)(ii)
      Redemption Event                               3.1(d)
      Sale Transaction                               2.4(a)
      Tendered Exchange Shares                       2.4(c)
      Transferee                                     2.4(c)
      Universal                                      Introduction
      Violation                                      5.4(d)

                                    ARTICLE 2

                     EXCHANGE OF SHARES; TRANSFER OF SHARES

            SECTION 2.1 Right to Exchange the LLC Shares. (a) (i) Universal
Group Right. The Universal Group shall have the right, from time to time,
subject to the terms and conditions of this Agreement, to exchange a number of
LLC Shares at the then applicable Exchange Rate (as of the Exchange Date (as
defined below)), rounded down to the nearest whole number, for shares of HSN
Stock, so long as, after giving effect to such issuance, the Foreign Ownership
Limitation would not be exceeded and Universal (or its permitted transferee) is
otherwise permitted by law to Own such shares. Universal shall also be entitled
to receive upon such Exchange the kind and amount of Other Property (other than
shares of HSN Stock) for which such LLC Shares are then exchangeable pursuant to
Article 3 hereof. Subject to the provisions of the Investment Agreement,
Universal shall be entitled to elect whether to receive shares of HSN Common
Stock or HSN Class B Stock in connection with such exchange.

            (ii) Liberty Group Right. At such time, or from time to time, that
Liberty is entitled or otherwise permitted to Own additional shares of HSN Stock
in accordance with paragraph (c) of this Section 2.1, the Liberty Group shall
have the right, subject to the terms and conditions of this Agreement, to
exchange a number of LLC Shares at the then applicable Exchange Rate (as of the
Exchange Date), rounded down to the nearest whole number, for shares of HSN
Common Stock which would result in the issuance to such holder of a number of
shares of HSN Common Stock no greater than the then Available HSN Amount.
Liberty shall also be entitled to receive upon such Exchange the kind and amount
of Other Property (other than shares of HSN Stock) for which such LLC Shares are
then exchangeable pursuant to Article 3 hereof.


                                      -7-
   11

            (iii) Alternative Merger. With respect to any exchange provided for
in this Agreement, Universal or Liberty, as the case may be, may, in lieu of
such exchange, effect a transaction intended to qualify as a tax-free
reorganization under Section 368(a) of the Internal Revenue Code of 1986, as
amended (the "Code"), of a member or members of the Universal Group or the
Liberty Group, as the case may be, that owns LLC Shares by either (A) merging
such member or members of the Universal Group or the Liberty Group, as the case
may be (other than Universal or Liberty), with and into HSN (or, subject to
HSN's consent, which consent shall not be unreasonably withheld and shall be
exercised in good faith, with any direct wholly owned subsidiary of HSN) or (B)
exchanging all of the issued and outstanding stock of such member or members of
the Universal Group or the Liberty Group, as the case may be, for a number of
shares of HSN Common Stock (or, in the case of Universal, shares of HSN Class B
Stock as described in this Section), in the case of clause (A) or (B) as
provided in this paragraph. It shall be a condition to HSN's obligation to
effect any such merger or exchange that the representations set forth in Section
6.3 are true and correct, and the party hereto electing to effect such merger or
exchange shall have agreed to indemnify HSN with respect to any liabilities of
the Group member (regardless of materiality) pursuant to a customary
indemnification agreement reasonably satisfactory to HSN. In the event that such
condition cannot be satisfied, then Universal or Liberty, as the case may be,
shall not be entitled to the right described in this paragraph and such exchange
shall be effected as otherwise provided in this Agreement.

            In the case of a merger or exchange described in this paragraph, the
Exchange Rate for each outstanding share of stock of the member of the
respective Group shall be calculated by dividing the number of LLC Shares owned
by such member of the respective Group by the number of shares of stock of such
member issued and outstanding. The Exchange Rate shall be adjusted as
contemplated by the definition thereof to include Other Property as applicable.

            HSN shall take all reasonable actions to cause any merger pursuant
to clause (A) above to qualify as a statutory merger under state law and shall
make all required tax filings in connection with such merger.

            (b) (i) At such time as Liberty is entitled or otherwise permitted
to Own additional Shares of HSN Stock in accordance with paragraph (c) of this
Section 2.1, but following the issuance or expiration of the Contingent Shares
and prior to the exchange of any Liberty HSN Exchange Shares, HSN and Liberty
shall be obligated, subject to the terms and conditions of this Agreement, to
exchange a number of LLC Shares held by the Liberty Group at the then applicable
Exchange Rate (as of the Exchange Date) for shares of HSN Common Stock, rounded
down to the nearest whole number, which would result in the issuance to such
holder of a number of shares of HSN Common Stock up to the then Available HSN
Amount. Any Exchange described in this Section shall be effected by means of the
merger described in Section 2.1(a)(iii) and shall be subject to paragraph (d)
below, provided that if such Exchange would not satisfy the condition set forth
in paragraph (d)(i)(A) below, HSN may elect to effect such Exchange in any
reasonable manner to the extent that HSN agrees to indemnify Liberty for any
taxable income recognized by it as a result of such other manner of Exchange
(compared to an Exchange under Section 2.1(a)(iii)), on terms reasonably
acceptable to Liberty. Such holder shall also be entitled to receive upon such
Exchange, the kind and amount of Other Property (other than shares of HSN Stock)
for which such LLC Shares are then exchangeable pursuant to Article 3 hereof.


                                      -8-
   12

            (ii) In the event that the exchange with the Liberty Group described
in this paragraph is with a Liberty Newco, HSN shall only be permitted to effect
such exchange with respect to all LLC Shares held by any single Liberty Newco.

            (iii) HSN shall have the option, which may be exercised at any time
or from time to time, after the issuance or expiration of all Contingent Shares,
to suspend the mandatory exchange described in this paragraph as well as Liberty
HSN's right to exchange the Liberty HSN Exchange Shares in connection with a
future issuance of shares of HSN Stock in order to permit HSN to purchase or
redeem (in compliance with applicable law, including the FCC Regulations) up to
10 million shares of HSN Stock, which suspension shall remain in effect as long
as HSN continues to make diligent efforts to effect such purchase or redemption
and to complete such repurchases as promptly as reasonably practicable.

            (c) A Group shall be deemed to be entitled or otherwise permitted to
own additional shares of HSN Stock (i) upon the occurrence of an Issuance Event
or (ii) in connection with an Agreement to Transfer; provided that in the case
of clause (ii), all conditions to such transfer (other than the issuance of the
applicable number of shares of HSN Stock and other than any conditions which are
capable of being satisfied only at the closing of such transfer) have been
satisfied or waived by the applicable parties. In the case of an Exchange in
connection with an Agreement to Transfer, such holder shall be deemed to be
entitled or otherwise permitted to Own the number of shares of HSN Stock subject
to such agreement and which the applicable Transferee is entitled or otherwise
permitted to Own.

            (d) (i) It shall be a condition to the obligation of the Liberty
Group to consummate an Exchange that is mandatory pursuant to this Agreement
(including under subsection (b) above) that:

                  (A) only in the case of an Exchange described in Section
      2.1(a)(iii), that such Exchange not be taxable to such holder; provided,
      however, (x) that to the extent that the taxability of such Exchange was
      caused by or resulted from (1) any action or inaction by a member of the
      Liberty Group or any controlled affiliate thereof (other than any action
      or inaction specifically contemplated or required by the Investment
      Agreement, the Stockholders Agreement or this Agreement), or (2) the laws
      and regulations in effect as of the Closing Date, then such holder shall
      not be entitled to assert the failure of this condition; and (y) in the
      case of a Sale Transaction, the only condition under this clause (A) shall
      be that HSN and any other party to such transaction comply with the
      applicable requirements set forth in Section 2.4 regarding tax matters;
      and

                  (B) such Exchange not result in the creation or imposition of
      any Restrictive Condition with respect to any member of the Liberty Group
      or with respect to any shares received in the Exchange.

            (ii) It shall be a condition to the obligation of the Universal
Group to consummate an Exchange that is mandatory pursuant to Section 2.4 of
this Agreement that:

                  (A) HSN has complied with the covenants set forth in Section
      2.4 regarding tax matters; and


                                      -9-
   13

                  (B) such Exchange not result in the creation or imposition of
      any Restrictive Condition with respect to any member of the Universal
      Group or with respect to any shares received in the Exchange.

            (e) HSN's right and obligation to effect an Exchange shall be
deferred to the extent that the number of shares of HSN Stock which would then
otherwise be required to be issued to a Group upon such Exchange is less than
25,000 (which number shall be adjusted to give effect to any stock splits,
reverse splits, recapitalizations or the like); provided, however, that any such
LLC Shares not then required to be exchanged as a result of the provisions of
this paragraph shall be exchanged at such time as such number of shares of HSN
Stock issuable upon the Exchange of all LLC Shares then required or permitted to
be exchanged equals or exceeds such number, at which time, subject to the other
conditions herein, the parties shall execute each such Exchange. The deferral
set forth in this paragraph shall not be applicable in the event that upon the
Exchange of all of the outstanding LLC Shares by a Group, such holder would be
entitled to receive in the aggregate less than 25,000 shares of HSN Stock.

            SECTION 2.2 Disputes Concerning Occurrence of an Issuance Event and
Available HSN Amount. The determination of whether or not a holder is entitled
or otherwise permitted to Own additional shares of HSN Stock and the
determination of the Available HSN Amount issuable to the applicable holder,
shall be made in the good faith reasonable determination of the Person
exercising the Exchange Right based upon FCC Regulations. In the event of any
dispute between HSN and a holder of LLC Shares with respect to whether a holder
is entitled or otherwise permitted to Own additional shares of HSN Stock or the
determination of the Available HSN Amount issuable to such holder, such dispute
shall be resolved by delivery to HSN and such holder of a written opinion
addressed to each of HSN and such holder (which opinion shall be in form and
substance reasonably satisfactory to HSN and such holder and shall not be
subject to material qualifications or limitations) of counsel to HSN
specializing in FCC matters as to the matters that are the subject of any such
dispute. Such opinion shall be delivered within 10 Business Days after notice by
either HSN or such holder to the other party that the matter is outstanding and
has not been resolved between them. In the event that no such opinion is
delivered within 10 Business Days after such notice, the matter shall be
resolved in favor of such holder.

            SECTION 2.3 Mechanics of the Exchange. (a) A Group may exercise the
Exchange Right set forth in Section 2.1(a) above by delivering an Exchange
Notice to HSN. Subject to the terms and conditions thereof, HSN shall exercise
the Exchange Right set forth in Section 2.1(b) above by delivering an Exchange
Notice to the Liberty Group. If HSN delivers the Exchange Notice, such notice
shall set forth in reasonable detail the facts and circumstances which have
entitled or otherwise permitted such holder to Own additional shares of HSN
Stock, the Available HSN Amount, a brief description of the method used to
calculate such amount and the Exchange Rate in effect at such time. If a holder
delivers the Exchange Notice, such notice shall include the same information, to
the extent known by such holder, and shall also set forth whether the holder
elects to effect the Exchange under Section 2.1(a)(iii) and the number of LLC
Shares such holder desires to exchange or that are Owned by the member.
Universal shall in its Exchange Notice indicate the number and type of shares of
HSN Stock Universal requests be issued in respect of such Exchange. Each
Exchange Notice shall be irrevocable, and upon receipt of an Exchange Notice and
satisfaction of the conditions to such Exchange, HSN and such holder shall be
obligated to effect such Exchange.


                                      -10-
   14

            (b) Subject to the resolution of any disputes pursuant to Section
2.2 and subject to Section 2.1(d) and (e), as promptly as practicable following
receipt or delivery by HSN of an Exchange Notice, each of HSN and the applicable
holder shall, and shall cause each of its respective subsidiaries and the
officers, directors and employees of such Person and such Person's subsidiaries
to, (i) make any and all required applications or filings with, and seek any
required authorizations, consents, approvals, waivers, licenses, franchises,
permits or certificates from, any governmental or regulatory agencies
(including, but not limited to, with the FCC and under the HSR Act), (ii) use
all reasonable efforts to obtain any and all such authorizations, consents,
approvals, waivers, licenses, franchises, permits or certificates and the
expiration or termination of any applicable waiting period under the HSR Act, in
each case, which are reasonably necessary in connection with the applicable
Exchange, and (iii) use reasonable efforts to cooperate with, and express its
support for, such other party's efforts to obtain any such authorizations,
consents, approvals, waivers, licenses, franchises, permits and certificates and
the expiration or termination of any applicable waiting period under the HSR
Act. Upon receipt of such authorizations, consents, approvals, waivers, license,
franchises, permits or certificates or the expiration or termination of such
waiting period, as the case may be, HSN or the holder, as the case may be, shall
notify the other of such receipt, expiration or termination. Within 5 Business
Days of the receipt of any required authorizations, consents, approvals,
waivers, licenses, franchises, permits or certificates and the termination or
expiration of any applicable waiting period under the HSR Act has terminated,
and all required filings, notifications, registrations and qualifications with
federal, state, and local governmental and regulatory authorities have been
obtained, such holder of the LLC Shares specified (or the shares of the member
of the Group, if applicable) in the applicable Exchange Notice shall surrender
for exchange the appropriate stock certificate(s) pursuant to Section 2.3(c)
hereof.

            (c) At such time as all required consents, approvals, waivers and
terminations described in Section 2.3(b) have been obtained or waived and
provided that the conditions set forth in Section 2.2(e) have been satisfied (if
applicable), the holder shall surrender such holder's certificate or
certificates for the LLC Shares (or the shares of the member of the Group, if
applicable) to be exchanged, with appropriate stock powers attached, duly
endorsed, at the office of HSN or any transfer agent for HSN's stock, together
with a written notice to HSN that such holder is exchanging all or a specified
number of LLC Shares (or the shares of the member of the Group, if applicable),
represented by such certificate or certificates and stating the name or names in
which such holder desires the certificate or certificates for HSN Stock, to be
issued. Promptly thereafter, HSN shall (i) issue and deliver to such holder or
such holder's nominee or nominees, a certificate or certificates representing
the HSN Stock to be issued, conveyed and delivered to such holder pursuant to
Section 2.1, with any necessary documentary or transfer tax stamps duly affixed
and canceled, dated the applicable Exchange Date (as defined below), and such
certificates shall be issued to and registered in the name of the applicable
holder or in such other name as such holder shall request, and, (ii) if
applicable, file a certificate of merger. Certificates representing HSN Stock
include appropriate legends based on federal and state securities laws.

            (d) Each Exchange shall be deemed to have been effected at the close
of business on the date (the "Exchange Date") of receipt by HSN or any such
transfer agent of the certificate or certificates and notice referred to in
paragraph (c) above and, in any case, no later than five Business Days after all
applicable conditions to such Exchange have been satisfied or upon the filing of
a certificate of merger, if applicable. Each Exchange shall be at the Exchange
Rate in effect immediately prior to the close of business on the Exchange 


                                      -11-
   15

Date. If any transfer is involved in the issuance or delivery of any certificate
or certificates for shares of HSN Stock in a name other than that of the
registered holder of the LLC Shares (or the shares of the member of the Group,
if applicable), surrendered for exchange, such holder shall also deliver to HSN
a sum sufficient to pay all stock transfer taxes, if any, payable in respect of
such transfer or evidence satisfactory to HSN that such stock transfer taxes
have been paid. Except as provided above, HSN shall pay any issue, stamp or
other similar tax in respect of such issuance or delivery.

            (e) The Person or Persons entitled to receive the shares of HSN
Stock issuable on such Exchange shall be treated for all purposes as the record
holder or holders of such shares of HSN Stock, as of the close of business on
the Exchange Date; provided, however, that no surrender of LLC Shares (or the
shares of the member of the Group, if applicable) on any date when the stock
transfer books of HSN are closed for any purpose shall be effective to
constitute the Person or Persons entitled to receive the shares of HSN Stock,
deliverable upon such Exchange as the record holder(s) of such shares of HSN
Stock, on such date, but such surrender shall be effective (assuming all other
requirements for the valid Exchange of such shares have been satisfied) to
constitute such Person or Persons as the record holder(s) of such shares of HSN
Stock for all purposes as of the opening of business on the next succeeding day
on which such stock transfer books are open, and such Exchange shall be at the
Exchange Rate in effect on the Exchange Date as if the stock transfer books of
HSN had not been closed on such date. Without limiting the first sentence of
this paragraph (e), as of the close of business on an Exchange Date, the rights
and obligations of the holder of the applicable LLC Shares, as a holder thereof,
shall cease (other than with respect to such holder's right to receive the
applicable number of shares of HSN Stock and its obligation to deliver the
applicable certificate(s) for shares of HSN Stock as provided herein).

            (f) Holders of LLC Shares at the close of business on a record date
for any payment of declared dividends or distributions on such shares shall be
entitled to receive the dividend payable on such shares on the corresponding
dividend payment date notwithstanding the effective Exchange of such shares
following such record date and prior to the corresponding dividend payment date;
provided that in the event of a merger under Section 2.1(a)(iii), the holder of
the stock of such member shall be entitled to such dividend or distribution.

            (g) If LLC Shares represented by a certificate surrendered for
exchange are exchanged in part only, then simultaneously with any such Exchange,
HSN shall cause the LLC to issue and deliver to the registered holder, without
charge therefor, a new certificate or certificates representing in the aggregate
the number of unexchanged shares.

            SECTION 2.4 Sale Transaction. (a) Subject to applicable law, each of
the Universal Group and the Liberty Group agrees to immediately exercise its
option with respect to an Exchange provided for in this Article 2 with respect
to all LLC Shares held by any member of its Group simultaneously with the
consummation of a merger, consolidation or amalgamation between HSN and another
entity (other than an affiliate of HSN) in which HSN is acquired by such other
entity or a person who controls such entity, other than a subsidiary of HSN (a
"Sale Transaction"); provided that if such Sale Transaction can be effected as
to the applicable holders as a tax-free exchange involving a merger or exchange
of shares of members of the Universal Group (other than Universal) or Liberty
Group (other than Liberty), as the case may be, the Sale Transaction shall be
structured in such 


                                      -12-
   16

manner in lieu of such members exercising the option to effect an Exchange and,
in lieu of receiving shares of HSN Stock upon consummation of an Exchange, such
Persons shall be entitled to receive the type and amount of consideration that
such Persons would have received had such Exchange been consummated immediately
prior to the Sale Transaction, unless the alternative structure described in
this paragraph would materially adversely affect the ability of HSN to
consummate such Sale Transaction. In the case of a Sale Transaction which
provides for holders of HSN Stock to elect the form of consideration, HSN shall
make reasonable provision so that holders of LLC Shares may similarly make such
election, to the same extent that would be the case had such holder held shares
of HSN Stock immediately prior to the time of such election.

            (b) To the extent that a member of the Universal Group or the
Liberty Group is not permitted by law (including FCC Regulations) to take the
actions described in paragraph (a) above, in connection with a Sale Transaction,
the Exchange Rate shall, upon consummation of such transaction, be adjusted to
reflect the right to receive for each share of HSN Stock issuable pursuant to
this Article 2, the same consideration per share to be received by the holders
of HSN Common Stock in the Sale Transaction.

            (c) If a tender offer or exchange offer has been commenced for HSN
Common Stock (other than by HSN or a subsidiary of HSN) and, to the extent
permissible under the terms of the Governance Agreement, either Universal or
Liberty wishes to tender their respective LLC Shares or the stock of Universal
Sub, the Universal Newcos, or the Liberty Newcos, as the case may be, in such
tender or exchange offer, Universal or Liberty may at its option, either: (i)
simultaneously tender its shares of HSN Stock received pursuant to an Exchange
("Tendered Exchange Shares") to the exchange agent in such tender offer and
exercise its right to exchange LLC Shares for such shares in accordance with the
provisions of Section 2.1 (a) and the terms of this Agreement; provided that any
such exercise shall be conditioned on, and subject to, the consummation of such
tender offer; provided, further, that in the event that fewer than all Tendered
Exchange Shares are purchased in the tender offer, the exchange shall only occur
with respect to such Tendered Exchange Shares that are purchased in the tender
offer and the remaining Tendered Exchange Shares shall be returned to Universal
or Liberty, as the case may be, or (ii) transfer such LLC Shares or the stock of
Universal Sub, the Universal Newcos or the Liberty Newcos, as the case may be,
to a person or entity (the "Transferee") which (A) is not considered to be a
foreign owner for purposes of the FCC alien ownership rules and who would
otherwise be permitted to lawfully hold the shares of HSN Stock underlying the
right to effect the Exchange and (B) agrees to be bound by the terms of this
Agreement, and such Transferee shall exercise such Exchange right immediately
prior to the closing of the tender offer solely for purposes of participating in
such tender offer and pay the proceeds to Universal or Liberty, as the case may
be. In the case of clause (ii) above, in the event that less than all the HSN
Stock represented by the exchanged LLC Shares are purchased in such tender offer
or the tender offer is not consummated, at HSN's election, either (x) the
Transferee shall exchange with HSN such shares of HSN Stock not purchased in the
tender offer for a number of LLC Shares (based on the Exchange Rate and which
LLC Shares shall have the same terms as the original right contained herein),
and HSN shall deliver such shares and issue such replacement right to exchange
to the Transferee and the Transferee shall transfer such LLC Shares and related
right to exchange to Universal or Liberty, as the case may be, or (y) permit
Universal or Liberty, as the case may be, to hold the LLC Shares not purchased
in the tender offer.


                                      -13-
   17

            (d) In connection with any of the transactions described in this
Section 2.4 with respect to which HSN is a party to any agreement or contract
relating thereto, HSN shall require that effective provision be made in any such
transaction agreements or otherwise so that the provisions set forth herein
relating to any LLC Shares that are not exchanged in connection with such
transaction pursuant to paragraph (a) of this Section shall be entitled to the
same rights of Exchange as provided herein, as nearly as reasonably may be
practicable, to any other securities and assets deliverable upon an Exchange.
The resulting or surviving corporation of any such transaction shall expressly
assume the obligation to deliver, upon the exercise of an Exchange, such
securities, cash or other assets as the holders of LLC Shares shall be entitled
to receive pursuant to the provisions hereof, and to make provision for the
protection of the exchange of LLC Shares as provided in the preceding sentence.

            SECTION 2.5 Transfer Restrictions. (a) Except as otherwise set forth
in this Article 2 in connection with an Exchange, the rights and obligations of
each Group to effect an Exchange shall not be transferable by any member of such
Group.

            (b) (i) Except as permitted pursuant to Section 2.3(a), Universal
shall not sell or otherwise transfer any of its shares in Universal Sub or any
Universal Newco while such entity holds LLC Shares (other than to another member
of such Group) (provided that a merger or consolidation not in violation of with
the Governance Agreement in which Universal is a constituent corporation shall
be deemed not to be the transfer of shares beneficially owned by Universal if a
significant purpose of such transaction is not to avoid the provisions of this
Agreement), and Liberty shall not sell or otherwise transfer any of its shares
in any Liberty Newco while such entity holds LLC Shares (other than to another
member of such Group).

            (ii) Except in connection with the exercise of a right or obligation
to exchange LLC Shares (or shares of a member of the Universal Group or the
Liberty Group) (including pursuant to a transfer provided for in Sections 2.4(a)
and (c)), or the hypothecation, pledge or creation of a lien or security
interest in LLC Shares by HSN or its affiliates (including Home Shopping
Network, Inc.), except as specifically contemplated by the Investment Agreement,
none of HSN, Home Shopping Network, Inc., any Universal Newco, Liberty or any
Liberty Newco shall directly or indirectly transfer, pledge or create a lien or
security interest in their respective LLC Shares to any other person or entity.
The parties agree that any attempt to make or create such transfer, pledge, lien
or security interest shall be null and void and of no force and effect. The
foregoing notwithstanding, Universal or Liberty (so long as, in the case of
Liberty, such pledge does not impair HSN's right to cause an Exchange
hereunder), may pledge LLC Shares in connection with a bona fide financing,
provided that the pledgee agrees with HSN to effect an Exchange promptly upon
any foreclosure of such pledge and is permitted to Own such shares of HSN Stock.

            (iii) Notwithstanding paragraphs (i) and (ii), a holder may transfer
shares of the members of its Group so long as, after giving effect to such
transfer, such member continues to be a controlled member of the Group and the
transfer is not otherwise in violation of the Stockholders Agreement or the
Governance Agreement. Any such transfer shall be deemed an action taken by the
applicable holder, including for purposes of the tax matters in this Agreement.


                                      -14-
   18

            (c) Without limiting the foregoing, HSN shall cooperate with each of
the Universal Group and Liberty Group to ensure that, by virtue of holding LLC
Shares, neither Universal nor Liberty is disadvantaged in connection with a Sale
Transaction or tender or exchange offer by virtue of holding LLC Shares.

                                    ARTICLE 3

                            EXCHANGE RATE ADJUSTMENTS

            SECTION 3.1 Exchange Rate Adjustments. Subject to Section 3.5
hereof, the Exchange Rate shall be subject to adjustment from time to time as
provided below in this Section 3.1.

            (a) (i) If HSN shall, after the Closing Date:

            (1)   pay a stock dividend or make a distribution on the outstanding
                  shares of HSN Common Stock in shares of HSN Common Stock,

            (2)   subdivide or split the outstanding shares of HSN Common Stock
                  into a greater number of shares,

            (3)   combine the outstanding shares of HSN Common Stock into a
                  smaller number of shares,

            (4)   pay a dividend or make a distribution on the outstanding
                  shares of HSN Common Stock in shares of its capital stock
                  (other than HSN Common Stock, or rights, warrants or options
                  for its capital stock), or

            (5)   issue by reclassification of its outstanding shares of HSN
                  Common Stock (other than a reclassification by way of merger
                  or binding share exchange that is subject to Section 3.2) any
                  shares of its capital stock (other than rights, warrants or
                  options for its capital stock),

then, in any such event, the Exchange Rate, in effect immediately prior to the
opening of business on the record date for determination of stockholders
entitled to receive such dividend or distribution or the effective date of such
subdivision, split, combination or reclassification, as the case may be, shall
be adjusted so that the holder of LLC Shares shall thereafter be entitled to
receive, upon exchange of such shares, the number of shares of HSN Common Stock
(or, in the case of permitted election by Universal pursuant to Section 2.1(a)
and the Investment Agreement, HSN Class B Stock) or other capital stock (or a
combination of the foregoing) of HSN which such holder would have owned or been
entitled or otherwise permitted to receive immediately following such event if
such holder had exchanged its LLC Shares immediately prior to the record date
for, or effective date of, as applicable, such event.

            (ii) Notwithstanding the foregoing, if an event listed in clause (4)
or (5) above would result in the LLC Shares being exchangeable for shares or
units (or a fraction thereof) of more than one class or series of capital stock
of HSN and any such class or 


                                      -15-
   19

series of capital stock provides by its terms a right in favor of HSN to call,
redeem, exchange or otherwise acquire all of the outstanding shares or units of
such class or series (such class or series of capital stock being herein
referred to as "Redeemable Capital Stock") for consideration that may include
Redemption Securities, then the Exchange Rate shall not be adjusted pursuant to
this subparagraph (a) and in lieu thereof, the holders of such LLC Shares shall
be entitled to the rights contemplated by paragraph (c) with the same effect as
if the dividend or distribution of such Redeemable Capital Stock or the issuance
of the additional class or series of such Redeemable Capital Stock by
reclassification had been a distribution of assets of HSN to which such
paragraph (c) is applicable.

            (iii) The adjustment contemplated by this paragraph (a) shall be
made successively whenever any event listed above shall occur. For a dividend or
distribution, the adjustment shall become effective at the opening of business
on the Business Day next following the record date for such dividend or
distribution. For a subdivision, split, combination or reclassification, the
adjustment shall become effective immediately after the effectiveness of such
subdivision, split, combination or reclassification.

            (iv) If after an adjustment pursuant to this paragraph (a) a holder
of LLC Shares would be entitled to receive upon exchange thereof shares of two
or more classes or series of capital stock of HSN, the Exchange Rate shall
thereafter be subject to adjustment upon the occurrence of an action
contemplated by this Section 3.1 taken with respect to any such class or series
of capital stock other than HSN Common Stock on terms comparable to those
applicable to the HSN Common Stock pursuant to this Section 3.1.

            (b) (i) Subject to Section 3.5 hereof, if HSN shall, after the
Closing Date, distribute rights, warrants or options to all or substantially all
holders of its outstanding shares of HSN Common Stock and/or HSN Class B Stock
entitling them (for a period not exceeding 45 days from the record date referred
to below) to subscribe for or purchase shares of HSN Common Stock (or
Convertible Securities for shares of HSN Common Stock) at a price per share (or
having an exercise, exchange or conversion price per share, after adding thereto
an allocable portion of the exercise price of the right, warrant or option to
purchase such Convertible Securities, computed on the basis of the maximum
number of shares of HSN Common Stock issuable upon exercise, exchange or
conversion of such Convertible Securities) less than the Current Market Price on
the applicable Determination Date, then, in any such event, the Exchange Rate
shall be adjusted by multiplying such exchange rate in effect immediately prior
to the opening of business on the record date for the determination of
stockholders entitled to receive such distribution by a fraction, of which the
numerator shall be the number of shares of HSN Common Stock outstanding on such
record date plus the number of additional shares of HSN Common Stock so offered
pursuant to such rights, warrants or options to the holders of HSN Common Stock
(and to holders of Convertible Securities for shares of HSN Common Stock) for
subscription or purchase (or into which the Convertible Securities for shares of
HSN Common Stock so offered are exercisable, exchangeable or convertible), and
of which the denominator shall be the number of shares of HSN Common Stock
outstanding on such record date plus the number of additional shares of HSN
Common Stock which the aggregate offering price of the total number of shares of
HSN Common Stock so offered (or the aggregate exercise, exchange or conversion
price of the Convertible Securities for shares of HSN Common Stock so offered,
after adding thereto the aggregate exercise price of the rights, warrants or
options to purchase such Convertible Securities) to the holders of HSN Common
Stock (and 


                                      -16-
   20

to such holders of Convertible Securities for shares of HSN Common Stock) would
purchase at such Current Market Price.

            (ii) The adjustment contemplated by this paragraph (b) shall be made
successively whenever any such rights, warrants or options are distributed, and
shall become effective immediately after the record date for the determination
of stockholders entitled to receive such distribution. If all of the shares of
HSN Common Stock (or all of the Convertible Securities for shares of HSN Common
Stock) subject to such rights, warrants or options have not been issued when
such rights, warrants or options expire (or, in the case of rights, warrants or
options to purchase Convertible Securities for shares of HSN Common Stock which
have been exercised, if all of the shares of HSN Common Stock issuable upon
exercise, exchange or conversion of such Convertible Securities have not been
issued prior to the expiration of the exercise, exchange or conversion right
thereof), then the Exchange Rate shall promptly be readjusted to the Exchange
Rate which would then be in effect had the adjustment upon the issuance of such
rights, warrants or options been made on the basis of the actual number of
shares of HSN Common Stock (or such Convertible Securities) issued upon the
exercise of such rights, warrants or options (or the exercise, exchange or
conversion of such Convertible Securities).

            (iii) No adjustment shall be made under this paragraph (b) if the
adjusted Exchange Rate would be lower than the Exchange Rate in effect
immediately prior to such adjustment, other than in the case of an adjustment
pursuant to the last sentence of paragraph (b)(ii). The adjustment pursuant to
this paragraph in respect of any one event offered to holders of both HSN Common
Stock and HSN Class B Stock shall be made only once.

            (c) (i) Subject to Section 3.5 hereof, if HSN shall, after the
Closing Date, (x) pay a dividend or make a distribution to all or substantially
all holders of its outstanding shares of HSN Common Stock and/or HSN Class B
Stock of any assets (including cash) or debt securities or any rights, warrants
or options to purchase securities (excluding dividends or distributions referred
to in paragraph (a) (except as otherwise provided in clause (y) of this
sentence) and distributions of rights, warrants or options referred to in
paragraph (b)), or (y) pay a dividend or make a distribution to all or
substantially all holders of its outstanding shares of HSN Common Stock and/or
HSN Class B Stock of Redeemable Capital Stock, or issue Redeemable Capital Stock
by reclassification of the HSN Common Stock and/or HSN Class B Stock, and
pursuant to paragraph (a) such Redeemable Capital Stock is to be treated the
same as a distribution of assets of HSN subject to this paragraph (c), then, in
any such event, from and after the record date for determining the holders of
HSN Common Stock and HSN Class B Stock entitled to receive such dividend or
distribution, a holder of LLC Shares that exchanges such shares in accordance
with the provisions of this Agreement will upon such Exchange be entitled to
receive, in addition to the shares of HSN Common Stock or HSN Class B Stock for
which such shares are then exchangeable, the kind and amount of assets or debt
securities or rights, warrants or options to purchase securities comprising such
dividend or distribution that such holder would have received if such holder had
exchanged such LLC Shares immediately prior to the record date for determining
the holders of HSN Common Stock or HSN Class B Stock entitled to receive such
distribution. The adjustment pursuant to this paragraph in respect of any one
event offered to holders of both HSN Common Stock and HSN Class B Stock shall be
made only once.


                                      -17-
   21

            (ii) The adjustment pursuant to the foregoing provisions of this
paragraph (c) shall be made successively whenever any dividend or distribution
or reclassification to which this paragraph (c) applies is made, and shall
become effective immediately after (x) in the case of a dividend or
distribution, the record date for the determination of stockholders entitled to
receive such dividend or distribution or (y) in the case of a reclassification,
the effective date of such reclassification.

            (d) In the event that a holder of LLC Shares would be entitled to
receive upon exercise of an Exchange pursuant to this Agreement any Redeemable
Capital Stock and HSN redeems, exchanges or otherwise acquires all of the
outstanding shares or other units of such Redeemable Capital Stock (such event
being a "Redemption Event"), then, from and after the effective date of such
Redemption Event, the holders of LLC Shares then outstanding shall be entitled
to receive upon the Exchange of such shares (in addition to the consideration
such holders are otherwise entitled to receive pursuant to this Agreement), in
lieu of shares or any units of such Redeemable Capital Stock, the kind and
amount of securities, cash or other assets receivable upon the Redemption Event
(less any consideration paid to HSN by a holder of HSN Stock in connection with
such holders' receipt of Redemption Securities upon such Redemption Event (other
than the surrender of shares of Redeemable Capital Stock)) by a holder of the
number of shares or units of such Redeemable Capital Stock for which such LLC
Shares could have been exchanged immediately prior to the effective date of such
Redemption Event (assuming, to the extent applicable, that such holder failed to
exercise any rights of election with respect thereto and received per share or
unit of such Redeemable Capital Stock the kind and amount of securities, cash or
other assets received per share or unit by a plurality of the non-electing
shares or units of such Redeemable Capital Stock) (as such type and amount of
securities may be adjusted in accordance with this Agreement to reflect events
or actions subsequent to the Redemption Event), and from and after the effective
date of such Redemption Event the holders of LLC Shares shall have no other
exchange rights under these provisions with respect to such Redeemable Capital
Stock.

            (e) If this Section 3.1 shall require that an adjustment be made to
the Exchange Rate, such adjustment shall apply to any Exchange effected after
the record date for the event which requires such adjustment notwithstanding
that such Exchange is effected prior to the occurrence of the event which
requires such adjustment.

            (f) All adjustments to the Exchange Rate shall be calculated to the
nearest 1/1000th of a share. No adjustment in either such exchange rate shall be
required unless such adjustment would require an increase or decrease of at
least one percent therein; provided, however, that any adjustment which by
reason of this paragraph (f) is not required to be made shall be carried forward
and taken into account in any subsequent adjustment. No adjustment need be made
for a change in the par value of the HSN Common Stock and/or HSN Class B Stock.
To the extent the LLC Shares become exchangeable for cash, no adjustment need be
made thereafter as to the cash and no interest shall accrue on such cash, except
to the extent (as required under applicable law or otherwise) such cash is to be
held separate for the benefit of the holder, in which case the cash shall be
placed in an interest-bearing account with such interest for the benefit of the
holder.

            (g) HSN shall be entitled, to the extent permitted by law, to make
such increases in the Exchange Rate, in addition to those referred to above in
this Section 3.1, as HSN determines to be advisable in order that any stock
dividends, subdivisions of shares, 


                                      -18-
   22

reclassification or combination of shares, distribution of rights, options or
warrants to purchase stock or securities, or a distribution of other assets
hereafter made by HSN to its stockholders shall not be taxable.

            (h) There shall be no adjustment to the Exchange Rate in the event
of the issuance of any stock or other securities or assets of HSN in a
reorganization, acquisition or other similar transaction, except as specifically
provided in this Section 3.1 or, if applicable, Section 3.2. In the event this
Section 3.1 requires adjustments to the Exchange Rate under more than one of
paragraph (a), (b) or (c), and the record dates for the dividends or
distributions giving rise to such adjustments shall occur on the same date, then
such adjustments shall be made by applying first, the provisions of paragraph
(a), second, the provisions of paragraph (c) and third, the provisions of
paragraph (b).

            SECTION 3.2 Notice of Adjustment. Whenever the Exchange Rate is
adjusted as provided in Section 3.1 or 3.4 (an "Adjustment Event"), HSN shall:

            (a) compute the adjusted Exchange Rate in accordance herewith and
prepare a certificate signed by an officer of HSN setting forth the adjusted
Exchange Rate, the method of calculation thereof and the facts requiring such
adjustment and upon which such adjustment is based, all in reasonable detail;
and

            (b) promptly mail a copy of such certificate and a notice to the
holders of the outstanding LLC Shares.

The notice of adjustment and such certificate shall be mailed at or prior to the
time HSN mails an interim statement, if any, to its stockholders covering the
fiscal quarter during which the facts requiring such adjustment occurred, but in
any event within 45 days following the end of such fiscal quarter; provided that
if an Adjustment Event occurs following delivery of an Exchange Notice but prior
to the Exchange Date, HSN shall mail the notice of adjustment as soon as
practicable following the Adjustment Event but in no event later than five days
prior to the applicable Exchange Date.

            SECTION 3.3 Notice of Certain Transactions. In case, at any time
while any of the LLC Shares are outstanding,

            (a) HSN takes any action which would require an adjustment to the
Exchange Rate;

            (b) HSN shall authorize (i) any consolidation, merger or binding
share exchange to which HSN is a party, for which approval of the stockholders
of HSN is required or (ii) the sale or transfer of all or substantially all of
the assets of HSN (including any Sale Transaction); or

            (c) HSN shall authorize the voluntary dissolution, liquidation or
winding up of HSN or HSN is the subject of an involuntary dissolution,
liquidation or winding up;

then HSN shall cause to be filed at each office or agency maintained for the
purpose of exchange of LLC Shares and shall cause to be mailed to each holder of
LLC Shares at its last address as it shall appear on the stock register, at
least 10 days before the record date (or other date set for definitive action if
there shall be no record date), a notice stating the 


                                      -19-
   23

action or event for which such notice is being given and the record date for (or
such other date) and the anticipated effective date of such action or event;
provided, however, that any notice required hereunder shall in any event be
given no later than the time that notice is given to the holders of HSN Common
Stock or HSN Class B Stock.

            SECTION 3.4 Exchange Rate Adjustments for Actions of the LLC. In the
event of the occurrence of any of the transactions or other events described in
paragraphs (a)-(d) of Section 3.1 or in Section 2.4(a) with respect to the LLC
Shares, or otherwise affecting the LLC, the Exchange Rate shall be appropriately
adjusted in the manner contemplated by Sections 3.1 and 2.4(a), mutatis
mutandis, so that each holder's LLC Shares thereafter shall become exchangeable
for the kind and amount of HSN Stock or Other Property, upon the Exchange of
such holder's LLC Shares, that such holder would have received had such holder
exchanged all of its LLC Shares pursuant to this Agreement immediately prior to
the applicable Determination Date (or other comparable date) for such
transaction or other event. In addition to its obligation to adjust the Exchange
Rates, HSN's other rights and obligations set forth in Sections 3.1, 3.2 and 3.3
shall also apply to the extent applicable in the event of an adjustment pursuant
to this Section 3.4. HSN agrees that it will not cause or permit to occur any
such transaction or other event which would result in any adjustment to the
Exchange Rate unless the terms of the agreement relating to such transaction or
other event include obligations of the applicable parties consistent with the
foregoing. The provisions of this paragraph shall apply similarly to successive
transactions or other events to which this paragraph would otherwise be
applicable.

            SECTION 3.5 Limitation on Adjustments to Exchange Rate. The
covenants set forth in Sections 6.2 and 6.4 of the Investment Agreement shall
take priority over the adjustments to the Exchange Rate and other actions set
forth in this Article 3. With respect to any action, event or circumstance that
is covered by Section 6.2 or Section 6.4 of the Investment Agreement, HSN shall
have no obligation hereunder (and the Exchange Rate shall not be adjusted)
provided that HSN and the LLC comply with the terms of Sections 6.2 and 6.4 of
the Investment Agreement.

                                    ARTICLE 4

                    GENERAL REPRESENTATIONS AND WARRANTIES OF
                               HSN AND EACH HOLDER

            SECTION 4.1 Representations and Warranties of HSN. HSN hereby
represents and warrants:

            (a) As of the date hereof, the authorized capital stock of HSN
consists of (a) 150,000,000 shares of HSN Common Stock and 30,000,000 shares of
HSN Class B Stock, and (b) 15,000,000 shares of preferred stock, par value $.01
per share, of HSN (the "HSN Preferred Stock"), none of which have been
designated as to class or series. At the close of business on August 8, 1997,
(i) 43,526,372 shares of HSN Common Stock were issued and outstanding and
12,227,647 shares of HSN Class B Stock were issued and outstanding, all of which
are validly issued, fully paid and nonassessable and not subject to any
preemptive rights and (ii) no shares of HSN Common Stock were held in treasury
by HSN or by subsidiaries of HSN. The statements in Section 3.2 of the
Investment Agreement with respect to the number of outstanding options and other
rights to purchase or acquire 


                                      -20-
   24

HSN Common Stock or HSN Class B Stock are true and complete in all material
respects as of the date reflected therein. As of the date hereof, no shares of
HSN Preferred Stock were issued or outstanding.

            (b) HSN has all necessary corporate power and authority to execute
and deliver this Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement by HSN and the consummation by HSN of the transactions
contemplated hereby have been duly and validly authorized by all necessary
corporate action on the part of HSN, and no other corporate proceedings on the
part of HSN are necessary to authorize this Agreement or consummate the
transactions contemplated hereby.

            (c) This Agreement has been duly and validly executed and delivered
by HSN and, assuming the due authorization, execution and delivery by the other
parties hereto, constitutes the legal and binding obligation of HSN, enforceable
against HSN in accordance with its terms, subject to (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting or relating to
creditors rights generally and (ii) the availability of injunctive relief and
other equitable remedies.

            (d) The execution, delivery and performance of this Agreement by HSN
(with or without the giving of notice, the lapse of time, or both): (i) do not
require any notices, reports or other filings to be made by HSN with any public
or governmental authority; (ii) do not require the consent of any third party
(including any governmental or regulatory authority); (iii) will not conflict
with any provision of the HSN Charter or the HSN By-Laws; (iv) will not violate
or result in a breach of, or contravene any law, judgment, order, ordinance,
injunction, decree, rule, regulation or ruling of any court or governmental
instrumentality applicable to HSN; and (v) violate or result in the breach of
any material Contract, except for such matters that would not have a material
adverse effect on the transactions contemplated hereby.

            SECTION 4.2 Representations and Warranties of Universal and Liberty.
Each of Universal and Liberty, with respect to itself and each member of its
respective Group, hereby represents and warrants:

            (a) It has all necessary corporate power and authority to execute
and deliver this Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement by it, and the consummation by it and the members of its Group of
the transactions contemplated hereby have been duly and validly authorized by
all necessary corporate action on the part of it and the members of its Group,
and no other corporate proceedings on the part of it and the members of its
Group are necessary to authorize this Agreement or to consummate the
transactions contemplated hereby.

            (b) This Agreement has been duly and validly executed and delivered
by it and, assuming the due authorization, execution and delivery by the other
parties hereto, constitutes the legal and binding obligation of it and the
members of its Group, enforceable against it and the members of its Group in
accordance with its terms, subject to (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting or relating to
creditors rights generally and (ii) the availability of injunctive relief and
other equitable remedies.


                                      -21-
   25

            (c) The execution, delivery and performance of this Agreement by it
and the members of its Group (with or without the giving of notice, the lapse of
time, or both): (i) do not require any notices, reports or other filings to be
made by it or the members of its Group with any public or governmental
authority; (ii) do not require the consent of any third party (including any
governmental or regulatory authority); (iii) will not conflict with any
provision of the Certificate of Incorporation or By-Laws of it or any member of
its Group; (iv) will not violate or result in a breach of, or contravene any
law, judgment, order, ordinance, injunction, decree, rule, regulation or ruling
of any court or governmental instrumentality applicable to it or the members of
its Group; and (v) violate or result in the breach of any material Contract
(applying such term to such Group), except for such matters that would not have
a material adverse effect on the transactions contemplated hereby.

                                    ARTICLE 5

                        REPRESENTATIONS AND WARRANTIES OF
                        HSN WITH RESPECT TO EACH EXCHANGE

            With respect to each Exchange, HSN shall be deemed to have made, as
of the applicable Exchange Date, the following representations and warranties to
each holder effecting such Exchange:

            SECTION 5.1 Organization and Qualification. HSN (i) is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation; (ii) has all requisite corporate power and
authority to carry on its business as it is now conducted and to own, lease and
operate the properties it now owns, leases or operates at the places currently
located and in the manner currently used and operated and (iii) is duly
qualified or licensed and in good standing to do business in each jurisdiction
in which the properties owned, leased or operated by it or the nature of the
business conducted by it makes such qualification or license necessary, except,
in the case of clause (iii) where the failure to be so qualified or licensed, or
in good standing would not have a material adverse effect on the business,
assets or condition (financial or otherwise) of HSN and its subsidiaries, taken
as a whole. HSN has delivered or made available to such holder true and complete
copies of its certificate of incorporation and by-laws, each as amended to date
and currently in effect (respectively, the "HSN Charter" and the "HSN Bylaws").
The HSN Charter and the HSN Bylaws are in full force and effect and neither HSN
nor the LLC is in violation of its respective organizational documents.

            SECTION 5.2 Authorization of the Exchange. The consummation of such
Exchange by HSN has been duly and validly authorized by the board of directors
of HSN and by any necessary action of the HSN stockholders. HSN has full
corporate power and authority to perform its obligations under this Agreement
with respect to such Exchange and to consummate such Exchange. No other
corporate proceedings on the part of HSN or any of its subsidiaries are
necessary to authorize the consummation of such Exchange.

            SECTION 5.3 Validity of HSN Shares, etc. The shares of HSN Common
Stock and/or HSN Class B Stock to be issued by HSN to such holder pursuant to
such Exchange, upon issuance and delivery in accordance with the terms and
conditions of this Agreement, will be duly authorized, validly issued, fully
paid and non-assessable, and will be free of any liens, claims, charges,
security interests, preemptive rights, pledges, voting 


                                      -22-
   26

or stockholder agreements, options or encumbrances of any kind whatsoever (other
than any of the foregoing arising under the Investment Agreement, the Governance
Agreement, Stockholders Agreement or any Federal or state securities laws), will
not be issued in violation of any preemptive rights and will vest in such holder
full rights with respect thereto, including the right to vote such shares of HSN
Stock on all matters properly presented to the stockholders of HSN to the extent
set forth in the HSN Charter. The issuance of the shares of HSN Stock will not
violate the rules, regulations and requirements of the National Association of
Securities Dealers, Inc. ("NASD") or of the principal exchange or trading market
on which the HSN Common Stock is then quoted or traded (including, without
limitation the NASD policies set forth in Section 6(i) and (j) of Part III of
Schedule D of the NASD By-Laws and the Policy of the Board of Governors with
respect to Voting Rights set forth in Part III of Schedule D of the NASD By-Laws
or any similar policies of such other exchange or trading market).

            SECTION 5.4 No Approvals or Notices Required; No Conflict with
Instruments. The performance by HSN of its obligations under this Agreement in
connection with such Exchange and the consummation of the transactions
contemplated by such Exchange, including the issuance of HSN Stock in such
Exchange, will not:

            (a) conflict with or violate the HSN Charter or the HSN Bylaws or
      the organizational documents of the LLC or any other subsidiary of HSN, in
      each case as amended to date;

            (b) require any consent, approval, order or authorization of or
      other action by any court, administrative agency or commission or other
      governmental authority or instrumentality, foreign, United States federal,
      state or local (each such entity a "Governmental Entity" and each such
      action a "Governmental Consent") or any registration, qualification,
      declaration or filing with or notice to any Governmental Entity (a
      "Governmental Filing"), in each case on the part of or with respect to HSN
      or the LLC or any other subsidiary of HSN, other than (i) such as have
      been obtained or made or (ii) the absence or omission of which would,
      either individually or in the aggregate, have a material adverse effect on
      the applicable Exchange or otherwise with respect to the transactions
      contemplated hereby or on the business, assets, results of operations or
      financial condition of HSN and its subsidiaries, taken as a whole;

            (c) require, on the part of HSN or the LLC or any other subsidiary
      of HSN, any consent by or approval of (a "Contract Consent") or notice to
      (a "Contract Notice") any other person or entity (other than a
      Governmental Entity), other than (i) such as have been obtained or made or
      (ii) the absence or omission of which would, either individually or in the
      aggregate, have a material adverse effect on the transactions contemplated
      hereby or on the business, assets, results of operations or financial
      condition of HSN and its subsidiaries, taken as a whole;

            (d) conflict with, result in any violation or breach of or default
      (with or without notice or lapse of time, or both) under, or give rise to
      a right of termination, cancellation or acceleration of any obligation or
      the loss of any material benefit under or the creation of any lien,
      security interest, pledge, charge, claim, option, right to acquire,
      restriction on transfer, voting restriction or agreement, or any other
      restriction or encumbrance of any nature whatsoever on any assets pursuant
      to (any 


                                      -23-
   27

      such conflict, violation, breach, default, right of termination,
      cancellation or acceleration, loss or creation, a "Violation") any
      "Contract" (which term shall mean and include any note, bond, indenture,
      mortgage, deed of trust, lease, franchise, permit, authorization, license,
      contract, instrument, employee benefit plan or practice, or other
      agreement, obligation, commitment or concession of any nature) to which
      HSN or the LLC or any other subsidiary of HSN is a party, by which HSN,
      the LLC or any other subsidiary of HSN or any of their respective assets
      or properties is bound or pursuant to which HSN or the LLC or any other
      subsidiary of HSN is entitled to any rights or benefits, except for such
      Violations which would not, either individually or in the aggregate, have
      a material adverse effect on the applicable Exchange or otherwise with
      respect to transactions contemplated hereby or on the business, assets,
      results of operations or financial condition of HSN and its subsidiaries,
      taken as a whole; or

            (e) result in a Violation of, under or pursuant to any law, rule,
      regulation, order, judgment or decree applicable to HSN or the LLC or any
      other subsidiary of HSN or by which any of their respective properties or
      assets are bound, except for such Violations which would not, either
      individually or in the aggregate, have a material adverse effect on the
      applicable Exchange or otherwise with respect to the transactions
      contemplated hereby.

                                    ARTICLE 6

                  REPRESENTATIONS AND WARRANTIES OF THE HOLDER
                          WITH RESPECT TO EACH EXCHANGE

            As of each Exchange Date, the holder who is seeking or required to
exchange its LLC Shares (or with respect to which the merger or exchange
described in Section 2.1(a)(iii) is elected) shall be deemed to have made the
following representations and warranties to HSN; provided that it shall be a
condition to HSN's obligation to effect any such Exchange in connection with an
Agreement to Transfer that the applicable Transferee and Transferor pursuant to
Section 2.3 shall be deemed to have made to HSN the representations set forth in
paragraphs (a)-(e) of Section 6.2 (as such matters relate to, and taking into
account, such Transferee's ownership of HSN Stock or LLC Shares in connection
with the Exchange):

            SECTION 6.1 Ownership and Validity of LLC Shares. Such holder owns,
and following such Exchange, HSN will own beneficially and of record the
applicable LLC Shares, free of any liens, claims, charges, security interests,
pledges, voting or stockholder agreements, encumbrances or equities (other than
any of the foregoing arising under this Agreement, the Investment Agreement, the
Governance Agreement, or the Stockholders Agreement or any Federal or state
securities laws or as may be due to an action of HSN). Universal and Liberty
also hereby make, with respect to each member of its respective Group which is
participating in such Exchange (whether through ownership of LLC Shares or in
the event shares of such entity are being exchanged or converted pursuant to
Section 2.1(a)(iii)), the representations and warranties contained in the
preceding sentence, subject to the same exceptions contained therein.


                                      -24-
   28

            SECTION 6.2 No Approvals or Notices Required; No Conflict with
Instruments. The consummation of such Exchange will not:

            (a) if applicable, conflict with or violate such holder's (or its
      Group members') organizational documents;

            (b) require any Governmental Consent or Governmental Filing, in each
      case on the part of or with respect to each of such holder or any member
      of its Group, other than (i) such as have been obtained or made or (ii)
      the absence or omission of which would, either individually or in the
      aggregate, have a material adverse effect on such Exchange or otherwise
      with respect to the transactions contemplated hereby;

            (c) require, on the part of such holder or any member of its Group
      any Contract Consent or Contract Notice (in each case, applying such terms
      to such Group), other than (i) such as have been obtained or made or (ii)
      the absence or omission of which would, either individually or in the
      aggregate, have a material adverse effect on such Exchange or otherwise
      with respect to the transactions contemplated hereby;

            (d) conflict with or result in any Violation of any Contract to
      which such holder or any member of its Group is a party, or by which such
      holder or any of its Group, or any of its respective assets or properties
      are bound, except for such Violations which would not, either individually
      or in the aggregate, have a material adverse effect on such Exchange or
      otherwise with respect to the transactions contemplated hereby; or

            (e) result in a Violation of, under or pursuant to any law, rule,
      regulation, order, judgment or decree applicable to such holder or any
      member of its Group or by which any of its respective properties or assets
      are bound, except for such Violations which would not, either individually
      or in the aggregate, have a material adverse effect on such Exchange or
      otherwise with respect to the transactions contemplated hereby;

provided that any such representation pursuant to this Section 6.2 by a holder
in connection with an Agreement to Transfer shall take into account the
transactions contemplated to occur with such Transferee.

            SECTION 6.3 No Liabilities of Universal Sub and Group Newco. In the
case of a merger or exchange pursuant to Section 2.1(a)(iii), Universal (with
respect to Universal Sub and each Universal Newco, to the extent participating
in such Exchange) and Liberty (with respect to each Liberty Newco, to the extent
participating in such Exchange) hereby represents and warrants that (a) none of
such Newcos (or Universal Sub, if applicable) has any liabilities of any kind
whatsoever, whether absolute or contingent, matured or unmatured, liquidated or
unliquidated, accrued or unaccrued, known or unknown, whenever arising, other
than the obligation to consummate the transactions contemplated by the Exchange,
and other than liabilities (i) that are immaterial and (ii) as to which HSN has
a reasonable likelihood of being fully indemnified by the applicable Group
pursuant to the contemplated indemnification agreement referred to in Section
2.1(a)(iii), (b) upon consummation of such Exchange, neither the LLC nor HSN
shall have any obligation or liability in 


                                      -25-
   29

respect of any liabilities of such entities other than those described in the
preceding clause (a) that are covered by the agreement described in clause
(a)(ii), (c) upon consummation of the Exchange, HSN shall own all of the capital
stock of such entity (or, in the event of an Exchange under Section 2.1(a)(iii),
all such capital stock shall have been exchanged), free of any liens, claims,
charges, security interests, preemptive rights, voting or stockholder
agreements, options or encumbrances of any kind whatsoever (other than any of
the foregoing under the Investment Agreement, the Governance Agreement,
Stockholders Agreement or any Federal or state securities laws, and (d) the
shares of the capital stock of such entity are duly authorized, validly issued,
fully paid and non-assessable and will result in HSN having full rights with
respect thereto. The representations and warranties in this Section 6.3 shall
survive consummation of the Exchange and be subject to the indemnification
agreement referred to in Section 2.1(a)(iii).

                                    ARTICLE 7

                         COVENANTS AND OTHER AGREEMENTS

            For so long as there remain outstanding any LLC Shares, the parties
covenant and agree as follows:

            SECTION 7.1 Notification of Issuance Event. At any time HSN or any
of its subsidiaries or a holder (i) plans or proposes to take any action which
has resulted, or is reasonably likely to result, in an Issuance Event or (ii)
becomes aware of any event, fact or circumstance which results in an Issuance
Event, HSN or the holder, respectively, shall (x) in the case of clause (i),
prior to taking such action and (y) in the case of clause (ii), promptly upon
becoming so aware, give notice of such Issuance Event to each holder of LLC
Shares or HSN, as the case may be, which notice shall set forth in reasonable
detail the facts, circumstances or events which will result or have resulted, as
the case may be, in the occurrence of such Issuance Event. No notice shall be
required pursuant to this Section 7.1 unless the number of shares issuable
pursuant to such Issuance Event, together with any other shares which are then
issuable in accordance with this Agreement, meet the threshold set forth in
Section 2.1(e).

            SECTION 7.2 Reservation of HSN Stock. HSN agrees to at all times
reserve and keep available, free from preemptive rights, out of the aggregate of
its authorized but unissued HSN Common Stock and HSN Class B Stock (assuming
Universal would elect to receive the maximum number of shares of HSN Class B
Stock permitted hereunder), for the purpose of effecting any Exchange pursuant
to this Agreement, the full number of shares of HSN Common Stock and HSN Class B
Stock, then deliverable upon the Exchange of all then outstanding LLC Shares
(based on the assumption in the preceding parenthetical), and shall reserve an
additional number of shares of HSN Common Stock equal to the number of shares
issuable upon the conversion of shares of HSN Class B Stock issuable pursuant to
this Agreement.

            SECTION 7.3 Certain Obligations Upon Insolvency or Bankruptcy of
LLC. In the event that the LLC should become insolvent or, within the meaning of
any federal or state bankruptcy law, commence a voluntary case or consent to the
entry of any order of 


                                      -26-
   30

relief or for the appointment of any custodian for its property or a court of
competent jurisdiction enters an order or decree for relief against the LLC
appointing a custodian or ordering its liquidation, and Liberty or Universal
determines in good faith that the equity of the LLC is reasonably likely to be
impaired or extinguished in connection therewith, then upon the request of
Liberty or Universal, its rights under this Agreement shall be converted into
the deferred right to receive from HSN the number of shares of HSN Common Stock
(or, in the case of Universal, of HSN Class B Stock) which Liberty or Universal,
as the case may be, would then have had the right to acquire upon the Exchange
of all of its LLC Shares then outstanding (such deferred right, the "Additional
Contingent Right"). The terms and conditions of the Additional Contingent Right
shall reflect, to the extent practicable and permitted by applicable law, the
terms of this Agreement as well as other provisions to ensure, to the greatest
extent practicable, that such holders will be able to exchange their LLC Shares
as contemplated by this Agreement or otherwise receive the number of shares of
HSN Stock or Other Property to which they would be entitled hereunder.

            SECTION 7.4 Reasonable Efforts. (a) Subject to the terms and
conditions of this Agreement and applicable law, in connection with an Exchange,
each of the holder exercising an Exchange and HSN shall use its reasonable
efforts to take, or cause to be taken, all actions, and do, or cause to be done,
all things reasonably necessary, proper or advisable to consummate and make
effective such Exchange as soon as reasonably practicable following the receipt
or delivery by HSN of an Exchange Notice, including such actions or things as
HSN or such holder may reasonably request in order to cause the consummation of
an Exchange following the receipt or delivery by HSN of an Exchange Notice.
Without limiting the generality of the foregoing, such holder and HSN shall (and
shall cause their respective subsidiaries, and use their reasonable efforts to
cause their respective affiliates, directors, officers, employees, agents,
attorneys, accountants and representatives, to) consult and fully cooperate with
and provide reasonable assistance to each other in (i) obtaining all necessary
Governmental Consents and Contract Consents, and giving all necessary Contract
Notices to, and making all necessary Governmental Filings and other necessary
filings with and applications and submissions to, any Governmental Entity or
other person or entity; (ii) lifting any permanent or preliminary injunction or
restraining order or other similar order issued or entered by any court or
Governmental Entity in connection with an Exchange; (iii) providing all such
information about such party, its subsidiaries and its officers, directors,
partners and affiliates and making all applications and filings as may be
necessary or reasonably requested in connection with any of the foregoing; and
(iv) in general, consummating and making effective the transactions contemplated
hereby; provided, however, that, in order to obtain any such Consent, or the
lifting of any injunction or order referred to in clauses (i) and (ii) of this
sentence, neither such holder nor HSN shall be required to (x) pay any
consideration, to divest itself of any of, or otherwise rearrange the
composition of, its assets or to agree to any conditions or requirements which
could reasonably be expected to be materially adverse or burdensome to its
respective businesses, assets, financial condition or results of operations, or
(y) amend, or agree to amend, in any material respect any Contract. Prior to
making any application to, or filing with any Governmental Entity or other
person or entity in connection with an Exchange, each of HSN and the applicable
holder shall provide the other party with drafts thereof and afford the other
party a reasonable opportunity to comment on such drafts.

            (b) In addition to the foregoing paragraph (a), HSN shall take such
reasonable action which may be necessary in order that (i) it may validly and
legally deliver fully paid and nonassessable shares of HSN Common Stock or HSN
Class B Stock upon 


                                      -27-
   31

any surrender of LLC Shares or shares of a Newco, as applicable, for exchange
pursuant to this Agreement, (ii) the delivery of shares of HSN Common Stock and
HSN Class B Stock in accordance with this Agreement is exempt from the
registration or qualification requirements of the Securities Act and applicable
state securities laws or, if no such exemption is available, that the offer and
Exchange of such shares of HSN Common Stock and HSN Class B Stock have been duly
registered or qualified under the Securities Act and applicable state securities
laws, (iii) the shares of HSN Common Stock (including the shares of HSN Common
Stock issuable upon conversion of any shares of HSN Class B Stock), delivered
upon such Exchange are listed for trading on the Nasdaq National Market or on a
national securities exchange (upon official notice of issuance) and (iv) the
shares of HSN Common Stock or HSN Class B Stock, as applicable, delivered upon
such Exchange are free of preemptive rights and any liens or adverse claims
(other than any of the foregoing created or caused by the Person receiving such
shares in such Exchange).

            SECTION 7.5 Notification of Certain Matters. HSN shall give prompt
notice to each of Universal and Liberty so long as its Group holds LLC Shares,
and each holder of LLC Shares shall give prompt notice to HSN, of the
occurrence, or failure to occur, of any event, which occurrence or failure to
occur would be likely to cause (a) any representation or warranty to be made as
of an applicable Exchange Date to be untrue or inaccurate in any material
respect, (b) any material failure of HSN or such holder of LLC Shares, as the
case may be, or of any officer, director, employee or agent thereof, to comply
with or satisfy any covenant or agreement to be complied with or satisfied by it
under this Agreement or (c) the failure to be satisfied of any condition to
HSN's or such holder's respective obligations to consummate an Exchange.
Notwithstanding the foregoing, the delivery of any notice pursuant to this
Section shall not limit or otherwise affect the remedies available hereunder to
the party receiving such notice.

            SECTION 7.6 Additional Covenants. (a) Notwithstanding any other
provision of this Agreement to the contrary (but excluding actions specifically
contemplated by this Agreement, the Investment Agreement and the agreements
contemplated thereby), and in addition to the rights granted to the holders of
LLC Shares pursuant to this Agreement and any other voting rights granted by law
to the holders of the LLC Shares, without the consent of Universal and Liberty,
to the extent such party is affected by the matter (which consent, in the case
of clauses (ii) through (iv) below, will not be unreasonably withheld), HSN will
not (and will not cause or permit any of its subsidiaries to) cause or permit
the LLC or any of its subsidiaries to take any action that would, or could
reasonably be expected to, or fail to take any action which failure would or
could reasonably be expected to:

                  (i) make the ownership by any holder of the LLC Shares or any
      other material assets of such holder unlawful or result in a violation of
      any law, rule, regulation, order or decree (including the FCC Regulations)
      or impose material additional restrictions or limitations on such holder's
      full rights of ownership of the LLC Shares or the ownership of its other
      material assets or the operation of its businesses (provided that for
      purposes of the foregoing with respect to the Liberty Group, to the extent
      that a condition, restriction or limitation upon HSN or LLC or their
      respective subsidiaries relates to or is based upon or would arise as a
      result of, any action or the consummation of a transaction by the Liberty
      Group, such condition, restriction or limitation shall be deemed to be
      such a condition, restriction or limitation on such Group (regardless of
      whether it is a party to or otherwise would 


                                      -28-
   32

      be legally obligated thereby) to the extent that the taking of an action
      or the consummation of a transaction by the Liberty Group would result in
      the entities known as the BDTV Entities, HSN, or any of their respective
      subsidiaries being in breach or violation of any law, rule, regulation,
      order or decree or otherwise causing such rule, regulation, order or
      decree to terminate or expire or would otherwise result in the Liberty
      Group's ownership of LLC Shares or any other material assets being illegal
      or in violation of any law, rule, regulation, order or decree);

                  (ii) cause the Exchange (but only with respect to an Exchange
      by merger as described in Section 2.1(a)(iii)) of LLC Shares for shares of
      HSN Stock and/or Redeemable Capital Stock or Redemption Securities to be a
      taxable transaction to the holder thereof (to the extent not otherwise
      taxable) or from and after the time, if any, at which a merger can no
      longer be effected as a tax-free transaction (to the extent not otherwise
      taxable), cause an Exchange under Section 2.1(a)(iii)(B) to be a taxable
      transaction to the holder thereof (to the extent not otherwise taxable);

                  (iii) result in LLC being unable to pay its debts as they
      become due or becoming insolvent; or

                  (iv) otherwise restrict, impair, limit or otherwise adversely
      affect the right or ability of a holder of LLC Shares at any time to
      exercise an Exchange under this Agreement (but excluding repurchases of
      shares of HSN equity securities).

provided, however, that with respect to clause (ii) hereof, if (x) such Exchange
is taxable to a holder of LLC Shares as a result of (1) any action or failure to
act by such holder (other than as required by the Investment Agreement, the
Stockholders Agreement or this Agreement), (2) the laws and regulations in
effect at the Closing Date or (3) any difference in the tax position of a member
of the Universal Group or the Liberty Group relative to the tax position of
Universal or Liberty, respectively, or (y) in the case of a Sale Transaction,
HSN and any other party to such transaction have complied with the applicable
terms of Section 2.4 regarding tax matters, then compliance with the covenants
set forth in such clause (ii) shall be deemed waived by such holder of LLC
Shares and provided, further, that with respect to the covenants set forth in
clause (i) hereof, such covenants shall not apply to any such consequence that
would be suffered or otherwise incurred by a holder of LLC Shares, solely as a
result of such holder being subject to additional or different regulatory
restrictions and limitations than those applicable to Liberty or Universal, as
the case may be.

            (b) If, other than in connection with a Sale Transaction, a
mandatory Exchange which is effected by a merger pursuant to Section 2.1(a)(iii)
is taxable to the applicable member of the Liberty Group as a result of any
action taken by HSN (but not due to an action or unreasonable inaction by the
Liberty Group, or any action of HSN contemplated by the Investment Agreement and
the agreements contemplated thereby) after the Closing Date, HSN acknowledges
and agrees that it shall be obligated to provide to such holder upon such
Exchange, a number of additional shares of HSN Common Stock sufficient on an
after-tax basis to pay any such resulting tax; provided, however, that HSN shall
have no obligation under this paragraph (b) to the extent such Exchange is
taxable to a holder solely as a result of any difference in the tax position of
such holder relative to the tax position of Liberty.


                                      -29-
   33

            (c) HSN shall not become a party and shall not permit any of its
subsidiaries to become a party to any transaction with respect to the foregoing
unless the terms of the agreements relating to such transaction include
obligations of the applicable parties consistent with this Section 7.6.

                                    ARTICLE 8

                                  MISCELLANEOUS

            SECTION 8.1 Further Assurances. From and after the Closing Date,
each of HSN, Universal, Liberty and each member of their respective Group shall,
at any time and from time to time, make, execute and deliver, or cause to be
made, executed and delivered, such instruments, agreements, consents and
assurances and take or cause to be taken all such actions as may reasonably be
requested by any other party hereto to effect the purposes and intent of this
Agreement.

            SECTION 8.2 Expenses. Except as otherwise provided herein, all costs
and expenses, including, without limitation, fees and disbursements of counsel,
financial advisors and accountants, incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by the party incurring
such costs and expenses, whether or not any Exchange shall occur.

            SECTION 8.3 Notices. All notices, requests, demands, waivers and
other communications required or permitted to be given under this Agreement
shall be in writing and shall be deemed to have been duly given on (i) the day
on which delivered personally or by telecopy (with prompt confirmation by mail)
during a Business Day to the appropriate location listed as the address below,
(ii) three Business Days after the posting thereof by United States registered
or certified first class mail, return receipt requested, with postage and fees
prepaid or (iii) one Business Day after deposit thereof for overnight delivery.
Such notices, requests, demands, waivers or other communications shall be
addressed as follows:

            (a)   if to HSN to:

                  HSN, Inc.
                  152 West 57th Street
                  New York, NY  10019
                  Attention:  General Counsel
                  Telecopier No.:  (212) 247-5811

                  with a copy to:

                  Wachtell, Lipton, Rosen & Katz
                  51 West 52nd Street
                  New York, NY  10019-5150
                  Attention:  Pamela S. Seymon, Esq.
                  Telecopier No.:  (212) 403-2000


                                      -30-
   34

            (b)   if to a member of the Liberty Group, to:

                  Liberty Media Corporation
                  8101 East Prentice Avenue, Suite 500
                  Englewood, Colorado  80111
                  Attention:  President
                  Telecopier No.:  (303) 721-5415

                  with a copy to:

                  Baker & Botts, L.L.P.
                  599 Lexington Avenue
                  New York, New York  10022
                  Attention:  Frederick H. McGrath Esq.
                  Telecopier No.:  (212) 705-5125

            (c)   if to a member of the Universal Group, to:

                  Universal Studios, Inc.
                  100 Universal City Plaza
                  Universal City, CA  91608
                  Attention:  Karen Randall, Esq.
                  Telecopier No.:  (818) 866-3444

                  with a copy to:
                  Simpson Thacher & Bartlett
                  425 Lexington Avenue
                  New York, NY  10117
                  Attention: John G. Finley, Esq.
                  Telecopier No.:  (212) 455-2502;

or to such other person or address as any party shall specify by notice in
writing to the other party.

            SECTION 8.4 Entire Agreement. This Agreement (including the
documents referred to herein), together with the Investment Agreement and the
Liberty Exchange Agreement (as amended by the letter agreement dated as of the
date hereof), constitutes the entire agreement between the parties and
supersedes all prior agreements and understandings, oral and written, between
the parties with respect to the subject matter hereof.

            SECTION 8.5 Assignment; Binding Effect; Benefit. Neither this
Agreement nor any of the rights, benefits or obligations hereunder may be
assigned by HSN without the prior written consent of, in the case of an
assignment by Universal or Liberty, HSN, and, in the case of an assignment by
HSN, each Group that holds LLC Shares at such time. This Agreement will be
binding upon, inure to the benefit of and be enforceable by the parties and
their respective successors and assigns. Nothing in this Agreement, expressed or
implied, is intended to confer on any person other than the parties or their
respective successors and assigns, any rights, remedies, obligations or
liabilities under or by 


                                      -31-
   35

reason of this Agreement. No assignment permitted hereunder shall be effective
until the assignee shall have agreed in writing to be bound by the terms of this
Agreement.

            SECTION 8.6 Amendment. Any provision of this Agreement may be
amended if, and only if, such amendment is in writing and signed by the party or
parties whose rights or obligations hereunder are affected by such amendment.
Any amendment by HSN shall be authorized by a majority of the Board of Directors
of HSN, excluding for this purpose any director who is a nominee of Universal or
Liberty if such Person is a party to such amendment.

            SECTION 8.7 Extension; Waiver. In connection with an Exchange, a
holder exercising its Exchange, or HSN may, to the extent legally allowed, (i)
extend the time specified herein for the performance of any of the obligations
of the other Person, (ii) waive any inaccuracies in the representations and
warranties of the other Person contained herein or in any document delivered
pursuant hereto, (iii) waive compliance by the other Person with any of the
agreements or covenants of such other Person contained herein or (iv) waive any
condition to such waiving Person's obligation to consummate such Exchange to any
of such waiving Person's other obligations under this Agreement. Any agreement
on the part of HSN or such holder to any such extension or waiver shall be valid
only if set forth in a written instrument signed on behalf of such Person. Any
such extension or waiver by any Person shall be binding on such Person but not
on any other Person entitled to the benefits of the provision of this Agreement
affected unless such other Person also has agreed to such extension or waiver.
No such waiver shall constitute a waiver of, or estoppel with respect to, any
subsequent or other breach or failure to comply strictly with the provisions of
this Agreement. The failure of any Person to insist on strict compliance with
this Agreement or to assert any of its rights or remedies hereunder or with
respect hereto shall not constitute a waiver of such rights or remedies in the
future. Whenever this Agreement requires or permits consent or approval by any
Person, such consent or approval shall be effective if given in writing in a
manner consistent with the requirements for a waiver of compliance as set forth
in this Section 8.7. To the extent that a waiver by HSN affects or is otherwise
sought by Universal or Liberty, as the case may be, any director who is a
nominee of such Person shall not participate in the approval by the Board of
Directors of HSN of such waiver.

            SECTION 8.8 Survival. The covenants and agreements in Articles 2, 3,
and 7 and elsewhere in this Agreement shall survive with respect to each holder
until all of the LLC Shares held by its Group have been exchanged for HSN Stock.

            SECTION 8.9 Tax Interpretation. Whenever it is necessary for
purposes of this Agreement to determine whether an Exchange is taxable or
tax-free, such determination shall be made with respect to the Code. For
purposes of this Agreement, a Person's "tax position" shall not include or take
into account any offsets against any tax which are peculiar to such Person (such
as tax credits, loss carry-overs, and current losses). References to taxes or
taxable relating to an Exchange (including pursuant to Section 2.1(a)(iii)), or
otherwise involving a Newco, shall refer to the taxes actually incurred by, or
the taxability of such Exchange to, such entity and its direct and indirect
shareholders assuming for these purposes that such Newco has the corporate
characteristics relevant for tax purposes of Universal or Liberty, as the case
may be.


                                      -32-
   36

            SECTION 8.10 General Interpretation. When a reference is made in
this Agreement to Sections, Articles or Schedules, such reference shall be to a
Section, Article or Schedule (as the case may be) of this Agreement unless
otherwise indicated. When a reference is made in this Agreement to a "party" or
"parties", such reference shall be to a party or parties to this Agreement
unless otherwise indicated. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the words "include",
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation". The use of any gender herein shall
be deemed to be or include the other genders and the use of the singular herein
shall be deemed to be or include the plural (and vice versa), wherever
appropriate. The use of the words "hereof", "herein", "hereunder" and words of
similar import shall refer to this entire Agreement, and not to any particular
article, section, subsection, clause, paragraph or other subdivision of this
Agreement, unless the context clearly indicates otherwise. Notwithstanding
anything herein to the contrary, for purposes of this Agreement, (i) HSN shall
not be deemed to be a subsidiary or an affiliate of Universal or Liberty, (ii)
Matsushita Electric Industrial Co., Ltd. ("MEI") shall not be considered an
affiliate of Universal or any subsidiary of Universal so long as MEI does not
materially increase its influence over Universal following the date hereof, and
(iii) the subsidiaries, directors, officers, employees and affiliates of HSN
shall not be deemed to be subsidiaries, directors, officers, employees or
affiliates of Universal or Liberty.

            SECTION 8.11 Severability. If any provision of this Agreement or the
application thereof to any person or circumstance is held by a court of
competent jurisdiction to be invalid, void or unenforceable, the remaining
provisions hereof, or the application of such provision to persons or
circumstances other than those as to which it has been held invalid or
unenforceable, shall remain in full force and effect and shall in no way be
affected, impaired or invalidated thereby, provided that, if any provision
hereof or the application thereof shall be so held to be invalid, void or
unenforceable by a court of competent jurisdiction, then such court may
substitute therefor a suitable and equitable provision in order to carry out, so
far as may be valid and enforceable, the intent and purpose of the invalid, void
or unenforceable provision. To the extent that any provision shall be judicially
unenforceable in any one or more states, such provision shall not be affected
with respect to any other state, each provision with respect to each state being
construed as several and independent.

            SECTION 8.12 Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original, and all of which
together shall be deemed to be one and the same instrument.

            SECTION 8.13 Applicable Law. This Agreement and the legal relations
between the parties shall be governed by and construed in accordance with the
laws of the State of Delaware, without regard to the conflict of laws rules
thereof.


                                      -33-
   37

            IN WITNESS WHEREOF, the parties hereto have executed this Exchange
Agreement as of the date first above written.

                                       HSN, INC.


                                       By: /s/ James G. Gallagher 
                                          -------------------------------------
                                          Name:  James G. Gallagher 
                                          Title: Vice President


                                       UNIVERSAL STUDIOS, INC.


                                       By: /s/ Brian C. Mulligan  
                                          -------------------------------------
                                          Name: Brian C. Mulligan  
                                          Title: Senior Vice President


                                       LIBERTY MEDIA CORPORATION


                                       By: /s/ Robert R. Bennett 
                                          -------------------------------------
                                          Name: Robert R. Bennett      
                                          Title: President and Chief Executive
                                                 Officer 

                                      -34-

   1
                                                                  Exhibit 99.37

                                                                [CONFORMED COPY]


================================================================================

                              AMENDED AND RESTATED

                       LIMITED LIABILITY COMPANY AGREEMENT

                                       OF

                                    USANi LLC

================================================================================
   2

                                TABLE OF CONTENTS

                                                                    Page
                                                                    ----
                                    ARTICLE I

                                  DEFINED TERMS

         Section 1.1    Definitions................................   1
         Section 1.2    Headings...................................   8


                                   ARTICLE II

                               FORMATION AND TERM

         Section 2.1    Formation..................................   9
         Section 2.2    Name.......................................   9
         Section 2.3    Term.......................................   9
         Section 2.4    Registered Agent and Office................   9
         Section 2.5    Principal Place of Business................   9
         Section 2.6    Qualification in Other Jurisdictions.......   9


                                   ARTICLE III

                        PURPOSE AND POWERS OF THE COMPANY

         Section 3.1    Purpose....................................  10
         Section 3.2    Powers of the Company......................  10


                                   ARTICLE IV

                                     MEMBERS

         Section 4.1    Members....................................  10
         Section 4.2    Powers of Members..........................  10
         Section 4.3    Member's Share.............................  10
         Section 4.4    Classes....................................  10
         Section 4.5    Partition..................................  11
         Section 4.6    Resignation................................  11
         Section 4.7    Member Meetings............................  11
         Section 4.8    Voting.....................................  11
         Section 4.9    Quorum.....................................  11
         Section 4.10   Notice of Meetings.........................  12
         Section 4.11   Action Without a Meeting...................  12
         Section 4.12   Fundamental Changes........................  12
   3

                                                                    Page
                                                                    ----
                                    ARTICLE V

                                   MANAGEMENT

         Section 5.1    Manager....................................  14
         Section 5.2    Duties, Number, Designation and Term of 
                        Directors..................................  15
         Section 5.3    Resignation of Directors...................  16
         Section 5.4    Vacancies on the Company Board.............  16
         Section 5.5    Removal of a Director......................  16
         Section 5.6    Committees of Directors....................  17
         Section 5.7    Meetings of the Company Board..............  17
         Section 5.8    Quorum of a Company Board Meeting..........  17
         Section 5.9    Compensation of Directors..................  17
         Section 5.10   Action Without Company Board Meeting.......  18
         Section 5.11   Officers...................................  18


                                   ARTICLE VI

                           SHARES AND CAPITAL ACCOUNTS

         Section 6.1    Capital Contributions......................  18
         Section 6.2    Status of Capital Contributions............  19
         Section 6.3    Capital Accounts...........................  19
         Section 6.4    Advances...................................  20
         Section 6.5    Redemption, Exchange, Transfer.............  20


                                   ARTICLE VII

                                   ALLOCATIONS

         Section 7.1    Profits and Losses.........................  20
         Section 7.2    Allocation Rules...........................  20
         Section 7.3    Priority Allocations.......................  21
         Section 7.4    Tax Allocations; Section 704(c) of the Code. 22


                                  ARTICLE VIII

                                  DISTRIBUTIONS

         Section 8.1    Distributions; Special Distribution........  23
         Section 8.2    Mandatory Distributions....................  23
         Section 8.3    Limitations on Distribution................  23
         Section 8.4    Tax Loans to HSNi..........................  23
         Section 8.5    Intercompany Transfer of Funds.............  23


                                       -ii-
   4

                                                                    Page
                                                                    ----
                                   ARTICLE IX

                                BOOKS AND RECORDS

         Section 9.1    Books, Records and Financial Statements....  24
         Section 9.2    Accounting Method..........................  25
         Section 9.3    Annual Audit...............................  25


                                    ARTICLE X

                                   TAX MATTERS

         Section 10.1   Tax Matters................................  26
         Section 10.2   Right to Make Section 754 Election.........  26
         Section 10.3   Section 709 Election.......................  26
         Section 10.4   Taxation as Partnership....................  27


                                   ARTICLE XI

                   LIABILITY, EXCULPATION AND INDEMNIFICATION

         Section 11.1   Liability..................................  27
         Section 11.2   Exculpation................................  27
         Section 11.3   Fiduciary Duty.............................  27
         Section 11.4   Indemnification............................  27
         Section 11.5   Expenses...................................  28
         Section 11.6   Insurance..................................  28
         Section 11.7   Outside Businesses.........................  28
         Section 11.8   Third-Party Beneficiaries..................  28


                                   ARTICLE XII

                               ADDITIONAL MEMBERS

         Section 12.1   Admission..................................  29
         Section 12.2   Allocations................................  29


                                  ARTICLE XIII

                                   ASSIGNMENTS
                                             
         Section 13.1   Assignments of Shares Generally............  29
         Section 13.2   Recognition of Assignment by the Company...  30


                                       -iii-
   5

                                                                    Page
                                                                    ----
                                   ARTICLE XIV

                    DISSOLUTION, LIQUIDATION AND TERMINATION

         Section 14.1   No Dissolution.............................  30
         Section 14.2   Events Causing Dissolution.................  30
         Section 14.3   Liquidation................................  30
         Section 14.4   Termination................................  31
         Section 14.5   Claims of the Members......................  31


                                   ARTICLE XV

                                  MISCELLANEOUS

         Section 15.1   Notices....................................  31
         Section 15.2   Formation Expenses.........................  31
         Section 15.3   Failure to Pursue Remedies.................  31
         Section 15.4   Cumulative Remedies........................  31
         Section 15.5   Binding Effect.............................  32
         Section 15.6   Interpretation.............................  32
         Section 15.7   Severability...............................  32
         Section 15.8   Counterparts...............................  32
         Section 15.9   Integration................................  32
         Section 15.10  Governing Law..............................  32
         Section 15.11  Confidentiality............................  33


                                   ARTICLE XVI

                                   AMENDMENTS

         Section 16.1   Amendments.................................  33


         SCHEDULE A     MEMBERS


                                       -iv-
   6

            AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT
                                       OF
                                    USANi LLC

            This Amended and Restated Limited Liability Company Agreement (this
"Agreement") of USANi LLC (the "Company"), dated and effective as of February
12, 1998, is entered into among USA Networks, Inc., a Delaware corporation
(formerly known as HSN, Inc., "HSNi"), Home Shopping Network, Inc., a Delaware
corporation and direct subsidiary of HSNi ("Home Shopping"), Universal Studios,
Inc., a Delaware corporation ("Universal"), on behalf of USA Networks Partner,
Inc., a Delaware corporation ("Universal Sub"), and certain of its newly formed
and wholly owned subsidiaries listed on Schedule A to this Agreement, and
Liberty Media Corporation, a Delaware corporation ("Liberty"), on behalf of
Liberty HSN LLC Holdings, Inc., a Delaware corporation ("Liberty Sub") and
certain of its newly formed and wholly owned subsidiaries listed on Schedule A
to this Agreement, as members (the "Members"), and Mr. Barry Diller ("Mr.
Diller") (for purposes of Sections 4.12 and 5.1 of this Agreement).

            WHEREAS, Universal, HSNi, Home Shopping and Liberty have entered
into an Investment Agreement, dated as of October 19, 1997, as amended and
restated as of December 18, 1997, pursuant to which HSNi, Home Shopping,
Universal and Liberty agreed to form a limited liability company to own and
operate USA Networks, an unincorporated joint venture (the "Partnership"), and
the domestic production and distribution business of Universal ("UTV") and
substantially all of the non-broadcast-related assets of HSNi (the "Investment
Agreement");

            WHEREAS, the Investment Agreement contemplates the formation of a
limited liability company which is referred to therein as the "LLC";

            WHEREAS, on January 26, 1998, HSNi formed the LLC and entered into a
limited liability company agreement relating to the LLC; and

            WHEREAS, this Agreement amends and restates in its entirety such
limited liability company agreement;

            NOW, THEREFORE, in consideration of the agreements and obligations
set forth herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Members hereby form a limited
liability company pursuant to and in accordance with the Delaware Limited
Liability Company Act (6 Del.C. ss.18-101, et seq.), as amended from time to
time (the "Delaware Act"), as provided herein, and hereby agree as follows:

                                    ARTICLE I

                                  DEFINED TERMS

            Section 1.1 Definitions. Unless the context otherwise requires, the
terms defined in this Article I shall, for the purposes of this Agreement, have
the meanings herein specified.
   7

            "Acquired Partnership Interest" shall have the meaning set forth in
the Investment Agreement.

            "Additional Shares" shall mean any Share that is acquired after the
Initial Capital Contributions.

            "Adjusted Capital Account Deficit" shall mean, with respect to any
Member, the deficit balance, if any, in such Member's Capital Account as of the
end of the relevant Fiscal Year, after giving effect to the following
adjustments:

            (a) Credit to such Capital Account any amounts which such Member is
      deemed to be obligated to restore pursuant to the penultimate sentence of
      either of Treasury Regulation ss.ss.1.704-2(g)(1) or 1.704-2(i)(5); and

            (b) Debit to such Capital Account the items described in Treasury
      Regulation ss.ss.1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5) and
      1.704-1(b)(2)(ii)(d)(6).

The foregoing definition of Adjusted Capital Account Deficit is intended to
comply with the provisions of Treasury Regulation ss.1.704-1(b)(2)(ii)(d) and
shall be interpreted consistently therewith.

            "Adjusted Taxable Income" shall mean LLC Taxable Income; provided,
however, that if the HSNi Group has a net taxable loss for federal income tax
purposes for a taxable year, LLC Taxable Income shall be reduced (but not below
zero) by an amount equal to the net tax loss of the HSNi Group for federal
income tax purposes for such year divided by one minus the Ratio; provided,
however, that if such net tax loss of the HSNi Group exceeds the Loss Limit,
then any net tax loss in excess of the Loss Limit shall be taken into account in
determining the HSNi Group's taxable income for purposes of this provision for
the subsequent years and, provided, further, that if the HSNi Group has net
taxable income for federal income tax purposes for the year (taking into account
any prior year net loss in excess of the Loss Limit), for this purpose LLC
Taxable Income shall be increased by the product of (a) any net income of the
HSNi Group for the year and (b) a fraction, the numerator of which is one and
the denominator of which is one minus the Ratio (such net income to be taken
into account only to the extent prior year net losses were previously taken into
account in calculation of Adjusted Taxable Income hereunder and not previously
offset by inclusions of prior year net income of the HSNi Group).

            "Affiliate" shall mean, with respect to any Person, any direct or
indirect subsidiary of such Person, any other Person that directly or through
one or more intermediaries, is controlled by, or is under common control with,
the specified Person, and, if such a Person is an individual, any member of the
immediate family (including parents, spouse and children) of such individual and
any trust whose principal beneficiary is such individual or one or more members
of such immediate family and any person who is controlled by any such member or
trust. As used in this definition, the term "control" (including with
correlative meanings, "controlled by" and "under common control with") shall
mean possession, directly or indirectly, of power to direct or cause the
direction of management or policies, whether through ownership of securities or
partnership or other ownership interests, by contract or otherwise.
Notwithstanding the foregoing, for purposes of this Agreement (i) HSNi and its
Subsidiaries (including the Company) shall not be deemed to be Affiliates of
Universal, Diller and Liberty, (ii) Universal and its Subsidiaries shall not be
deemed to be


                                       -2-
   8

Affiliates of HSNi, Diller and Liberty, (iii) Liberty and its Subsidiaries shall
not be deemed to be Affiliates of HSNi, Diller, Universal, (iv) Matsushita
Electric Industrial Co., Ltd. ("MEI") shall not be deemed to be an Affiliate of
Universal or any Subsidiary of Universal so long as MEI does not materially
increase its influence over Universal following the date hereof, and (v) natural
persons shall not be deemed to be Affiliates other than of an individual.

            "Agreement" shall have the meaning set forth in the recitals hereof.

            "Assign" and "Assignment" shall have the meanings set forth in
Section 13.1 hereof.

            "Capital Account" shall mean, with respect to any Member and any
Share, the account maintained for such Member and such Share in accordance with
the provisions of Section 6.3 hereof.

            "Capital Contribution" shall mean, with respect to any Member and
any Share, the aggregate amount of cash and the initial Gross Asset Value of any
property (other than cash) contributed to the Company pursuant to Section 6.1
hereof with respect to such Share, net of any liabilities of such Member that
are assumed by the Company in connection with such contribution or that are
secured by property so contributed, and shall include the Initial Capital
Contribution and any Subsequent Capital Contribution.

            "CEO" shall mean the Chief Executive Officer of HSNi or any
successor entity.

            "Certificate" shall mean the Certificate of Formation of the Company
and any and all amendments thereto and restatements thereof filed on behalf of
the Company with the office of the Secretary of State of the State of Delaware
pursuant to the Delaware Act.

            "Class A Share," "Class B Share" and "Class C Share" shall have the
respective meanings set forth in Section 4.4 hereof.

            "Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, or any corresponding United States federal tax statute enacted
after the date of this Agreement. A reference to a specific section (ss.) of the
Code refers not only to such specific section but also to any corresponding
provision of any United States federal tax statute enacted after the date of
this Agreement, as such specific section or corresponding provision is in effect
on the date of application of the provisions of this Agreement containing such
reference.

            "Company" shall have the meaning set forth in the preamble hereto.

            "Company Board" shall have the meaning set forth in Section 5.2
hereof.

            "Company CEO" shall have the meaning set forth in Section 5.1
hereof.


                                       -3-
   9

            "Company Minimum Gain" shall mean "partnership minimum gain" of the
Company within the meaning of Treasury Regulation ss.1.704-2(b)(2) and shall be
computed in accordance with Treasury Regulation ss.1.704-2(d).

            "Covered Person" shall mean any Officer or director of the Company
or its Affiliates (but shall not include an officer, director or employee of
HSNi, Home Shopping, Universal, or Liberty or their respective Affiliates who is
not an Officer of the Company or its Affiliates).

            "Delaware Act" shall have the meaning set forth in the preamble
hereof.

            "Depreciation" shall mean, for each Fiscal Year or other period, an
amount equal to the depreciation, amortization or other cost recovery deduction
allowable with respect to an asset for such Fiscal Year or other period;
provided, however, that, if the Gross Asset Value of an asset differs from its
adjusted basis for United States federal income tax purposes at the beginning of
such Fiscal Year or other period, Depreciation shall be an amount that bears the
same ratio to such beginning Gross Asset Value as the United States federal
income tax depreciation, amortization or other cost recovery deduction with
respect to such asset for such Fiscal Year or other period bears to such
beginning adjusted tax basis; and provided, further, that if the United States
federal income tax depreciation, amortization or other cost recovery deduction
for such Fiscal Year or other period is zero, Depreciation shall be determined
with reference to such beginning Gross Asset Value using any reasonable method
selected by the Members; and provided, further, that with respect to any
goodwill that is not amortizable under the Code (including with respect to the
Owned Partnership Interest), there shall be no Depreciation.

            "Distributions" shall mean distributions of cash or other property
made by the Company with respect to the Class A Shares, Class B Shares or the
Class C Shares. Distributions shall not mean payments of cash or other property
to holders of Shares for reasons other than their ownership of such Shares.

            "Economic Percentage Interest," with respect to any Member, shall
mean the number of Class A Shares, Class B Shares and/or Class C Shares owned by
such Member divided by the sum of the total number of Shares in the Company
(expressed as a percentage of one hundred percent rounded to the nearest
one-thousandth of percent).

            "Economic Risk of Loss" shall have the meaning set forth in Treasury
Regulation ss.1.752-2.

            "Excess Cash" shall mean cash held by an entity (including from the
proceeds of borrowings) on the last business day of each month which is
reasonably determined by such entity not to be needed by such entity to fund its
operations or repay indebtedness owed by such entity during the immediately
succeeding month.

            "Fiscal Year" shall mean (a) the period commencing upon the date of
this Agreement and ending on December 31, 1998, (b) any subsequent twelve-month
period commencing on January 1 and ending on December 31, (c) any other
twelve-month period required by the Code or the Treasury Regulations to be used
as the taxable year of the


                                       -4-
   10

Company or (d) any portion of the periods described in clauses (a), (b) or (c)
of this sentence for which the Company is required to allocate Profits, Losses
and other items of Company income, gain, loss or deduction pursuant to Article
VII hereof.

            "Foreign Ownership Restriction" means any applicable restrictions of
a Governmental Authority on foreign ownership or foreign control of the Company
or the Shares, the breach of which, or non-compliance with which, could result
in the loss, or failure to secure the renewal or reinstatement, of any license
or franchise of any Governmental Authority held by the Company or any of its
Subsidiaries to conduct any portion of the business of the Company or such
Subsidiary.

            "GAAP" means generally accepted accounting principles in the United
States.

            "Governance Agreement" means that certain Governance Agreement,
dated as of October 19, 1997, among Universal, HSNi, Mr. Diller and Liberty,
which sets forth certain terms and conditions concerning Universal's, Mr.
Diller's and Liberty's relationships with HSNi and certain matters relating to
the securities of HSNi.

            "Governmental Authority" means any nation or government, any state
or other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.

            "Gross Asset Value" means, with respect to any asset, such asset's
adjusted basis for United States federal income tax purposes, except as follows:

            (a) the initial Gross Asset Value of any asset contributed by a
      Member to the Company shall be the gross fair market value of such asset,
      as determined by mutual agreement of the Members;

            (b) the Gross Asset Value of all Company assets shall be adjusted to
      equal their respective gross fair market values, as determined by mutual
      agreement of the Members, as of the following times: (i) immediately prior
      to the acquisition of an additional Share in the Company by any new or
      existing Member in exchange for more than a de minimis Capital
      Contribution; (ii) immediately prior to the distribution by the Company to
      a Member of more than a de minimis amount of Company assets in redemption
      of a Share in the Company; and (iii) the liquidation of the Company within
      the meaning of Treasury Regulation ss.1.704-1(b)(2)(ii)(g); and

            (c) the Gross Asset Value of any Company asset distributed to any
      Member shall be the gross fair market value of such asset on the date of
      distribution, as determined by mutual agreement of the Members.

            If the Gross Asset Value of an asset has been determined or adjusted
pursuant to paragraph (a) or paragraph (b) above, such Gross Asset Value shall
thereafter be adjusted by the Depreciation taken into account with respect to
such asset for purposes of computing Profits and Losses.

            "Home Shopping" shall have the meaning set forth in the preamble
hereof.


                                       -5-
   11

            "HSNi" shall have the meaning set forth in the preamble hereof.

            "HSNi Board" means the Board of Directors of HSNi.

            "HSNi Board Vacancy" shall have the meaning set forth in Section
5.2(b) hereof.

            "HSNi Designees" shall have the meaning set forth in Section 5.2(b)
hereof.

            "HSNi Group" means the "affiliated group" (within the meaning of
Section 1504(a) of the Code) of which HSNi is the common parent (including any
continuation of such group under the rules of Section 1.1502-75(d) of the
Treasury Regulations).

            "HSNi Members" shall mean HSNi and its Affiliates (including Home
Shopping) who may be Members of the Company.

            "Initial Capital Contributions" shall have the meaning set forth in
Section 6.1 hereof.

            "Initial Liberty Contribution" shall have the meaning set forth in
Section 6.1 hereof.

            "Interest Rate" shall have the meaning set forth in the Investment
Agreement.

            "Investment Agreement" shall have the meaning set forth in the
recitals hereof.

            "LLC Taxable Income" shall mean the taxable income of the Company,
determined in accordance with Section 703(a) of the Code (but including, for
this purpose, all items of income, gain, loss or deduction required to be stated
separately pursuant to Section 703(a)(1) of the Code).

            "Liberty" shall have the meaning set forth in the preamble hereof.

            "Liberty Designees" shall have the meaning set forth in Section
5.2(b) hereof.

            "Liberty Members" shall mean Liberty and its Affiliates who may be
Members of the Company.

            "Loss Limit" shall mean LLC Taxable Income multiplied by one minus
the Ratio.

            "Manager" shall have the meaning set forth in Section 5.1 hereof.

            "Member" shall mean any Person named as a member of the Company in
the preamble hereof and on Schedule A hereto and includes any Person who
acquires a Share pursuant to the provisions of this Agreement. For purposes of
the Delaware Act, the Members shall constitute three (3) classes or groups of
members.


                                       -6-
   12

            "Member Minimum Gain" means an amount, with respect to each Member
Nonrecourse Liability, determined in accordance with Treasury Regulation
ss.1.704-2(i)(3).

            "Member Nonrecourse Deductions" shall mean "partner nonrecourse
deductions" within the meaning of Treasury Regulation ss.ss.1.704-2(i)(1) and
1.704-2(i)(2).

            "Member Nonrecourse Liability" shall mean "partner nonrecourse debt"
or "partner nonrecourse liability" within the meaning of Treasury Regulation
ss.1.704-2(b)(4).

            "Mr. Diller" shall have the meaning set forth in the preamble
hereof.

            "Officers" means those Persons appointed by the Manager to manage
the day-to-day affairs of the Company pursuant to Section 5.12 hereof.

            "Owned Partnership Interest" shall have the meaning set forth in the
Investment Agreement.

            "Person" includes any individual, corporation, association,
partnership (general or limited), joint venture, trust, estate, limited
liability company or other legal entity or organization.

            "Profits" and "Losses" means, for each Fiscal Year, an amount equal
to the Company's taxable income or loss for such Fiscal Year, determined in
accordance with ss.703(a) of the Code (but including in taxable income or loss,
for this purpose, all items of income, gain, loss or deduction required to be
stated separately pursuant to ss.703(a)(1) of the Code), with the following
adjustments:

            (a) any income of the Company exempt from federal income tax and not
      otherwise taken into account in computing Profits or Losses pursuant to
      this definition shall be added to such taxable income or loss;

            (b) any expenditures of the Company described in ss.705(a)(2)(B) of
      the Code (or treated as expenditures described in ss.705(a)(2)(B) of the
      Code pursuant to Treasury Regulation ss.1.704-1(b)(2)(iv)(i)) and not
      otherwise taken into account in computing Profits or Losses pursuant to
      this definition shall be subtracted from such taxable income or loss;

            (c) in the event the Gross Asset Value of any Company asset is
      adjusted in accordance with paragraph (b) or paragraph (c) of the
      definition of "Gross Asset Value" above, the amount of such adjustment
      shall be taken into account as gain or loss from the disposition of such
      asset for purposes of computing Profits or Losses;

            (d) gain or loss resulting from any disposition of any asset of the
      Company with respect to which gain or loss is recognized for federal
      income tax purposes shall be computed by reference to the Gross Asset
      Value of the asset disposed of, notwithstanding that the adjusted tax
      basis of such asset differs from its Gross Asset Value; and

            (e) in lieu of the depreciation, amortization and other cost
      recovery deductions taken into account in computing such taxable income or
      loss, there shall be


                                       -7-
   13

      taken into account Depreciation for such Fiscal Year or other period,
      computed in accordance with the definition of "Depreciation" above.

            "Ratio" shall mean HSNi Group's combined Economic Percentage
Interest.

            "Regulated Subsidiaries" shall have the meaning set forth in the
Investment Agreement.

            "Share" shall mean a unit of limited liability company interest
owned by a Member in the Company which represents, in respect of any Class A
Share, Class B Share or Class C Share, a right to allocations of the profits and
losses of the Company, a right to participate in certain voting and/or
management rights and a right to receive distributions as provided in Article
VIII or Section 14.3(c) hereof, in each case in accordance with the provisions
of this Agreement and the Delaware Act.

            "Subsequent Capital Contribution" shall have the meaning set forth
in Section 6.1 hereof.

            "Subsidiaries" shall mean, with respect to any Person, each of the
direct or indirect subsidiaries of such Person.

            "Tax Matters Partner" shall have the meaning set forth in Section
10.1(a) hereof.

            "Tax Rate" shall mean the highest marginal federal and applicable
state corporate income tax rates (giving effect to the deductibility, if any, of
state income taxes for federal income tax purposes) in effect for the taxable
year.

            "Total Voting Power" means the total number of votes represented by
the Class A Shares, Class B Shares and Class C Shares when voting together as a
single class, with each Share entitled to one vote.

            "Treasury Regulations" means the income tax regulations, including
temporary regulations, promulgated under the Code, as such regulations may be
amended from time to time (including corresponding provisions of succeeding
regulations).

            "Universal" shall have the meaning set forth in the preamble hereof.

            "Universal Designees" shall have the meaning set forth in Section
5.2(b) hereof.

            "Universal Members" shall mean the Affiliates of Universal who may
be Members of the Company from time to time.

            "Universal Sub" shall have the meaning set forth in the preamble
hereof.

            Section 1.2 Headings. The headings and subheadings in this Agreement
are included for convenience and identification only and are in no way intended
to describe, interpret, define or limit the scope, extent or intent of this
Agreement or any provision hereof.


                                       -8-
   14

                                   ARTICLE II

                               FORMATION AND TERM

            Section 2.1 Formation. (a) Subject to the filing of the Certificate
with the Office of the Secretary of State of the State of Delaware as provided
in Section 2.3, the Members hereby form the Company as a limited liability
company under and pursuant to the provisions of the Delaware Act, and agree that
the rights, duties and liabilities of the Members shall be as provided in the
Act, except as otherwise provided herein.

            (b) Upon the execution of this Agreement or a counterpart of this
Agreement and the making of the Initial Capital Contributions or Initial Liberty
Contribution contemplated by Section 6.1(a), the HSNi Members, Universal Members
and Liberty Members shall be admitted as Members of the Company with the number
and type of Shares reflected on Schedule A.

            (c) The name and mailing address of each Member and the amount of
such Member's Initial Capital Contribution shall be listed on Schedule A
attached hereto.

            (d) HSNi, by its duly authorized officers, is hereby designated an
authorized person, within the meaning of the Delaware Act, to execute, deliver
and file, or cause the execution, delivery and filing of the Certificate. The
Secretary of the Company and any assistant secretary are hereby designated as
authorized Persons, within the meaning of the Delaware Act, to execute, deliver
and file, or cause the execution, delivery and filing of, all certificates,
notices or other instruments (and any amendments and/or restatements thereof)
required or permitted by the Delaware Act to be filed in the office of the
Secretary of State of Delaware and any other certificates, notices or other
instruments (and any amendments and/or restatements thereof) necessary for the
Company to qualify to do business in a jurisdiction in which the Company may
wish to conduct business.

            Section 2.2 Name. The name of the Company shall be "USANi LLC."

            Section 2.3 Term. The term of the Company shall commence on the date
the Certificate is filed in the office of the Secretary of State of the State of
Delaware, which shall be the date hereof, and shall continue perpetually unless
the Company is dissolved pursuant to Section 14.2, which dissolution shall be
carried out pursuant to the Delaware Act and the provisions of this Agreement.

            Section 2.4 Registered Agent and Office. The Company's registered
agent and office in Delaware shall be the Corporation Trust Company, Corporation
Trust Center, 1209 Orange Street in the City of Wilmington, County of New
Castle.

            Section 2.5 Principal Place of Business. The principal place of
business of the Company shall be in the State of California or such other
location as the Company Board may designate from time to time and embody in a
writing to be filed with the records of the Company.

            Section 2.6 Qualification in Other Jurisdictions. The Officers shall
cause the Company to be qualified, formed or registered under assumed or
fictitious name statutes or similar laws in any jurisdiction in which the
Company transacts business and such


                                       -9-
   15

qualification, formation or registration is necessary or appropriate for the
transaction of such business.

                                   ARTICLE III

                        PURPOSE AND POWERS OF THE COMPANY
 
            Section 3.1 Purpose. The Company is formed for the object and
purpose of, and the nature of the business to be conducted and promoted by the
Company is, engaging in any lawful act or activity for which limited liability
companies may be formed under the Delaware Act.

            Section 3.2 Powers of the Company. The Company shall have the power
and authority to take any and all actions necessary, appropriate, proper,
advisable, incidental or convenient to or for the furtherance of the purpose set
forth in Section 3.1.

                                   ARTICLE IV

                                     MEMBERS
 
            Section 4.1 Members. The name and mailing address of each Member and
the number and class of Shares owned thereby shall be listed on Schedule A
attached hereto. The Secretary or other designated Officer shall be required to
update Schedule A from time to time as necessary to accurately reflect changes
in address and/or the ownership of Shares. Any amendment or revision to Schedule
A made to reflect an action taken in accordance with this Agreement shall not be
deemed an amendment to this Agreement. Any reference in this Agreement to
Schedule A shall be deemed to be a reference to Schedule A as amended and in
effect from time to time. No Person, whether or not such Person holds any
Shares, shall be deemed a Member of the Company hereunder or under the Delaware
Act unless approved as such pursuant to the provisions of Article XIII of this
Agreement.

            Section 4.2 Powers of Members. The Members shall have the power to
exercise any and all rights or powers granted to the Members pursuant to the
express terms of this Agreement. Members shall not have the authority to bind
the Company by virtue of their status as Members.

            Section 4.3 Member's Share. A Member's Shares shall for all purposes
be personal property. No holder of a Share or Member shall have any interest in
specific Company assets or property, including any assets or property
contributed to the Company by such Member as part of any Capital Contribution.

            Section 4.4 Classes. (a) The Shares shall be divided between Class A
Shares, Class B Shares and Class C Shares.

            (b) The Class A Shares, Class B Shares and Class C Shares may not be
subdivided, and each of such Shares shall have identical rights and terms in all
respects except as specifically set forth in this Article IV and Article V of
this Agreement. Subject


                                      -10-
   16

to the rights and obligations of the Manager and the Company Board, the Class A
Shares, Class B Shares and Class C Shares shall have all management and voting
rights (subject to Section 4.12), all rights to any allocation of Profits and
Losses by the LLC and provided for under the Delaware Act and all rights to
distributions as may be authorized under this Agreement and under the Delaware
Act.

            (c) Upon exchange of Class B or Class C Shares for shares of HSNi
stock pursuant to the Exchange Agreement (as defined in the Investment
Agreement) such Class B or Class C Shares shall automatically be converted into
an equal number of Class A Shares.

            (d) Class A Shares, Class B Shares and Class C Shares shall be
securities governed by Article 8 of the Uniform Commercial Code as in effect in
the State of New York.

            Section 4.5 Partition. Each Member waives any and all rights that it
may have to maintain an action for partition of the Company's property.

            Section 4.6 Resignation. A Member shall cease to be a Member at the
time such Member ceases to own any Shares. Shares are redeemable only pursuant
to Sections 1.7 and 6.2(c) of the Investment Agreement.

            Section 4.7 Member Meetings. (a) A meeting of Members for the
designation of directors, and for such other business as may be stated in the
notice of the meeting, shall be held at least annually at such date, time and
place as is determined by the Manager. At each annual meeting, the Members shall
designate directors in accordance with Section 5.2(b) and they may transact such
other business as shall be stated in the notice of the meeting.

            (b) Special meetings of the Members for any purpose or purposes may
be called only by the Manager or by a resolution of the Company Board.

            Section 4.8 Voting. Each Member entitled to vote in accordance with
the terms of this Agreement may vote in person or by proxy. The Members shall be
entitled to vote only on the matters set forth in Section 4.12 and to the other
rights expressly set forth herein, including designating their respective
designees to the Company Board. Except in the case of designation of directors
and unless otherwise provided for by this Agreement, all matters to be decided
by the Members shall be decided by an affirmative vote (or consent in writing)
of the majority of the Total Voting Power of the holders of the Class A Shares,
Class B Shares and Class C Shares, voting together as a single class, and no
matter may be decided without such affirmative vote or consent in writing.

            Section 4.9 Quorum. Except as otherwise required by law, the
presence, in person or by proxy, of a majority of the holders of the Class A
Shares, Class B Shares and Class C Shares shall constitute a quorum at all
meetings of the Members. In case a quorum shall not be present at any meeting,
Members holding a majority of the Total Voting Power held by Members represented
thereat, in person or by proxy, shall have the power to adjourn the meeting from
time to time, without notice other than announcement at the meeting, until the
requisite amount of Shares shall be present. At any such adjourned meeting at
which the requisite amount of Shares shall be represented, any business may be
transacted that might have been transacted at the meeting as originally noticed.


                                      -11-
   17

            Section 4.10 Notice of Meetings. Written notice, stating the place,
date and time of the meeting, shall be given to each Member, at such Member's
address as it appears on the records of the Company, not less than two business
days before the date of the meeting (except that notice to any Member may be
waived in writing by such Member).

            Section 4.11 Action Without a Meeting. Any action required or
permitted to be taken at any annual or special meeting of Members may be taken
without a meeting, without prior notice and without a vote, if a consent in
writing, setting forth the action so taken, shall be signed by the number of
Members as would be required to take such action at a meeting, notice of such
action shall be given to those Members who have not so consented in writing to
such action without a meeting and such written consent is filed with the minutes
of proceedings of the Members.

            Section 4.12 Fundamental Changes. Notwithstanding anything to the
contrary contained in this Agreement, for so long as Mr. Diller, Universal (on
behalf of the Class B Shares) or Liberty (on behalf of the Class C Shares),
respectively, has rights to approve Fundamental Changes under Section 2.04 of
the Governance Agreement, the following matters (each a "Fundamental Change")
shall require the prior approval of Mr. Diller, Universal (on behalf of the
Class B Shares) and Liberty (on behalf of the Class C Shares), respectively, and
the Company shall not take any of the actions set forth below prior to such
approval (provided that approval by a Member of a Fundamental Change pursuant to
Section 2.04 of the Governance Agreement shall constitute approval of the
correlative matters under this Section 4.12):

            (a) Any transaction that would subject the Company or any Subsidiary
      to Foreign Ownership Restrictions; provided that the matter set forth in
      this clause (a) will not constitute a "Fundamental Change" with respect to
      Liberty and Mr. Diller and shall not require their approval.

            (b) Any transaction not in the ordinary course of business,
      launching new or additional channels or engaging in any new field of
      business, in any case, which will result in or will have a reasonable
      likelihood of resulting in, such Member or any Affiliate thereof being
      required under law to divest itself of all or any part of its Shares or
      Parent Common Shares (as defined in the Investment Agreement), or any
      interest therein, or any other material assets of such Member, or which
      will render such Member's continued ownership of such securities,
      interests or assets illegal or subject to the imposition of a fine or
      penalty or which will impose material additional restrictions or
      limitations on Universal's, Liberty's or their respective Affiliates' (as
      defined in the Governance Agreement) full rights of ownership (including,
      without limitation, voting) thereof or therein.

            (c) Acquisition or disposition (including pledges), directly or
      indirectly, by the Company or any of its Subsidiaries of any assets
      (including debt and/or equity securities), or business (by merger,
      consolidation or otherwise), provided that the transactions contemplated
      by the Investment Agreement, including the matters contemplated by Section
      9.14 of the Investment Agreement (to the extent conducted in all material
      respects in accordance with the letter agreement relating to such matters
      dated as of the date of the Investment Agreement among Liberty, Universal


                                      -12-
   18

      and the Company, as such agreement may be amended or modified), shall not
      require the prior approval of Liberty pursuant to this Section 4.12, the
      grant or issuance of any debt or equity securities of the Company or any
      of its Subsidiaries (other than in any of the foregoing as contemplated by
      this Agreement, the Investment Agreement and the Exchange Agreement), the
      redemption, repurchase or reacquisition of any debt or equity securities
      of the Company or any of its Subsidiaries (other than as contemplated by
      this Agreement, the Investment Agreement and the Exchange Agreement) by
      the Company or any such Subsidiary, or the incurrence of any indebtedness,
      or any combination of the foregoing, in any such case, in one transaction
      or a series of transactions in a six-month period, with a value of 10% or
      more of the market value of the Total Equity Securities (as defined in the
      Governance Agreement) at the time of such transaction, provided that the
      prepayment, redemption, repurchase or conversion of prepayable, callable,
      redeemable or convertible securities (including Shares) in accordance with
      the terms thereof shall not be a transaction subject to this paragraph
      (c).

            (d) For a five-year period following the Closing (as defined in the
      Investment Agreement), disposition of any interest in the Partnership (as
      defined in the Investment Agreement) or, other than in the ordinary course
      of business, its assets, directly or indirectly (by merger, consolidation
      or otherwise), provided that the matters set forth in this paragraph (d)
      will not constitute a "Fundamental Change" with respect to Liberty and
      shall not require its approval unless it otherwise would constitute a
      "Fundamental Change" under one of the other items of this Section 4.12
      with respect to which Liberty's consent is required.

            (e) Disposition or issuance (including pledges), directly or
      indirectly, by the Company of any Shares or Additional Shares except as
      contemplated by this Agreement, the Investment Agreement, the Governance
      Agreement, the Stockholders Agreement and the Exchange Agreement or
      pledges in connection with the financings.

            (f) Voluntarily commencing any liquidation, dissolution or winding
      up of the Company or any material Subsidiary.

            (g) Engagement by the Company in any line of business other than
      media, communications and entertainment products, services and
      programming, and electronics retailing, or other businesses engaged in by
      the Company and HSNi and its Subsidiaries as of the closing date or as
      contemplated by the Investment Agreement, provided that the Company shall
      not engage in theme park, arcade or film exhibition businesses so long as
      Universal is restricted from competing in such lines of businesses under
      non-compete or similar agreements in effect on the date hereof and such
      agreements would be applicable to the Company by virtue of Universal's
      ownership therein, provided that the matters set forth in the foregoing
      proviso shall not constitute a "Fundamental Change" with respect to
      Liberty and shall not require its approval unless it otherwise would
      constitute a "Fundamental Change" under one of the other items of this
      Section 4.12 with respect to which Liberty's consent is required.


                                      -13-
   19

            (h) Settlement of any litigation, arbitration or other proceeding
      which is other than in the ordinary course of business and which involves
      any material restriction on the conduct of business by the Company or such
      Member or any of their respective Affiliates or the continued ownership of
      assets by the Company or such Member of any of their respective
      Affiliates.

            (i) Engagement in any transaction (other than contemplated by the
      Investment Agreement) between the Company and its Affiliates (excluding
      Mr. Diller, HSNi, Universal and Liberty), on the one hand, and Mr. Diller,
      HSNi, Universal or Liberty, and their respective Affiliates, on the other
      hand, subject to the exceptions relating to the size of the proposed
      transaction and except for those transactions which are otherwise on an
      arm's-length basis.

            (j) Entering into any agreement with any holder of Shares in such
      Member's capacity as such which grants such Member approval rights similar
      in type and magnitude to those set forth in this Section 4.12.

            (k) Entering into any transaction that could reasonably be expected
      to impede HSNi's ability to engage in the Spinoff (as defined in the
      Governance Agreement) or cause it to be taxable.

            (l) Material amendment to the certificate of formation.

            (m) Any non-ministerial actions taken by the Tax Matters Partner
      pursuant to Section 10.01 or in connection with any income tax audit of
      any tax return of the Company, the filing of any amended return or claim
      for refund in connection with any item of income, gain, loss, deduction or
      credit, in each case, materially adversely affecting the tax liability of
      a Member, or any administrative or judicial proceedings arising out of or
      in connection with any such audit, amended return, claim for refund or
      denial of such claim; provided, however, that the foregoing shall require
      the prior approval of the affected Member or Members only.

Notwithstanding anything to the contrary, Universal and Liberty shall be
entitled to exercise the matters set forth in paragraphs (b), (f) and (i) above,
which shall continue to be "Fundamental Changes" as provided in Section 4.12
with respect to Universal or Liberty so long as Universal or Liberty, as the
case may be, is not legally permitted to exchange all of its Shares for Parent
Common Shares and Universal or Liberty, as the case may be, continues to own
such Shares.

                                    ARTICLE V

                                   MANAGEMENT
 
            Section 5.1 Manager. In accordance with Section 18-402 of the
Delaware Act, management of the Company shall be vested in the manager of the
Company (the "Manager"). The business and affairs of the Company shall be
managed exclusively by and under the direction of the Manager, subject to the
control of the Board of Directors and the Members to the extent set forth in
Section 4.12. So long as Mr. Diller is the Manager, the Manager shall also be
the Chief Executive Officer of the Company and Chairman of the


                                      -14-
   20

Company Board (the "Company CEO") and shall have such powers and authority
relative to the Company as does the CEO relative to HSNi. Mr. Diller shall be
the Manager and Company CEO and shall retain such positions until the CEO
Termination Date (as defined in the Governance Agreement) or Mr. Diller is
Disabled (as defined in the Governance Agreement). Immediately following the CEO
Termination Date or if Mr. Diller is Disabled, the Manager (and the Company CEO)
shall be designated by Universal (or, at Universal's option, a Universal Member
shall be the Managing Member and shall designate the Company CEO); provided that
(i) Universal and Liberty and their respective Affiliates then Beneficially Own
Equity Securities representing at least 40% of the total voting power of the
Total Equity Securities (each as defined in the Governance Agreement) and (ii)
no shareholder of HSNi (other than Universal or Liberty and their respective
Affiliates) Beneficially Owns Equity Securities representing a greater
percentage of the total voting power of the Total Equity Securities than the
total voting power of the Total Equity Securities represented by the Equity
Securities Beneficially owned by Universal and Liberty and their Affiliates.
Notwithstanding the preceding sentence, if the conditions in clauses (i) and
(ii) of the proviso above are satisfied and the excess, if any, of the
percentage (expressed as a whole number) of the total voting power of the Total
Equity Securities that the Equity Securities Beneficially owned by Liberty and
its Affiliates represents minus the percentage (expressed as a whole number) of
the total voting power of the Total Equity Securities that the Equity Securities
Beneficially Owned by Universal and its Affiliates represents is greater than
five (5), then the Manager (and the Company CEO) shall instead be designated by
Liberty or, at Liberty's option, a Liberty Member shall be the Managing Member
and shall designate the Company CEO. If neither Universal nor Liberty is then
entitled to designate the Manager in accordance with this provision, then the
Manager (and the Company CEO) shall be designated by HSNi.

            Section 5.2 Duties, Number, Designation and Term of Directors. (a)
The business and affairs of the Company shall be managed under the direction of
a Board of Directors of the Company (the "Company Board") consisting of a number
of directors equal to the number of directors constituting the HSNi Board;
provided, however, that if Liberty would be entitled to designate directors to
the HSNi Board pursuant to the terms of the Governance Agreement but such
representation on the HSNi Board by Liberty is not permitted by applicable law,
the number of directors of the Company Board shall be increased by one or two
until such time as Liberty is so entitled to designate one or two directors of
HSNi pursuant to the Governance Agreement and such representation would be
permitted by applicable law. Except as to matters delegated to Officers of the
Company, the approval of the Company Board shall be required for any action or
decision of the Company customarily reserved to a board of directors. The power
of the Company Board to approve such actions and decisions shall be exclusive to
the Company Board, and no Officer may take any action or make any decision
referred to in the foregoing sentence without the approval of the Company Board,
if such approval is required.

            (b) The directors shall consist, at all times, of (i) Class A
directors, consisting of the HSNi Designees who are the same persons as the
directors of the HSNi Board (other than Satisfactory Nominees and Liberty
Directors (as such terms are defined in the Governance Agreement), if any) (the
"HSNi Designees"), (ii) Class B directors, consisting of a number of directors
selected by Universal (the "Universal Designees") and equal to the number of
Satisfactory Nominees that Universal is entitled to designate to the HSNi Board
pursuant to the terms of the Governance Agreement and (iii) Class C directors,
consisting of a number of directors selected by Liberty ("Liberty Designees")
equal to the number of


                                      -15-
   21

Liberty Directors that Liberty would be entitled to designate to the HSNi Board
pursuant to the terms of the Governance Agreement (without regard to whether
such representation is permitted by applicable law). Universal shall designate
the Persons who are Satisfactory Nominees as the Class B directors and Liberty
shall designate the Persons who are Liberty Directors as the Class C directors,
in each case for so long as such Persons are also serving as directors on the
HSNi Board. In the event that Universal or Liberty is entitled to designate a
director on the HSNi Board but such position is not filled by Universal's or
Liberty's nominees (whether due to a legal limitation on the number of directors
such Person may designate or otherwise) (an "HSNi Board Vacancy"), Universal or
Liberty, as the case may be, shall be entitled to designate as directors such
additional number of individuals, subject to the definitions of Satisfactory
Nominee or Liberty Director. In the event that the HSNi Board Vacancy is
subsequently filled by Universal's or Liberty's designee, such entity shall
cause the resignation from the Company Board of the individuals designated
pursuant to the preceding sentence and to designate its HSNi Director to the
Company Board.

            (c) Directors shall be designated to serve until the earlier of (i)
the designation and qualification of his or her successor, (ii) removal of such
director in accordance with Section 5.5 of this Agreement or (iii) such
director's death.

            (d) Unless otherwise specified herein, any action or decision of the
Company Board, whether at a meeting of the Company Board or by written consent,
may only be taken if approved unanimously by the HSNi Designees, the Universal
Designees and the Liberty Designees; provided, however, that in the event any
action is deadlocked because of a failure to receive unanimous approval by the
Company Board, the Chairman of the Board shall have the power and authority to
break the deadlock by approving or rejecting such action and the affirmative
vote of the Chairman of the Board shall be deemed to be the unanimous vote of
the Company Board. Nothing in this Section shall affect the right of each Member
to approve or reject any Fundamental Change in accordance with Section 4.12.

            (e) Committees of the Company Board will not be used in a manner
that usurps the overall responsibility of the Company Board pursuant to this
Agreement.

            Section 5.3 Resignation of Directors. Any director, other than the
Company CEO prior to the date he ceases for any reason to be CEO or becomes
Disabled, may resign at any time. Such resignation shall be made in writing, and
shall take effect at the time specified therein, and, if no time be specified,
at the time of its receipt by the Chairman of the Board, the CEO or the
Secretary. The acceptance of a resignation shall not be necessary to make it
effective.

            Section 5.4 Vacancies on the Company Board. Upon any removal,
resignation, death or disability of any member of the Company Board, the Member
who designated such Company Board member shall designate a replacement in
accordance with Section 5.2.

            Section 5.5 Removal of a Director. (a) An HSNi Designee may be
removed only upon, and shall be removed effective upon, the removal or
resignation of such Designee from the HSNi Board.

            (b) Any Universal Designee may be removed either for or without
cause at any time, but only by the holders of a majority of the Class B Shares
in a writing to such


                                      -16-
   22

effect; provided that Universal shall also cause such designee to be removed
from the HSNi Board pursuant to the Governance Agreement. A Universal Designee
shall be removed from the Company Board effective upon the removal for cause of
such Universal Designee from the HSNi Board.

            (c) Any Liberty Designee may be removed either for or without cause
at any time, but only by the holders of a majority of the Class C Shares in a
writing to such effect; provided that, to the extent such Liberty Designee is
then serving as a Liberty Director, Liberty shall also cause such designee to be
removed from the HSNi Board pursuant to the Governance Agreement. A Liberty
Designee shall be removed from the Company Board effective upon the removal for
cause of such Liberty Designee from the HSNi Board.

            Section 5.6 Committees of Directors. The Company Board may, by
resolution or resolutions of the Company Board, designate one or more
committees, each committee to consist of two or more directors of the Company.
Any such committee, to the extent provided in the resolution of the Company
Board establishing such committee, shall have and may exercise all the powers
and authority of the Company Board in the management of the business and affairs
of the Company.

            Section 5.7 Meetings of the Company Board. The newly designated
directors may hold their first meeting for the purpose of organization and the
transaction of business, if a quorum be present, immediately after the formation
of the Company, or the time and place of such meeting may be fixed by consent of
all the directors. Regular meetings of the Company Board may be held without
notice (provided that directors were advised of the date and time of such
regular meeting at least the minimum number of days that would constitute notice
under Section 4.10 hereof) at such places and times as shall be determined from
time to time by resolution of the Company Board. Special meetings of the Company
Board may be called by the Chairman of the Board or a majority of the directors,
upon at least one day's notice to each director (except that notice to any
director may be waived in writing by such director), and shall be held at such
place or places as may be determined by the Company Board, or as shall be stated
in the call of the meeting. Where appropriate and practicable in the judgment of
the Manager, immediately prior to or following each regular or special meeting
of the HSNi Board of Directors, a separate special or regular meeting of the
Company Board shall be held. Copies of agendas and minutes of all meetings of
the Company Board shall be distributed to all directors. Members of the Company
Board, or any committee designated by the Company Board, may participate in any
meeting of the Company Board or any committee thereof by means of a conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and such participation in a
meeting shall constitute presence in person at the meeting.

            Section 5.8 Quorum of a Company Board Meeting. The presence in
person of a majority of the directors shall constitute a quorum for the
transaction of business. If at any meeting of the Company Board there shall be
less than a quorum present, a majority of those present may adjourn the meeting
from time to time until a quorum is obtained, and no further notice thereof need
be given other than by announcement at the meeting which shall be so adjourned.

            Section 5.9 Compensation of Directors. Directors shall not receive
any stated salary for their services as directors or as members of committees of
the Company


                                      -17-
   23

Board, but by resolution adopted by the Company Board, a fixed fee and expenses
of attendance may be allowed for attendance at each meeting. Nothing herein
contained shall be construed to preclude any director from serving the Company
in any other capacity as an Officer, agent or otherwise, and receiving
compensation therefor or from serving a Member in the capacity of officer, agent
or otherwise and receiving compensation therefor.

            Section 5.10 Action Without Company Board Meeting. Any action
required or permitted to be taken at any meeting of the Company Board or of any
committee thereof may be taken without a meeting if a written consent thereto is
signed by the number and type of directors as would be required to take such
action at a meeting, and such written consent is filed with the minutes of
proceedings of the Company Board or such committee.

            Section 5.11 Officers. (a) In addition to the Company CEO, the
Officers of the Company shall be a Chairman of the Board and a Secretary and
such other officers as may be established by the Manager, all of whom shall be
appointed by the Manager and shall hold office until their successors are duly
appointed. Subject to Sections 4.12 and 5.1 of this Agreement, the Company CEO
shall be responsible for managing the business of the Company and shall have
such powers and authority relative to the Company as does the CEO of HSNi
relative to HSNi. In addition, the Manager may appoint such Assistant
Secretaries and Assistant Treasurers as it deems proper. The Manager may also
establish additional or alternate offices of the Company as it deems advisable,
and such offices shall be filled with such Officers, who shall perform such
duties and serve such terms, as the Manager shall determine from time to time.

            (i) The Chairman of the Board. The Manager (or, in the case of a
      Member Manager, its designee) shall be the Chairman of the Board and shall
      preside at all meetings of the Company Board and shall have such powers
      and authority relative to the Company as does the Chairman of the Board of
      HSNi relative to HSNi.

            (ii) Secretary. The Secretary shall record all the proceedings of
      the meetings of the Company Board, any committees thereof and the Members
      in a book to be kept for that purpose, and shall perform such other duties
      as may be assigned to him or her by the Company Board or the Manager.

            (iii) Assistant Treasurers and Assistant Secretaries. Assistant
      Treasurers and Assistant Secretaries, if any, shall be elected and shall
      have such powers and shall perform such duties as shall be assigned to
      them, respectively, by the Manager.

            (b) Subject to Sections 4.12 and 5.1, officers shall have the
exclusive authority to conduct the day-to-day affairs of the Company. In no
event may an Officer take any action for which approval is required under
Section 4.12 in the absence of such approval.

                                   ARTICLE VI

                           SHARES AND CAPITAL ACCOUNTS
 
            Section 6.1 Capital Contributions. (a) Upon formation of the
Company, and, in the case of Liberty, no later than June 30, 1998 pursuant to
Section 1.5(f) of the


                                      -18-
   24

Investment Agreement, each Member shall contribute to the capital of the Company
(each, an "Initial Capital Contribution") the consideration set forth opposite
the Member's name on Schedule A attached hereto in the form indicated thereon
and in respect of the relevant number of Shares indicated thereon. The agreed
value of the Initial Capital Contributions shall be as set forth on Schedule A.
In addition, upon formation of the Company, Liberty shall contribute to the
capital of the Company a nominal contribution to be mutually agreed upon by
HSNi, Universal and Liberty (the "Initial Liberty Contribution").

            (b) Notwithstanding the other provisions of this Section, no Member
shall make any Capital Contributions to the Company other than the Initial
Capital Contributions, provided that Members holding Class A Shares, Class B
Shares and Class C Shares may make additional Capital Contributions in cash or
shares of HSNi Class B or common stock in exchange for additional shares of the
same class of Shares such Member holds prior to such Capital Contribution (any
such Capital Contribution, a "Subsequent Capital Contribution") to the Company
as contemplated by, and subject to the conditions and limitations contained in
the Investment Agreement, the Governance Agreement and the Stockholders
Agreement, including Sections 1.7, 1.8 and 6.1(c) of the Investment Agreement,
Section 1.01(h) of the Governance Agreement and Section 4.4(f) of the
Stockholders Agreement. At the time any Subsequent Capital Contributions are
made, Schedule A shall be revised to reflect such contributions.

            Section 6.2 Status of Capital Contributions. (a) No Member shall
receive any interest, salary or drawing with respect to its Capital
Contributions or its Capital Account or for services rendered on behalf of the
Company or otherwise in its capacity as a Member, except as otherwise
specifically provided in this Agreement with respect to allocations and
distributions.

            (b) Except as otherwise provided herein and by the Delaware Act, the
Members shall be liable only to make their Capital Contributions pursuant to
Section 6.1 hereof, and no Member shall be required to lend any funds to the
Company or, after a Member's Capital Contributions have been fully paid pursuant
to Section 6.1 hereof, to make any additional Capital Contributions to the
Company except as provided herein or therein. Other than as provided herein or
under the Delaware Act, no Member shall have any personal liability for the
payment of any Capital Contribution of any other Member.

            Section 6.3 Capital Accounts. (a) An individual Capital Account
shall be established and maintained for each Member by class of Share.

            (b) The Capital Account of each Member by class of Share shall be
maintained in accordance with the following provisions:

            (i) to such Member's Capital Account there shall be credited such
      Member's Capital Contributions, Profits allocated to such Member under
      Sections 7.1 and 7.2 hereof and the amount of any Company liabilities that
      are assumed by such Member or that are secured by any Company assets
      distributed to such Member;

            (ii) to such Member's Capital Account there shall be debited the
      amount of cash and the Gross Asset Value of any Company assets transferred
      to such Member in a Distribution pursuant to any provision of this
      Agreement, Losses allocated to such Member under Sections 7.1 and 7.2
      hereof and the amount of any liabilities


                                      -19-
   25
      of such Member that are assumed by the Company (other than liabilities
      taken into account in determining a Member's Capital Contribution); and

            (iii) in determining the amount of any liability for purposes of
      this subsection (b), there shall be taken into account Section 752(c) of
      the Code and any other applicable provisions of the Code and the Treasury
      Regulations.

            Section 6.4 Advances. Subject to Article 5 of the Investment
Agreement, if any Member shall advance any funds to the Company in excess of its
Capital Contributions, the amount of such advance shall neither increase its
Capital Account nor entitle it to any increase in its share of the Distributions
of the Company. Subject to Article 5 of the Investment Agreement and Section
4.12 of this Agreement, the amount of any such advance shall be a debt
obligation of the Company to such Member and shall be repaid to it by the
Company with such interest rate, conditions and terms as mutually agreed upon by
such Member and the Manager. Any such advance shall be payable and collectible
only out of Company assets, and the other Members shall not be personally
obligated to repay any part thereof. No Person who makes any nonrecourse loan to
the Company shall have or acquire, as a result of making such loan, any direct
or indirect interest in the profits, capital or property of the Company, other
than as a creditor.

            Section 6.5 Redemption, Exchange, Transfer. Subject in addition to
Section 4.4 hereof, Shares shall be redeemable, exchangeable and transferable
only in accordance with the Investment Agreement and the Exchange Agreement (as
defined therein). The Company and the Members shall take all actions necessary
to effect the terms of the Investment Agreement as they relate to Shares (LLC
Shares, as defined in the Investment Agreement), including, without limitation,
the terms of Articles 6 and 7 thereof.

                                   ARTICLE VII

                                   ALLOCATIONS
 
            Section 7.1 Profits and Losses. (a) Subject to the allocation rules
of Section 7.2 hereof, Profits for any Fiscal Year shall be allocated among the
Members in proportion to their respective Economic Percentage Interests.

            (b) Subject to the allocation rules of Section 7.2 hereof, Losses
for any Fiscal Year shall be allocated among the Members in proportion to their
Economic Percentage Interests.

            Section 7.2 Allocation Rules. (a) In the event there is a change in
the respective Economic Percentage Interests of Members during the year, the
Profits (or Losses) allocated to the Members for each Fiscal Year during which
there is a change in the respective Economic Percentage Interests of Members
during the year shall be allocated among the Members in proportion to the
Economic Percentage Interests during such Fiscal Year in accordance with ss.706
of the Code, using any convention permitted by law and selected by the Company
Board.

            (b) For purposes of determining the Profits, Losses or any other
items allocable to any period, Profits, Losses and any such other items shall be
determined on a


                                      -20-
   26
 daily, monthly or other basis, as determined by the Company Board using any
method that is permissible under Section 706 of the Code and the Treasury
Regulations thereunder.

            (c) Except as otherwise provided in this Agreement, all items of
Company income, gain, loss, deduction, credit and any other allocations not
otherwise provided for shall be divided among the Members in the same
proportions as they share Profits and Losses for the Fiscal Year in question.

            (d) The Members are aware of the income tax consequences of the
allocations made by this Article VII and hereby agree to be bound by the
provisions of this Article VII in reporting their shares of Company income,
gain, loss, deduction and credit for income tax purposes.

            Section 7.3 Priority Allocations. The following allocations shall be
made in the following order of priority:

            (a) Minimum Gain Chargeback. Notwithstanding any other provision of
      this Section 7.3, if there is a net decrease in Company Minimum Gain
      during any Fiscal Year, each Member shall be specially allocated items of
      Company income and gain for such year (and, if necessary, subsequent
      years) equal to such Member's share of the net decrease in Company Minimum
      Gain, determined in accordance with Treasury Regulation Section
      1.704-2(g)(2); provided that a Member shall not be subject to this Section
      7.3(a) to the extent that an exception is provided by Treasury Regulation
      Section 1.704-2(f)(2)-(5). This Section 7.3(a) is intended to comply with
      the minimum gain chargeback requirement in Treasury Regulation Section
      1.704-2(f) and shall be interpreted consistently therewith.

            (b) Member Nonrecourse Liability Minimum Gain Chargeback.
      Notwithstanding any other provision of this Section 7.3 except Section
      7.3(a), if there is a net decrease in Member Minimum Gain attributable to
      a Member Nonrecourse Liability during any Fiscal Year, each Member who has
      a share of the Member Minimum Gain attributable to such Member Nonrecourse
      Liability (determined in accordance with Treasury Regulation Section
      1.704-2(i)(5)) as of the beginning of the year shall be specially
      allocated items of Company income and gain for such year (and, if
      necessary, subsequent years) equal to such Member's share of the net
      decrease in Member Minimum Gain attributable to such Member Nonrecourse
      Liability. A Member's share of the net decrease in Member Minimum Gain
      shall be determined in accordance with Treasury Regulation Section
      1.704-2(i)(4); provided that a Member shall not be subject to this
      provision to the extent that an exception is provided by Treasury
      Regulation Section 1.704-2(i)(4). This Section 7.3(b) is intended to
      comply with the minimum gain chargeback requirement in Treasury Regulation
      Section 1.704-2(i)(4) and shall be interpreted consistently therewith.

            (c) Qualified Income Offset. In the event any Member unexpectedly
      receives any adjustments, allocations or distributions described in
      Treasury Regulation Sections 1.704-1(b)(2)(ii)(d)(4),
      1.704-1(b)(2)(ii)(d)(5) or 1.704-1(b)(2)(ii)(d)(6), items of Company
      income and gain (consisting of a pro rata portion of each item of Company
      income, including gross income, and gain for the Fiscal Year) shall be
      specially allocated to each such Member in an amount and manner sufficient
      to eliminate, to the extent required by the Treasury Regulation, the
      Adjusted Capital


                                      -21-
   27
      Account Deficit of such Member created by such adjustments, allocations or
      distributions as quickly as possible; provided that an allocation pursuant
      to this Section 7.3(c) shall be made if and only to the extent that such
      Member would have an Adjusted Capital Account Deficit after all other
      allocations provided for in this Section 7.3 have been tentatively made as
      if this Section 7.3(c) were not in this Agreement. This Section 7.3(c) is
      intended to comply with the qualified income offset requirement in
      Treasury Regulation Section 1.704-1(b)(2)(ii)(d) and shall be interpreted
      consistently therewith.

            (d) Gross Income Allocation. In the event any Member has a deficit
      Capital Account at the end of any Fiscal Year that is in excess of the sum
      of (i) the amount such Member is obligated to restore pursuant to the
      terms of this Agreement or otherwise, and (ii) the amount such Member is
      deemed to be obligated to restore pursuant to the penultimate sentence of
      each of Treasury Regulation Sections 1.704-2(g)(1) and 1.704-2(i)(5), each
      such Member shall be specially allocated items of Company income and gain
      in the amount of such excess as quickly as possible, provided that an
      allocation pursuant to this Section 7.3(d) shall be made if and only to
      the extent that such Member would have a deficit Capital Account in excess
      of such sum after all other allocations provided for in this Section 7.3
      have been tentatively made as if Section 7.3(c) and this Section 7.3(d)
      were not in this Agreement.

            (e) Member Nonrecourse Deductions. If any Member bears the Economic
      Risk of Loss with respect to a Member Nonrecourse Liability, any Member
      Nonrecourse Deductions for any Fiscal Year shall be specially allocated to
      the Member who bears the Economic Risk of Loss with respect to the Member
      Nonrecourse Liability to which such Member Nonrecourse Deductions are
      attributable in accordance with Treasury Regulation Section 1.704-2(i).

            (f) Deductions under Section 709 of the Code for amortization of
      amounts paid or incurred to organize the Company or, in the case of
      liquidation of the Company prior to the end of the amortization period
      specified in Section 709 of the Code, deductions under Section 165 for the
      previously unrecovered portion of such amounts, shall be specially
      allocated to the Member who paid or incurred such amounts and such
      Member's Capital Account shall be credited for amounts paid or incurred by
      such Member.

            Section 7.4 Tax Allocations; Section 704(c) of the Code. (a) In
accordance with Section 704(c) of the Code and the Treasury Regulations
thereunder, income, gain, loss and deduction with respect to any property
contributed to the capital of the Company shall, solely for income tax purposes,
be allocated among the Members so as to take account of any variation between
the adjusted basis of such property to the Company for United States federal
income tax purposes and its initial Gross Asset Value (computed in accordance
with paragraph (a) of the definition of "Gross Asset Value" contained in Section
1.1 hereof). Such variation shall be taken into account under the "traditional
method" of Treasury Regulation Section 1.704-3(b). For these purposes the Owned
Partnership Interest and the Acquired Partnership Interest shall be treated as
separate assets.

            (b) In the event the Gross Asset Value of any Company asset is
adjusted pursuant to paragraph (b) of the definition of "Gross Asset Value"
contained in Section 1.1 hereof, subsequent allocations of income, gain, loss
and deduction with respect to such asset


                                      -22-
   28

shall, solely for income tax purposes, take account of any variation between the
adjusted basis of such asset for United States federal income tax purposes and
its Gross Asset Value in the same manner as under ss.704(c) of the Code and the
Treasury Regulations thereunder.

            (c) Allocations pursuant to this Section 7.4 are solely for purposes
of United States federal, state and local taxes, and shall not affect, or in any
way be taken into account in computing, any Member's Capital Account or share of
Profits, Losses, other items or distributions pursuant to any provision of this
Agreement.

                                  ARTICLE VIII

                                  DISTRIBUTIONS
 
            Section 8.1 Distributions; Special Distribution. The Manager may, by
resolution, at any regular or special meeting, declare and make pro rata
Distributions in accordance with the Members' respective Economic Percentage
Interests of cash and, subject to paragraphs (i) and (l) of Section 4.12,
property, in each case in proportion to the respective Economic Percentage
Interests at such times as it deems appropriate, at its sole discretion;
provided, however, that (except in respect of Distributions required by Section
8.2 below) any Distribution may only be paid in connection with a related
distribution by HSNi to its stockholders in an aggregate amount equal to the
proceeds to HSNi of such Distribution; and provided, further, that the form of
consideration shall be the same for all Classes (e.g., each Member will receive
a pro rata interest in the assets being distributed).

            Section 8.2 Mandatory Distributions. Notwithstanding Section 8.1,
the Company shall make a Distribution to the Members with respect to each
taxable year of the Company, within 60 days after the close of such taxable
year, in an aggregate amount equal to the product of the Adjusted Taxable Income
multiplied by the Tax Rate. Such Distribution shall be made to all Members in
accordance with their respective Economic Percentage Interests.

            Section 8.3 Limitations on Distribution. Notwithstanding any
provision to the contrary contained in this Agreement, the Company shall not
make any Distribution if such Distribution would violate Section 18-607 of the
Delaware Act or other applicable law, but shall instead make such Distribution
as soon as practicable after the making of such Distribution would not cause
such violation.

            Section 8.4 Tax Loans to HSNi. If the LLC Taxable Income for any
year is a loss and the HSNi Group has positive taxable income for such year,
then HSNi shall be entitled to an interest-free loan from the LLC equal to the
HSNi Group's taxable income (but not in excess of the LLC Taxable Loss
multiplied by one minus the Ratio) multiplied by the Tax Rate and divided by one
minus the Ratio, and the repayment of such loan will reflect the cumulative net
income or loss of the Company and the HSNi Group for that year and subsequent
years.

            Section 8.5 Intercompany Transfer of Funds. (a) The Company shall
keep records of all movement of funds between the Company and its Subsidiaries,
on the one hand, and HSNi and its Subsidiaries which are not also Subsidiaries
of the Company ("Non-LLC Subs"), on the other hand. HSNi shall cause all Excess
Cash held by HSNi and its


                                      -23-
   29

Subsidiaries from time to time to be transferred to the Company in accordance
with the terms of this Section 8.5 and Article 5 of the Investment Agreement.

            (b) Except as otherwise provided in Section 5.4 of the Investment
Agreement and Section 8.5(d) of this Agreement, all transfers of funds from the
Company to HSNi and Non-LLC Subs (other than distributions on, or redemptions
of, the Class A Shares or payment of interest on indebtedness owed or assumed by
the Company) shall either be (i) evidenced by a demand note from the recipient
of such funds payable to the Company or (ii) applied to repay indebtedness owed
by the Company to such recipient.

            (c) Except as otherwise provided in Section 5.4 of the Investment
Agreement and Section 8.5(d) of this Agreement, all transfers of funds from HSNi
and Non-LLC Subs (other than contributions of capital in connection with the
acquisition of the Class A Shares or payment of interest on indebtedness owed to
the Company) shall either be (i) evidenced by a demand note from the Company
payable to the transferor of such funds or (ii) applied to repay indebtedness
owed by such transferor to the Company.

            (d) The provisions of paragraphs (b) and (c) above shall not apply
to the payments of funds described in clauses (i) through (iv) of Section 5.4 of
the Investment Agreement. HSNi shall cause any transactions between the Company,
on the one hand, and the Non-LLC Subs, on the other hand, to be (i) on terms in
the aggregate which are no less favorable to the Company than the terms which
the Company would have received in a transaction with an unaffiliated third
party or (ii) on an allocated cost basis.

            (e) The outstanding demand notes referred to in paragraphs (b) and
(c) above shall bear interest at the Interest Rate from time to time and
interest shall be payable monthly in arrears.

                                   ARTICLE IX

                                BOOKS AND RECORDS
 
            Section 9.1 Books, Records and Financial Statements. (a) The Company
shall at all times maintain, at its principal place of business, separate books
of account for the Company that shall show a true and accurate record of all
costs and expenses incurred, all charges made, all credits made and received and
all income derived in connection with the operation of the Company in accordance
with GAAP consistently applied, and, to the extent inconsistent therewith, in
accordance with this Agreement. Such books of account, together with a copy of
this Agreement and the Certificate, shall at all times be maintained at the
principal place of business of the Company and shall be open to inspection and
examination at reasonable times by each Member and its duly authorized
representatives for any purpose reasonably related to such Member's interest in
the Company.

            (b) The Officers shall prepare and maintain, or cause to be prepared
and maintained, the books of account of the Company. The following financial
information, prepared in accordance with GAAP (or, in the case of item (v), in
accordance with United States federal income tax principles) and applied on a
basis consistent with prior periods, which shall be audited and certified to by
an independent certified public accountant (who may be the independent certified
public accountant for HSNi and its Affiliates), shall be


                                      -24-
   30

transmitted by the Company to each Member as soon as reasonably practicable and
in no event later than ninety (90) days after the close of each Fiscal Year:

            (i) balance sheet of the Company as of the beginning and close of
      such Fiscal Year;

            (ii) statement of profits and losses for such Fiscal Year;

            (iii) statement of each Member's Capital Account as of the close of
      such Fiscal Year, and changes therein during such Fiscal Year;

            (iv) statement of the Company's cash flows during such Fiscal Year;
      and

            (v) a statement indicating such Member's share of each item of the
      Company income, gain, loss, deduction or credit for such Fiscal Year for
      income tax purposes, which statement shall include or consist of a
      Schedule K-1 to the Company's Internal Revenue Service Form 1065 (or any
      corresponding schedule to any successor form) for such Fiscal Year.

            (c) Following the end of each of the Company's four fiscal quarters,
the Company shall prepare and provide to each Member on a reasonably timely
basis in order to permit each Member to comply with its public reporting
requirements an unaudited balance sheet of the Company with respect to such
quarter, a statement of the profits and losses of the Company for such quarter
and a statement of cash flows during such quarter, each of which shall be
prepared in accordance with GAAP, applied on a basis consistent with prior
periods. To the extent that, with respect to the first four fiscal quarters of
the Company, the Company cannot provide final financial statements with respect
to such fiscal quarter on a reasonably timely basis for a Member to comply with
its reporting obligations, the Company shall provide estimates on a reasonably
timely basis to permit such compliance. Except as provided in the next
paragraph, a Member shall not disclose any of the information provided pursuant
to this paragraph prior to the earlier of (i) immediately following the time
such information is made publicly available by HSNi, and (ii) the date HSNi is
required to file its quarterly report on Form 10-Q or its annual report on Form
10-K with respect to the fourth quarter, as the case may be, containing such
information.

            (d) To the extent that a Member is required pursuant to its public
reporting requirements to disclose the quarterly financial information described
in paragraph (c) prior to the date described in the last sentence thereof, a
Member may use such information or estimates in its required public disclosure,
provided that such disclosure does not result in the financial information
relating to the Company being separately identifiable or determinable from such
disclosure.

            Section 9.2 Accounting Method. For both financial and tax reporting
purposes and for purposes of determining Profits and Losses, the books and
records of the Company shall be kept on the accrual method of accounting and
shall reflect all Company transactions and be appropriate and adequate for the
Company's business.

            Section 9.3 Annual Audit. The financial statements of the Company
shall be audited by an independent certified public accountant, selected by the
HSNi Board, with



                                      -25-
   31

such audit to be accompanied by a report of such accountant containing its
opinion. The cost of such audit shall be an expense of the Company.

                                    ARTICLE X

                                   TAX MATTERS
 
            Section 10.1 Tax Matters. (a) The "Tax Matters Partner" of the
Company for purposes of ss.6231(a)(7) of the Code shall have the power to manage
and control, on behalf of the Company, any administrative proceeding at the
Company level with the Internal Revenue Service or any other taxing authority
relating to the determination of any item of Company income, gain, loss,
deduction or credit for United States federal, state, local or foreign income or
franchise tax purposes. The Tax Matters Partner shall take such action as may be
reasonably necessary to constitute each other Member a "notice partner" within
the meaning of ss.6231(a)(8) of the Code. The Tax Matters Partner shall cause to
be prepared for each taxable year of the Company the federal, state and local
tax returns and information returns, if any, which the Company is required to
file, copies of which returns shall be made available by the Company at least 30
days prior to filing for inspection, examination, and approval by any Member or
any of its representatives during reasonable business hours, and all of such
persons shall be entitled to make copies or extracts thereof. The Members shall
provide any comments on such returns to the Tax Matters Partner within 15 days
after their being made available to the Members. Where the Members are required
to file federal, state or local income tax returns by reason of their interest
in the Company, the Tax Matters Partner shall cause them to be furnished with
the relevant returns filed by the Company. The Tax Matters Partner shall notify
each other Member of all material matters that come to its attention in its
capacity as Tax Matters Partner. The Tax Matters Partner shall be Home Shopping
while Mr. Diller is the Manager and, thereafter, the Tax Matters Partner shall
be a designee of the Manager. The Tax Matters Partner shall not have the
authority to bind any of the Members, including with respect to any extension of
any statute of limitations.

            (b) The Company shall, within ten (10) days of the receipt of any
notice from the Internal Revenue Service or any state, local or foreign tax
authority in any administrative proceeding at the Company level relating to the
determination of any Company item of income, gain, loss, deduction or credit,
mail a copy of such notice to each Member.

            Section 10.2 Right to Make Section 754 Election. The Company Board
may, in its sole discretion, make or apply for permission with the Commissioner
of the Internal Revenue Service to revoke, on behalf of the Company, an election
in accordance with ss.754 of the Code, so as to adjust the basis of Company
property in the case of a distribution of property within the meaning of ss.734
of the Code, and in the case of a transfer of a Company interest within the
meaning of ss.743 of the Code. Each Member shall, upon request of the Company,
supply the information necessary to give effect to such an election.

            Section 10.3 Section 709 Election. The Tax Matters Partner shall
cause the Company to file, with the Company's Internal Revenue Service Form 1065
for the taxable year in which the Company begins business, an election under
ss.709 of the Code (meeting



                                      -26-
   32

the requirements of Treasury Regulation ss.1.709-1(c)) to amortize its
organizational expenses over 60 months. Each Member agrees to (i) treat any
amounts paid or incurred by such Member to organize the Company as deferred
expenses of the Company that are subject to ss.709 of the Code and (ii) maintain
records of any such amounts that are sufficiently detailed to enable the Company
to file an election meeting the requirements of Treasury Regulation
ss.1.709-1(c).

            Section 10.4 Taxation as Partnership. The Company shall be treated
as a partnership for United States federal, state, local and foreign tax
purposes and will make any necessary elections to achieve such status.

                                   ARTICLE XI

                   LIABILITY, EXCULPATION AND INDEMNIFICATION

            Section 11.1 Liability. Except as otherwise provided by the Delaware
Act, the debts, obligations and liabilities of the Company, whether arising in
contract, tort or otherwise, shall be solely the debts, obligations and
liabilities of the Company, and no Covered Person or Member shall be obligated
personally for any such debt, obligation or liability of the Company solely by
reason of being a Covered Person or Member. Except as expressly provided herein,
no Member in its capacity as such, shall have liability to the Company, any
other Member or the creditors of the Company.

            Section 11.2 Exculpation. (a) No Covered Person shall be liable to
the Company or any other Covered Person for any loss, damage or claim incurred
by reason of any act or omission performed or omitted by such Covered Person in
good faith on behalf of the Company and in a manner reasonably believed to be
within the scope of authority conferred on such Covered Person by this
Agreement, the Company Board or an appropriate Officer or employee of the
Company, except that a Covered Person shall be liable for any such loss, damage
or claim incurred by reason of such Covered Person's gross negligence, fraud or
willful misconduct.

            (b) A Covered Person shall be fully protected in relying in good
faith upon the records of the Company and upon such information, opinions,
reports or statements presented to the Company by any Person as to matters the
Covered Person reasonably believes are within such other Person's professional
or expert competence, including information, opinions, reports or statements as
to the value and amount of the assets, liabilities, Profits or Losses or any
other facts pertinent to the existence and amount of assets from which
distributions to Members might properly be paid.

            Section 11.3 Fiduciary Duty. To the extent that, at law or in
equity, a Covered Person has duties (including fiduciary duties) and liabilities
relating thereto to the Company or to any Member, a Covered Person acting under
this Agreement shall not be liable to the Company or to any Member for its good
faith acts or omissions in reliance on the provisions of this Agreement. The
provisions of this Agreement, to the extent that they restrict the duties and
liabilities of a Covered Person otherwise existing at law or in equity, are
agreed by the parties hereto to replace such other duties and liabilities of
such Covered Person.



                                      -27-
   33

            Section 11.4 Indemnification. To the fullest extent permitted by
applicable law, a Covered Person shall be entitled to indemnification from the
Company for any loss, damage or claim incurred by such Covered Person by reason
of any act or omission performed or omitted by such Covered Person in good faith
on behalf of the Company and in a manner reasonably believed to be within the
scope of authority conferred on such Covered Person by this Agreement, except
that no Covered Person shall be entitled to be indemnified in respect of any
loss, damage or claim incurred by such Covered Person by reason of gross
negligence, fraud or willful misconduct with respect to such acts or omissions;
provided, however, that any indemnity under this Section shall be provided out
of and to the extent of Company assets only, and no Covered Person shall have
any personal liability on account thereof.

            Section 11.5 Expenses. To the fullest extent permitted by applicable
law, reasonable expenses (including reasonable legal fees) incurred by a Covered
Person in defending any claim, demand, action, suit or proceeding shall, from
time to time, be advanced by the Company prior to the final disposition of such
claim, demand, action, suit or proceeding upon receipt by the Company of an
undertaking by or on behalf of the Covered Person to repay such amount if it
shall be determined that the Covered Person is not entitled to be indemnified as
authorized in Section 11.4 hereof.

            Section 11.6 Insurance. The Company may purchase and maintain
insurance, to the extent and in such amounts as the Company Board by resolution
shall deem reasonable or appropriate, on behalf of Covered Persons and such
other Persons as the Company Board by resolution shall determine, against any
liability that may be asserted against or expenses that may be incurred by any
such Person in connection with the activities of the Company or such
indemnities, regardless of whether the Company would have the power to indemnify
such Person against such liability under the provisions of this Agreement. The
Members and the Company may enter into indemnity contracts with Covered Persons
and such other Persons as the Company Board shall determine and adopt written
procedures pursuant to which arrangements are made for the advancement of
expenses and the funding of obligations under Section 11.5 hereof and containing
such other procedures regarding indemnification as are appropriate.

            Section 11.7 Outside Businesses. Any Member (including any Member
that is the Manager) or Affiliate thereof may engage in or possess an interest
in other business ventures of any nature or description, independently or with
others, similar or dissimilar to the business of the Company, and the Company
and the Members shall have no rights by virtue of this Agreement in and to such
independent ventures or the income or profits derived therefrom, and the pursuit
of any such venture, even if competitive with the business of the Company, shall
not be deemed wrongful or improper. No Member or Affiliate thereof shall be
obligated to present any particular investment opportunity to the Company even
if such opportunity is of a character that, if presented to the Company, could
be taken by the Company, and any Member or Affiliate thereof shall have the
right to take for its own account (individually or as a partner or fiduciary) or
to recommend to others any such particular investment opportunity. The
provisions of this Section 11.7 shall not in any way limit, modify or amend the
terms of any noncompetition, license or employment agreement that may be entered
into between the Company and any Member, which terms shall be binding on the
parties thereto.


                                      -28-
   34

            Section 11.8 Third-Party Beneficiaries. There shall be no
third-party beneficiaries of this Agreement.

                                   ARTICLE XII

                               ADDITIONAL MEMBERS

            Section 12.1 Admission. Except as provided in Section 2.1(b),
Article VI or Section 13.1, the Company may not admit any new Members and may
issue no new Class A Shares, Class B Shares or Class C Shares.

            Section 12.2 Allocations. Additional Shares shall not be entitled to
any retroactive allocation of the Company's income, gains, losses, deductions,
credits or other items; provided that, subject to the restrictions of ss.706(d)
of the Code, Additional Shares shall be entitled to their respective share of
the Company's income, gains, losses, deductions, credits and other items arising
under contracts entered into before the effective date of the issuance of any
Additional Shares to the extent that such income, gains, losses, deductions,
credits and other items arise after such effective date. To the extent
consistent with ss.706(d) of the Code and Treasury Regulations promulgated
thereunder, the Company's books may be closed at the time Additional Shares are
admitted (as though the Company's tax year had ended) or the Company may credit
to the Additional Shares pro rata allocations of the Company's income, gains,
losses, deductions, credits and other items for that portion of the Company's
Fiscal Year after the effective date of the issuance of the Additional Shares.

                                  ARTICLE XIII

                                   ASSIGNMENTS

            Section 13.1 Assignments of Shares Generally. Except as permitted by
the Investment Agreement and the Exchange Agreement, a Member may not, directly
or indirectly, sell, assign, transfer, pledge, hypothecate, mortgage or dispose
of, by gift or otherwise, or in any way encumber ("Assign," and such act, an
"Assignment") all or any part of the Shares or Additional Shares owned by such
Member without the consent of the holders of the Class A Shares, Class B Shares
and Class C Shares and any attempt to do so shall be void ab initio to the
maximum extent permitted by law; provided, however, that a merger or
consolidation between a Member and a member of its Group (as defined in the
Exchange Agreement) shall not be deemed to be an Assignment of any of the Shares
or Additional Shares owned by such Member and that a merger or consolidation in
which Universal, HSNi (or Home Shopping Network) or Liberty is a constituent
corporation shall not be deemed to be an Assignment of any Shares or Additional
Shares Beneficially Owned by such person (provided in each case that a
significant purpose of any such transaction is not to avoid the provisions of
this Agreement and provided that the surviving corporation agrees to be bound by
the terms of this Agreement then applicable to such Member). Any assignment of a
Share permitted under this Section 13.1 shall not be effective until the
assignee has been admitted as a Member of the Company which shall be when the
assignee has executed a counterpart to this Agreement and is reflected as a
Member of the Company on Schedule A hereto. Notwithstanding any other provision
of this Agreement, the Members


                                      -29-
   35

expressly agree that the transactions contemplated by that certain credit
agreement among the Company, certain Affiliates of the Company and the lenders
thereunder, with Chase Securities, Inc. as Arranger, in connection with
consummation of the transactions contemplated by the Investment Agreement, which
include the incurrence of certain indebtedness and the issuance of certain
guarantees and pledges (including of the Class A Shares), or in connection with
any replacement facility, shall not constitute an Assignment or otherwise
violate this Agreement.

            Section 13.2 Recognition of Assignment by the Company. No Assignment
of Shares or Additional Shares in violation of Section 13.1 shall be valid or
effective, and neither the Company nor the Members shall recognize the same for
the purpose of making allocations or Distributions. Neither the Company nor the
Members shall incur any liability as a result of refusing to make any such
allocations or Distributions with respect to Assigned Shares in violation of
Section 13.1.

                                   ARTICLE XIV

                    DISSOLUTION, LIQUIDATION AND TERMINATION

            Section 14.1 No Dissolution. The death, retirement, resignation,
expulsion, bankruptcy or dissolution of any Member or the occurrence of any
other event that terminates the continued membership of a Member in the Company
shall not, in and of itself, cause the dissolution of the Company. In such
event, the business of the Company shall be continued by the remaining Members.

            Section 14.2 Events Causing Dissolution. The Company shall be
dissolved and its affairs shall be wound up upon the occurrence of any of the
following events:

            (a) the written consent of the holders of a majority of each of the
      Class A Shares, the Class B Shares and the Class C Shares; or

            (b) the entry of a decree of judicial dissolution under Section
      18-802 of the Delaware Act.

            Section 14.3 Liquidation. Upon dissolution of the Company, the
Person or Persons approved by the Members to carry out the winding up of the
Company shall immediately commence to wind up the Company's affairs; provided,
however, that a reasonable time shall be allowed for the orderly liquidation of
the assets of the Company and the satisfaction of liabilities to creditors so as
to enable the Members to minimize the normal losses attendant upon a
liquidation. The Members shall continue to share Profits and Losses during
liquidation as specified in Article VII hereof. The proceeds of liquidation
shall be distributed in the following order and priority:

            (a) to secured creditors of the Company whether or not they are
      Members and to unsecured creditors that are not Members, to the extent
      otherwise permitted by law, in satisfaction of the liabilities of the
      Company (whether by payment or the making of reasonable provision for
      payment thereof);
    

                                      -30-
   36

            (b) to unsecured creditors of the Company that are Members, to the
      extent otherwise permitted by law, in satisfaction of the liabilities of
      the Company (whether by payment or the making of reasonable provision for
      payment thereof); and

            (c) to the holders of the Class A Shares, the Class B Shares and the
      Class C Shares on a pro rata basis in accordance with their respective
      Economic Percentage Interests.

            Section 14.4 Termination. The Company shall terminate when all of
the assets of the Company, after payment, or due provision for all debts,
liabilities and obligations, of the Company shall have been distributed to the
Members in the manner provided for in this Article XIV and the Certificate shall
have been canceled in the manner required by the Delaware Act.

            Section 14.5 Claims of the Members. The Members and former Members
shall look solely to the Company's assets for the return of their Capital
Contributions, and if the assets of the Company remaining after payment of or
due provision for all debts, liabilities and obligations of the Company are
insufficient to return such Capital Contributions, the Members and former
Members shall have no recourse against the Company or any other Member.

                                   ARTICLE XV

                                  MISCELLANEOUS

            Section 15.1 Notices. All notices provided for in this Agreement
shall be in writing, duly signed by the party giving such notice, and shall be
hand delivered, faxed or mailed by registered or certified mail or overnight
courier service, as follows:

            (a) if given to the Company, to the address (and, if applicable, fax
      number) specified in Section 2.5 hereof to the attention of the General
      Counsel of the Company (or, if there be none, to the General Counsel of
      HSNi); or

            (b) if given to any Member, to the person and at the address (and,
      if applicable, fax number) set forth opposite its name on Schedule A
      attached hereto, or at such other address (and, if applicable, fax number)
      as such Member may hereafter designate by written notice to the Company.

All such notices shall be deemed to have been given when received.

            Section 15.2 Formation Expenses. Each party shall pay its own
expenses incurred in connection with the formation of the Company.

            Section 15.3 Failure to Pursue Remedies. The failure of any party to
seek redress for violation of, or to insist upon the strict performance of, any
provision of this Agreement shall not prevent a subsequent act, which would have
originally constituted a violation, from having the effect of an original
violation.


                                      -31-
   37

            Section 15.4 Cumulative Remedies. The rights and remedies provided
by this Agreement are cumulative and the use of any one right or remedy by any
party shall not preclude or waive its right to use any or all other remedies.
Said rights and remedies are given in addition to any other rights the parties
may have by law, statute, ordinance or otherwise.

            Section 15.5 Binding Effect. This Agreement shall be binding upon
and inure to the benefit of all of the parties and, to the extent permitted by
this Agreement, their successors, legal representatives and assigns.

            Section 15.6 Interpretation. All references herein to "Articles,"
"Sections" and "Paragraphs" shall refer to corresponding provisions of this
Agreement. Whenever the words "include," "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation." The words "hereof," "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement. All terms defined in this
Agreement shall have the defined meanings when used in any certificate or other
document made or delivered pursuant hereto unless otherwise defined therein. The
definitions contained in this Agreement are applicable to the singular as well
as the plural forms of such terms and to the masculine as well as to the
feminine and neuter genders of such term. Any agreement, instrument or statute
defined or referred to herein or in any agreement or instrument that is referred
to herein means such agreement, instrument or statute as from time to time
amended, modified or supplemented, including (in the case of agreements or
instruments) by waiver or consent in writing and (in the case of statutes) by
succession of comparable successor statutes and references to all attachments
thereto and instruments incorporated therein. References to a Person are also to
its permitted successors and assigns. It is the intent of the parties hereto
that this Agreement shall be an effectuation of certain terms of the Investment
Agreement consistent with such terms of the Investment Agreement and that the
provisions of this Agreement should be interpreted to give effect to the
Investment Agreement.

            Section 15.7 Severability. The invalidity or unenforceability of any
particular provision of this Agreement shall not affect the other provisions
hereof, and this Agreement shall be construed in all respects as if such invalid
or unenforceable provision were omitted.

            Section 15.8 Counterparts. This Agreement may be executed in any
number of counterparts with the same effect as if all parties hereto had signed
the same document. All counterparts shall be construed together and shall
constitute one instrument.

            Section 15.9 Integration. This Agreement constitutes the entire
agreement among the parties hereto pertaining to the subject matter hereof and
supersedes all prior agreements and understandings pertaining thereto other than
the Exchange Agreement (including the related letter agreement), the Investment
Agreement and the agreements referred to therein (including the Stockholders
Agreement). Notwithstanding anything to the contrary contained herein, this
Agreement shall not alter any of HSNi's, Universal or Liberty's indemnification
obligations under the Investment Agreement or their respective obligations to
make Capital Contributions to the Company pursuant to the Investment Agreement.


                                       -32-
   38

            Section 15.10 Governing Law. This Agreement and the rights of the
parties hereunder shall be interpreted in accordance with the laws of the State
of Delaware, and all rights and remedies shall be governed by such laws without
regard to principles of conflict of laws.

            Section 15.11 Confidentiality. Each Member expressly acknowledges
that such Member will receive confidential and proprietary information relating
to the Company, including, without limitation, information relating to the
Company's financial condition and business plans, and that the disclosure of
such confidential information to a third party would cause irreparable injury to
the Company. Except with the prior written consent of the Company or as required
by law, no Member shall disclose any such information to a third party (other
than on a "need to know" basis to any Affiliate or any employee, agent or
representative of such Member or its Affiliates (each of whom shall agree to
maintain the confidentiality of such information)), and each Member shall use
reasonable efforts to preserve the confidentiality of such information.

                                   ARTICLE XVI

                                   AMENDMENTS

            Section 16.1 Amendments. Subject to approval pursuant to Section
4.12 of this Agreement, any amendment to this Agreement shall be adopted and be
effective as an amendment hereto if approved by the affirmative vote of 85% of
the Total Voting Power of the holders of the Class A Shares, the Class B Shares
and the Class C Shares, voting together as a single class, except that any
amendment which would adversely affect the rights or obligations of any Member
shall be approved by such Member.


                                      -33-
   39

            IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date first above stated.

                                       MEMBERS:

                                       HSN, INC.



                                       By: /s/ James G. Gallagher
                                          -------------------------------
                                          Name:  James G. Gallagher
                                          Title: Vice President


                                       HOME SHOPPING NETWORK, INC.



                                       By: /s/ James G. Held
                                          -------------------------------
                                          Name:  James G. Held
                                          Title: President and Chief
                                                 Executive Officer


                                       UNIVERSAL STUDIOS, INC.



                                       By: Brian C. Mulligan
                                          -------------------------------
                                          Name:  Brian C. Mulligan
                                          Title: Senior Vice President


                                       LIBERTY MEDIA CORPORATION



                                       By: /s/ Robert R. Bennett
                                          -------------------------------
                                          Name:  Robert R. Bennett
                                          Title: President and CEO


                                       BARRY DILLER, for purposes of Sections
                                       4.12 and 5.1 of this Agreement



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


                                       -34-

   1
                                                                   Exhibit 99.38

                                                                [CONFORMED COPY]


                                LIBERTY HSN, INC.
                      8101 EAST PRENTICE AVENUE, SUITE 500
                            ENGLEWOOD, COLORADO 80111



As of October 19, 1997



HSN, Inc.
152 West 57th Street
New York, NY 10019

Ladies and Gentlemen:

                  Reference is made to (i) that certain Exchange Agreement (the
"Liberty Exchange Agreement"), dated as of December 20, 1996, by and between
Liberty HSN, Inc. ("Liberty HSN") and HSN, Inc. ("HSN") and (ii) that certain
Exchange Agreement (the "New Exchange Agreement"), dated as of October 19, 1997,
by and among HSN, Universal Studios, Inc. (and certain of its subsidiaries) and
Liberty Media Corporation (and certain of its subsidiaries) ("Liberty"). All
capitalized terms not otherwise defined herein shall have the respective
meanings ascribed thereto in the New Exchange Agreement.

                  In connection with and in consideration of the transactions
contemplated by the New Exchange Agreement, Liberty and HSN hereby agree as
follows:

                           (i) Unless otherwise agreed by Liberty and HSN, no
         Liberty HSN Exchange Shares or LLC Shares shall be exchanged prior to
         (i) the earliest to occur of the moment immediately prior to the Holder
         Closing (as may be effected by agreement of Liberty and HSN in
         anticipation of such Holder Closing), (ii) the termination of the
         Investment Agreement with respect to the transactions contemplated to
         occur at the Holder Closing, and (iii) June 30, 1998 (unless the date
         of the Holder Closing is extended beyond such date).

                           (ii) At such time as Liberty is entitled or otherwise
         permitted to Own additional shares of HSN Stock in accordance with
         paragraph 2.1(d) of the New Exchange Agreement, but following the
         issuance of all Contingent Shares and prior to the exchange of any
         Liberty HSN Exchange Shares, HSN shall have the right, subject to the
         applicable terms and conditions of the New Exchange Agreement, to
         require the members of the Liberty Group to exchange a number of LLC
         Shares at the then applicable Exchange Rate (as of the Exchange Date)
         for shares of HSN Common Stock, rounded down to the nearest whole
   2
         number, which would result in the issuance to such members of the
         Liberty Group of an aggregate number of shares of HSN Common Stock up
         to the then Available HSN Amount.

                           (iii) HSN shall have the option, which may be
         exercised at any time or from time to time, after the issuance or
         expiration of all Contingent Shares, to suspend Liberty HSN's right to
         exchange the Liberty HSN Exchange Shares in connection with a future
         issuance of shares of HSN Stock in order to permit HSN to repurchase
         (in compliance with applicable law, including the FCC Regulations) up
         to 10 million shares of HSN Stock, which suspension shall remain in
         effect as long as HSN continues to make diligent efforts to effect such
         repurchase and to complete such repurchase as promptly as reasonably
         practicable.

                           (iv) Except as expressly set forth in clauses (i),
         (ii) and (iii) above, the provisions of this Letter Agreement and the
         New Exchange Agreement and the transactions contemplated hereby and
         thereby (x) shall not modify or amend the Liberty Exchange Agreement
         and (y) shall not constitute a waiver or amendment by Liberty HSN of
         any of its rights under the Liberty Exchange Agreement.




                                        2
   3
                  If the foregoing provisions are acceptable to you, please
execute and return the enclosed copy of this Letter Agreement.

                                                Sincerely,

                                                LIBERTY HSN, INC.


                                                By: /s/ Robert R. Bennett
                                                    -----------------------
                                                Name:   Robert R. Bennett
                                                Title:  President


Accepted and Agreed:

HSN, INC.


By:    /s/ Victor A. Kaufman      
       ----------------------     
Name:  Victor A. Kaufman
Title: Office of Chairman


                                        3

   1
                                                                   Exhibit 99.39

                                                                [CONFORMED COPY]


               FOURTH AMENDED AND RESTATED JOINT FILING AGREEMENT


                  FOURTH AMENDED AND RESTATED JOINT FILING AGREEMENT, dated as
of February 23, 1998, by and among Tele-Communications, Inc., a Delaware
corporation, Barry Diller, Universal Studios, Inc., a Delaware corporation, The
Seagram Company Ltd., a Canada corporation, BDTV INC., a Delaware corporation,
BDTV II INC., a Delaware corporation, BDTV III INC., a Delaware corporation, and
BDTV IV INC., a Delaware corporation.

                  WHEREAS, each of the parties hereto beneficially owns shares
of common stock or options to purchase shares of common stock, or shares of
Class B Common Stock or securities convertible into or exchangeable for common
stock or Class B Common Stock (collectively, the "Company Securities") of USA
Networks, Inc. (formerly HSN, Inc.), a Delaware corporation;

                  WHEREAS, the parties hereto constitute a "group" with respect
to the beneficial ownership of the Company Securities for purposes of Rule 13d-1
and Schedule 13D promulgated by the Securities and Exchange Commission; and

                  WHEREAS, Tele-Communications, Inc., Barry Diller, BDTV INC.,
BDTV II INC. and BDTV III INC. have previously entered into the Third Amended
and Restated Joint Filing Agreement, dated as of July 17, 1997, pursuant to
which the parties thereto agreed to prepare a single statement containing the
information required by Schedule 13D with respect to their respective interests
in the Company.

                  NOW, THEREFORE, the parties hereto agree as follows:

                  1. The parties hereto shall prepare a single statement
containing the information required by Schedule 13D with respect to their
respective interests in the Company Securities (the "Reporting Group Schedule
13D"), and the Reporting Group Schedule 13D shall be filed on behalf of each of
them.

                  2. Each party hereto shall be responsible for the timely
filing of the Reporting Group Schedule 13D and any necessary amendments thereto,
and for the completeness and accuracy of the information concerning him or it
contained therein, but shall not be responsible for the completeness and
accuracy of the information concerning any other party contained therein, except
to the extent that he or it knows or has reason to believe that such information
is inaccurate.

                  3. This Agreement shall continue unless terminated by any
party hereto.

                  4. Stephen M. Brett, Pamela S. Seymon and Karen Randall shall
be designated as the persons authorized to receive notices and communications
with respect to the Reporting Group Schedule 13D and any amendments thereto.
   2
                  5. This Agreement may be executed in counterparts, each of
which taken together shall constitute one and the same instrument.

                  IN WITNESS WHEREOF, the undersigned have executed this
Agreement as of the date first above written.

                                       TELE-COMMUNICATIONS, INC.


                                       By: /s/ Stephen M. Brett
                                          --------------------------
                                       Name: Stephen M. Brett
                                       Title: Senior Vice President
                                              and General Counsel



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


                                       UNIVERSAL STUDIOS, INC.



                                       By: /s/ Brian C. Mulligan
                                          ---------------------------
                                       Name: Brian C. Mulligan
                                       Title: Senior Vice President


                                       THE SEAGRAM COMPANY LTD.



                                       By: /s/ Daniel R. Paladino
                                          ---------------------------
                                       Name: Daniel R. Paladino
                                       Title: Executive Vice President


                                       BDTV INC.


                                       By: /s/ Barry Diller
                                          ---------------------------
                                       Name: Barry Diller
                                       Title: President



                                       -2-
   3
                                       BDTV II INC.


                                       By: /s/ Barry Diller
                                           ---------------------
                                       Name:  Barry Diller
                                       Title: President


                                       BDTV III INC.


                                       By: /s/ Barry Diller
                                           ---------------------
                                       Name:  Barry Diller
                                       Title: President         


                                       BDTV IV INC.


                                       By: /s/ Barry Diller
                                           ---------------------
                                       Name:  Barry Diller
                                       Title: President



                                       -3-

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                                                                   Exhibit 99.40

                                                                [CONFORMED COPY]

                          CERTIFICATE OF INCORPORATION

                                       OF

                                  BDTV IV INC.


                  I, the undersigned, for the purposes of incorporating and
organizing a corporation under the General Corporation Law of the State of
Delaware, do execute this Certificate of Incorporation and do hereby certify as
follows:


                                    ARTICLE I

                                      NAME

                   The name of the Corporation is BDTV IV INC.


                                   ARTICLE II

                                REGISTERED OFFICE

                  The location of the registered office of the Corporation in
the State of Delaware is the office of The Prentice-Hall Corporation System,
Inc., 1013 Centre Road, in the City of Wilmington, County of New Castle, State
of Delaware 19805, and the name of the registered agent at such address is The
Prentice-Hall Corporation System, Inc.


                                   ARTICLE III

                                     PURPOSE

                  The purpose of the Corporation is to engage in any lawful act
or activity for which corporations may be organized under the General
Corporation Law of the State of Delaware.

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                                   ARTICLE IV

                                    SECTION A

                                AUTHORIZED STOCK

                  The total number of shares of capital stock which the
Corporation shall have authority to issue is two hundred sixty six thousand six
hundred sixty seven (266,667) shares, of which one hundred thirty three thousand
three hundred thirty four (133,334) shares shall be Class A Common Stock, par
value $.01 share (the "Class A Common Stock"), and one hundred thirty three
thousand three hundred thirty three (133,333) shares shall be Class B Common
Stock, par value $.01 per share (the "Class B Common Stock," and together with
the Class A Common Stock, the "Common Stock").


                                    SECTION B

                  CLASS A COMMON STOCK AND CLASS B COMMON STOCK

                  Each share of Class A Common Stock and Class B Common Stock of
the Corporation shall, except as otherwise provided in this Certificate of
Incorporation, be identical in all respects and shall have equal rights and
privileges.

                  1.       Voting Rights.

                           (a) The holders of the Class A Common Stock shall be
entitled to vote on all matters presented to a vote of the stockholders of the
Corporation, including elections of directors, at any annual or special meeting
of stockholders of the Corporation or in connection with the taking of any
action by the stockholders of the Corporation by written consent, with each such
holder entitled to one vote for each share of such stock held.

                           (b) Except as otherwise required by law or as
provided in paragraph 1(c) of this Section B below the holders of the Class B
Common Stock shall have no voting rights whatsoever.

                           (c) Notwithstanding anything else in this Certificate
of Incorporation to the contrary, so long as any shares of the Class B Common
Stock remain outstanding, the Corporation shall not take any action with respect
to any of the following matters without first obtaining the affirmative vote (or
written consent) of (i) from and after the initial issuance of shares of the
Class B Common Stock until such time as Liberty Media Corporation, a Delaware
corporation (including its successors by merger, consolidation, sale of assets
or otherwise, "Liberty"), ceases to


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hold any shares of the Class B Common Stock, Liberty, and (ii) thereafter, until
such time as the members of Liberty's Stockholder Group (as defined in the
Stockholders Agreement, dated as of October 19, 1997, among Liberty, Barry
Diller, Universal Studios, Inc., HSN, Inc. and The Seagram Company Ltd.
(including any amendments or successor agreements thereto, the "Stockholders
Agreement")) cease to own any shares of the Class B Common Stock, the member of
Liberty's Stockholder Group so designated in writing by Liberty by notice to the
Corporation (Liberty or such designee, the "Designated Holder"):

                                    (i) the issuance of any shares of capital
stock of the Corporation or any interests therein other than (x) pursuant to the
Stockholders Agreement, and (y) the issuance of shares of Class A Common Stock
as a result of the conversion of shares of Class B Common Stock pursuant to
Section B(2) below;

                                    (ii) any acquisition or disposition
(including pledges), directly or indirectly, by the Corporation of any equity
securities (or any interest therein) of HSN, Inc., a Delaware corporation
("HSNI", which term shall include any successor by merger, consolidation, sale
of assets or otherwise), or any rights relating to the acquisition or
disposition of such equity securities (or any interest therein), except as
specifically provided for by the Stockholders Agreement;

                                    (iii) other than as provided in clauses (i)
and (ii) above, the acquisition or disposition (including pledges), directly or
indirectly, by the Corporation of any assets (including debt and/or equity
securities) or business (by merger, consolidation or otherwise), the grant or
issuance of any debt or equity securities of the Corporation, the redemption,
repurchase, or reacquisition of any debt or equity securities of the Corporation
by the Corporation or any of its subsidiaries (other than the conversion of
shares of Class B Common Stock as provided in Section B(2)), or the incurrence
of any indebtedness by the Corporation;

                                    (iv) any amendments to this Certificate of
Incorporation or the Bylaws of the Corporation;

                                    (v) engaging in any business other than
holding shares of the capital stock of HSNI, exercising rights of ownership and
voting related to such shares of stock and pursuant to the Stockholders
Agreement (subject in any event to the provisions hereof and of the Stockholders
Agreement), and engaging in corporate governance and administrative activities
consistent with the terms of this Certificate of Incorporation, the
Corporation's bylaws and the Stockholders Agreement;

                                    (vi) the settlement of any litigation,
arbitration or other proceeding which is other than in the ordinary course of
business and which involves any material restriction


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on the conduct of business by the Corporation or the continued ownership (A) of
its assets by the Corporation or (B) of the capital stock of the Corporation by
its stockholders;

                                    (vii) except as specifically contemplated by
the Stockholders Agreement and this Certificate of Incorporation, any
transaction between the Corporation and Barry Diller and his affiliates;

                                    (viii) the merger, consolidation,
dissolution or liquidation of the Corporation; or

                                    (ix) permitting HSNI to issue any shares of
HSNI's Class B Common Stock, par value $.01 per share, or any options, warrants
or other rights to acquire any shares of such Class B Common Stock of HSNI.

                  2.       Conversion Rights.

                           (a) Upon the first to occur of any of the following:
(i) a Change in Law (as defined below), (ii) the failure for any reason of Barry
Diller to be Chairman of the Board and/or Chief Executive Officer and/or
President of HSNI and to be a director of this Corporation, or (iii) the
satisfaction of all conditions (other than any conditions which are capable of
being satisfied only at the closing of such transaction) to the consummation of
any Agreement to Transfer (as defined below) (any such event set forth in
clauses (i), (ii) or (iii), a "Conversion Event"), each share of Class B Common
Stock shall become convertible, at the option of the holder thereof, into one
share of Class A Common Stock; provided, however, that with respect to a
Conversion Event occurring pursuant to clause (iii) above, such shares of Class
B Common Stock shall only become convertible immediately prior to the
consummation of the transactions contemplated by such Agreement to Transfer. A
"Change in Law" shall be deemed to have occurred at such time as Liberty, a
member of Liberty's Stockholder Group or a permitted transferee of the foregoing
under the Stockholders Agreement (Liberty, such member of the Liberty
Stockholder Group or such permitted transferee, a "Qualified Holder") is
entitled to exercise full ownership and control over its pro rata interest in
the shares of the capital stock of HSNI held at such time by the Corporation,
notwithstanding HSNI's ownership of its broadcast licenses (or interests
therein). An "Agreement to Transfer" shall mean an agreement pursuant to which
Liberty or a member of the Liberty Stockholder Group proposes, subject to its
obligations under the Stockholders Agreement, to transfer, directly or
indirectly (including by merger, sale of assets or otherwise), such member's
interest in the Corporation, or all or part of such member's pro rata interest
in shares of the capital stock of HSNI held at such time by the Corporation, to
any third party which is, or upon receipt of any required governmental consent,
approval or waiver, would be entitled or otherwise permitted to own (in
accordance with FCC Regulations (as defined in the Stockholders Agreement)) such
securities (including in connection with a public offering of such HSNI capital
stock effected pursuant to the registration


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rights provided for in the Governance Agreement (as defined in the Stockholders
Agreement)) (such third party, a "Qualified Transferee").

                           (b) As promptly as practicable following notice to
the Corporation (i) by any Qualified Holder that, upon the receipt of any
required governmental or regulatory consents, approvals or waivers (provided
that such Qualified Holder has determined in good faith that any such waiver is
obtainable) and the termination or expiration of any applicable waiting period
under the HSR Act, a Conversion Event shall have occurred, or (ii) by Liberty, a
member of the Liberty Stockholder Group or a Qualified Transferee of the
execution of an Agreement to Transfer, then the Corporation shall, and shall
cause each of its subsidiaries and affiliates (including HSNI) to, (A) make any
and all required applications or filings with and seek any required consents,
approvals or waivers from, any governmental or regulatory agencies (including,
but not limited to, with the Federal Communications Commission (the "FCC") and
under the Hart-Scott-Rodino Antitrust Improvements of 1976, as amended (the "HSR
Act")), (B) obtain any and all such consents, approvals or waivers from such
governmental or regulatory agencies, and the expiration or termination of any
applicable waiting period under the HSR Act, in each case, which is reasonably
necessary in connection with such conversion or transfer (including a transfer
pursuant to an Agreement to Transfer) and (C) use reasonable efforts to
cooperate with, and express its support for, such Qualified Holder's or
Qualified Transferee's efforts to obtain any such consents, approvals and
waivers or the expiration or termination of such waiting period. Upon receipt of
such consents, approvals or waivers or the expiration or termination of such
waiting period, as the case may be, the Corporation shall notify such Qualified
Holder or Qualified Transferee of such receipt, expiration or termination. Such
Qualified Holder or Qualified Transferee shall use reasonable efforts to
cooperate with the Corporation in connection with the satisfaction by the
Corporation of its obligations under this paragraph (b).

                           (c) Any conversion provided for in paragraph (a) of
this Section B(2) above may be effected by any holder of Class B Common Stock by
(i) delivering written notice to the Corporation of such holder's intent to
convert shares of Class B Common Stock, which notice shall specify the number of
shares to be converted and the proposed date of such conversion, which shall be
not less than two business days after the delivery of such notice and (ii)
surrendering on the date specified in such notice (or such later date as all
required consents, approvals, waivers and terminations described in paragraph
(b) of this Section B(2) have been obtained) such holder's certificate or
certificates for the Class B Common Stock to be converted, duly endorsed, at the
office of the Corporation or any transfer agent for the Class B Common Stock,
together with a written notice to the Corporation at such office that such
holder elects to convert all or a specified number of shares of Class B Common
Stock represented by such certificate and stating the name or names in which
such holder desires the certificate or certificates for Class A Common Stock to
be issued. If so required by the Corporation, any certificate for shares
surrendered for conversion shall be accompanied by instruments of transfer, in
form satisfactory to the Corporation, duly executed by the holder of such shares
or the duly authorized representative of such holder. Promptly thereafter,


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the Corporation shall issue and deliver to such holder or such holder's nominee
or nominees, a certificate or certificates for the number of shares of Class A
Common Stock to which such holder shall be entitled as herein provided. Such
conversion shall be deemed to have been made at the close of business on the
date of receipt by the Corporation or any such transfer agent of the certificate
or certificates, notice and, if required, instruments of transfer referred to
above, and the Person or Persons entitled to receive the Class A Common Stock
issuable on such conversion shall be treated for all purposes as the record
holder or holders of such Class A Common Stock at the close of business on that
date. A number of shares of Class A Common Stock equal to the number of shares
of Class B Common Stock outstanding from time to time shall at all times be set
aside and reserved for issuance upon conversion of shares of Class B Common
Stock. Shares of Class B Common Stock that have been converted hereunder shall
be retired and shall not be reissued by the Corporation. Shares of Class A
Common Stock shall not be convertible into shares of Class B Common Stock.

                  3. Dividends and Other Distributions. The Corporation shall be
entitled to declare and pay, out of funds legally available therefor, dividends
and make distributions on the Class A Common Stock and Class B Common Stock only
as provided in this Section B(3). In connection with the declaration and payment
of any dividend or the making of any distribution on the Common Stock (other
than Liquidating Distributions (as defined below)), the holders of the Class A
Common Stock shall be entitled to receive, prior to the declaration or payment
of any dividend or other distribution to the holders of the Class B Common
Stock, an amount equal to $1.00 per share, payable solely in cash (the "Class A
Preferential Dividend"), and no more. Following the declaration and payment of
such amount to the holders of the Class A Common Stock, the Corporation shall be
entitled to pay such dividends and make such distributions to the holders of the
Class B Common Stock as the Corporation shall determine. Other than the payment
in cash of the Class A Preferential Dividend, the holders of the Class A Common
Stock shall have no other or further right to the payment of any other dividend
or distribution, other than Liquidating Distributions.

                  4. Reclassifications, Subdivisions and Combinations. The
Corporation shall not reclassify, subdivide or combine one class of its Common
Stock without reclassifying, subdividing or combining the other class of Common
Stock, on an equal per share basis.

                  5. Liquidation and Mergers. In connection with any
liquidation, dissolution or winding up of the Corporation, the holders of any
shares of Class A Common Stock originally issued as shares of Class A Common
Stock (and not upon conversion of shares of Class B Common Stock) shall be
entitled to receive an amount in cash equal to the Class A Liquidation Price (as
defined below) for such shares of Class A Common Stock, and no other or further
amount, and the holders of shares of (i) Class B Common Stock and (ii) shares of
Class A Common Stock issued upon conversion of shares of Class B Common Stock
shall thereafter be entitled to share ratably, on a share for share basis, in
any distribution of the Corporation's remaining assets upon any liquidation,


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dissolution or winding up of the Corporation, whether voluntary or involuntary,
after payment or provisions for payment of the debts and other liabilities of
the Corporation. The "Class A Liquidation Price" of a share of Class A Common
Stock which was originally issued as Class A Common Stock and was not issued
upon conversion of a share of Class B Common Stock shall be an amount in cash
equal to the price paid (or the fair market value of property contributed) to
the Corporation in respect of the initial issuance and sale thereof by the
Corporation, plus interest thereon at the Agreed Rate from the date of original
issuance thereof to and including the effective date of any liquidation or
dissolution of the Corporation, compounded annually. The "Agreed Rate" shall be
the rate of interest per annum equal to the commercial lending rate per annum
publicly announced from time to time by The Bank of New York as its prime rate
(such rate of interest to change as of the close of business on each date such
prime rate changes). The distributions to be made upon the shares of Class A
Common Stock and Class B Common Stock upon the liquidation, dissolution or
winding up of the Corporation are referred to as the "Liquidating Distribution."
Neither the consolidation or merger of the Corporation with or into any other
corporation or corporations nor the sale, transfer or lease of all or
substantially all of the assets of the Corporation shall itself be deemed to be
a liquidation, dissolution or winding up of the Corporation within the meaning
of this Section B(5).


                                    ARTICLE V

                                  INCORPORATOR

                  The incorporator of the Corporation is Elizabeth McCabe, whose
mailing address is 599 Lexington Avenue, 29th floor, New York, New York 10022.

                                   ARTICLE VI

                                    DIRECTORS

                  The governing body of the Corporation shall be a Board of
Directors. The number of directors constituting the entire Board of Directors
shall be one. Election of directors need not be by written ballot. All directors
of the Corporation shall serve without compensation.




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                                   ARTICLE VII

                    INDEMNIFICATION OF OFFICERS AND DIRECTORS

                  1. Elimination of Certain Liability of Directors. A director
of the Corporation shall not be personally liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability (a) for any breach of the director's duty of loyalty to the
Corporation or its stockholders, (b) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (c) under
Section 174 of the General Corporation Law of the State of Delaware, or (d) for
any transaction from which the director derived an improper personal benefit.

                  2. Indemnification and Insurance.

                     (a) Right to Indemnification. Each person who was or is
made a party or is threatened to be made a party to or is involved in any
action, suit or proceeding, whether civil, criminal, administrative or
investigative (hereinafter a "proceeding"), by reason of the fact that he or
she, or a person of whom he or she is the legal representative, is or was a
director or officer of the Corporation or is or was serving at the request of
the Corporation as a director, officer, employee or agent of another corporation
or of a partnership, joint venture, trust or other enterprise, including service
with respect to employee benefit plans, whether the basis of such proceeding is
alleged action in an official capacity as a director, officer, employee or agent
or in any other capacity while serving as a director, officer, employee or
agent, shall be indemnified and held harmless by the Corporation to the fullest
extent authorized by the General Corporation Law of the State of Delaware, as
the same exists or may hereafter be amended (but, in the case of any such
amendment, only to the extent that such amendment permits the Corporation to
provide broader indemnification rights than said law permitted the Corporation
to provide prior to such amendment), against all expense, liability and loss
(including attorneys' fees, judgments, fines, amounts paid or to be paid in
settlement, and excise taxes or penalties arising under the Employee Retirement
Income Security Act of 1974) reasonably incurred or suffered by such person in
connection therewith and such indemnification shall continue as to a person who
has ceased to be a director, officer, employee or agent and shall inure to the
benefit of his or her heirs, executors and administrator; provided, however,
that, except as provided in paragraph 2(b), the Corporation shall indemnify any
such person seeking indemnification in connection with a proceeding (or part
thereof) initiated by such person only if such proceeding (or part thereof) was
authorized by the Designated Holder. The right to indemnification conferred in
this paragraph 2 shall be a contract right and shall include the right to be
paid by the Corporation the expenses incurred in defending any such proceeding
in advance of its final disposition; provided, however, that, if the General
Corporation Law of the State of Delaware requires, the payment of such expenses
incurred by a director or officer in his or her capacity as a director or
officer (and not in any other capacity in which service was or is rendered by
such person while a director or officer, including, without limitation, service
to an employee benefit plan) in advance of the final disposition


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of a proceeding, shall be made only upon delivery to the Corporation of an
undertaking, which undertaking shall itself be sufficient without the need for
further evaluation of the creditworthiness of the undertaking or of such
advancement, by or on behalf of such director or officer, to repay all amounts
so advanced if it shall ultimately be determined that such director or officer
is not entitled to be indemnified under this paragraph 2 or otherwise.
Notwithstanding the foregoing, no director or officer of the Corporation shall
be deemed to be serving at the request of the Corporation as a director,
officer, employee or agent of HSNI or any entity controlled by, controlling or
under common control (other than the Corporation) with HSNI (including employee
benefit plans) (collectively, the "HSNI Entities").

                     (b) Right of Claimant to Bring Suit. If a claim under
paragraph 2(a) is not paid in full by the Corporation within thirty days after a
written claim has been received by the Corporation, the claimant may at any time
thereafter bring suit against the Corporation to recover the unpaid amount of
the claim and, if successful in whole or in part, the claimant shall be entitled
to be paid also the expense of prosecuting such claim, unless the failure to
have been so paid is the result of any action or failure to act on the part of
such claimant. It shall be a defense to any such action (other than an action
brought to enforce a claim for expenses incurred in defending any proceeding in
advance of its final disposition where the required undertaking, if any is
required, has been tendered to the Corporation) that the claimant has not met
the standards of conduct which make it permissible under the General Corporation
Law of the State of Delaware for the Corporation to indemnify the claimant for
the amount claimed, but the burden of proving such defense shall be on the
Corporation. Neither the failure of the Corporation (including its Board,
independent legal counsel, or its stockholders) to have made a determination
prior to the commencement of such action that indemnification of the claimant is
proper in the circumstances because he or she has met the applicable standard of
conduct set forth in the General Corporation Law of the State of Delaware, nor
an actual determination by the Corporation (including its Board, independent
legal counsel, or its stockholders) that the claimant has not met such
applicable standard of conduct, shall be a defense to the action or create a
presumption that the claimant has not met the applicable standard of conduct.

                     (c) Non-Exclusivity of Rights. The right to indemnification
and the payment of expenses incurred in defending a proceeding in advance of its
final disposition conferred in this paragraph 2 shall not be exclusive of any
other right which any person may have or hereafter acquire under any statute,
provision of the Certificate of Incorporation, bylaw, agreement, vote of
stockholders or disinterested directors or otherwise.

                     (d) Insurance. The Corporation may maintain insurance, at
its expense, to protect itself and any director, officer, employee or agent of
the Corporation or another corporation, partnership, joint venture, trust or
other enterprise against any such expense, liability or loss, whether or not the
Corporation would have the power to indemnify such person against such expense,
liability or loss under the General Corporation Law of the State of Delaware.


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                     (e) Set-off of Indemnification Remedies; Subrogation. In
the case of a claim for indemnification or advancement of expenses against the
Corporation under this paragraph 2 arising out of acts, events or circumstances
for which the claimant, who was at the relevant time serving as a director,
officer, employee or agent of any of the HSNI Entities, may be entitled to
indemnification or advancement of expenses pursuant to such HSNI Entity's
certificate of incorporation or by-laws, insurance policy or a contractual
agreement between the claimant and such entity (a "HSNI Indemnity Provision"),
the claimant seeking indemnification hereunder shall first seek indemnification
and advancement of expenses pursuant to any such HSNI Indemnity Provision. To
the extent that amounts to be indemnified or advanced to a claimant hereunder
are paid or advanced by or on behalf of a HSNI Entity, the claimant's right to
indemnification and advancement of expenses hereunder shall be reduced. In the
event of any payment of indemnification or advancement of expenses pursuant to
this paragraph 2 by the Corporation, the Corporation shall be subrogated to any
such rights the applicable claimant may have to indemnification from or on
behalf of any of the HSNI Entities in connection with the acts, events or
circumstances giving rise to such claim.


                                  ARTICLE VIII

                                      TERM

                  The term of existence of this Corporation shall be perpetual.


                                   ARTICLE IX

                              STOCK NOT ASSESSABLE

                  The capital stock of this Corporation shall not be assessable.
It shall be issued as fully paid, and the private property of the stockholders
shall not be liable for the debts, obligations or liabilities of this
Corporation.


                                    ARTICLE X

                            MEETINGS OF STOCKHOLDERS

                  Except as otherwise prescribed by law or by another provision
of this Certificate, special meetings of the stockholders of the Corporation,
for any purpose or purposes, shall be called by the Secretary of the Corporation
(i) upon the written request of the holders of not less than a majority of the
total voting power of the outstanding Common Stock, (ii) at any time following
the


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occurrence of a Conversion Event or following notice to the Corporation of the
execution of an Agreement to Transfer, upon the written request of the holders
of not less than a majority of the outstanding shares of Class B Common Stock,
(iii) at the request of at least a majority of the members of the Board of
Directors then in office or (iv) at the request of the Chairman of the Board, if
there be one. The holders of the Class B Common Stock shall be given notice of
and shall be entitled to attend all annual and special meetings of the
stockholders of the Corporation.


                                   ARTICLE XI

                   ACTION BY WRITTEN CONSENT OF STOCKHOLDERS;
                        ACTION BY THE BOARD OF DIRECTORS

                  Except as otherwise prescribed by law or by another provision
of this Certificate, any action required or permitted to be taken at any annual
or special meeting of the stockholders may be taken without a meeting, if a
consent in writing, setting forth the action to be taken, shall be signed by the
holder or holders of shares having not less than the minimum number of votes
that would be necessary to authorize or take such action at a meeting at which
all shares entitled to vote on the action were present and voted.


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                  IN WITNESS WHEREOF, the undersigned has signed this
Certificate of Incorporation this 9th day of February, 1998.



                                /s/ Elizabeth McCabe
                                ----------------------------------
                                Elizabeth McCabe
                                Incorporator


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