TICKETMASTER ONLINE CITYSEARCH INC, S-4/A, 1999-09-08

TICKETMASTER ONLINE CITYSEARCH INC
S-4/A, 1999-09-08
COMPUTER PROCESSING & DATA PREPARATION

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As filed with the Securities and Exchange Commission on September 8, 1999

Registration No. 333-83753
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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AMENDMENT NO. 1 TO FORM S-4
REGISTRATION STATEMENT
Under
The Securities Act of 1933

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TICKETMASTER ONLINE-CITYSEARCH, INC.
(Exact name of Registrant as specified in its charter)

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<S> <C> <C>
Delaware 7375 95-4546874
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification Number)
</TABLE>

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790 E. Colorado Boulevard, Suite 200
Pasadena, California 91101
(626) 405-0050
(Address and telephone number of Registrant's principal executive offices)

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Charles Conn
Chief Executive Officer
Ticketmaster Online-CitySearch, Inc.
790 E. Colorado Boulevard, Suite 200
Pasadena, California 91101
(626) 405-0050
(Name, address and telephone number of agent for service of process)

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Copies to:

Larry W. Sonsini, Esq. John R. Holzgraefe, Esq.
John T. Sheridan, Esq. Michael Pendleton, Esq.
Elizabeth A. Blomberg, Esq. Douglas Linebarger, Esq.
Wilson Sonsini Goodrich & Rosati Jenkens & Gilchrist, P.C.
Professional Corporation 1445 Ross Avenue
650 Page Mill Road Suite 3200
Palo Alto, CA 94304 Dallas, TX 75202
(650) 493-9300 (214) 855-4500

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Approximate date of commencement of proposed sale to the public: As soon as
practicable following the effective time of the merger of a wholly-owned
subsidiary of the Registrant with and into Web Media Ventures, L.L.C. d/b/a One
& Only Network as described herein.

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [X]

If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [_]

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]

If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]

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The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.

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EXPLANATORY NOTE

This proxy statement/prospectus contains two forms of prospectus: one to be
used by TMCS in connection with its issuance and sale of up to 2,574,233 shares
of Class B Common Stock, $.01 par value per share, in connection with its
acquisition of Web Media Ventures, L.L.C., a Texas limited liability (dba One &
Only Network), and one to be used by the Unitholders of Web Media who will
receive shares of the Class B Common Stock in the merger and who wish to offer
and sell such shares in transactions in which they and any broker/dealer from
whom such shares are sold may be deemed to be underwriters within the meaning of
the Securities Act of 1933, as amended. The first form of prospectus is
referred to as the TMCS Prospectus and the second form of prospectus is referred
to as the Selling Stockholders Prospectus. These prospectuses will be identical
in all respects except that they will contain a different front cover page and
the Selling Stockholders Prospectus will contain additional sections under the
captions "Plan of Distribution" and "Share Ownership of Selling Stockholders."
The TMCS Prospectus is included herein and is followed by those pages to be used
in the Selling Stockholders Prospectus that differ from, or are in addition to,
those in the TMCS Prospectus. Each of the alternate or additional pages for the
Selling Stockholders Prospectus included herein has been labeled "Alternate Page
For Selling Stockholders Prospectus."

<PAGE>

PRELIMINARY PROXY STATEMENT-PROSPECTUS

Subject to Completion dated September 8, 1999

- --------------------------------------------------------------------------------
The information in this proxy statement-prospectus is not complete and may be
changed. We may not sell these securities until the registration statement filed
with the Securities and Exchange Commission is effective. This proxy statement-
prospectus is not an offer to sell these securities and is not soliciting an
offer to buy these securities in any state where the offer or sale is not
permitted.
- --------------------------------------------------------------------------------

PROXY STATEMENT
of
WEB MEDIA VENTURES, L.L.C. d/b/a
One & Only Network

The Member-Managers of Web Media Ventures, L.L.C. d/b/a One & Only
Network, or Web Media, and the Board of Directors of Ticketmaster Online-
CitySearch, Inc., or TMCS, have approved an Agreement and Plan of Reorganization
that would merge a subsidiary of TMCS into Web Media. If the merger is
completed, it would result in Web Media operating as a wholly-owned subsidiary
of TMCS and Unitholders of Web Media becoming TMCS stockholders.

As a result of the merger, Web Media Unitholders will receive, in the
aggregate, the purchase price of $40,650,000 if Web Media's revenues for 1999
shall equal $9 million. If Web Media's revenues are less than $9 million, the
purchase price will be $40,650,000 minus an amount equal to $4.065 for each $1
of revenues under $9 million (with a minimum of $36,585,000). If Web Media's
revenues are greater than $9 million, the purchase price will be $40,650,000
plus an amount equal to $4.065 for each $1 of revenues above $9 million (with a
maximum of $44,715,000). Thirty million dollars of the purchase price will be
paid on the closing date of the merger. The remainder of the purchase price will
be paid in installments 90, 180 and 270 days after the closing of the merger.
TMCS is permitted to pay the purchase price either in cash or with its Class B
Common Stock. The total number of shares of TMCS Class B Common Stock that may
be issued to the Web Media Unitholders will be no more than 2,574,233 shares and
no less than 1,130,387 shares. The TMCS Class B Common Stock at each payment
date will be valued at the average closing price per share of the stock on the
Nasdaq National Market over the five consecutive trading days ending on the
trading day two days preceding the respective payment date; provided, however,
that in no event shall the value be more than $39 per share or less than $13 per
share. Web Media Unitholders will be entitled to receive, for each Unit held,
the amount of the purchase price divided by the total number of Units
outstanding at the effective time of the merger. The total number of Units which
will be outstanding at the effective time are 3,000,000 Units.

PROSPECTUS
of
TICKETMASTER ONLINE-
CITYSEARCH, INC.

We estimate that the shares of TMCS Class B Common Stock to be issued
to Web Media Unitholders will represent up to approximately 12.7% of the
outstanding TMCS Class B Common Stock and up to approximately 0.29% of the
voting power of TMCS common stock after the merger based on the capitalization
of TMCS as of July 31, 1999.
<PAGE>

Web Media has scheduled a special meeting for Web Media Unitholders to
vote on the matters described in this document. Whether or not you plan to
attend the Web Media special meeting, please take the time to vote by completing
and mailing the enclosed proxy card to Web Media. If you sign, date and mail
your proxy card without indicating how you want to vote, your proxy will count
as a vote in favor of the proposals. Your vote is very important.

You may vote at the Web Media special meeting if you own Units as of
the close of business on September , 1999. The date, time and place of the Web
Media special meeting is as follows:

September __, 1999, 10:00 a.m., Central Time
5307 East Mockingbird Lane, Suite 102
Dallas, Texas

This proxy statement-prospectus provides you with detailed information
about the proposed merger. TMCS provided the information concerning TMCS. Web
Media provided the information concerning Web Media. Please see "Where You Can
Find More Information" on page 115 for additional information about TMCS.

TMCS Class B Common Stock trades on The Nasdaq National Market under
the symbol TMCS.

We strongly urge you to read and consider carefully this proxy
statement-prospectus in its entirety, including the matters referred to under
"Risk Factors" beginning at page 16.

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Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
proxy statement-prospectus is accurate or complete. Any representation to the
contrary is a criminal offense.
- --------------------------------------------------------------------------------

We are first mailing this proxy statement-prospectus and the form of
proxy on or about September __, 1999.
<PAGE>

LOGO

5307 East Mockingbird Lane, Suite 102, Dallas, Texas 75206
September __, 1999

Dear Members:

We will hold a special meeting of our Unitholders at our headquarters at
5307 East Mockingbird Lane, Suite 102, Dallas, Texas on September __, 1999 at
10:00 a.m., Central time.

At the meeting, you will be asked to consider and vote upon a proposal to
approve and adopt an Agreement and Plan of Reorganization with Ticketmaster
Online-CitySearch, Inc., or TMCS and William Bunker, David Kennedy and Glenn
Wiggins, and approve a merger that will cause Web Media Ventures, L.L.C. d/b/a
One & Only Network, or Web Media, to become a wholly-owned subsidiary of TMCS.
Based on the capitalization of Web Media and TMCS as of July 31, 1999, after the
merger and payment in full by TMCS of the merger consideration, Web Media
Unitholders will own approximately 12.7% of the outstanding TMCS Class B Common
Stock and approximately 0.29% of the voting power of TMCS outstanding common
stock.

The aggregate purchase price to be paid by TMCS for all outstanding units
of Web Media is estimated to be $40,650,000. The purchase price is subject to
adjustment as described more fully in the attached proxy statement/prospectus
based upon the financial performance of Web Media for calendar year 1999. The
total purchase price will not be less than $36,585,000 or greater than
$44,715,000.

Thirty million dollars of the purchase price will be paid upon the closing
of the merger, and the remainder will be paid in three installments 90, 180 and
270 days after the merger. The payments may be paid in cash or TMCS Class B
Common Stock at the election of TMCS. Each Web Media Unitholders will be
entitled to receive, for each unit held, the amount of the purchase price
divided by the total number of outstanding Units at the effective time of the
merger. The total number of outstanding Units at the effective time will be
3,000,000 Units. The value of TMCS Class B Common Stock distributed to the Web
Media Unitholders at each payment date will be equal to the average closing
price per share of TMCS Class B Common Stock on the Nasdaq National Market over
the five consecutive trading days ending two days preceding the respective
payment date; provided, however, that in no event shall the value be more than
$39 per share or less than $13 per share. The total number of shares of TMCS
Class B Common Stock that may be issued to the Web Media Unitholders will be no
more than 2,574,233 shares and no less than 1,130,387 shares.

AFTER CAREFUL CONSIDERATION, THE MEMBER-MANAGERS UNANIMOUSLY APPROVED THIS
TRANSACTION AND CONCLUDED THAT IT IS IN THE BEST INTERESTS OF WEB MEDIA AND ITS
UNITHOLDERS. THE MEMBER-MANAGERS UNANIMOUSLY RECOMMEND THAT YOU VOTE "FOR" THIS
TRANSACTION.

Attached is a notice of special meeting of members and a proxy
statement/prospectus relating to the merger. This document describes the merger
in detail. We encourage you to read it carefully.

THE MERGER AND AN INVESTMENT IN SHARES OF TMCS CLASS B COMMON STOCK
INVOLVES RISKS. YOU SHOULD CAREFULLY CONSIDER THE DISCUSSION IN THE SECTION
ENTITLED "RISK FACTORS" ON PAGE 16 OF THIS PROXY STATEMENT/PROSPECTUS.

We cordially invite you to attend the meeting. However, whether or not you
plan to attend the meeting, please complete, sign and date the enclosed proxy
and return it to us in the enclosed envelope. If you attend the meeting, you
may vote in person if you wish, even though you have previously returned your
proxy. YOUR VOTE IS VERY IMPORTANT.

DO NOT SEND YOUR MEMBERSHIP UNIT CERTIFICATES AT THIS TIME.

Sincerely,

R. Glenn Wiggins, Secretary and Member-Manager
<PAGE>

This proxy statement/prospectus is dated September __, 1999 and was first mailed
to members on or about September __, 1999.
<PAGE>

LOGO
5307 East Mockingbird Lane, Suite 102
Dallas, Texas 75206

NOTICE OF SPECIAL MEETING OF MEMBERS

To Our Unitholders:

A special meeting of Unitholders of Web Media Ventures, L.L.C. will be held
at 10:00 a.m., Central time, on September __, at our headquarters, located at
5307 East Mockingbird Lane, Suite 102, Dallas, Texas to consider and vote on a
proposal to approve and adopt an Agreement and Plan of Reorganization with
Ticketmaster Online CitySearch, Inc. and approve a merger that will cause Web
Media to become a wholly-owned subsidiary of Ticketmaster Online CitySearch,
Inc.

No other business will be considered at the meeting.

This proposal is more fully described in the proxy statement/prospectus
that accompanies this notice, which you should read carefully.

We have fixed the close of business on September __, 1999 as the record
date for the determination of our Unitholders entitled to vote at this meeting.

By Order of the Member-Managers of
Web Media Ventures, L.L.C.

R. Glenn Wiggins, Secretary and Member-Manager

Dallas, Texas
September ___, 1999

TO ASSURE THAT YOUR MEMBERSHIP UNITS ARE REPRESENTED AT THE MEETING, PLEASE
COMPLETE, DATE AND SIGN THE ENCLOSED PROXY AND MAIL IT PROMPTLY IN THE POSTAGE-
PAID ENVELOPE PROVIDED, WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING. YOU CAN
REVOKE YOUR PROXY AT ANY TIME BEFORE IT IS VOTED.
<PAGE>

PROXY STATEMENT/PROSPECTUS
TABLE OF CONTENTS

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Page
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QUESTIONS AND ANSWERS ABOUT THE TMCS/WEB MEDIA MERGER................................................... 1

SUMMARY OF THE PROXY STATEMENT/PROSPECTUS............................................................... 4

THE COMPANIES......................................................................................... 4
SUMMARY OF THE TRANSACTION............................................................................ 5

SELECTED HISTORICAL AND SELECTED UNAUDITED PRO FORMA COMBINED FINANCIAL DATA............................ 8
TMCS Selected Historical Financial Data............................................................... 9
Selected Unaudited Pro Forma Combined Financial Data of TMCS and Web Media............................ 12
Comparative Historical and Unaudited Pro Forma Combined Per Share Data of TMCS and Web Media.......... 14

RISK FACTORS............................................................................................ 16
Risks Relating To TMCS's Proposed Merger With Web Media............................................... 16
Risk Factors Applicable To TMCS....................................................................... 17

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS....................................................... 39

THE WEB MEDIA MEETING................................................................................... 41
Date, Time, Place and Purpose of the Meeting.......................................................... 41
Record Date and Outstanding Units..................................................................... 41
Vote Required......................................................................................... 41
Unit Ownership of Management and Certain Members...................................................... 41
Quorum................................................................................................ 41
Abstentions; Broker Non-Votes......................................................................... 41
Voting of Proxies..................................................................................... 41
How to Revoke your Proxy.............................................................................. 42
No Appraisal Rights................................................................................... 42

THE MERGER.............................................................................................. 43
Background of the Merger.............................................................................. 43
General Information about the Merger.................................................................. 44
Effective Time........................................................................................ 44
Purchase Price and Exchange of Units.................................................................. 44
The Merger Agreement.................................................................................. 45
Restrictions on the Transfer of TMCS Class B Common Stock to be Received by Affiliates of Web Media... 50
Reasons for the Merger................................................................................ 50
Recommendation of Web Media Member-Managers........................................................... 50
Material United States Federal Income Tax Consequences of the Merger.................................. 50
Accounting Treatment of the Merger.................................................................... 52
Regulatory Filings and Approvals Required to Complete the Merger...................................... 52
</TABLE>
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RELATED AGREEMENTS..................................................................................... 53
Noncompetition Agreements............................................................................ 53
Affiliate Agreements................................................................................. 53

DESCRIPTION OF TMCS CAPITAL STOCK...................................................................... 54

PRICE RANGE OF TMCS CLASS B COMMON STOCK............................................................... 59

COMPARISON OF RIGHTS OF HOLDERS OF WEB MEDIA MEMBERSHIP UNITS AND TMCS CLASS B COMMON STOCK........... 60

BUSINESS OF TMCS....................................................................................... 65

SHARE OWNERSHIP BY PRINCIPAL STOCKHOLDERS, MANAGEMENT AND DIRECTORS OF TMCS............................ 80

MANAGEMENT OF TMCS..................................................................................... 84
Executive Officers and Directors..................................................................... 84
Board Composition.................................................................................... 87
Director Compensation................................................................................ 87
Compensation Committee Interlocks and Insider Participation.......................................... 87
Executive Compensation............................................................................... 87

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF TMCS.......... 90

BUSINESS OF WEB MEDIA.................................................................................. 100

UNIT OWNERSHIP BY PRINCIPAL UNITHOLDERS AND MANAGEMENT OF WEB MEDIA.................................... 104

MANAGEMENT OF WEB MEDIA................................................................................ 105

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF WEB MEDIA..... 106

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS FOR TMCS................................................ 111

LEGAL MATTERS.......................................................................................... 114

EXPERTS................................................................................................ 114

WHERE YOU CAN FIND MORE INFORMATION.................................................................... 115

INDEX TO FINANCIAL STATEMENTS.......................................................................... F-1
ANNEX A -- AGREEMENT AND PLAN OF REORGANIZATION........................................................ A-1
</TABLE>
<PAGE>

QUESTIONS AND ANSWERS ABOUT THE TMCS/WEB MEDIA MERGER

Q: WHAT IS THE MERGER?

A: In the merger, Web Media will become a wholly-owned subsidiary of
TMCS.

Based on the capitalization of TMCS and Web Media as of July 31, 1999,
the Unitholders of Web Media will receive in accordance with the terms
of the merger a number of shares of TMCS Class B Common Stock
representing up to approximately 12.7% of TMCS's outstanding Class B
Common Stock and up to approximately 0.29% of the voting power of
TMCS's outstanding common stock.

For a more complete description of the merger, see the section
entitled "The Merger" beginning on page 43.

Q: WHAT WILL WEB MEDIA UNITHOLDERS RECEIVE IN THE MERGER?

The total number of shares of TMCS Class B Common Stock which may be
issued to the Web Media Unitholders will be no more than 2,574,233
shares and no less than 1,130,387 shares. The TMCS Class B Common
Stock at each payment date will be valued at the average closing price
per share of the stock on the Nasdaq National Market over the five
consecutive trading days ending on the trading day two days preceding
the respective payment date. Web Media Unitholders will be entitled to
receive, for each Unit held, the amount of the purchase price divided
by the total number of Units outstanding at the effective time of the
merger. The total number of Units which will be outstanding at the
effective time are 3,000,000 Units.

For a more complete description of what you will receive in the
merger, see the section entitled "The Merger--Purchase Price and
Exchange of Units" on page 44.

Q: DO THE MEMBER-MANAGERS OF WEB MEDIA RECOMMEND VOTING IN FAVOR OF THE
MERGER?

A: Yes. After careful consideration, Web Media's Member-Managers
recommend that its Unitholders vote in favor of the merger agreement
and the proposed merger.

For a more complete description of the recommendations of the Member-
Managers, see the section entitled "The Merger-Recommendation of Web
Media Member-Managers."

1
<PAGE>

Q: ARE THERE RISKS I SHOULD CONSIDER IN DECIDING WHETHER TO VOTE FOR THE
MERGER?

A: Yes. For example, the number of shares of TMCS Class B Common Stock
that Web Media Unitholders will receive will change if the market
price of TMCS Class B Common Stock increases or decreases before each
respective payment date. WE URGE YOU TO OBTAIN CURRENT MARKET
QUOTATIONS OF TMCS CLASS B COMMON STOCK.

In evaluating the merger, you should carefully consider these and
other factors discussed in the section entitled "Risk Factors"
beginning on page 16.

Q: WHAT DO I NEED TO DO NOW?

A: Mail your signed proxy card in the enclosed return envelope as soon as
possible so that your Units may be represented at the meeting. If you
do not include instructions on how to vote your properly signed proxy,
your Units will be voted "FOR" approval and adoption of the merger
agreement and approval of the merger.

For a more complete description of voting at the meeting, see the
sections entitled "The Web Media Meeting--Voting of Proxies" on page
41.

Q: WHAT DO I DO IF I WANT TO CHANGE MY VOTE?

A: If you want to change your vote, send the secretary of Web Media a
later-dated, signed proxy card before your meeting or attend your
meeting in person. You may also revoke your proxy by sending written
notice to the secretary of Web Media before your meeting.

For a more complete description of how to change your vote, see the
sections entitled "The Web Media Meeting--Voting of Proxies" on pages
41 and 42.

Q: SHOULD I SEND IN MY WEB MEDIA MEMBERSHIP UNIT CERTIFICATES NOW?

A: No. After the merger is completed, we will send you written
instructions for exchanging your Web Media Membership Unit
certificates for TMCS stock certificates.

Q: WHEN DO YOU EXPECT THE MERGER TO BE COMPLETED?

A: We are working toward completing the merger as quickly as possible.

For a more complete description of the conditions to the merger, see
the section entitled "The Merger--The Merger Agreement--Conditions to
the Merger" on page 48.

Q: WILL I RECOGNIZE A GAIN OR LOSS ON THE TRANSACTION?

A: We expect that if the merger is completed, you will recognize taxable
gain or loss for United States federal income tax purposes. However,
Web Media Unitholders are urged to consult their own tax advisor to
determine their particular tax consequences.

For a more complete description of the tax consequences, see the
section entitled "The Merger--Material United States Federal Income
Tax Consequences of the Merger" on page 50.

2
<PAGE>

Q: AM I ENTITLED TO DISSENTERS' OR APPRAISAL RIGHTS?

A: No. Web Media Unitholders are not entitled to dissenters' rights or
appraisal rights with respect to the merger.

Q: WHOM SHOULD I CALL WITH QUESTIONS?

A: Web Media Unitholders should call Lisa Kohring, Investor Relations,
telephone number (214) 827-2262 with any questions about the merger.

You may also obtain additional information about TMCS from documents
filed with the Securities and Exchange Commission by following the
instructions in the section entitled "Where You Can Find More
Information" on page 115.

3
<PAGE>

SUMMARY OF THE PROXY STATEMENT/PROSPECTUS

THE COMPANIES

Web Media Ventures, L.L.C. dba
One & Only Network
5307 East Mockingbird Lane, Suite 102
Dallas, Texas 75206
(214) 827-2262

Web Media Ventures, L.L.C., dba One & Only Network, or Web Media,
distributes classified ads through three on-line Internet World Wide Web sites:
(1) One & Only Internet Personals, a mainstream personals classified ads site,
(2) Alternative Connections, a "Generation X" personals classified ads site and
(3) Utrade.com, an online person-to-person auction site.

Ticketmaster Online-CitySearch, Inc.
790 East Colorado boulevard, Suite 200
Pasadena, California 91101
(626) 405-0050

Ticketmaster Online-CitySearch, Inc., or TMCS, is a leading provider of
local city guides, local advertising and live event ticketing on the Internet.
CitySearch was incorporated in September 1995 and launched its first local city
guide in May 1996. Ticketmaster Online was formed in 1993 to administer the
online business of Ticketmaster Corp. and began selling live event tickets and
related merchandise online in November 1996. Prior to its merger with CitySearch
in September 1998, Ticketmaster Online was operated as a wholly-owned subsidiary
of Ticketmaster Corp., a leading provider of live event automated ticketing
services in the United States. The local CitySearch city guides and Ticketmaster
Online live events ticketing and merchandising distribution capabilities have
been integrated to offer online ticketing, merchandise, electronic coupons and
other transactions to a broader audience of consumers, and these activities will
be integrated with the additional services offered by recent acquisitions,
CityAuction, Match.com and, once the transaction closes, Web Media. The
CitySearch city guides provide up-to-date information regarding arts and
entertainment events, community activities, recreation, business, shopping,
professional services and news/sports/weather to consumers in metropolitan
areas. Ticketmaster Online offers consumers up-to-date information on live
entertainment events and a convenient means of purchasing tickets and related
merchandise on the Web for live events in 44 states and in Canada and the United
Kingdom. Consumers can access the Ticketmaster Online service at
www.ticketmaster.com and from CitySearch owned operated city guides at
www.citysearch.com through numerous direct links from banners and event
profiles. Subject to specified limitations, Ticketmaster Online is the exclusive
agent for Ticketmaster Corp, for the online sale of tickets to live events
presented by Ticketmaster Corp.'s clients.

<PAGE>

SUMMARY OF THE TRANSACTION

The Merger (page 43)

In the merger, Web Media and a wholly-owned subsidiary of TMCS will merge,
and as a result Web Media will become a wholly-owned subsidiary of TMCS. The
Agreement and Plan of Reorganization, or merger agreement, is attached as Annex
A. We encourage you to read the merger agreement carefully.

What You Will Receive in the Merger (page 44)

TMCS is permitted to pay the purchase price either in cash or with its
common stock. The total number of shares of TMCS Class B Common Stock which may
be issued to the Web Media Unitholders will be no more than 2,574,233 shares and
no less than 1,130,387 shares.

The TMCS Class B Common Stock at each payment date will be valued at the
average closing price per share of the stock on the Nasdaq National Market over
the five consecutive trading days ending on the trading day two days preceding
the respective payment date. Web Media Unitholders will be entitled to receive,
for each Unit held, the amount of the purchase price divided by the total number
of Units outstanding at the effective time of the merger. The total number of
Units which will be outstanding at the effective time are 3,000,000 Units.

Web Media's Reasons for the Merger (page 50)

The Web Media Member-Managers considered a number of relevant factors in
approving the merger agreement and recommending it to Web Media Unitholders
including:

. The merger with TMCS will create opportunities for significant
efficiencies because Web Media will be able to utilize TMCS's online
personals operations of Match.com; and

. The merger will provide Web Media's Unitholders with the opportunity
to benefit from TMCS's strong revenue growth, the strength and
experience of TMCS's senior management team and an investment in a
combined company with significant potential for growth.

Recommendation to Web Media Unitholders (page 50)

The Web Media Member-Managers have unanimously determined that the merger
agreement and the merger are fair to the Web Media Unitholders and in their best
interests. The Web Media Member-Managers recommend that Web Media Unitholders
vote for approval of the merger agreement.

Vote Required (page 41)

The proposal to approve the merger agreement and the merger requires the
affirmative vote of 56.7% of the membership Units of Web Media present and
entitled to vote at a meeting at which a quorum is present.

5
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Unit Ownership of Management and Certain Members of Web Media (page 41)

As of the record date, the Member-Managers, executive officers and
affiliates of Web Media, as a group, beneficially owned and were entitled to
vote 100% of the outstanding Web Media Units. Member-Managers, executive
officers and their affiliates beneficially owning approximately 66 2/3% of
outstanding Units on the record date have agreed to vote their shares in favor
of the merger.

No Dissenters' Rights of Appraisal (page 42)

Under Texas law, Web Media Unitholders do not have dissenters' rights of
appraisal with respect to the merger.

Conditions to the Merger (page 48)

We will not complete the merger unless a number of conditions are satisfied
or waived. These include:

. the affirmative vote of the holders of 56.7% of the Web Media Units
present and entitled to vote at a meeting at which a quorum is
present;
. the registration statement with respect to the TMCS Class B Common
Stock to be issued in connection with the merger shall have been
declared effective by the Securities and Exchange Commission;
. approval by the NASDAQ of the listing of the TMCS Class B Common Stock
to be issued in the merger;
. receipt of necessary consents;
. receipt of customary legal opinions;
. the absence of third party actions that would prohibit or restrict the
completion of the merger or would have a material adverse effect on
either Web Media or TMCS;
. the resignations of the Member-Managers of Web Media;
. the execution by certain employees of Web Media of TMCS proprietary
information agreements; and
. other customary closing conditions.

Accounting Treatment (page 52)

The merger is expected to be accounted for under the purchase method of
accounting. This means that after the merger, TMCS will be required to record as
intangible assets the excess of the consideration paid over the estimated fair
value of net assets acquired and will subsequently amortize this excess cost
against earnings.

Comparison of Securityholder Rights (page 60)

The certificates of incorporation and by-laws of Web Media and TMCS vary.
As a result, Web Media Unitholders will have different rights as TMCS
stockholders.

Termination of the Merger Agreement (page 48)

We can agree to terminate the merger agreement without completing the
merger. Either one of us can terminate the merger agreement if:

. the registration statement registering the TMCS Class B Common Stock
to be issued in connection with the merger has not been declared
effective by the SEC by September 30, 1999;
. we do not complete the merger by October 31, 1999;
. either of us materially breaches the merger agreement;
. an injunction prevents the merger;
. an order, rule or regulation prevents TMCS from operating Web Media's
business;
. the value of the TMCS Class B Common Stock falls below $20.80 per
share; or
. we mutually agree to terminate the merger.

6
<PAGE>

Income Tax Consequences of the Merger (page 50)

The merger is intended to be a taxable sale to holders of Web Media Units.

The tax consequences of the merger to you will depend on the facts of your
own situation. You should consult your tax advisor.

Regulatory Filings and Approvals Required to Complete the Merger (page 52)

Neither TMCS nor Web Media is aware of any material governmental or
regulatory approval required for completion of the merger, other than the
effectiveness of the registration statement of which this proxy
statement/prospectus is a part, and compliance with applicable corporate laws of
Delaware and Texas.

Forward-Looking Statements

Statements in this document are or may be forward-looking statements that
involve risks and uncertainties. Actual results may differ materially from those
expressed in such statements, depending on a variety of factors. You should
carefully review all information, including the financial statements and the
notes to the financial statements, included in this document.

Market Price Information

Shares of TMCS Class B Common Stock are listed on the Nasdaq National
Market. On June 9, 1999, the last full trading day prior to the public
announcement of the proposed merger, TMCS Class B Common Stock closed at $26 per
share. On August 25, 1999, TMCS Class B Common Stock closed at $28.56 per share.
We urge you to obtain current market quotations.

For a more complete description of market price information see the section
entitled "Price Range of TMCS Class B Common Stock" on page 59.

This summary may not contain all of the information that is important to
you. You should read carefully this entire document and the other documents we
refer to for a more complete understanding of the merger. In particular, you
should read the documents attached to this proxy statement/prospectus, including
the Agreement and Plan of Reorganization, which is attached as Annex A.

7
<PAGE>

SELECTED HISTORICAL AND SELECTED UNAUDITED
PRO FORMA COMBINED FINANCIAL DATA

The selected financial data listed below is set forth on the following
pages:

. Selected historical financial data of TMCS

. Selected historical financial data of CitySearch (prior to the merger
of Ticketmaster Online and CitySearch)

. Selected unaudited pro forma combined financial data of TMCS and Web
Media

. Comparative historical and unaudited pro forma combined per share data
of TMCS and Web Media

8
<PAGE>

TMCS Selected Historical Financial Data
(in thousands, except per share data)

TMCS

The selected financial data of TMCS presented below as of December 31, 1998
and the eleven months ended December 31, 1998 are derived from the audited
consolidated financial statements of TMCS. The selected financial data presented
below at January 31, 1998 and 1997 and for each of the three years in the period
ended January 31, 1998, are derived from audited financial statements of
Ticketmaster Online as the predecessor entity. The balance sheet data as of
January 31, 1996 are derived from unaudited financial statements of Ticketmaster
Online that are not included herein. The statements of operations data for the
six-month periods ended June 30, 1998 and 1999 and the balance sheet data at
June 30, 1999 are derived from unaudited financial statements included elsewhere
in this proxy statement/prospectus. In the opinion of management, the unaudited
financial statements have been prepared on the same basis as the audited
financial statements and contain all adjustments, consisting only of normal
recurring adjustments, necessary for a fair presentation of TMCS's results of
operations for such periods and financial condition at such date. The results of
operations for the six-months ended June 30, 1999 are not necessarily indicative
of the results to be expected for the full year or future periods. The selected
TMCS financial data set forth below are qualified in their entirety by, and
should be read in conjunction with "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and the consolidated financial
statements of TMCS and notes thereto included elsewhere in this consolidated
proxy statement/prospectus.

<TABLE>
<CAPTION>
Eleven
Months
Ended Six Months Ended
--------------------
Year Ended January 31, December 31, June 30, June 30,
---------------------------
Statements of Operations 1996 1997 1998 1998(1) 1998 1999
------- ------- ------- -------- ------- --------
Data:
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Ticketing operations................ $ -- $ 199 $ 5,972 $ 15,743 $ 5,947 $ 27,178
Sponsorship and advertising......... 14 997 3,933 6,754 2,444 2,209
City guide and related.............. -- -- -- 5,376 -- 12,112
------- ------- ------- -------- ------- --------
Total revenues...................... 14 1,196 9,905 27,873 8,391 41,499

Costs and expenses:
Ticketing operations................ -- 635 3,522 9,842 3,451 20,307
City guide and related.............. -- -- -- 4,021 -- 10,468
Sales and marketing................. -- 290 490 6,834 470 15,578
Research and development............ -- -- -- 1,728 -- 3,538
General and administrative.......... 548 1,260 1,719 3,495 1,007 5,907
Amortization of goodwill............ -- -- -- 16,275 -- 25,689
Merger and other transaction costs. -- -- -- -- -- 2,771
------- ------- ------- -------- ------- --------
Total costs and expenses............. 548 2,185 5,731 42,195 4,928 84,258
------- ------- ------- -------- ------- --------
Income (loss) from operations......... (534) (989) 4,174 (14,322) 3,463 (42,759)
Interest income, net.................. -- -- -- 54 -- 2,237
------- ------- ------- -------- ------- --------
Income (loss) before provision for
income taxes......................... (534) (989) 4,174 (14,268) 3,463 (40,522)
Income tax (benefit) provision........ (204) (374) 1,827 2,951 1,511 134
------- ------- ------- -------- ------- --------
Net income (loss)..................... $ (330) $ (615) $ 2,347 $(17,219) $ 1,952 $(40,656)
======= ======= ======= ======== ======= ========
Basic and diluted net income (loss)
per share(2)......................... $ (0.01) $ (0.02) $ 0.06 $ (0.38) $ 0.05 $ (0.56)
======= ======= ======= ======== ======= ========
Shares used to compute basic and
diluted net income (loss) (2)......... 37,238 37,238 37,238 45,201 37,238 72,249
======= ======= ======= ======== ======= ========
</TABLE>

9
<PAGE>

<TABLE>
<CAPTION>
January 31,
-------------------
1996 1997 1998 December 31, 1998 June 30, 1999
----- ----- ----- ----------------- -------------
<S> <C> <C> <C> <C> <C>
Balance Sheet Data:
Cash and cash equivalents.................... $ -- $ 3 $ -- $106,910 $ 88,494
Working capital (deficit).................... 223 218 (100) 100,691 82,802
Total assets (3)............................. 354 554 688 416,725 450,684
Stockholders' equity......................... 354 489 289 403,588 434,572
</TABLE>

__________________
(1) Includes the operating results of CitySearch from September 29, 1998 to
December 31, 1998 as a result of the merger of Ticketmaster Online and
CitySearch. The eleven month period reflects our change in year end to
December 31 from January 31. Comparable amounts for the prior period are not
presented because as a result of the merger of Ticketmaster Online and
CitySearch and our continuing growth such presentation would not be
considered meaningful.

(2) Basic and diluted net income (loss) per share is based on the weighted
average number of outstanding Class A and Class B Common Stock shares for
the eleven months ended December 31, 1998 and six months ended June 30,
1999, and for the six months ended June 30, 1998 and prior periods the
number of shares of CitySearch Common Stock exchanged in the merger with
Ticketmaster Online.

(3) Total assets at December 31, 1998 reflect $299.6 million of goodwill, net of
accumulated amortization of $16.3 million resulting from the merger of
Ticketmaster Online and CitySearch and USAi's acquisition of all of the
outstanding equity of Ticketmaster Group in June 1998 and USAi's acquisition
of 1,997,502 shares of Class A Common Stock of CitySearch from holders of
such Class A Common Stock for $17.3 million on November 3, 1998. Total
assets at June 30, 1999 reflect $344.7 million of goodwill, net of
accumulated amortization of $42 million resulting from the transactions
previously mentioned in addition to $28.1 and $42.6 million of goodwill
associated with the TMCS purchase of CityAuction and Match.com,
respectively.

CitySearch, Inc. Selected Historical Financial Data

The selected consolidated financial data of CitySearch, Inc. presented
below for the period from September 20, 1995 (date of formation) through
December 31, 1995 and for, and as of the end of, each of the years in the two-
year period ended December 31, 1997, are derived from the audited consolidated
financial statements of CitySearch, Inc., which are included elsewhere in this
proxy statement/prospectus. The consolidated balance sheet data as of December
31, 1995 are derived from audited consolidated financial statements of
CitySearch, Inc. that are not included herein. The consolidated statements of
operations data for the nine-month periods ended September 30, 1997 and
September 28, 1998, respectively, and the consolidated balance sheet data at
September 28, 1998 are derived from unaudited consolidated financial statements
included elsewhere in this proxy statement/prospectus. In the opinion of
management, the unaudited consolidated financial statements have been prepared
on the same basis as the audited consolidated financial statements and contain
all adjustments, consisting only of normal recurring adjustments, necessary for
a fair presentation of CitySearch's results of operations for such periods and
financial condition at such date. The selected consolidated financial data set
forth below are qualified in their entirety by, and should be read in
conjunction with, "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the consolidated financial statements of
CitySearch, Inc. and notes thereto included elsewhere in this proxy
statement/prospectus.

10
<PAGE>

<TABLE>
<CAPTION>
Period from
September 20,
1995 (date of
formation to Year Ended Nine Months Ended
--------------------
December 31, December 31, Sept. 30, Sept. 28,
--------------------
1995 1996 1997 1997 1998(1)
------------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Consolidated Statements of Operations Data:
Revenues:
Subscription and services........................... $ -- $ 203 $ 4,913 $ 2,986 $ 9,458
Licensing and royalty............................... -- -- 1,271 677 1,859
-------- -------- -------- -------- --------
Total revenues..................................... -- 203 6,184 3,663 11,317
Costs and expenses:
Cost of revenues.................................... -- 2,908 9,688 7,612 10,491
Sales and marketing................................. 57 6,369 20,172 13,716 14,902
Research and development............................ 152 2,563 7,182 4,949 5,000
General and administrative.......................... 104 2,475 5,883 4,263 5,104
Merger and other transactions costs................. -- -- -- -- 3,101
-------- -------- -------- -------- --------
Total costs and expenses............................ 313 14,315 42,925 30,540 38,598
-------- -------- -------- -------- --------
Loss from operations................................. (313) (14,112) (36,741) (26,877) (27,281)
Interest income, net................................. 5 217 223 104 227
-------- -------- -------- -------- --------
Loss before provision for income taxes............... (308) (13,895) (36,518) (26,773) (27,054)
Provision for income taxes........................... -- 2 8 -- --
-------- -------- -------- -------- --------
Net loss............................................. $ (308) $(13,897) $(36,526) $(26,773) $(27,054)
======== ======== ======== ======== ========
Historical basic and diluted net loss per share(2)... $ (0.04) $ (1.58) $ (3.86) $ (2.84) $ (2.73)
======== ======== ======== ======== ========
Pro forma basic and diluted net loss per share(2).... $ (1.96) $ (1.51) $ (1.10)
======== ======== ========
Shares used to compute historical basic and diluted
net loss per share(2)............................... 7,895 8,786 9,452 9,431 9,923
======== ======== ======== ======== ========
Shares used to compute pro forma basic and diluted
net loss per share(2)............................... 18,660 17,764 24,547
======== ======== ========
</TABLE>

<TABLE>
<CAPTION>
December 31, Sept. 28
----------------------------
1995 1996 1997 1998(1)
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Consolidated Balance Sheet Data:
Cash and cash equivalents................................. $ 1,413 $ 7,527 $ 25,227 $ 57,877
Working capital........................................... 1,323 4,257 19,375 50,940
Total assets.............................................. 1,490 13,370 31,655 65,209
Long-term obligations, less current portion............... -- 1,451 2,420 52,320
Redeemable Convertible Preferred Stock.................... -- 20,309 70,882 --
Stockholders' equity (deficit)............................ 8,366 (11,943) (47,911) 3,837
</TABLE>

__________________
(1) The historical financial data of CitySearch is presented through September
28, 1998, the effective date of the merger of Ticketmaster Online and
CitySearch. References throughout this proxy statement/prospectus to the
nine months ended September 28, 1998 refer to the period from January 1,
1998 through September 28, 1998.
(2) Shares used to compute pro forma basic and diluted net loss per share give
effect to the conversion of outstanding CitySearch Convertible Preferred
Stock as if converted at the earlier of the beginning of the period or
issue date. See Note 1 of Notes to Consolidated Financial Statements of
CitySearch, Inc. for an explanation of the determination of the number of
shares used to compute historical and pro forma basic and diluted net loss
per share.

11
<PAGE>

SELECTED UNAUDITED PRO FORMA COMBINED FINANCIAL DATA

The selected unaudited pro forma combined financial data set forth below
gives effect to the merger of TMCS and Web Media, pursuant to the Agreement and
Plan of Reorganization dated June 10, 1999. The Agreement provides that TMCS
will purchase all the outstanding units of Web Media in exchange for shares of
TMCS Class B Common Stock. TMCS has the option to pay cash or issue shares of
Class B Common Stock in exchange for the Web Media units. The unaudited pro
forma combined financial data set forth below does not give pro forma effect for
the acquisition of CityAuction and Match.com which resulted in the recording of
an additional $28.1 million and $42.6 million, respectively, of goodwill to be
amortized over a five year period which represents additional amortization
expense of $14.2 million on an annual basis. In addition, the unaudited pro
forma combined financial data set forth below for the year ended December 31,
1998 does not give pro forma effect to the merger of Ticketmaster Online with
CitySearch, Inc. which occurred in September 1998.

The initial target purchase price for the Web Media Units is $40.6 million,
of which $30 million of Class B Common Stock is payable upon the closing of the
transaction and $2,195,000 of Class B Common Stock is payable in two quarterly
installments with the remainder due 270 days after the closing of the
transaction. The initial target purchase price is subject to a 10% increase or
decrease based on, among other things, the achievement of certain 1999 calendar
revenue targets of Web Media. TMCS has the option to pay cash or issue shares of
its Class B Common Stock for all of the Web Media Units.

The number of shares of TMCS Class B Common Stock assumed to be issued for
purposes of the pro forma combined financial data set forth below is 1,611,497
shares which is based on the initial target purchase price of $40.6 million
divided by the average closing price of the Class B Common Stock for two days
before and two days after the date of the Agreement. The actual number of shares
of Class B Common Stock to be issued will be determined by dividing the portion
of the purchase price, as adjusted, then payable under the terms of the
Agreement, by the average closing price of the Class B Common Stock shortly
before the closing of the acquisition and shortly before each subsequent payment
date, subject to certain minimum and maximum share prices. The final purchase
price and the resulting goodwill amounts to be recorded will depend on the price
of the Class B Common Stock at the closing date and subsequent payment dates.
The closing of the acquisition is subject to several conditions, including but
not limited to the effectiveness of this registration statement with respect to
the Class B Common Stock to be issued in the transaction.

The unaudited pro forma combined balance sheet data as of the applicable
dates reflects the historical balance sheet data of TMCS combined with the
historical balance sheet data of Web Media including the effects of the merger.
The unaudited pro forma combined financial data set forth below assumes
approximately $39.7 million of goodwill will be recorded and amortized over a
five year period.

The unaudited pro forma combined statement of operations data for the year
ended December 31, 1998 reflects the unaudited results of operations data of
TMCS for the year ended December 31, 1998 (including the effects of a change in
year end to December 31) combined with the historical audited results of
operations data of Web Media for the year ended December 31, 1998. The only pro
forma adjustment included in the unaudited pro forma combined statement of
operations data is a charge of $7.9 million for the amortization of the
estimated goodwill resulting from the merger.

The unaudited pro forma combined statement of operations data for the six
months ended June 30, 1999 reflects the historical unaudited results of
operations data of TMCS for the six months ended June 30, 1999 combined with
the historical unaudited results of operations data of Web Media for six
months ended June 30, 1999. The only pro forma adjustment included in the
unaudited pro forma

12
<PAGE>

combined statement of operations data is a charge of $4 million for the
amortization of the estimated goodwill resulting from the merger.

The purchase price assumed in the unaudited pro forma combined financial
data is preliminary and subject to change upon the final evaluation of the fair
value of assets to be acquired and liabilities to be assumed including
allocation to the intangibles other than goodwill. Accordingly, the purchase
accounting information is preliminary and has been made solely for the purpose
of developing such unaudited pro forma combined financial information.

The unaudited pro forma combined financial data are presented for
illustrative purposes only and are not necessarily indicative of the financial
position which would have actually been reported had the merger occurred on
December 31, 1998 or June 30, 1999 or of the results of operations which would
have actually been reported for the year ended December 31, 1998 or the six
months ended June 30, 1999 had the merger occurred as of January 1, 1998, nor
are the unaudited pro forma combined financial data necessarily indicative of
future results of operations. The information in the table should be read in
conjunction with the financial statements of TMCS and Web Media and the related
notes included in this proxy statement/prospectus.

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------

SELECTED UNAUDITED PRO FORMA COMBINED FINANCIAL DATA
(in thousands, except per share data)

Year Ended Six Months
December 31, Ended June
1998 30, 1999
----------- ----------
<S> <C> <C>
UNAUDITED PRO FORMA COMBINED CONSOLIDATED
STATEMENT OF OPERATIONS DATA:

Revenues......................................... $ 32,666 $ 45,898
Loss from operations............................. (21,451) (45,752)
Net loss......................................... (24,440) (43,806)
Net loss per share basic and diluted............ (0.53) (0.59)
Number of shares used in per share
calculation basic and undiluted................. 46,136 73,860
</TABLE>

<TABLE>
<CAPTION>
December 31, June 30,
1998 1999
----------- ---------
<S>.............................................. <C> <C>
UNAUDITED PRO FORMA COMBINED BALANCE SHEET DATA:
Working capital.................................. $100,103 $ 82,322
Total assets..................................... 457,949 493,371
Long-term debt and capital lease obligations,
less current portion............................ 2,692 2,080

Total stockholders' equity....................... 443,529 475,222

- -------------------------------------------------------------------------------
</TABLE>

13
<PAGE>

Comparative Historical and Unaudited Pro Forma Combined Per Share Data
of TMCS and Web Media

The following table sets forth (1) historical net loss per share,
historical book value per share and historical tangible book value per share
data of TMCS, (2) historical net income per Unit, historical book value per Unit
and historical tangible book value per Unit data of Web Media, (3) unaudited pro
forma combined net loss per share, unaudited pro forma combined book value per
share and unaudited pro forma combined tangible book value per share data of
TMCS after giving effect to the merger of TMCS with Web Media; and (4) unaudited
equivalent pro forma combined net loss per share, unaudited equivalent pro forma
combined book value per share and unaudited equivalent pro forma combined
tangible book value per share data of Web Media based on an assumed exchange
ratio of .537 of a share of TMCS Class B Common Stock for each Unit of Web
Media.

The exchange ratio is based on the assumed issuance of 1,611,497 shares of
TMCS Class B Common Stock in exchange for the 3,000,000 Units of Web Media
outstanding. The number of shares of TMCS Class B Common Stock is estimated by
dividing the initial purchase price of $40,650,000 by the average closing price
of the Class B Common Stock for two days before and two days after the date of
the Agreement and Plan of Reorganization. The initial purchase price is subject
to a 10% increase or decrease based on, among other things, the achievement of
certain 1999 calendar revenue targets by Web Media. In addition, the actual
number of shares of Class B Common Stock to be issued will be determined by
dividing the portion of the purchase price, as adjusted, then payable under the
terms of the Agreement by the average closing price of the Class B Common Stock
shortly before the closing of the merger and shortly before each subsequent
payment date, subject to certain minimum and maximum share prices. The final
purchase price and the resulting goodwill amounts to be recorded will depend on
the price of the Class B Common Stock at the date of closing and each subsequent
payment date.

The unaudited pro forma combined financial data set forth below assumes
approximately $39.7 million of goodwill will be recorded and amortized over a
five year period. The unaudited pro forma combined financial data set forth
below does not give pro forma effect for the acquisitions of CityAuction and
Match.com which resulted in the recording of an additional $28.1 million and
$42.6 million, respectively, of goodwill to be amortized over a five year
period which represents additional amortization expense of $14.1 million on an
annual basis. In addition, the unaudited pro forma combined financial data set
forth below for the year ended December 31, 1998 does not give pro forma
effect to the merger of Ticketmaster Online with CitySearch in September 1998.

The information in the table should be read in conjunction with the
financial statements of TMCS and Web Media and the related notes included in
this proxy statement/prospectus. The unaudited pro forma combined financial
information is not necessarily indicative of the net loss per share or book
value per share that would have been achieved had the merger been consummated as
of the beginning of the periods presented and should not be construed as
representative of these amounts for any future dates or periods.

14
<PAGE>

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------

COMPARATIVE HISTORICAL AND UNAUDITED PRO FORMA COMBINED PER SHARE DATA OF
TICKETMASTER ONLINE-CITYSEARCH, INC. AND WEB MEDIA

Unaudited
Web Media
Equivalent
Historical Unaudited Pro Forma
------------------- Pro Forma Combined
TMCS Web Media Combined (5)
-------- --------- -------- ----------
<S> <C> <C> <C> <C>
Net income (loss) per
share/unit basic and diluted

For the six months ended
June 30, 1999.................. $ (0.56) $ 0.27 $ (0.59) $ (0.32)
For the year ended December
31, 1998....................... $ (0.38) $ 0.15 $ (0.53) $ (0.28)

Book value per share/unit (1)(2)

At June 30, 1999............... 5.82 0.39 6.23 3.35
At December 31, 1998........... 5.65 0.15 6.07 3.26

Tangible book value per
share/unit (3)(4)
At June 30, 1999............... 1.20 0.30 1.19 0.64
At December 31, 1998........... 1.45 0.06 1.42 0.76
- ------------------------------------------------------------------------------------
</TABLE>

(1) Historical book value per share/unit is computed by dividing stockholders'
equity by the number of shares/units of common stock outstanding at the end
of each period.

(2) The pro forma combined book value per share/unit is computed by dividing pro
forma stockholders' equity including the effect of pro forma adjustments by
the pro forma number of shares of TMCS common stock which would have been
outstanding had the merger been consummated as of December 31, 1998 and
June 30, 1999.

(3) Historical tangible book value per share/unit is computed by dividing
stockholders' equity less goodwill and other intangible assets by the number
of shares/units of common stock outstanding at the end of each period.

(4) The unaudited pro forma combined tangible book value per share/unit is
computed by dividing pro forma stockholders' equity less goodwill and other
intangible assets, including the effect of pro forma adjustments, by the pro
forma number of shares of TMCS common stock which would have been
outstanding had the merger been consummated as of December 31, 1998 and
June 30, 1999.

(5) Unaudited Web Media equivalent pro forma combined per share amounts are
calculated by multiplying the pro forma combined book value per share
amounts by the assumed exchange ratio of .537 of a share of TMCS Common
Stock for each unit of Web Media.

15
<PAGE>

RISK FACTORS

The merger involves a high degree of risk. Also, by voting in favor of the
merger, Web Media's Unitholders will choose to invest in TMCS Class B Common
Stock. An investment in TMCS Class B Common Stock involves a high degree of
risk. In addition to the other information contained in this proxy
statement/prospectus, Web Media's Unitholders should carefully consider the
following risk factors in deciding whether to vote for the merger.

Risks Relating To TMCS's Proposed Merger With Web Media

The Expected Benefits of Combining TMCS and Web Media May Not Be Realized

TMCS and Web Media entered into the Agreement and Plan of Reorganization
with the expectation that the merger will result in benefits to the combined
companies, including the expansion of TMCS's product and service offerings and
the combination of TMCS's CityGuide Network with Web Media's personals services.
If TMCS is unable to integrate Web Media's technology, operations and personnel
in a timely and efficient manner, then the benefits of the merger will not be
realized and, as a result, TMCS's operating results and the market price of
TMCS's Class B Common Stock may be adversely effected. In particular, if the
integration is not successful:

. TMCS may lose key personnel; and

. TMCS may not be able to retain or expand Web Media's customer base.

In addition, the attention and effort devoted to the integration of the two
companies will divert management's attention from other important issues, and
could significantly harm the combined company's business and operating results.
See also the risk factor entitled "TMCS's Future Operations Depend on the
Successful Integration of Its Component Companies."

The Number Of Shares Of TMCS Class B Common Stock You Will Receive In The
Merger Will Depend In Part On The Future Operating Performance Of Web Media
And In Changes In The Market Value Of TMCS Class A Common Stock

In accordance with the terms of the Agreement and Plan of Reorganization,
TMCS has the option to pay cash or issue shares of its Class B Common Stock in
exchange for all of the Web Media units. The initial target price for the Web
Media units is $40,650,000 of the TMCS Class B Common Stock, of which
$30,000,000 of Class B Common Stock is payable upon the closing of transaction
and $2,195,000 of Class B Common Stock is payable in two quarterly installments
with the remainder of the target purchase price due 270 days after the closing
of the transaction. The target purchase price is subject to a 10% increase or
decrease based on among other things, the achievement of certain calendar 1999
revenue targets by Web Media. The number of shares for TMCS Class B Common Stock
to be issued at each payment date will be determined by dividing the amount
due at such date by the average closing price of the TMCS Class B Common Stock
on the Nasdaq National Market over the five consecutive trading days ending on
the trading day two days preceding the respective payment date; provided,
however, that in no event shall the value be more than $39 per share or less
than $13 per share. The total number of shares that may be issued to the Web
Media Unitholders in the transaction will be no more than 2,574,233 shares and
no less than 1,130,387 shares.

16
<PAGE>

Consequently, the specific number of shares of TMCS Class B Common Stock to
be received by the Web Media Unitholders will depend on the market value of TMCS
prior to the time of each respective payment date. You are urged to obtain
recent market quotations for TMCS Class B Common Stock. TMCS cannot predict or
give assurances to the market price of TMCS Class B Common Stock at any time
before or after the merger. The prices of TMCS Class B Common Stock may vary for
many reasons, including those set forth under the risk factor entitled "TMCS's
Future Revenues Are Difficult To Predict And TMCS Expect Its Operating Results
To Fluctuate."

TMCS's Accounting For The Merger May Change

TMCS has allocated the total estimated purchase price for the merger on a
preliminary basis to assets and liabilities based on TMCS's best estimates of
the fair value of these assets and liabilities, with the excess costs over the
net assets acquired allocated to goodwill and other intangible assets. This
allocation is subject to change pending a final analysis of the fair values of
the assets acquired and liabilities assumed. The impact of these changes could
be material to TMCS's future results of operations.

Risk Factors Applicable To TMCS

TMCS Has A History Of Losses, TMCS Expects Future Losses And TMCS Cannot
Assure You That TMCS Will Achieve Or Maintain Profitability

TMCS incurred net losses of $17.2 million and $40.6 million for the eleven
months ended December 31, 1998 and the six months ended June 30, 1999,
respectively. TMCS expects to expend significant financial and management
resources on the roll-out of TMCS's service in new CitySearch owned and operated
and partner- led markets, site and content development on TMCS's CitySearch.com,
CityAuction.com, Match.com and Ticketmaster.com sites, integration of the
CitySearch, CityAuction, Match.com and Ticketmaster Online services, strategic
relationships, technology and operating infrastructure. As a result, TMCS
expects to incur significant additional losses and continued negative cash flow
from operations for the foreseeable future.

TMCS believes that its future profitability and success will depend in
large part on, among other things:

. TMCS's ability to generate sufficient revenues from online ticketing,
online auctions, sales of its Web sites to businesses and from the
licensing of its technology and business systems to partners setting up
TMCS's services in partner-led markets;

. the ability of Ticketmaster Corp. to maintain existing relationships and
enter into new relationships with live event venues, sports franchises,
promoters and other clients for which it sells live event tickets;

. the ability of Ticketmaster Corp. to obtain or retain for TMCS the right to
sell live event tickets and related merchandise online;

. TMCS's ability to effectively maintain existing relationships with its
media partners;

. TMCS's ability to successfully enter into new strategic relationships for
distribution and increased usage of TMCS's services;

. TMCS's ability to provide superior customer service;

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. TMCS's ability to continue to develop and upgrade its technologies and
commercialize its services incorporating these technologies;

. and TMCS's ability to generate sufficient online traffic and sales volume
to achieve profitability.

As a result of the merger of Ticketmaster Online and CitySearch in
September 1998, TMCS recorded a significant amount of goodwill which will
adversely affect its earnings and profitability for the foreseeable future. TMCS
recorded an aggregate of $315.9 million of goodwill and other intangibles,
$154.8 million of which related to the transaction in which Ticketmaster Group,
Inc. became a wholly-owned subsidiary of USAi, and is to be amortized through
2008, and $161.1 million of which related directly to the merger of Ticketmaster
Online and CitySearch and is to be amortized through 2003. In addition, TMCS's
acquisitions of CityAuction and Match.com resulted in an aggregate of $70.7
million in goodwill which will be amortized through 2004. TMCS's proposed
acquisition of Web Media would result in additional goodwill of approximately
$39.7 million, assuming the final purchase price is in the middle of the range,
which will be amortized through 2004. To the extent the amount of recorded
goodwill is increased or TMCS has future losses and is unable to demonstrate its
ability to recover the amount of goodwill recorded during these time periods,
the period of amortization could be shortened, which may further increase annual
amortization charges. In this case, TMCS's business, financial condition and
results of operations could be materially and adversely affected.

Furthermore, TMCS completed its initial public offering in December 1998
and has a limited history as a company with public reporting obligations. TMCS
is hiring additional management personnel and is expanding its operating systems
to address these reporting obligations. To the extent these expenditures precede
and are not subsequently followed by increased revenues, TMCS's business,
financial condition and results of operations could be materially and adversely
affected.

TMCS's Online Ticketing Service Is Dependent Upon Its Relationship With
Ticketmaster Corp.

In connection with the merger of CitySearch and Ticketmaster Online,
Ticketmaster Online, Ticketmaster Corp. and USAi entered into a license
agreement which designates, subject to certain limitations, Ticketmaster Online
as Ticketmaster Corp.'s exclusive agent for online live event ticket sales and
as its non-exclusive agent for the online sale of merchandise.

For the foreseeable future, TMCS anticipates that a majority of its
revenues will be derived from the online sale of tickets. TMCS also expects that
it will continue to derive a substantial portion of its revenues from per ticket
convenience charges and per order handling charges paid by consumers in
connection with online purchases of tickets to live events presented or promoted
by clients of Ticketmaster Corp. TMCS does not have contractual relationships
with the entities for which its Ticketmaster Online service sells tickets as
Ticketmaster Corp.'s agent and TMCS is restricted under the license agreement
from having such relationships, whether with current Ticketmaster Corp. clients
or its potential clients. Accordingly, TMCS's future revenues and business
success are dependent on Ticketmaster Corp.'s ability to maintain and renew
relationships with its existing clients and to establish relationships with
additional clients.

For the year ended December 31, 1998, Ticketmaster Corp. processed ticket
sales for over 3,750 clients. Approximately 20% of Ticketmaster Corp.'s client
contracts are subject to renewal each year. TMCS is dependent upon Ticketmaster
Corp.'s ability to enter into and maintain client contracts on terms that are
favorable to Ticketmaster Corp. and TMCS's Ticketmaster Online service. There
can be no assurance that Ticketmaster Corp. will be able to enter into or
maintain client contracts on such terms.

All of TMCS's online ticket sales are processed through Ticketmaster
Corp.'s systems. Under the license agreement, Ticketmaster Corp. is generally
obligated to provide order fulfillment services at least at

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the same level as such services were generally provided as of the date of the
license agreement. The license agreement obligates Ticketmaster Corp. to process
a specified number of tickets sold online each year through December 31, 2001.
As a result, TMCS's future online ticketing revenues are dependent upon
Ticketmaster Corp.'s ability to process online ticket sales in an accurate and
timely manner. While TMCS believes that, due to its perpetual right to serve as
Ticketmaster Corp.'s exclusive agent for online live event ticket sales,
Ticketmaster Corp. has a substantial interest in its relationship with us, there
can be no assurance that Ticketmaster Corp. will provide fulfillment services to
TMCS in excess of the requirements of the license agreement and, in particular,
after December 31, 2001.

TMCS's ability to generate ticket and merchandise sales on TMCS's
Ticketmaster Online Web sites is also dependent in part on Ticketmaster Corp.'s
ability to maintain and enhance the Ticketmaster brand name. Any failure on the
part of Ticketmaster Corp. to maintain its existing base of clients, to
establish relationships with new clients upon terms favorable to TMCS's
Ticketmaster Online service, to obtain or retain for TMCS the right to sell
tickets and merchandise online for Ticketmaster Corp.'s clients, to process
TMCS's online ticket sales in a timely and accurate manner or at levels
necessary to support TMCS's business or to maintain and enhance the Ticketmaster
brand name would have a material adverse effect on TMCS's business, financial
condition and results of operations.

TMCS Is Controlled By USAi

TMCS is currently a direct, majority-owned subsidiary of Ticketmaster
Corp., which is an indirect wholly-owned subsidiary of USAi. As of June 9, 1999,
USAi owned approximately 68% of TMCS's total outstanding Class A Common Stock,
representing approximately 67% of the total voting power of TMCS's total
outstanding common stock. As a result of its ownership of Class A Common Stock,
USAi generally has the ability to control the outcome of any matter submitted
for the vote or consent of TMCS's stockholders, except where a separate vote of
the holders of Class B Common Stock is required by Delaware law. Subject to
applicable Delaware law, USAi is generally not restricted with regard to its
ability to control the election of TMCS's directors, to cause the amendment of
TMCS's Amended and Restated Certificate of Incorporation, or generally to
exercise a controlling influence over TMCS's business and affairs. This control
relationship may have the effect of delaying or preventing a change in control
of TMCS and might adversely affect the market price of the Class B Common Stock.

Subject to applicable Delaware law, USAi could elect to sell all or a
substantial portion of its equity interest in TMCS to a third party, which would
represent a controlling or substantial interest in TMCS, without offering to
TMCS's other stockholders the opportunity to participate in such a transaction.
In the event of a sale of USAi's interest to a third party, that third party may
be able to control TMCS in the manner that USAi is able to control TMCS,
including the ability to control the election of directors.

USAi is currently controlled by Barry Diller, who is also a director of
TMCS. Mr. Diller is the Chairman and Chief Executive Officer of USAi. Under
stockholder and governance agreements with Liberty Media and Universal Studios,
two other significant USAi stockholders, Mr. Diller generally has the right to
control the outcome of any matter requiring the approval of USAi stockholders,
other than with respect to specified fundamental changes relating to USAi or its
subsidiaries. To engage in these fundamental changes, the approval of each of
Mr. Diller, Liberty Media and Universal Studios is generally required. Copies of
the governance and stockholders agreements among USAi, Universal Studios,
Liberty Media and Mr. Diller have been filed with the Securities and Exchange
Commission (SEC) as Appendices B and C, respectively, to USAi's Definitive Proxy
Statement, dated January 12, 1998 and are available from the SEC. Mr. Diller
does not have an employment agreement with USAi, although he has been granted
options to purchase a substantial number of shares of USAi common stock. The
vesting of the unvested portion of these options, which should occur in the next
two years, is conditioned on Mr. Diller remaining at USAi. If Mr. Diller no
longer serves in his positions at USAi, generally Universal Studios and Liberty
Media will be able to control

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USAi. Any change in the governance, management, operations or business of USAi
could have a material adverse effect on TMCS's relationship with USAi and
Ticketmaster Corp., and could materially and adversely affect TMCS's business,
financial condition and results of operations.

Conflicts Of Interest May Arise Between TMCS And USAi

Conflicts of interest may arise between TMCS and USAi, including TMCS's
Ticketmaster Online service, on the one hand, and USAi and its affiliates,
including Ticketmaster Corp., on the other hand, in areas relating to past,
ongoing and future relationships and other matters. These also include:

. corporate opportunities;

. indemnity arrangements;

. tax and intellectual property matters;

. potential acquisition or financing transactions;

. sales or other dispositions by USAi of shares of the TMCS's Class A Common
Stock held by it; and

. the exercise by USAi of its ability to control TMCS's management and
affairs.

These conflicts also may include disagreements regarding TMCS's license
agreement with Ticketmaster Corp., including possible amendments to, or waivers
of provisions of, the agreement. Due to USAi's ability to control TMCS's board
of directors and subject to Delaware law, USAi may be able to effect amendments
without seeking the approval of any other party. These amendments, modifications
or waivers may adversely affect TMCS's business, financial condition and results
of operations.

Ownership interests of TMCS's directors or officers in the USAi Common
Stock, or service as both a director or officer of TMCS and a director, officer
or employee of USAi, could create or appear to create potential conflicts of
interest when directors and officers are faced with decisions that could have
different implications for TMCS and USAi. Several of the members of TMCS's board
of directors are also directors, officers or employees of USAi.

In addition, USAi is engaged in a diverse range of media and entertainment-
related businesses, including businesses engaged in electronic and online
commerce including Home Shopping Network and its USA Interactive business. These
businesses may have interests that conflict or compete in some manner with
TMCS's businesses. Subject to applicable Delaware law, USAi is under no
obligation, and has not indicated any intention, to share any future business
opportunities available to it with TMCS except as expressly provided by TMCS's
license agreement with Ticketmaster Corp. TMCS's Amended and Restated
Certificate of Incorporation also includes provisions which provide that:

. USAi shall have no duty to refrain from engaging in the same or similar
activities or lines of business as TMCS: thereby competing with TMCS;

. USAi, its officers, directors and employees shall not be liable to TMCS or
TMCS's stockholders for breach of any fiduciary duty by reason of any
activities of USAi in competition with TMCS; and

. USAi shall have no duty to communicate or offer corporate opportunities to
TMCS and shall not be liable for breach of any fiduciary duty as a
stockholder of TMCS in connection with these

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opportunities, provided that the relevant procedures set forth in the
Amended and Restated Certificate of Incorporation are followed.

There can be no assurance that any conflicts that may arise between TMCS
and USAi, any loss of a corporate opportunity to USAi that might otherwise be
available to TMCS, or any engagement by USAi in any activity that is similar to
TMCS's businesses will not have a material adverse effect on TMCS's business,
financial condition and results of operations or TMCS's other stockholders.

USAi May Sell A Significant Portion Of TMCS's Common Stock That It Owns
Which Could Adversely Effect The Price Of TMCS's Stock

Subject to applicable federal securities laws, USAi may sell a significant
portion of the shares of TMCS Class A Common Stock beneficially owned by it or
distribute any or all of its shares of Class A Common Stock to its stockholders.
At June 9, 1999, USAi's holdings represented approximately 68% of the
outstanding TMCS Class A Common Stock, representing approximately 67% of the
voting power of TMCS's total outstanding common stock. Pursuant to TMCS's
Amended and Restated Certificate of Incorporation, each share of Class A Common
Stock will generally be converted automatically into one share of Class B Common
Stock upon any transfer by the initial registered holder. Any sales or
distributions by USAi of substantial amounts of Common Stock in the public
market or to its stockholders, or the perception that these sales or
distributions could occur, could adversely affect the prevailing market prices
for the Class B Common Stock. USAi is not subject to any obligation to retain
any portion of its controlling interest in us.

TMCS's Future Operations Depend On The Successful Integration Of Its
Component Companies

Before the transactions that combined CitySearch and Ticketmaster Online,
these companies operated independently and Ticketmaster Online operated as a
wholly-owned subsidiary of Ticketmaster Corp. and USAi. CityAuction and
Match.com also operated independently prior to their acquisition by TMCS. TMCS's
future success will depend to a significant extent on the efficient, effective
and timely integration of the operations of these companies. This integration
includes the combination of different business models, different technologies
and personnel with different expertise and backgrounds and the development of
services in which CitySearch's local content, CityAuction's auction
functionality, Match.com's Internet personals technology and Ticketmaster
Online's live event-specific content and transactional capabilities are
integrated with each other. To the extent TMCS closes additional acquisitions
such as One and Only and the Sidewalk transaction, TMCS needs to integrate those
companies as well.

TMCS is also evaluating its existing technologies and its ability to
support the expanded range of products and services TMCS is expected to offer.
TMCS is currently linking the Ticketmaster Online ticketing service more closely
with some of its CitySearch city guides and promoting CityAuction's and
Match.com's services throughout the city guides. TMCS has not executed this
integration in the past, and this integration could require adaptation of
existing technologies or development of new technologies. There can be no
assurance that TMCS will be able to coordinate either operational or
technological integration effectively or efficiently with these entities. If
TMCS does not effectively accomplish the integration of the companies'
operations or lose any key employees from these companies, its business,
financial condition and results of operations could be materially and adversely
affected.

TMCS May Have Future Capital Needs And May Not Be Able To Obtain Additional
Financing On Acceptable Terms

TMCS expects to continue to experience significant negative cash flow from
operations for the foreseeable future. USAi has no obligation or agreement to
provide any future capital or other funding to

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TMCS. TMCS may be required to raise additional funds at some point in the
future. If additional funds are raised through the issuance of equity
securities, TMCS's stockholders may experience significant dilution.
Furthermore, there can be no assurance that additional financing will be
available when needed or that if available, such financing will include terms
favorable to TMCS's stockholders or TMCS. If this financing is not available
when required or is not available on acceptable terms, TMCS may be unable to
develop or enhance TMCS's services, take advantage of business opportunities or
respond to competitive pressures, any of which could have a material adverse
effect on TMCS's business, financial condition and results of operations.

TMCS's Future Revenues Are Difficult To Predict And TMCS Expects Its
Operating Results To Fluctuate

As a result of TMCS's limited operating history and the emerging nature of
the markets in which it competes, TMCS is unable to accurately forecast its
future revenues. TMCS's current and future expense levels are based
predominantly on TMCS's operating plans and estimates of future revenues and are
to a large extent fixed. For example, the CitySearch business model,
particularly in TMCS's owned and operated markets, requires significant staffing
to develop content and to create and maintain relationships with small- and
medium-size businesses. TMCS may be unable to adjust spending in a timely manner
to compensate for any unexpected revenue shortfall. Accordingly, any significant
shortfall in revenues would likely have an immediate material adverse effect on
TMCS's business, financial condition and results of operations. Furthermore,
TMCS currently intends to increase its operating expenses to roll out its
CitySearch service in new markets, to fund increased sales and marketing and
customer service operations, to further develop its technology infrastructure,
to integrate its local content with the event-specific content and transactional
capabilities of its Ticketmaster Online service and to broaden its management
personnel. To the extent these expenses precede or are not subsequently followed
by increased revenues, TMCS's operating results will fluctuate and net
anticipated losses in a given period may be greater than expected.

TMCS expects to experience significant fluctuations in its future operating
results due to a variety of factors, many of which are outside of its control.
Factors that may adversely affect TMCS's operating results include, but are not
limited to:

. Ticketmaster Corp.'s ability to maintain and increase the number of clients
for which it provides online ticketing services;

. the ability of TMCS's partners to meet roll-out schedules for CitySearch
city guide services;

. the timing and amount of license and royalty payments from TMCS's partners;

. its ability to increase the volume of online ticket sales through the
Ticketmaster Online Web site;

. its ability to offer its online ticketing services through its city guides
in TMCS's partner-led markets on terms acceptable to TMCS;

. its ability to increase the number of users of the CityAuction service and
revenues generated from auctions;

. its ability to retain existing business customers, attract new business
customers at a steady rate and maintain customer satisfaction;

. the timing and volume of new business Web site orders and TMCS's capacity
to meet such orders;

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. its ability to maintain or increase current rates of sales productivity;

. the announcement or introduction of new or enhanced sites and services by
TMCS or its competitors;

. the amount of traffic on its online sites;

. the amount of expenditures for online advertising by businesses;

. the level of use of the Web and online services and consumer acceptance of
the Internet for services such as those offered by TMCS;

. its ability to upgrade and develop its systems and attract personnel in a
timely and effective manner;

. the amount and timing of operating costs and capital expenditures relating
to expansion of TMCS's business and infrastructure, technical difficulties,
system downtime or Internet brownouts;

. political or economic events affecting the cities in which it operates; and

. general economic conditions.

Unfavorable changes in any of the above factors could adversely affect
TMCS's revenues, gross margins and results of operations in future periods. In
addition, TMCS derives a majority of its Ticketmaster Online revenues directly
or indirectly from the sale of tickets and related merchandise for live
entertainment, sporting and leisure events and this revenue is directly affected
by the popularity, frequency and location of these events. Factors affecting the
demand for and attendance of these events include general economic conditions,
consumer trends and work stoppages. Any occurrence or condition that results in
decreased attendance or demand for these entertainment, sporting and leisure
events would likely have a material adverse effect on TMCS's business, financial
condition and results of operations.

As a result of the foregoing, TMCS believes that period-to-period
comparisons of its results of operations should not be relied upon as an
indication of future performance. In addition, the results of any quarterly
period are not indicative of results to be expected for a full fiscal year. The
foregoing factors are largely unpredictable and TMCS's quarterly results of
operations may be below the expectations of public market analysts or investors
in some future period.

TMCS Competes In New And Emerging Markets And Its Services May Not Gain
Widespread Acceptance In These Markets

The markets for TMCS's services have only recently begun to develop, are
rapidly evolving and are characterized by a number of entrants that have
introduced or plan to introduce competing services. As is typical in the case of
new and rapidly evolving industries, demand and market acceptance for recently
introduced services are subject to a high level of uncertainty and risk. It is
therefore difficult to predict the size and future growth rate, if any, of these
markets.

There can be no assurance that the markets for TMCS's services will develop
or that demand for its services will emerge or become economically sustainable.
For example, the success of TMCS's Ticketmaster Online service will depend on
the willingness of consumers to purchase tickets to live events and related
merchandise online and TMCS's ability to significantly increase online traffic
and sales volume. The success of the CityAuction service will depend, in part,
on users' willingness to post and purchase goods or services online. The success
of Match.com's service will depend on the willingness of single adults to
subscribe to online dating services. The success of CitySearch's city guide
service will depend, in part, on the willingness of

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local businesses to pay for custom business Web sites developed by us and to
retain the service, which in turn may depend on the popularity of the guides to
consumers and on the actual or perceived revenues attributable to the services.
If the markets for TMCS's services fail to develop or develop more slowly than
anticipated or TMCS is not successful in gaining widespread acceptance in these
markets, TMCS's business, financial condition and results of operations could be
materially and adversely affected.

TMCS's Turnover Rate Of Business Customers For The CitySearch Service Is
Higher Than TMCS Initially Had Anticipated And, If It Does Not Improve, The
CitySearch Service Will Suffer

The turnover rate of business customers using TMCS's CitySearch service has
been higher than TMCS had anticipated, and TMCS cannot provide assurance that
turnover rates will decrease and will not in the future materially and adversely
affect its business, financial condition and results of operations.
Specifically, the turnover rate has been higher than TMCS expected due to
several factors, including:

. its early belief that TMCS's services would be suited to a broader base of
business customers;

. the challenges of proving advertising value to a broad range of small
businesses that may not have significant experience with online services;

. its continuing refinements to sales, production and customer service
processes to meet the needs of TMCS's business customers; and

. its initial underestimation of the need for continuous marketing support of
business customers.

TMCS cannot provide assurance that businesses will elect to outsource the
design, development and maintenance of their Web sites to services such as
CitySearch. Businesses may elect to perform such tasks internally, particularly
if third-party providers of such services prove to be unreliable, ineffective,
too expensive or if software companies offer user-friendly and cost-effective
tools for such purpose. In the event that a significant number of businesses
internalize tasks, TMCS's business, financial condition and results of
operations could be materially and adversely affected.

TMCS Depends On The Continued Growth Of Online Commerce

TMCS's future revenues and any future profits are substantially dependent
upon the widespread acceptance and use of the Web and online services as an
effective medium of commerce by consumers. The rapid growth in the use of and
interest in the Web, the Internet and commercial online services is a recent
phenomenon. There can be no assurance that acceptance and use will continue to
develop or that a sufficiently broad base of consumers will adopt, and continue
to use, the Web and online services as a medium of commerce, particularly for
purchasing tickets to live events and related merchandise.

Demand for recently introduced services and products over the Web and
online services is subject to a high level of uncertainty, and there are
relatively few proven services and products to date. The development of the Web
and online services as a viable commercial marketplace is subject to a number of
factors, including:

. continued growth in the number of Internet users and users of such
services;

. concerns about transaction security;

. continued development of the necessary technological infrastructure; and

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. the development of complementary services and products.

If the Web and online services do not become a viable commercial
marketplace, TMCS's business, financial condition and results of operations
would be materially and adversely affected.

The Success Of TMCS's CitySearch Service Depends On Establishing And
Maintaining Strategic Relationships with Local Media Companies

An important element of TMCS's current business strategy with respect to
the CitySearch service is to enter into agreements with local media companies to
establish and support city guides. TMCS has entered into, and intends to enter
into, agreements with media companies to address opportunities. In these
"partner-led" markets, TMCS develops and designs a city guide for local media
companies and licenses certain intellectual property to these companies in
exchange for certain up-front and continuing license payments and royalty
payments. These royalty payments are based on the amount of revenues generated
by these companies through the partner-led city guides. TMCS currently
anticipates that royalty payments from these agreements will constitute an
increasing portion of its revenues in future periods. Accordingly, TMCS's
success will depend in large part upon the ability of TMCS's partners to timely
launch city guides in partner-led markets and the extent to which these partners
are able to generate revenue through their city guides.

Under the terms of TMCS's agreements with its media company partners, TMCS
has very limited control over the amount of time and financial resources that a
partner devotes to the launch of a city guide or over the day-to-day operations
and management of the city guide, including the marketing and sale of business
Web sites to potential business customers. For example, one of TMCS's partners
did not launch a city guide in accordance with TMCS's initial expectations,
thereby delaying revenues subject to royalty payments payable to TMCS.

Some of TMCS's agreements also grant exclusivity in certain territories.
There can be no assurance that TMCS's partners that are in the process of
developing new city guides or future partners will launch their sites in a
timely manner, or at all, or that if launched, such sites will generate revenues
consistent with TMCS's expectations. Furthermore, TMCS is unable to accurately
forecast its revenues to be derived from these agreements with the partners. The
exclusivity provisions in some of TMCS's agreements also place certain
limitations on its ability to license intellectual property to other partners.
There also can be no assurance that TMCS will successfully enter into
partnerships with media companies in additional cities with respect to the
CitySearch service. In addition, some of TMCS's agreements with its media
company partners may be terminated for failure to meet performance criteria. Any
failure by one of TMCS's proposed partner-led city guides to launch in a timely
manner or by one of TMCS's existing partner-led city guides to generate
sufficient revenues, or a failure by TMCS to enter into or to renew agreements
with media company partners on terms favorable to it or early termination of
certain existing agreements could have a material adverse effect on its
business, financial condition and results of operations.

TMCS has entered into a license and services agreement with Classified
Ventures, pursuant to which TMCS licenses elements of its technology and
business systems to Classified Ventures and provides services in automotive and
real estate classified advertising categories. TMCS receives significant
revenues from licensing and service fees under this agreement. Under this
agreement, TMCS is restricted from entering into certain classified advertising
markets and from licensing its technology and business systems to competitors of
Classified Ventures. In addition, this agreement may be terminated by the
parties prior to the period that the shares of Class B Common Stock are issued
in connection with the Web Media merger. TMCS's failure to meet certain
milestones under this agreement, early termination of this agreement or TMCS's
inability to compete with Classified Ventures or to license technology to
competitors of Classified Ventures may have a material adverse effect on TMCS's
business, financial condition and results of operations.

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In TMCS's owned and operated markets, TMCS has entered into co-promotion or
distribution agreements with a number of television, radio, print media and
online companies. Some of these agreements are of a short duration and there can
be no assurance that TMCS's co-promotion or distribution partners with respect
to the CitySearch business will not terminate their agreements with TMCS or that
TMCS will secure additional co-promotion or distribution partners in the future
which could have a material adverse effect on its business, financial condition
and results of operations.

TMCS's Ticketmaster Online Service Also Relies On Strategic Relationships

TMCS's Ticketmaster Online service is to an extent dependent on its and
Ticketmaster Corp.'s relationships with certain strategic partners relating to
the sharing of certain Ticketmaster Online Web site and user links. TMCS hopes
to derive significant benefits, including increased revenues and consumer
awareness, from these relationships. The arrangements also include, in certain
cases, non-competition provisions that restrict TMCS's ability to engage in
similar activities on its own or with other partners. There can be no assurance
that these relationships will continue, that the relationships will be
successful in any respect or that TMCS will be able to find suitable additional
or replacement strategic partners. The failure of these relationships could have
a material adverse effect on TMCS's business, financial condition and results of
operations.

A Shortage of Trained Sales Personnel Would Limit TMCS's Ability To Sell
Its Services

TMCS currently derives and, for the foreseeable future, intends to derive a
substantial portion of its revenues from sales of business Web sites to local
businesses in markets in which it owns and operates CitySearch city guides. TMCS
depends on its direct sales force to sell business Web sites in these markets.
The creation of new revenue from CitySearch's city guide service and TMCS's
roll- out in additional cities requires the services of a highly trained sales
force working directly for TMCS. Accordingly, a shortage in the number of
trained salespeople could limit TMCS's ability to sell business Web sites as
TMCS rolls out its service in new cities or to maintain or increase TMCS's
number of business customers in cities in which it already operates. TMCS has in
the past and expects in the future to experience a high rate of turnover in its
direct sales force. There can be no assurance that turnover will not increase in
the future or have a material adverse effect on TMCS's sales, which could have a
material adverse effect on TMCS's business, financial condition and results of
operations.

In addition, TMCS currently derives a portion of its Ticketmaster Online
revenues from the sale of banner advertising and sponsorships. A shortage in the
number of trained salespeople could limit TMCS's ability to sell additional
banner advertising or sponsorships or renew existing sponsorship or advertising
relationships, which could have a material adverse effect on its business,
financial condition and results of operations.

TMCS Depends On Key Personnel And Needs To Hire Additional Qualified
Personnel

TMCS's success depends to a significant degree upon the continued
contributions of its executive management team, including Charles Conn, its
Chief Executive Officer. The loss of the services of Mr. Conn or other members
of TMCS's management team could have a material adverse effect on TMCS's
business, financial condition and results of operations. In addition, the
Ticketmaster Online service has been managed historically by the management of
Ticketmaster Corp. TMCS's success will depend upon a successful completion of
the transition of the Ticketmaster Online management responsibility to TMCS's
senior management team.

TMCS's employees, including its senior officers, may voluntarily terminate
their employment with us at any time, and competition for qualified employees is
intense. TMCS's success also depends upon its ability

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to attract and retain additional highly qualified management, technical and
sales and marketing personnel. The process of locating and hiring such personnel
with the combination of skills and attributes required to carry out TMCS's
strategy is often lengthy. The loss of the services of key personnel or the
inability to attract additional qualified personnel could have a material
adverse effect on TMCS's business, financial condition and results of
operations.

TMCS Must Maintain and Promote Its Brands To Be Successful

TMCS believes that maintaining and promoting the CitySearch brand and, to a
lesser extent, the CityAuction and Match.com brands, are critical to TMCS's
efforts to attract consumers and business customers to its sites. TMCS also
believes that the importance of brand recognition will increase due to the
growing number of Internet sites and relatively low barriers to entry to
providing Internet content. Promotion of TMCS's brands will depend largely on
its success and the success of its media company partners in providing high
quality Internet content.

Under the terms of TMCS's agreements with media company partners, TMCS has
very limited control over the content provided on the CitySearch partners'
sites. If consumers and business customers do not perceive the content of TMCS's
or its partners' existing sites to be of high quality, TMCS will be unsuccessful
in promoting and maintaining the CitySearch brand. Furthermore, not all of
TMCS's partners promote the CitySearch brand on their services with a high level
of prominence. In addition, users accessing partner-led market sites that
contain different interfaces from TMCS's owned and operated sites may be
confused by the differences in interface or navigation, and this confusion may
inhibit TMCS's ability to develop its brand and network.

In order to attract and retain consumers and business customers, and to
promote TMCS's brands in response to competitive pressures, TMCS may find it
necessary to increase its budget for content or otherwise to increase
substantially TMCS's financial commitment to creating and maintaining a distinct
brand loyalty among consumers and business customers. If either TMCS or its
media company partners are unable to provide high quality content or otherwise
fail to promote and maintain TMCS's brands or if TMCS incurs excessive expenses
in an attempt to improve its content or promote and maintain TMCS's brands, its
business, financial condition and results of operations could be materially and
adversely affected.

TMCS Must Rapidly Rollout Its CitySearch Service In Additional Cities In
The United States And Internationally To Be Successful

TMCS's future success will depend to a significant extent on its ability,
on its own and with partners, to rapidly roll out the CitySearch local city
guide service in additional cities in the United States and internationally. As
of June 30, 1999, TMCS has launched its local city guide service in 31
metropolitan areas and intends to expand its service in additional cities in the
United States and internationally. There can be no assurance that TMCS will be
able to launch its CitySearch service in additional markets in a cost-effective
or timely manner or in accordance with its planned schedule, or that any newly
launched service will achieve market acceptance. Any new service that is not
favorably received by local businesses or consumers could damage TMCS's
reputation or the CitySearch brand.

Launching the CitySearch service or future services offered by TMCS will
also require significant additional expenses and will strain TMCS's management,
financial and operational resources. In particular, the launch of the CitySearch
service in additional cities will require TMCS to expand and upgrade its
technology infrastructure and business systems, including its enterprise
management system and its business Web site production system. TMCS is in the
process of launching a new version of the software underlying the CitySearch
service. There can be no assurance that this new version will function as
intended, and any failure of the software could have a material adverse effect
on TMCS's business, financial condition and

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results of operations. There also can be no assurance that the existing
technology used with respect to TMCS's Ticketmaster Online service will be able
to accommodate increased volumes of traffic and transactions that may arise in
the future. Expansion of TMCS's technology capabilities could result in
significant expenses. Moreover, the strain placed on TMCS's resources by
simultaneous launches of the CitySearch service in multiple cities and TMCS's
efforts to integrate CitySearch's local content with the event-specific content
and transactional capabilities of Ticketmaster Online and the product specific
content of the CityAuction and Match.com acquisitions may adversely affect the
roll-out schedule or quality of the service in a particular city. TMCS's failure
to launch the CitySearch service in new markets in a timely and cost effective
manner in accordance with TMCS's planned schedule or the lack of market
acceptance of new services would have a material adverse effect on its business,
financial condition and results of operations.

TMCS's Fixed Price Contracts Expose It To Cost Overruns And Other Risks

The services TMCS offers to CitySearch business customers typically consist
of the design, implementation, hosting and maintenance of customized Web sites,
for which the customers are billed on a fixed-price basis, consisting of an up-
front fee and monthly fees. TMCS's failure to estimate accurately the resources
and time required for providing such services, to manage client expectations
effectively regarding the scope of services to be delivered for the estimated
fees or to complete the services within budget, on time and to clients'
satisfaction would expose TMCS to risks associated with cost overruns and
customer dissatisfaction.

The Markets In Which TMCS Sells Its Services Are Intensely Competitive And
Its Business Would Be Adversely Affected If It Fails To Grow Its Market
Share Or Otherwise Fails To Successfully Compete In These Markets

The markets for local interactive content and services, the selling of live
event tickets and related merchandise and TMCS's other services are highly
competitive and diverse. CitySearch's primary competitors include Digital City,
Inc., a company wholly owned by America Online, Inc. and Tribune Company,
Microsoft Corporation (Sidewalk) and InfoSpace. CitySearch also competes with
numerous search engines and other site aggregation companies, media,
telecommunications and cable companies, Internet service providers and niche
competitors which focus on a specific category or geography and compete with
specific content offerings provided by TMCS. Furthermore, additional major
media and other companies with financial and other resources greater than TMCS's
may introduce new Internet products addressing the local interactive content and
service market in the future.

Ticketmaster Corp.'s and Ticketmaster Online's online services compete with
event facilities and promoters that handle their own ticket sales and
distribution through online and other distribution channels, live event
automated ticketing companies with Web sites which may or may not currently
offer online transactional capabilities and certain Web-based live event
ticketing companies which only conduct business online. In certain specific
geographic regions, including certain of the local markets in which CitySearch
provides or intends to provide TMCS's local city guide service, one or more of
Ticketmaster Corp.'s and TMCS's Ticketmaster Online service's competitors may
serve as the primary ticketing service in the region. TMCS believes that its
Ticketmaster Online service will experience significant difficulty in
establishing a significant online presence in such regions and, as a result, any
local city guide for such a region may be unable to provide significant
ticketing capabilities. In addition, there can be no assurance that one or more
of these regional automated ticketing companies will not expand into other
regions or nationally, which could have a material adverse effect on TMCS's
business, financial condition and results of operations. Furthermore,
substantially all of the tickets sold through TMCS's Ticketmaster Online Web
site are also sold by Ticketmaster Corp. by telephone and through independent
retail outlets. These sales by Ticketmaster Corp. could have a material adverse
effect on TMCS's online sales, and as a result, on its business, financial
condition and results of operations.

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The online auction market is highly competitive. Currently, eBay.com
dominates the online auction market, both in terms of number of users and value
of goods auctioned. Search engine companies and other site aggregation companies
also offer auction functionality to Web users. The online personals market is
highly competitive and these services also compete directly with off line
personal services such as weekly newspapers, magazines and direct mail and video
dating services.

TMCS believes that the principal competitive factors for all its services
include:

. depth, quality and comprehensiveness of content;

. ease of use;

. distribution;

. search capability; and

. brand recognition.

Many of TMCS's competitors have greater financial and marketing resources
than it does and may have significant competitive advantages through other lines
of business and existing business relationships. There can be no assurance that
TMCS will be able to successfully compete against its current or future
competitors or that competition will not have a material adverse effect on its
business, financial condition and results of operations. Furthermore, as a
strategic response to changes in the competitive environment, TMCS may make
certain pricing, servicing or marketing decisions or enter into acquisitions or
new ventures that could have a material adverse effect on its business,
financial condition and results of operations.

TMCS Needs To Successfully Introduce New Services To Grow Its Business

TMCS expects to introduce new and expanded services in order to generate
additional revenues, attract more businesses and consumers, and respond to
competition. For example, TMCS recently introduced business Web sites containing
new and enhanced functionality for its CitySearch business customers. TMCS also
offers services facilitating the purchase of goods by consumers from
CitySearch's business customers or others. A key element of TMCS's strategy is
to technologically enable its city guides so that consumers and its business
customers can buy and sell goods and services online through its city guides.
TMCS has limited experience in building e-commerce functionality with its city
guides. There can be no assurance that TMCS will be able to offer e-commerce or
other new services in a cost-effective or timely manner or that its efforts
would be successful. Furthermore, any new service launched by TMCS that is not
favorably received by consumers could damage TMCS's reputation or its brand
names. Expansion of TMCS's services in this manner would also require
significant additional expenses and development and may strain its management,
financial and operational resources. If TMCS does not generate revenues from
expanded services sufficient to offset those costs, its business would suffer.

TMCS Has Recently Experienced And Is Currently Experiencing Rapid Growth
And Its Inability To Manage This Growth Could Harm Its Business

TMCS's businesses have grown rapidly in recent periods. The growth of these
businesses and expansion of TMCS's consumer bases have placed a significant
strain on its management and operations. The growth of TMCS's businesses has
resulted, and is expected in the future to result, in the growth in the number
of its employees, in the establishment of offices in disparate regions of the
country and in increased responsibility for both existing and new management
personnel. In addition, this growth has and will put additional pressure on
existing operational, financial and management information systems. TMCS's
success

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will depend to a significant extent on the ability of its executive officers and
other members of senior management to operate effectively, both independently
and as a group. To manage TMCS's growth, it must continue to implement and
improve operational, financial and management information systems and hire and
train additional qualified personnel, including sales and marketing staff. There
can be no assurance that TMCS will be able to manage recent or any future
expansions successfully, and any failure by it to do so could have a material
adverse effect on its business, financial condition and results of operations.
There also can be no assurance that TMCS's CitySearch, CityAuction, Match.com or
Ticketmaster Online services will be able to sustain the rate of expansion that
each has experienced in the past.

TMCS's Services Are Substantially Dependent On TMCS's Ability To Continue
To Develop Compelling Content

TMCS's success depends, in part, upon its ability to deliver compelling
interactive content on its CitySearch service, such as local events information,
recreation, business, shopping, professional services and news/sports/weather
and online ticketing services. TMCS needs to develop this content in order to
attract consumers with demographic characteristics valuable to CitySearch's
business customers. TMCS's success also depends on its ability to develop and
integrate compelling content with existing ticketing capabilities on its
Ticketmaster Online Web site.

There can be no assurance that TMCS will be successful in developing new
content and services or enhancing CitySearch's existing local city guide
service, or the Ticketmaster Online, CityAuction or Match.com services on a
timely basis, or that such content and services will effectively address
consumer requirements and achieve market acceptance. If TMCS, for technological
or other reasons, is unable to develop and enhance its local interactive content
and services in a manner compatible with emerging industry standards and that
allows TMCS to attract, retain and expand a consumer base possessing demographic
characteristics attractive to CitySearch's business customers, Ticketmaster
Online's advertisers and sponsors, and CityAuction's and Match.com's users,
TMCS's business, financial condition and results of operations would be
materially and adversely affected.

TMCS's Business Depends On The Increased Usage Of And The Stability Of The
Internet

The usage of the Internet for services such as those offered by TMCS will
depend in significant part on continued rapid growth in the number of households
and commercial, educational and government institutions with access to the
Internet, in the level of usage by individuals and in the number and quality of
products and services designed for use on the Internet. Because usage of the
Internet as a source for information, products and services is a relatively
recent phenomenon, it is difficult to predict whether the number of users drawn
to the Internet will continue to increase and whether any significant market for
usage of the Internet for such purposes will continue to develop and expand.
There can be no assurance that Internet usage patterns will not decline as the
novelty of the medium recedes or that the quality of products and services
offered online will improve sufficiently to continue to support user interest.
If the Internet fails to stimulate user interest and be accessible to a broad
audience at moderate costs, the markets for TMCS's services would be
jeopardized.

Moreover, issues regarding the stability of the Internet's infrastructure
remain unresolved. The rapid rise in the number of Internet users and increased
transmission of audio, video, graphical and other multimedia content over the
Internet has placed increasing strains on the Internet's communications and
transmission infrastructures. Continuation of such trends could lead to
significant deterioration in transmission speeds and reliability of the Internet
and could reduce the usage of the Internet by businesses and individuals. In
addition, to the extent that the Internet continues to experience significant
growth in the number of users and level of use without corresponding increases
and improvements in the Internet infrastructure, there can be no assurance that
the Internet will be able to support the demands placed upon it

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by such continued growth. If the Internet fails to support an increasing number
of users due to inadequate infrastructure or otherwise, the development of the
Internet as a viable source of local interactive content and services would be
severely limited, which could materially and adversely affect the acceptance of
TMCS's services.

TMCS's Plans To Expand Internationally Will Require It To Develop Localized
Versions Of Its Sites And Address Other Risks Of Operating Internationally

A key component of TMCS's strategy is to continue to expand its services
into international markets. TMCS expects to expend significant financial and
management resources to operate overseas and, with respect to the CitySearch
service, create localized user interfaces through the launch of additional
partner-led markets. TMCS believes Ticketmaster Corp. intends to continue to
expand its operations outside of the United States, which will require
additional resources from TMCS's Ticketmaster Online service to the extent it
distributes tickets online in those markets. If the revenues generated by these
international operations are insufficient to offset the expense of establishing
and maintaining such operations, TMCS's business, financial condition and
results of operations will be materially and adversely affected.

To date, TMCS has limited experience in developing localized versions of
its CitySearch online sites and marketing and distributing its products and
services internationally. There can be no assurance that TMCS or its partners
will be able to successfully market or sell TMCS's services in these
international markets. In addition to the uncertainty as to TMCS's ability to
expand its international presence, there are certain risks inherent in
conducting business on an international level, such as:

. unexpected changes in regulatory requirements, tariffs and other trade
barriers;

. difficulties in staffing and managing foreign operations;

. political instability;

. currency rate fluctuations; and

. potentially adverse tax consequences.

There can be no assurance that one or more of the foregoing factors will
not have a material adverse effect on TMCS's current and future international
operations and, consequently, on its business, financial condition and results
of operations.

TMCS's Business Relies On The Performance Of Its Systems and The
Performance and Availability of Third Party Systems

The satisfactory performance, reliability and availability of TMCS's city
guides, online ticketing services, auction services, Internet personals services
and its network infrastructures are critical to attracting Web users and
maintaining relationships with business customers and consumers. System
interruptions that result in the unavailability of sites or slower response
times for consumers would reduce the number of business Web sites and
advertisements purchased and reduce the attractiveness of TMCS's CitySearch
local city guides, CityAuction and Match.com services, and Ticketmaster Online's
online services to business customers and consumers. TMCS's services have
experienced system interruptions in the past and TMCS believes that such
interruptions will continue to occur from time to time in the future.

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Any substantial increase in traffic on TMCS's services will also require it
to expand and adapt its network infrastructure. TMCS's inability to add
additional software and hardware to accommodate increased traffic on its
services may cause unanticipated system disruptions and result in slower
response times.

In addition, TMCS currently depends on a limited number of suppliers for
certain key technologies used to roll out and manage its services, including
Exodus Communications, Inc., which hosts the CitySearch city guides, and PSINet,
which hosts the Ticketmaster Online service. There can be no assurance that TMCS
will be able to expand its network infrastructure on a timely basis to meet
increased demand or that key technology suppliers will continue to provide TMCS
with products and services that meet its requirements. Any increase in system
interruptions or slower response times resulting from the foregoing factors
could have a material adverse effect on TMCS's business, financial condition and
results of operations.

TMCS's operations are vulnerable to interruption by fire, earthquake, power
loss, telecommunications failure and other events beyond its control.
Substantially all of its server equipment is currently located in California in
areas that are susceptible to earthquakes. TMCS's business interruption
insurance may not be sufficient to compensate it for losses that may occur and
would not compensate it for the loss of consumer goodwill due to disruption of
service.

In addition, TMCS's Ticketmaster Online operations are substantially
dependent upon services and infrastructure provided by Ticketmaster Corp. that
enable Ticketmaster Online to access information on ticket and merchandise
inventory, events and consumers maintained by Ticketmaster Corp. In addition,
Ticketmaster Corp. has agreed to provide all order processing, payment
processing and fulfillment services for tickets to live events and merchandise
ordered through Ticketmaster Online pursuant to the terms and subject to the
limitations of TMCS's license agreement. Any discontinuation or disruption of
these services by Ticketmaster Corp. would be disruptive to the Ticketmaster
Online business and would likely have a material adverse effect on TMCS's
business, financial condition and results of operations.

TMCS uses a custom-developed system for its Ticketmaster Online ticketing
operations and certain aspects of transaction processing. Ticketmaster Online
has experienced temporary system interruptions, which may continue to occur in
the future from time to time. Any substantial increase in the volume of traffic
on TMCS's online sites or the number of tickets purchased by consumers may
require it to expand and upgrade further Ticketmaster Online technology,
transaction- processing systems and network infrastructure.

The Ticketmaster Online service has experienced, and TMCS expects to
continue to experience, temporary capacity constraints due to sharply increased
traffic for certain events, which may cause unanticipated system disruptions,
slower response times and degradation in levels of service. In addition, to the
extent TMCS experiences delays in processing ticketing confirmations and
reporting accurate financial information, its operations would be adversely
affected. There can be no assurance that TMCS's Ticketmaster Online service's
transaction-processing systems and network infrastructure will be able to
accommodate such increases in traffic in the future, or that TMCS will, in
general, be able to accurately project the rate or timing of such increases or
upgrade its systems and infrastructure to accommodate future traffic levels on
its online sites. In addition, there can be no assurance that TMCS will be able
to effectively upgrade and expand its Ticketmaster Online transaction-processing
systems in a timely manner or to successfully integrate any newly developed or
purchased components of its existing systems. Any inability to do so could have
a material adverse effect on TMCS's business, financial condition and results of
operations.

Security Breaches Of TMCS's Network Systems Would Significantly Adversely
Affect Its Business

A fundamental requirement for online commerce and communications is the
secure transmission of confidential information over public networks. TMCS
relies on encryption and authentication technology

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licensed from third parties to provide the security and authentication necessary
to effect secure transmission of confidential information, such as consumers
credit card numbers. In addition, TMCS maintains an extensive confidential
database of consumer profiles and transaction information. There can be no
assurance that advances in computer capabilities, new discoveries in the field
of cryptography, or other events or developments will not result in a compromise
or breach of the methods used by us to protect consumer transaction and personal
data contained in TMCS's database. If any such compromise of TMCS's security
were to occur, it could have a material adverse effect on its reputation and on
its business, operating results and financial condition. A party who is able to
circumvent TMCS's security measures could misappropriate proprietary information
or cause interruptions in its operations. TMCS may be required to expend
significant capital and other resources to protect against security breaches or
to alleviate problems caused by breaches.

Concerns over the security of transactions conducted on the Internet and
commercial online services and the privacy of users may also inhibit the growth
of the Web and online services as a means of conducting commercial transactions.
To the extent that TMCS's activities or those of third-party contractors involve
the storage and transmission of proprietary information, such as credit card
numbers or other personal information, security breaches could expose us to a
risk of loss or litigation and possible liability. In addition, TMCS may suffer
losses as a result of orders placed with fraudulent credit card data, even
though the consumer's payment for such orders has been authorized by the
associated financial institution. Under current credit card practices, a
merchant is liable for fraudulent credit card transactions where, as is the case
with the transactions processed by TMCS, no cardholder signature is obtained.
There can be no assurance that TMCS will not suffer significant losses as a
result of fraudulent use of credit card data in the future, which could have a
material adverse effect on TMCS's business, financial condition and results of
operations.

TMCS's Business Will Suffer If It Is Unable To Adapt To The Rapid
Technological Changes That Characterize The Internet And The Online
Commerce Industry

The Internet and the online commerce industry are characterized by the
following:

. rapid technological change;

. changes in user and customer requirements and preferences;

. frequent new product and service introductions embodying new technologies;
and

. the emergence of new industry standards and practices that could render
TMCS's existing online sites and proprietary technology and systems
obsolete.

The emerging nature of these products and services and their rapid
evolution will require that TMCS continually improve the performance, features
and reliability of its online services, particularly in response to competitive
offerings. TMCS's success will depend, in part, upon its ability:

. to enhance its existing services;

. to develop new services and technologies that address the increasingly
sophisticated and varied needs of its prospective customers; and

. to respond to technological advances and emerging industry standards and
practices on a cost-effective and timely basis.

The development of online sites and other proprietary technology entails
significant technical and business risks and requires substantial expenditures
and lead time. There can be no assurance that TMCS will

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successfully use new technologies effectively or adapt its online sites,
proprietary technology and transaction-processing systems to customer
requirements or emerging industry standards. If TMCS is unable, for technical,
legal, financial or other reasons, to adapt in a timely manner in response to
changing market conditions or customer requirements, its business, operating
results and financial condition could be materially adversely affected.

If TMCS's Internal Systems, Or The Internal Systems Of Its Suppliers, Are
Not Year 2000 Compliant, TMCS's Business Could Be Seriously Disrupted

The widespread use of computer programs that rely on two-digit dates to
perform computation and decision-making functions may cause computer systems,
including systems and software used by TMCS and its Internet services, to
malfunction prior to or in the year 2000 and lead to significant business delays
and disruptions in its business and operations in the United States and
internationally. TMCS has developed a plan to minimize the impact of this year
2000 issue. Pursuant to the plan, TMCS has established a Year 2000 Committee
consisting of senior managers from relevant functional areas. The Year 2000
Committee has reviewed all areas of TMCS's business and operations that may be
affected and has assigned responsibility for each area to individuals
knowledgeable about their respective areas. TMCS concluded its initial
assessment in the fourth quarter of 1998 and has commenced the implementation of
remediation necessary to achieve compliance. TMCS estimates that the dollar cost
of year 2000 compliance is approximately $300,000. However, TMCS has not yet
completed its comprehensive assessment of remediation costs and actual costs
could materially differ.

Several systems provided by third parties are required for the operation of
TMCS's services, any of which may contain software code that is not year 2000
compliant. These systems include:

. server software used to operate its network servers;

. software controlling routers;

. switches and other components of its data network;

. disk management software used to control its data disk arrays;

. firewall, security, monitoring and back-up software used by TMCS; and

. desktop PC applications software.

In most cases, TMCS employs widely available software applications and
other products from leading third party vendors, and expects that such vendors
will provide any required upgrades or modifications in a timely fashion.
However, any failure of third party suppliers to provide year 2000 compliant
versions of the products used by TMCS could result in a temporary disruption of
TMCS's services or otherwise disrupt its operations. In addition, TMCS intends
to provide its partners which host their own city guides using software that
TMCS has provided to them with software upgrades to make their hosted city
guides year 2000 compliant. In addition, TMCS's partners may operate their city
guide sites in proximity to other applications that may not be year 2000
compliant. While TMCS intends to assign an individual to coordinate each
partner's compliance efforts to ensure uninterrupted operations, its has limited
ability to influence decisions by its partners. TMCS's partner's inability or
unwillingness to timely install its year 2000 upgrades to their hosted city
guide sites or noncompliant systems that adjoin partners' city guide
applications could result in interruption or disruption of its city guide
service, which in turn could reduce royalties or other amounts due to TMCS.
There can be no assurance that TMCS, its third party suppliers or its partners
will be year 2000 compliant at the end of the millennium. Failure to achieve
compliance could result in complete

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failure or inaccessibility of TMCS's or its partners' services, and could
adversely affect TMCS's business, financial condition and results of operations.

Year 2000 compliance problems could also undermine the general
infrastructure necessary to support TMCS's operations. For instance, TMCS
depends on third party Internet service providers for connectivity to the
Internet. Any interruption of service from TMCS's Internet service providers
could result in a temporary interruption of TMCS's services. Moreover, the
effects of year 2000 compliance deficiencies on the integrity and stability of
the Internet are difficult to predict. A significant disruption in the ability
of businesses and consumers to reliably access the Internet or portions of it
would have an adverse effect on demand for TMCS's services and adversely impact
its business, financial condition and results of operations.

Information Displayed On Or Accessed From TMCS's Web Sites May Subject It
To Liability

TMCS may face potential liability for defamation, negligence, copyright,
patent or trademark infringement and other claims based on the nature and
content of the materials that appear on the CitySearch, CityAuction, Match.com
or Ticketmaster Online sites or on sites operated by TMCS's partners. These
claims have been brought, and sometimes successfully pressed, against online
services. Although TMCS intends to maintain its general liability insurance at
current levels, its insurance may not cover claims of these types or may not be
adequate to indemnify TMCS for any liability that may be imposed. Any imposition
of liability, particularly liability that is not covered by insurance or is in
excess of insurance coverage, could have a material adverse effect on TMCS's
reputation and its business, financial conditions and results of operations.

TMCS's Business Will Be Adversely Affected If It Is Unable To Protect
TMCS's Intellectual Property Rights From Third Party Challenges Or If It Is
Subject To Litigation

TMCS has licensed in the past, and expect to license in the future, certain
proprietary rights, such as trademarks or copyrighted material, to third
parties. In addition, TMCS has licensed in the past, and expects that it may
license in the future, certain content, including trademarks and copyrighted
material, from third parties. While TMCS attempts to ensure that the quality of
its brands is maintained by such licensees, there can be no assurance that such
licensees will not take actions that might materially adversely affect the value
of its proprietary rights or reputation, which could have a material adverse
effect on TMCS's business, financial condition and results of operations.

There can be no assurance that the steps taken by TMCS to protect its
proprietary rights will be adequate or that third parties will not infringe or
misappropriate its copyrights, trademarks, trade dress and similar proprietary
rights. In addition, there can be no assurance that other parties will not
assert infringement claims, including patent infringement claims, against TMCS.

TMCS licenses the trademark "CitySearch" from a third party, and there can
be no assurance that TMCS will be able to continue to license the trademark on
terms acceptable to TMCS.

TMCS licenses the trademark "Ticketmaster" and related trademarks from
Ticketmaster Corp. pursuant to TMCS's license agreement with Ticketmaster Corp.
TMCS may be subject to legal proceedings

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and claims of alleged infringement of the trademarks and other intellectual
property rights of third parties by TMCS and its licensees. Such claims, even if
not meritorious, could result in the expenditure of significant financial and
managerial resources which could result in a material adverse effect on TMCS's
business, financial condition and results of operations. TMCS is dependent upon
Ticketmaster Corp. to maintain and assert its rights to the trademarks and
defend infringement claims, if any.

If TMCS Fails To Comply With The Laws And Regulations That Govern Its
Services, Its Business Could Be Adversely Affected

TMCS is subject to regulations applicable to businesses generally and laws
or regulations directly applicable to access to online commerce. Although there
are currently few laws and regulations directly applicable to the Internet and
commercial online services, it is possible that a number of laws and regulations
may be adopted with respect to the Internet or commercial online services
covering issues such as:

. user privacy;

. pricing;

. content; taxation;

. copyrights;

. distribution;

. antitrust; and

. characteristics and quality of products and services.

Furthermore, the growth and development of the market for online commerce
may prompt calls for more stringent consumer protection laws that may impose
additional burdens on those companies conducting business online. The adoption
of any additional laws or regulations may decrease the growth of the Internet or
commercial online services, which could, in turn, decrease the demand for TMCS's
products and services and increase its cost of doing business, or otherwise have
a material adverse effect on its business, financial condition and results of
operations. Moreover, the applicability to the Internet and commercial online
services of existing laws in various jurisdictions governing issues such as
property ownership, sales and other taxes, libel and personal privacy is
uncertain and may take years to resolve. For example, tax authorities in a
number of states are currently reviewing the appropriate tax treatment of
companies engaged in online commerce, and new state tax regulations may subject
TMCS to additional state sales and income taxes. Any such new legislation or
regulation, the application of laws and regulations from jurisdictions whose
laws do not currently apply to TMCS's business, or the application of existing
laws and regulations to the Internet and commercial online services could have a
material adverse effect on TMCS's business, financial condition and results of
operations.

TMCS's Ticketmaster Online service is regulated by certain state and local
regulations, including, but not limited to, a law in Georgia that establishes
maximum convenience charges on tickets for certain sporting events. Other
legislation that could affect the way TMCS's Ticketmaster Online service does
business, including bills that would regulate the amount of convenience charges
and handling charges, are introduced from time to time in federal, state and
local legislative bodies. TMCS is unable to predict whether any such

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bills will be adopted and, if so, whether such legislation would have a material
effect on its business, financial condition and results of operations.

TMCS And Ticketmaster Corp. May Be Subject To Governmental Investigations
And Litigations

From time to time, federal, state and local authorities have conducted
investigations or inquiries with respect to Ticketmaster Corp.'s compliance with
antitrust, unfair business practice and other laws. In 1994, the Antitrust
Division of the Department of Justice commenced an investigation, which was
concluded in 1995 with no enforcement action being taken against Ticketmaster
Corp. Ticketmaster recently submitted responses to inquiries of the California
Department of Justice and the PTC regarding the practice and policies of
Ticketmaster, in selling subscriptions to Entertainment Weekly and Sports
------------- ------ -------
Illustrated. Ticketmaster believes it has not taken any action which is
- -----------
improper. In addition, TMCS is a mmercial disputes and inary course of business.
ertain, TMCS does not adverse effect on its business, In addition, TMCS is a
party to various legal proceedings involving commercial disputes and
intellectual property issues arising in the ordinary course of business. While
the outcomes of these proceedings are uncertain, TMCS does not currently expect
that they will have a material adverse effect on its business, financial
condition or results of operations.
During 1994, Ticketmaster Corp. was named as a defendant in 16 federal
class action lawsuits filed in United States District Courts purportedly on
behalf of consumers who were alleged to have purchased tickets to various events
through Ticketmaster Corp. These lawsuits alleged that Ticketmaster Corp.'s
activities violated antitrust laws. On December 7, 1994, the Judicial Panel on
Multidistrict Litigation transferred all of the lawsuits to the United States
District Court for the Eastern District of Missouri for coordinated and
consolidated pretrial proceedings. After an amended and consolidated complaint
was filed by the plaintiffs, Ticketmaster Corp. filed a motion to dismiss and,
on May 31, 1996, the District Court granted that motion ruling that the
plaintiffs had failed to state a claim upon which relief could be granted. On
April 10, 1998, the United States Court of Appeals for the Eighth Circuit issued
an opinion affirming the district court's ruling that the plaintiffs lack
standing to pursue their claims for damages under the antitrust laws and held
that the plaintiffs' status as indirect purchasers of Ticketmaster Corp.'s
services did not bar them from seeking equitable relief against Ticketmaster
Corp. Discovery on the plaintiffs' remanded claim for equitable relief is
ongoing in the District Court and a trial date of July 17, 2000 has been set. On
July 9, 1998, the plaintiffs filed a petition for writ of certiorari to the
United States Supreme Court seeking review of the decision dismissing their
damage claims. Plaintiff's petition for writ of certiorari in the United States
Supreme Court was denied on January 19, 1999.

Ticketmaster Corp. has stated that the court's affirmance of the decision
prohibiting plaintiffs from obtaining monetary damages against Ticketmaster
Corp. eliminates the substantial portion of plaintiffs' claims. With respect to
injunctive relief, the Antitrust Division of the United States Department of
Justice had previously investigated Ticketmaster Corp. for in excess of 15
months and closed its investigation with no suggestion of any form of injunctive
relief or modification of the manner in which Ticketmaster Corp. does business.

In March 1995, MovieFone, Inc. and The Teleticketing Company, L.P. filed a
complaint against Ticketmaster Corp. in the United States District Court for the
Southern District of New York. Plaintiffs allege that they are in the business
of providing movie information and teleticketing services, and that they are
parties to a contract with Pacer Cats Corporation, a wholly owned subsidiary of
Wembley plc, or the Pacer Cats, to provide teleticketing services to movie
theaters. Plaintiffs also allege that, together with Pacer Cats, they had
planned to begin selling tickets to live entertainment events, and that
Ticketmaster Corp., by its conduct, frustrated and prevented plaintiffs' ability
to do so. Plaintiffs further allege that Ticketmaster Corp. has interfered with
and caused Pacer Cats to breach its contract with plaintiffs. The complaint
asserts that Ticketmaster Corp.'s actions violate Section 7 of the Clayton Act
and Sections 1 and 2 of the Sherman Act, and that Ticketmaster Corp. tortiously
interfered with contractual and prospective business relationships and seeks
monetary and injunctive relief based on such allegations. Ticketmaster Corp.
filed a motion to dismiss. The court heard oral argument on September 26, 1995.
In March 1997, prior to the rendering of any decision by

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the court on Ticketmaster Corp.'s motion to dismiss, Ticketmaster Corp. received
an amended complaint in which the plaintiffs assert essentially the same claims
as in the prior complaint but have added a RICO claim and tort claims.
Ticketmaster Corp. filed a motion to dismiss the amended complaint in April
1997, which is still pending. On August 30, 1999, District Court Judge Stein
recused himself from the case. Some of the claims in this litigation are similar
to claims that were the subject of an arbitration award in which MovieFone was a
claimant and Pacer Cats a respondent. Among other things, the award included
damages from Pacer Cats to MovieFone of approximately $22.75 million before
interest and an injunction against some entities, which may include affiliates
of Ticketmaster Corp., restricting or prohibiting their activity with respect to
aspects of the movie teleticketing business for a specified period of time.
Neither USAi, Ticketmaster Corp., nor any entity owned or controlled by
Ticketmaster Corp., were parties to the arbitration. In May 1998, MovieFone
filed a petition in New York state court to hold an entity affiliated with
Ticketmaster Corp. in contempt of the injunction provision of the arbitration
award on the grounds that such entity is a successor or assignee of, or
otherwise acted in concert with, Pacer Cats. In November 1998, the court ruled
that the Ticketmaster Corp. affiliate is bound by the arbitrators' findings that
it is the successor to Pacer Cats and, as such, liable for breaches committed by
Pacer Cats and subject to the terms of the arbitration award's injunction. The
court further found that the Ticketmaster Corp. affiliate had violated the
injunction and awarded MovieFone $1.38 million for losses it incurred as a
result of such violations. The Ticketmaster Corp. affiliate has filed a notice
of appeal of the court's decision, including to seek reversal of the ruling
regarding successor liability and violations of the injunction. On May 17, 1999,
the Ticketmaster Corp. affiliate posted a bond to stay enforcement of the damage
award for violations of the injunction. Further, on July 9, 1999, the
Ticketmaster Corp. affiliate filed a motion for a declaratory judgment that it
is not in violation of the injunction, by respecting the rights and refusing to
interfere with the operation of American Movie Cinemas, Inc., a third party that
is the owner of certain teleticketing software currently maintained by the
Ticketmaster Corp. affiliate. On July 20, 1999, MovieFone filed a cross-motion
for further contempt sanctions requesting that the court hold the Ticketmaster
Corp. affiliate in contempt and award damages based upon MovieFone's allegation
that such affiliate is in violation of the injunction. The Ticketmaster Corp.
affiliate denies that it is in violation of the injunction. The court originally
set a hearing for September 13, 1999; however, on August 20, 1999, the court
adjourned the hearing without date pending resolution of the appeal.

On July 22, 1999, a class action entitled Anthony Mason v. Ticketmaster
-----------------------------
LLC; Ticketmaster Corporation, Ticketmaster Group, Inc.; Time Consumer Service,
- -------------------------------------------------------------------------------
Inc. and John Does 1-10 was filed in the United States District Court for the
- -----------------------
Northern District of Illinois. The plaintiff alleges that Ticketmaster engages
in unlawful business practices in connection with offering the "Entertainment
Weekly" to consumers. The complaint, which alleges that Ticketmaster's policies
violate 39 U.S.C. 3009 (mailing of unordered merchandise) and Section 2 of the
Illinois Consumer Fraud and Deceptive Business Practices Act, seeks restitution,
damages, punitive damages and attorney's fees. Defendants response to the
complaint is due September 16, 1999. Ticketmaster believes that these
allegations have no merit.

There can be no assurance that TMCS, Ticketmaster Online or Ticketmaster
Corp. or TMCS's affiliates will not become the subject of future governmental
investigations or inquiries or be named as a defendant in claims alleging
violations of federal or state antitrust laws or any other laws. Any adverse
outcome in such litigation, investigation or proceeding against TMCS,
Ticketmaster Online or Ticketmaster Corp. or TMCS's affiliates could limit or
prevent Ticketmaster Online from engaging in its online ticketing business or
subject TMCS to potential damage assessments, all of which could have a material
adverse effect on TMCS's business, financial condition or results of operations.
Regardless of its merit, source or outcome, any such litigation, investigation
or proceeding would at a minimum be costly and could divert the efforts of
TMCS's management and other personnel from productive tasks, which could have a
material adverse effect on TMCS's business, financial condition or results of
operations.

Any Acquisitions That TMCS Undertakes Could Be Difficult To Integrate,
Disrupt Its Business, Dilute Stockholder Value And Adversely Affect Its
Operating Results

As part of TMCS's business strategy, it intends to make acquisitions of or
significant investments in, complementary companies, products or technologies.
For example, TMCS recently completed its acquisitions of CityAuction and
Match.com and anticipates that it will close its acquisition of Web Media.
These acquisitions and any future acquisitions are and will be accompanied by
the risks commonly encountered in acquisitions of companies. These risks
include, among other things:

. the difficulty of assimilating the operations and personnel of the
acquired companies;

. the potential disruption of TMCS's ongoing business;

. the diversion of resources from TMCS's existing businesses, sites and
technologies;

. the inability of management to maximize TMCS's financial and strategic
position through the successful incorporation of the acquired technology
into its products and services;

. additional expense associated with amortization of acquired intangible
assets;

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<PAGE>

. the maintenance of uniform standards, controls, procedures and policies;
and

. the impairment of relationships with employees and customers as a result
of any integration of new management personnel.

There can be no assurance that TMCS would be successful in overcoming these
risks or any other problems encountered with such acquisitions. TMCS's inability
to overcome such risks could dilute its stockholder value and materially
adversely affect its operating results.

TMCS's Business Will Be Adversely Affected If It Does Not Maintain The
Value Of Its Domain Names

TMCS currently holds and licenses various Web domain names relating to its
brand, including the "citysearch.com", "cityauction.com", "match.com" and
"ticketmaster.com" domain names. The acquisition and maintenance of domain names
generally is regulated by governmental agencies and their designees. The
regulation of domain names in the United States and in foreign countries is
subject to change. Governing bodies may establish additional top-level domains,
appoint additional domain name registrars or modify the requirements for holding
domain names. As a result, there can be no assurance that TMCS will be able to
acquire or maintain relevant domain names in all countries in which it conducts
business. Furthermore, the relationship between regulations governing domain
names and laws protecting trademarks and similar proprietary rights is unclear.
TMCS, therefore, may be unable to prevent third parties from acquiring domain
names that are similar to, infringe upon or otherwise decrease the value of
TMCS's trademarks and other proprietary rights. Any such inability could have a
material adverse effect on TMCS's business, financial condition and results of
operations.

TMCS Is Subject To Anti-Takeover Provisions That May Affect The Price Of
Its Stock

TMCS's Restated Certificate of Incorporation and Restated Bylaws and
Delaware General Corporation Law Section 203 contain provisions that may render
more difficult, or have the effect of discouraging, unsolicited takeover bids
from third parties or the removal of TMCS's incumbent management. These
provisions include the right of the holders of the Class A Common Stock to 15
votes per share, versus one vote per share for the holders of Class B Common
Stock and provide that the stockholders may not call special meetings. In
addition, TMCS's Restated Certificate of Incorporation authorizes the Board of
Directors to issue, without stockholder approval, 2,000,000 shares of preferred
stock, par value $.01 per share, with voting, conversion and other rights and
preferences that could adversely affect the voting power or other rights of the
holders of TMCS's Common Stock. Although TMCS has no current plans to issue any
shares of Preferred Stock, the issuance of Preferred Stock or rights to purchase
Preferred Stock could render more difficult, or have the effect of discouraging,
unsolicited takeover bids from third parties or the removal of incumbent
management, or otherwise adversely affect the market price for the Class B
Common Stock. Although such provisions do not have a substantial practical
significance to investors while USAi, through its ownership of Class A Common
Stock, is in a position to effectively control all matters affecting TMCS, such
provisions could have the effect of depriving stockholders of an opportunity to
sell their shares at a premium over prevailing market prices should USAi no
longer be in such control.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This proxy statement/prospectus contains forward-looking statements that
relate to future events or TMCS's and Web Media's future financial performance.
In some cases, you can identify forward-looking statements by terminology such
as "may," "will," "should," "expects," "plans," "anticipates," "believes,"
"estimates," "predicts," "intend," "potential," or "continue" or the negative of
such terms or other comparable

39
<PAGE>

terminology. These statements are only predictions. Although TMCS believes that
the expectations reflected in the forward-looking statements are reasonable, it
cannot guarantee future results, levels of activity, performance or
achievements. TMCS's and Web Media's actual results could differ materially from
those anticipated in these forward-looking statements as a result of various
factors, including the risks outlined under "Risk Factors" and elsewhere in this
proxy statement/prospectus.

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<PAGE>

THE WEB MEDIA MEETING

Date, Time, Place and Purpose of the Meeting

The special meeting of Unitholders of Web Media will be held at 10:00 a.m.,
Central Time, on September __, 1999 at its headquarters located at 5307 East
Mockingbird Lane, Suite 102, Dallas Texas. At the meeting, Unitholders at the
close of business on September __, 1999 will be asked to approve and adopt the
Agreement and Plan of Reorganization, or the merger agreement, and approve the
merger.

The merger agreement is attached to this proxy statement/prospectus as
Annex A. See the sections entitled "The Merger" on page 43 and "The Merger
Agreement" on page A-1.

Record Date and Outstanding Units

Only holders of Web Media's Units at the close of business on the record
date are entitled to notice of and to vote at the meeting. As of the close of
business on the record date, there were 3,000,000 Web Media Units outstanding
and entitled to vote, held of record by three Members. Each member is entitled
to one vote for each Web Media Unit held as of the record date.

Vote Required

The affirmative vote of 56.7% of the membership Units of Web Media
present and entitled to vote at a meeting at which a quorum is present is
required to approve the merger agreement and the merger.

Unit Ownership of Management and Certain Members

On the record date, Member-Managers, executive officers and affiliates of
Web Media as a group beneficially owned 3,000,000 Web Media Units, or 100% of
the outstanding Units on that date. Member-Managers, executive officers and
their affiliates beneficially owning 2,000,000 Web Media Units, or 66 2/3% of
the outstanding Units on the record date, have agreed to vote their Units in
favor of the merger.

Quorum

The required quorum for the transaction of business at the meeting is a
majority of the Membership Units outstanding on the record date.

Abstentions; Broker Non-Votes

Abstentions will be included in determining the number of membership units
present and voting at the meeting and will have the same effect as votes against
the merger. Broker non-votes will have the same effect as votes against the
merger.

Voting of Proxies

The proxy accompanying this proxy statement/prospectus is solicited on
behalf of the Web Media Member-Managers for use at the meeting. You are
requested to complete, date and sign the accompanying proxy and promptly return
it in the enclosed envelope or otherwise mail it to Web Media. All properly
signed proxies received by Web Media prior to the vote at the meeting that are
not revoked will be voted at the meeting according to the instructions indicated
on the proxies or, if no direction is indicated, to approve the merger.

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<PAGE>

How to Revoke your Proxy

You may revoke your proxy at any time before it is exercised at the
meeting, by taking any of the following actions:

. delivering to the secretary of Web Media, by any means, including facsimile,
a written notice, bearing a date later than the date of the proxy, stating
that the proxy is revoked,

. signing and so delivering a proxy relating to the same Units and bearing a
later date prior to the vote at the meeting, or

. attending the meeting and voting in person, although attendance at the
meeting will not, by itself, revoke a proxy.

No Appraisal Rights

Web Media Unitholders are not entitled to dissenters' rights or
appraisal rights with respect to the merger.

Web Media Unitholders should not send any certificates representing
Web Media Units. Following the effective time of the merger, Web Media
Unitholders will receive instructions for the surrender and exchange of such
certificates.

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<PAGE>

THE MERGER

The following is a brief summary of some of the aspects of the merger
that is qualified in its entirety by reference to the Agreement and Plan of
Reorganization, or merger agreement, a copy of which is attached to this proxy
statement/prospectus as Appendix A and is incorporated in this proxy
statement/prospectus by reference. We urge you to read the merger agreement
carefully.

Background of the Merger

During a meeting held in January 1999, the Web Media Member-Managers
met and determined that Web Media should engage Donaldson Lufkin Jenrette
Securities Corp., or DLJ, to assist Web Media in a review of strategic
alternatives, including a sale of all or a part of the business, due to the
facts that (1) the Members wanted liquidity, (2) the industry was experiencing a
trend of consolidation, and (3) the Members believed that the business could
thrive with increased access to capital.

On January 12, 1999, Web Media engaged DLJ to act as its exclusive
financial advisor with respect to the sale, merger or consolidation of, or any
other business combination involving, all or a majority of the assets or the
issued and outstanding Units of Web Media. From February 1999 to March 1999, DLJ
contacted approximately 50 companies or private equity firms to determine the
extent of any interest in Web Media's business.

On March 29, 1999, Web Media received a letter from TMCS requesting
additional information with which to evaluate a transaction involving Web Media.
TMCS executives indicated that based on the preliminary information provided,
TMCS anticipated a favorable bid involving TMCS Class B Common Stock. Web Media
management then met with TMCS executives on April 9, 1999, to present Web
Media's business and operations. On April 20, 1999, Web Media received a letter
from TMCS requesting an exclusive right to negotiate a transaction with Web
Media.

On May 3, 1999, the Member-Managers met to discuss the various proposals
that had been presented to Web Media. The Member-Managers unanimously determined
it to be in the best interests of Web Media to pursue the TMCS proposal due to
the proposed value of the TMCS acquisition and strategic fit of the two
companies. That same day, TMCS and Web Media signed a preliminary term sheet
including a 30-day exclusivity period during which the parties were only
permitted to negotiate a transaction with each other.

On or about May 26, 1999, Web Media and TMCS began drafting definitive
agreements. The next day, the president of Web Media, David Kennedy, and the
Chief Executive Officer of TMCS, Charles Conn, began to negotiate certain issues
raised during the preparation of the definitive agreements. However, the parties
were unable to come to certain agreements. Therefore, the Member-Managers,
during a meeting held on May 27, 1999, voted to decline the TMCS offer. David
Kennedy notified TMCS of Web Media's decision.

On June 1, 1999, the Member-Managers met with representatives from DLJ to
discuss alternative structures for a transaction involving TMCS. After the
Member-Managers had agreed upon a new proposal, DLJ sent a letter to the Chief
Financial Officer of TMCS outlining the new proposal. TMCS agreed to the
structure outlined in the proposal.

On June 5, 1999 the Member-Managers met by telephonic conference call to
discuss the proposal and unanimously voted to invite the TMCS acquisition team
to Dallas to draft the definitive documents and close the acquisition. From June
5, 1999, to June 9, 1999, the parties negotiated the final terms of the
transaction and drafted the final agreements.

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<PAGE>

On June 9, 1999, the Member-Managers met for the purpose of reviewing the
Agreement and Plan of Reorganization pursuant to which TMCS would acquire Web
Media. The Member-Managers voted to pursue the acquisition and execute the
necessary documentation. The next day, the documentation was executed and Web
Media and TMCS issued a press release disclosing the transaction.

General Information about the Merger

When the merger is completed, a wholly-owned subsidiary of TMCS (Sub)
will be merged with and into Web Media, with Web Media as the surviving limited
liability company in the merger. By merging Sub with Web Media, Web Media's
organizational documents will be the organizational documents of the surviving
entity. If the merger agreement is approved and the merger is completed, each
Unit of Web Media outstanding immediately prior to the merger will be
automatically converted into and exchanged for the right to receive shares of
TMCS Class B Common Stock as described below.

Effective Time

TMCS and Web Media anticipate completing the merger as promptly as
possible after the approval of the merger agreement by Web Media Unitholders and
when all of the conditions contained in the merger agreement are satisfied or
waived.

Purchase Price and Exchange of Units

Purchase Price. The aggregate purchase price to be paid by TMCS in
the merger for all outstanding Units of Web Media will be equal to $40,650,000,
provided that accrued but not deferred revenues for calendar year 1999,
determined in accordance with generally accepted accounting principles, equal $9
million. If the accrued revenues are more than $9 million, then the purchase
price shall be $40,650,000 plus an amount equal to $4.065 for each $1 in accrued
revenues above $9 million. If the accrued revenues are less than $9 million,
then the purchase price shall be $40,650,000 minus an amount equal to $4.065 for
each $1 in accrued revenues below $9 million. In no event shall the purchase
price be less than $36,585,000 nor greater than $44,715,000. The final
determination of the purchase price shall be based upon an audit of Web Media's
1999 financial statements to be performed by the independent accounting firm of
Ernst & Young, LLP. TMCS and the Web Media Members have agreed to use their best
efforts and to cooperate fully with the auditors to complete the audit by March
1, 2000. The amount of the Web Media's accrued revenues as set forth in the
audited financial statements shall be final and non-appealable for purposes of
calculating the purchase price.

Purchase Price Payments. The purchase price shall be payable by TMCS
to the Web Media Unitholders in shares of TMCS Class B Common Stock as follows:

. At the closing of the merger, TMCS shall deliver a number of shares of
TMCS Class B Common Stock equal to $30.0 million divided by the Value
of the Class B Common Stock; provided, however, that in no event shall
the total shares of TMCS Class B Common Stock to be delivered at the
closing be more than 1,442,308 shares or less than 961,539 shares. The
Value of the TMCS Class B Common Stock with respect to the payments
due on the closing date and each subsequent payment date as described
below shall be equal to the average closing price per share of TMCS
Class B Common Stock on the Nasdaq National Market (or other national
securities exchange) over the five consecutive trading days ending on
the trading day two days preceding the closing date or the respective
payment date.

. Subsequent installments of the purchase price shall be paid as
follows:

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<PAGE>

On the dates that are 90 days and 180 days after the closing, TMCS
shall deliver a number of shares of TMCS Class B Common Stock equal to
$2,195,000 divided by the Value of the Class B Common Stock; provided, however,
that in no event shall the total shares of TMCS Class B Common Stock to be
delivered on either date be more than 168,847 shares or less than 56,283 shares.

On the date that is the later of 270 days after the closing or the
date Web Media's 1999 audit is completed, TMCS shall deliver a number of shares
of TMCS Class B Common Stock equal to the Remaining Purchase Price as defined in
the next sentence, divided by the Value of the Class B Common Stock; provided,
however, that in no event shall the Value of the Class B Common Stock used for
this purpose be more than $39 per share or less than $13 per share. The term
"Remaining Purchase Price" means the purchase price determined as pursuant to
the paragraph entitled "Purchase Price" above minus $34,390,000.

TMCS may, at its election, pay cash instead of Class B Common Stock at
any payment date.

The Merger Agreement

The following is a summary that highlights some of the significant
provisions of the merger agreement. You may read the merger agreement, which is
attached to this proxy statement/prospectus as Annex A for more detail. We
encourage you to read the merger agreement in its entirety.

Representations and Warranties of Web Media. The merger agreement
contains representations and warranties made by Web Media relating to, among
other things,

. the proper organization of the company and similar corporate matters;

. the capital structure of the company;

. the authorization, performance and enforceability of the merger
agreement;

. the absence of violations of the company's governing instruments and
applicable laws and agreements, governmental filings, authorizations
and consents required to complete the merger;

. compliance with applicable laws;

. claims and litigation;

. employment matters, including employee benefit plans and ERISA
matters;

. taxes and tax matters;

. the absence of material adverse changes and events relating to the
business and properties of the company;

. compliance with applicable environmental laws and regulations;

. the absence of undisclosed liabilities;

. interests in property, including real property and intellectual
property;

. transactions with management and affiliates;

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<PAGE>

. the absence of illegal payments;

. that Web Media disclosures in the merger agreement are not misleading;

. material contracts;

. the vote requirements for Web Media;

. the financial statements, including accounts receivable; and

. year 2000 compliance.

Representations and Warranties of TMCS and Sub. The merger agreement
contains representations and warranties made by TMCS and Sub relating to, among
other things,

. the proper organization of TMCS and Sub and similar corporate matters;

. the capital structure of TMCS and the issuance of the common stock;

. the authorization, performance and enforceability of the merger
agreement;

. the furnishing of true and correct copies of TMCS's SEC filings;

. the absence of material adverse changes and events relating to the
business of the companies; and

. TMCS's disclosures and information to be included in the registration
statement to be filed in connection with the merger.

Covenants of Web Media. Web Media has made covenants or promises in
the merger agreement. These include covenants that it will:

. operate its businesses in the usual and ordinary course;

. preserve its business organization intact, maintain rights and
franchises, retain the services of its officers and key employees and
maintain relationships with customers and suppliers;

. promptly notify TMCS of any event or occurrence not in the ordinary
course of business;

. file all tax returns required to be filed on or before the closing of
the merger; and

. give TMCS and its attorneys and other representatives access at all
reasonable times to the company's records.

Negative Covenants of Web Media. Web Media has also agreed that it
will not, among other things:

. increase the compensation payable or pay bonuses to any directors or
employees, other than as expressly permitted in the merger agreement;

. establish, adopt or amend any employee benefit plan or arrangement;

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<PAGE>

. declare or pay any dividend on its Units or other equity interests,
other than as expressly permitted in the merger agreement;

. split, combine or reclassify any of its Units;

. issue any Units, any securities convertible into or exercisable or
exchangeable for any Units, or any rights, warrants or options to
acquire any Units;

. take action with respect to its business, including its assets and
liabilities, except as consistent with past practice and in the
ordinary course of the company's business;

. enter into, violate or modify any material contracts;

. amend or modify its organizational documents;

. modify any of its significant tax elections;

. initiate or participate in any merger, consolidation, purchase of
assets, purchase of shares of capital stock or other material
acquisition of a business; or

. agree in writing to take any of the above actions.

No Solicitation by Web Media. During the term of the merger agreement, Web
Media has agreed that it will not initiate, solicit or encourage or enter into
discussions or negotiate with any person or entity regarding the possible
acquisition of Web Media, whether by way of merger, purchase of Units, purchase
of assets or otherwise, or any portion of its Units or assets.

Additional Agreements. In connection with the merger, each of the Web
Media Unitholders will be required to execute non-competition agreements and
affiliate agreements. See "Related Agreements."

The parties have also agreed, prior to the closing of the merger, to enter
into an escrow agreement with a mutually acceptable commercial bank. An escrow
account will be established to hold a portion of the purchase price for the
benefit of TMCS in the event TMCS is entitled to indemnification under the
merger agreement. Payments shall be made into the escrow account as follows:

. The entire number of shares of TMCS Class B Common Stock distributed
on the second payment date after the closing will be deposited into
the escrow. However, the maximum value of the shares to be deposited
in the escrow shall not exceed $4,065,000.

. The TMCS shares distributed on the last payment date shall also be
deposited in the escrow account, but only to the extent that the total
value of the shares in the escrow will not exceed $4,065,000.

. TMCS shall also be entitled to cause future payment obligations under
the merger agreement to be made into escrow to the extent it in good
faith determines that such an indemnification amount may be owed to it
in excess of the amount then held in escrow.

Except with respect to any pending claims TMCS may have with respect to the
amount held in escrow, the amount shall be released to the Unitholders on the
first anniversary on the closing of the merger.

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Conditions to the Merger. Completion of the merger is subject to a number
of conditions, including:

. the approval of the merger agreement by the affirmative vote of the
holders of 56.7% of the outstanding Web Media Units;

. the registration statement with respect to the TMCS Class B Common
Stock to be issued in connection with the merger shall have been
declared effective by the SEC;

. approval by the NASDAQ of the listing of the common stock to be issued
in the merger;

. receipt of necessary consents;

. receipt of customary legal opinions;

. the absence of third party actions that would prohibit or restrict the
completion of the merger or would have a material adverse effect on
either Web Media or TMCS;

. the resignations of the Member-Managers of Web Media;

. the execution by certain employees of Web Media of proprietary
information agreements; and

. other customary closing conditions.

There can be no assurance as to when and if the conditions to completion of
the merger will be satisfied or, where permissible, waived, or that the merger
will be completed. Holders of 66 % of the outstanding Web Media Units have
agreed to vote in favor of the merger agreement and the merger.

Amendment of Merger Agreement. The parties may modify or amend the merger
agreement by written agreement prior to the completion of the merger, subject to
the provisions of applicable law.

Waiver and Termination. The merger agreement permits the parties to waive
any of the conditions to the merger that are in favor of that party.

The merger agreement is subject to termination by one or more of the
parties at any time prior to the effective time if, among other things:

. the registration statement registering the TMCS Class B Common Stock
to be issued in connection with the merger has not been declared
effective by the SEC by September 30, 1999;

. the parties do not complete the merger by October 31, 1999;

. either TMCS or Web Media materially breaches the merger agreement;

. an injunction prevents the merger;

. an order, rule or regulation prevents TMCS from operating Web Media's
business;

. the value of the TMCS Class B Common Stock falls below $20.80 per
share; or

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. TMCS and Web Media mutually agree to terminate the merger.

Listing. TMCS will use all reasonable efforts to cause the Class B
Common Stock to be issued in the merger to be approved for listing and quotation
on the NASDAQ prior to the completion of the merger. This listing is also a
condition to completion of the merger. TMCS anticipates that it will file a
listing application with the NASDAQ relating to the issuance by TMCS of its
Class B Common Stock prior to the closing of the merger.

Registration Statement. Both Web Media and TMCS have made agreements
relating to the filing of the Registration Statement of which this proxy
statement/prospectus forms a part and the accuracy of the information contained
within it. They have also agreed to take all appropriate action, and do all
things necessary, proper or advisable under applicable law to complete the
transactions contemplated by the merger agreement and to use all reasonable
efforts to cooperate with each other in connection with the making of all
required filings.

Indemnification. The Unitholders have the obligation to indemnify TMCS
and the surviving corporation and their respective officers, directors,
employees, members, assigns, successors and affiliates with respect to losses
arising out of:

. breaches of representations and warranties set forth in the merger
agreement;

. any nonfulfillment of any covenant or agreement set forth in the
merger agreement; and

. the operation of certain aspects of the Web Media business prior to
the closing.

There shall be no liability for indemnification unless the aggregate
amount of the damages exceeds $200,000, in which event the liability for
indemnification will apply to the entire aggregate amount of damages in excess
of the first $200,000. Maximum liability from indemnification shall be
$10,000,000, except with respect to claims relating to any breach of the
representations and warranties in the agreement with respect to taxes,
intellectual property and environmental matters or for claims relating to fraud
or willful misconduct. The indemnification provided with respect to the
operation of certain portions of the Web Media business shall not be subject to
the $200,000 deductible.

The indemnification obligation shall terminate as follows:

. with respect to claims relating to a breach of the representation and
warranties with respect to taxes, intellectual property, environmental
matters, information supplied or fraud or willful misconduct, upon the
later of the expiration of the applicable statute of limitations or
the final resolutions of any and all such claims pending as of such
dates; and

. with respect to all other claims from indemnification, upon the later
of the first anniversary of the closing of the merger or the final
resolution of any such claims pending as of the first anniversary.

All claims from indemnification shall first be offset against cash
held in the escrow, next against securities held in the escrow and next against
future payments to be received under the merger agreement. In addition, TMCS
shall have the right to any and all equitable remedies available under law.

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<PAGE>

Restrictions on the Transfer of TMCS Class B Common Stock to be Received by
Affiliates of Web Media

The TMCS Class B Common Stock issuable in connection with the merger has
been registered under the Securities Act of 1933, as amended. However, the Web
Media Unitholders will be deemed to be "affiliates" of TMCS, as that term is
defined in Rule 144 and Rule 145 adopted under the Securities Act. Therefore,
the shares held by these affiliates may be resold without registration only as
provided for by Rule 145 or as otherwise permitted under the Securities Act. In
connection with the merger, each affiliate will be required to execute an
Affiliate Agreement providing that the affiliate will not sell, transfer or
otherwise dispose of the shares of Class B Common Stock to be received by that
person in the merger (1) except in compliance with the applicable provisions of
the Securities Act and its rules and regulations; (2) unless counsel
representing the affiliate, satisfactory to TMCS, advises TMCS in a written
opinion letter satisfactory to TMCS and TMCS's counsel that no registration
under the Securities Act would be required in connection with the proposed sale,
transfer or other disposition of the affiliate's shares; (3) except pursuant to
a registration statement under the Securities Act covering the Class B Common
Stock proposed to be sold, transferred or otherwise disposed of, describing the
manner and terms of the proposed sale, transfer or other disposition, and
containing a current prospectus under the Securities Act that is effective under
the Securities Act; or (4) unless an authorized representative of the SEC has
rendered written advice to the affiliate to the effect that the SEC would take
no action with respect to the proposed sale, transfer or other disposition if
consummated.

Reasons for the Merger

The Web Media Member-Managers considered a number of relevant factors in
approving the merger agreement and recommending it to Web Media Unitholders
including:

. the merger with TMCS will create opportunities for significant
efficiencies because Web Media will be able to utilize TMCS's online
personals operations of Match.com; and

. the merger will provide Web Media's Unitholders with the opportunity
to benefit from TMCS's potential revenue growth, the strength and
experience of TMCS's senior management team and an investment in a
combined company with significant potential for growth.

Web Media believes the merger is in the best interest of its Unitholders
and TMCS and Web Media expect that it will be beneficial to TMCS's business.

Recommendation of Web Media Member-Managers

AFTER CAREFUL CONSIDERATION, THE WEB MEDIA MEMBER-MANAGERS HAVE DETERMINED
THE MERGER AGREEMENT AND THE MERGER TO BE FAIR TO AND IN THE BEST INTERESTS OF
THE WEB MEDIA UNITHOLDERS.

Material United States Federal Income Tax Consequences of the Merger

The following is a general discussion of the material federal income tax
consequences of the merger. This summary does not address any tax considerations
under foreign, state, or local laws, or the tax consequences to certain Web
Media Unitholders in light of their particular circumstances, including persons
who are not United States persons, dealers in securities, tax-exempt entities,
and Web Media Unitholders who do not hold Units as "capital assets" as defined
in the Internal Revenue Code, corporations subject to the alternative minimum
tax and Web Media Unitholders who enter into agreements in their personal
capacity

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<PAGE>

pursuant to the merger agreement. ACCORDINGLY, ALL WEB MEDIA UNITHOLDERS ARE
URGED TO CONSULT THEIR OWN TAX ADVISORS AS TO THE SPECIFIC CONSEQUENCES OF THE
MERGER.

No party to the merger has sought or received a ruling from the Internal
Revenue Service or an opinion of counsel with regard to the federal income tax
consequences of the merger. There can be no assurance that the IRS will not
take a position contrary to that described herein.

The receipt of cash or TMCS Class B Common Stock by Web Media Unitholders
pursuant to the merger will be treated for federal income tax purposes as a
taxable sale. Except as otherwise described herein, Web Media Unitholders will
recognize gain on such sale measured by the difference between their tax basis
in the Units and the payments received after application of the original issue
discount and installment sales provisions discussed below. Any liabilities of
Web Media assumed by TMCS will be treated as a payment received by Web Media
Unitholders in the merger. Provided that the Web Media Unitholders held their
Units for more than one year, any such gain will generally be long-term capital
gain, except that a portion of such gain or loss may be recharacterized as
ordinary income or loss to the extent attributable to the Unitholder's indirect
share of certain assets of Web Media which are classified as "unrealized
receivables" (under Internal Revenue Code Section 751(c)) and "inventory items"
(under Internal Revenue Code Section 751(d)).

Installment Method Treatment. Any gain realized by a Web Media Unitholder
pursuant to the merger must be reported under the installment method, unless the
Unitholder affirmatively elects out of, or is otherwise ineligible for,
installment method treatment. The installment method does not apply to Web Media
Unitholders who will recognize a loss in the merger. A Web Media Unitholder may
elect out of the installment method by filing the appropriate form with his or
her tax return for the taxable year in which the closing date occurs.

Under the installment method, a portion of each payment is taxable as gain
in the year of receipt and a portion represents a tax-free recovery of the Web
Media Unitholders's basis in Units. The gain is calculated by multiplying the
principal amount of any payment received in the year by a "gross profit ratio,"
which is the ratio that (i) the purchase price less the Web Media Unitholder's
adjusted basis in the Units bears to (ii) the total purchase price of the Web
Media Unitholder's Units.

Under Treasury regulations, you are required to assume, for purposes of
calculating the purchase price and the gross profit ratio at the closing date,
that you will receive the maximum possible amount of the purchase price at the
earliest possible times. However, for purposes of this calculation, the
purchase price does not include the portion of any such payment that represents
interest. As a result, the purchase price equals the present value of all
payments that it is assumed will be made, discounted at the applicable federal
rates prescribed by the Internal Revenue Service determined at the time of the
merger.

If Web Media's revenues result in less of the purchase price being paid,
the gross profit ratio is recomputed with respect to payments received in or
after the taxable year in which the contingency is not met. To the extent the
rules described in the pre-ceding paragraph result in a net overinclusion of
gain because contingencies are not met, the Web Media Unitholder is entitled to
an off-setting capital loss.

One significant effect of the installment method is that a Web Media
Unitholder will be able to reduce the amount of gain attributable to the
purchase price paid on the closing date by only a portion of his or her Web
Media Unit basis.

A portion of the purchase price will be treated as interest income taxable
at ordinary income rates when received by Web Media Unitholders, pursuant to the
Internal Revenue Code's original issue discount

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<PAGE>

rules, and will reduce the amount of gain (or increase the amount of loss)
otherwise recognizable. Additional annual interest charges may be imposed by on
a Web Media Unitholder's tax liability deferred by the installment method (i)
generally with respect to sales of any property, including the Unites, with a
sales price greater than $150,000, (ii) to the extent that the aggregate face
amount of installment receivables that arise from all $150,000 sales by the Web
Media Unitholder (including, but not limited to, sales of Units) during the year
and that remain outstanding as of the close of the taxable year exceeds $5
million.

Backup Withholding. In order to avoid the 31% federal backup withholding
requirements, each Web Media Unitholder must certify his taxpayer identification
number or eligibility for exemption by providing a properly completed substitute
IRS Form W-9.

THE INTERNAL REVENUE CODE PROVISIONS WHICH ARE THE BASIS FOR THE FOREGOING
DISCUSSION ARE QUITE COMPLEX AND UNCERTAIN IN THEIR SCOPE AND APPLICATION. FOR
THESE REASONS, WEB MEDIA UNITHOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS
AS TO THE PARTICULAR FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES TO THEM
OF THE MERGER.

Accounting Treatment of the Merger

TMCS intends to account for the merger as a purchase for financial
reporting and accounting purposes, under generally accepted accounting
principles. After the merger, the results of operations of Web Media will be
included in the consolidated financial statements of TMCS. The purchase price,
i.e., the aggregate merger consideration, will be allocated based on the fair
values of the assets acquired and the liabilities assumed. Any excess of cost
over fair value of the net tangible assets of Web Media acquired will be
recorded as goodwill and other intangible assets and will be amortized by
charges to operations under generally accepted accounting principles. These
allocations will be made based upon valuations and other studies that have not
yet been finalized.

Regulatory Filings and Approvals Required to Complete the Merger

Neither TMCS nor Web Media is aware of any other material governmental or
regulatory approval required for completion of the merger, other than the
effectiveness of the registration statement of which this proxy
statement/prospectus is a part, and compliance with applicable corporate laws of
Delaware and Texas.

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RELATED AGREEMENTS

Noncompetition Agreements

In connection with the merger, Member-Managers William Bunker and David
Kennedy each entered into a Noncompetition Agreement with TMCS and Web Media,
whereby each agreed that for a period of three years after the effective date of
the merger, he would not, directly or indirectly, without the prior written
consent of TMCS, (1) engage anywhere in the world in, or have any ownership
interest in (except for ownership of one percent (1%) or less of the outstanding
securities of an entity whose securities are listed on a national securities
exchange), or participate in the financing, operation, management or control of,
any firm, corporation or business selling products or services in direct
competition with TMCS's or Web Media's business, including the online personals,
online ticketing, city guide, online auctions, and/or online consumer
classifieds business, (2) solicit, encourage, or hire any employee of TMCS or
Web Media or any subsidiary thereof to terminate his or her employment, or (3)
interfere with the contractual or employment relationship between Web Media and
any employee of Web Media or TMCS and any employee of TMCS or any subsidiary of
Web Media or TMCS and any employee of any such subsidiary.

Affiliate Agreements

In connection with the merger, each affiliate will be required to execute
an Affiliate Agreement providing that the affiliate will not sell, transfer or
otherwise dispose of the shares of TMCS Class B Common Stock to be received by
that person in the merger (1) except in compliance with the applicable
provisions of the Securities Act and its rules and regulations; (2) unless
counsel representing the affiliate, satisfactory to TMCS, advises TMCS in a
written opinion letter satisfactory to TMCS and its counsel that no registration
under the Securities Act would be required in connection with the proposed sale,
transfer or other disposition of the affiliate's shares; (3) except pursuant to
a registration statement under the Securities Act covering the Class B Common
Stock proposed to be sold, transferred or otherwise disposed of, describing the
manner and terms of the proposed sale, transfer or other disposition, and
containing a current prospectus under the Securities Act that is effective under
the Securities Act; or (4) unless an authorized representative of the SEC has
rendered written advice to the affiliate to the effect that the SEC would take
no action with respect to the proposed sale, transfer or other disposition if
consummated.

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DESCRIPTION OF TMCS CAPITAL STOCK

The following summary of the terms of TMCS's capital stock is qualified in
its entirety by reference to the applicable provisions of Delaware law and
TMCS's Restated Certificate of Incorporation and Restated Bylaws.

As of June 30, 1999, there were 60,727,223 shares of TMCS Class A Common
Stock outstanding and 13,955,461 shares of TMCS Class B Common Stock
outstanding, held of record by 398 stockholders, and options to purchase
2,551,291 shares of Class A Common Stock and options to purchase 2,549,942
shares of Class B Common Stock outstanding.

Common Stock

TMCS is authorized to issue 100,000,000 shares of Class A Common Stock,
250,000,000 shares of Class B Common Stock and 2,883,506 shares of Class C
Common Stock. The Class A Common Stock, Class B Common Stock and Class C Common
Stock have the following rights, preferences and privileges:

Class A Common Stock

Except as otherwise provided by the Restated Certificate of Incorporation
or by applicable law, each share of Class A Common Stock issued and outstanding
has 15 votes on any matter submitted to a vote of stockholders. Each share of
Class A Common Stock will be automatically converted into one share of Class B
Common Stock upon any transfer of such share, whether or not for value by the
initial registered holder thereof, other than any such transfer by such holder
to:

. a nominee of such holder without any change in beneficial ownership, within
the meaning of Section 13(d) of the Securities and Exchange Act of 1934, as
amended, or the Exchange Act; or

. another person that, at the time of the transfer, beneficially owns shares of
Class A Common Stock or a nominee thereof.

Notwithstanding the foregoing, any transfer by the initial holder without
consideration to:

. any affiliated entity of such initial holder;

. a partner, active or retired, of such initial holder;

. the estate of any initial holder or a trust established for the benefit of
the descendants or any relatives or spouse of an initial holder;

. a parent corporation or wholly-owned subsidiary of such initial holder or to
a wholly-owned subsidiary of such parent unless and until such transferee
ceases to be a parent or wholly-owned subsidiary of the initial holder or a
wholly-owned subsidiary of such parent; or

. the spouse of such initial holder

in each case, shall not result in such conversion.

In addition, notwithstanding the foregoing, any bona fide pledge to a
financial institution in connection with a borrowing shall not result in such
conversion; and provided further, that in the event any

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<PAGE>

transfer shall not give rise to automatic conversion hereunder, then any
subsequent transfer by the holder, other than any such transfer by such holder
to a nominee of such holder without any change in beneficial ownership, as such
term is defined under Section 13(d) of the Exchange Act, or the pledgor, as the
case may be, shall be subject to automatic conversion upon such terms and
conditions. In addition, each share of Class A Common Stock may be converted at
any time into one share of Class B Common Stock at the option of the holder
thereof. The one-to-one conversion ratio shall be in all events equitably
preserved in the event of any merger, consolidation or other reorganization of
TMCS with another corporation.

Class B Common Stock

Except as otherwise provided by applicable law, each share of Class B
Common Stock issued and outstanding has one vote on any matter submitted to a
vote of stockholders. The Restated Certificate of Incorporation provides that
TMCS shall at all times reserve and keep available out of our authorized but
unissued shares of Class B Common Stock, solely for the purpose of effecting the
conversion of the shares of the Class A Common Stock, such number of its shares
of Class B Common Stock as shall be necessary to effect the conversion of all
outstanding shares of Class A Common Stock. Except as otherwise required by
applicable law, the Class A Common Stock and the Class B Common Stock shall vote
together as a single class on all matters submitted to a vote of stockholders.

Class C Common Stock

No shares of Class C Common Stock issued and outstanding shall have any
vote on any matter submitted to a vote of stockholders, except as otherwise
required by applicable law.

Except as set forth in the Restated Certificate of Incorporation and
summarized in this proxy statement/prospectus, with respect to voting rights,
conversion and transfer, and except as otherwise provided by applicable law, the
Class A Common Stock, Class B Common Stock and the Class C Common Stock have
identical rights, preferences and privileges. As such, subject to preferences
that may apply to shares of Preferred Stock outstanding from time to time, the
holders of outstanding shares of TMCS's Common Stock are entitled to receive, on
a share-for- share basis, such dividends if, as and when declared from time to
time by the Board of Directors. Cumulative voting for the election of directors
is not provided for in the Restated Certificate of Incorporation. Therefore,
subject to applicable law, the holders of a majority of the total voting power
of the outstanding shares of Common Stock voted will have the power to elect all
of the directors then standing for election. No class of Common Stock is
entitled to preemptive or redemption rights. Upon a liquidation, dissolution or
winding-up of TMCS, the assets legally available for distribution to
stockholders are distributable ratably among the holders of each class of Common
Stock, subject to the preferences, if any, of any outstanding Preferred Stock
and payment of claims of creditors. The Restated Certificate of Incorporation
further provides that in no event will any stock dividends or stock splits or
combinations of stock be declared or made on Class A Common Stock, Class B
Common Stock or Class C Common Stock unless all shares of Class A Common Stock,
Class B Common Stock and Class C Common Stock then outstanding are treated
equally and identically. Each outstanding share of Common Stock is fully paid
and nonassessable.

Preferred Stock

TMCS is authorized to issue 2,000,000 shares of Preferred Stock. The Board
of Directors is authorized, subject to limitations prescribed by Delaware law,
to provide for the issuance of shares of Preferred Stock in one or more series,
to establish from time to time the number of shares to be included in each such
series, to fix the powers, designations, preferences and rights of the shares of
each wholly unissued series and designate any qualifications, limitations or
restrictions thereon and to increase or decrease the number of shares of any
such series, but not below the number of shares of such series then outstanding,

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<PAGE>

without any further vote or action by the stockholders. The issuance of
Preferred Stock may have the effect of delaying, deferring or preventing a
change in control of TMCS and may adversely affect the voting and other rights
of the holders of TMCS Common Stock, which could have an adverse impact on the
market price of the Class B Common Stock. TMCS has no current plan to issue any
shares of Preferred Stock.

Corporate Opportunities

TMCS's Restated Certificate of Incorporation provides that "USA Networks"
which, for purposes of this section only, is defined below, shall have no duty
to refrain from engaging in the same or similar activities or lines of business
as TMCS, and neither USA Networks nor any officer, director or employee,
thereof, except as described below, shall be liable to TMCS or its stockholders
for breach of any fiduciary duty by reason of any such activities of USA
Networks. In the event that USA Networks acquires knowledge of a potential
transaction or matter which may be a corporate opportunity for both USA Networks
and TMCS, USA Networks shall have no duty to communicate or offer such corporate
opportunity to TMCS and shall not be liable to TMCS or its stockholders for
breach of any fiduciary duty as a stockholder of TMCS by reason of the fact that
USA Networks pursues or acquires such corporate opportunity for itself, directs
such corporate opportunity to another person, or does not communicate
information regarding such corporate opportunity to TMCS. Nothing in this
provision of TMCS's Restated Certificate of Incorporation shall amend or modify
in any respect any written contractual agreement between USA Networks and TMCS.

In the event that a director or officer of TMCS who is also a director,
officer or employee of USA Networks acquires knowledge of a potential
transaction or matter which may be a corporate opportunity for both TMCS and USA
Networks, such director or officer of TMCS shall have fully satisfied and
fulfilled the fiduciary duty of such director or officer to TMCS and its
stockholders with respect to such corporate opportunity, if such director or
officer acts in a manner consistent with the following policy:

. a corporate opportunity offered to any person who is an officer of TMCS, and
who is also a director but not an officer or employee of USA Networks, shall
belong to TMCS;

. a corporate opportunity offered to any person who is a director but not an
officer of TMCS, and who is also a director, officer or employee of USA
Networks shall belong to TMCS if such opportunity is expressly offered to
such person in his or her capacity as a director of TMCS, and otherwise shall
belong to USA Networks; and

. a corporate opportunity offered to any person who is an officer or employee
of USA Networks and an officer of TMCS shall belong to TMCS if such
opportunity is expressly offered to such person in his or her capacity as an
officer or employee of TMCS, and otherwise shall belong to USA Networks.

For purposes of the foregoing:

. a director of TMCS who is Chairman of the Board of Directors of TMCS or of a
committee thereof shall not be deemed to be an officer of TMCS by reason of
holding such position without regard to whether such position is deemed an
office of TMCS under its Restated Bylaws, unless such person is a full-time
employee of TMCS; and

. the term "TMCS" shall mean Ticketmaster Online-- CitySearch, Inc. and all
corporations, partnerships, joint ventures, associations and other entities
in which Ticketmaster Online-- CitySearch, Inc. beneficially owns, directly
or indirectly, 50% or more of the outstanding voting stock, voting power,
partnership interests or similar voting interests. The term "USA Networks"
shall mean USA Networks, Inc., a Delaware corporation, USANi LLC, a Delaware
limited liability company, and all corporations, partnerships, joint
ventures, associations and other entities (other than TMCS, as defined in
accordance

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<PAGE>

with this paragraph) in which USA Networks beneficially owns, directly or
indirectly, 50% or more of the outstanding voting stock, voting power,
partnership interests or similar voting interests.

The foregoing provisions of TMCS's Restated Certificate of Incorporation
shall expire on the date that USA Networks ceases to beneficially own Common
Stock representing at least 20% of the total voting power of all classes of
outstanding capital stock of TMCS entitled to vote in the election of directors
and no person who is a director or officer of TMCS is also a director or officer
of USA Networks. In addition to any vote of the stockholders required by law,
until the time that USA Networks ceases to beneficially own Common Stock
representing at least 20% of the total voting power of all classes of
outstanding capital stock of TMCS entitled to vote in the election of directors,
the affirmative vote of the holders of more than 80% of the total voting power
of all such classes of outstanding capital stock of TMCS shall be required to
alter, amend or repeal in a manner adverse to the interests of USA Networks, or
adopt any provision adverse to the interests of USA Networks and inconsistent
with, the corporate opportunity provisions described above.

Any person purchasing or otherwise acquiring any interest in shares of the
capital stock of TMCS shall be deemed to have notice of and to have consented to
the foregoing provisions of its Restated Certificate of Incorporation.

Antitakeover Effects of Provisions of Certificate of Incorporation and Bylaws

TMCS's Restated Certificate of Incorporation and Restated Bylaws contain
provisions that may render more difficult, or have the effect of discouraging,
unsolicited takeover bids from third parties or the removal of incumbent
management of TMCS. These provisions include the right of the holders of Class A
Common Stock to 15 votes per share, versus one vote per share for the holders of
Class B Common Stock, and provide that the stockholders may not call special
meetings. In addition, the Restated Certificate of Incorporation authorizes the
Board of Directors to issue, without stockholder approval, 2,000,000 shares of
Preferred Stock with voting, conversion and other rights and preferences that
could adversely affect the voting power or other rights of the holders of Common
Stock of TMCS. Although TMCS has no current plans to issue any shares of
Preferred Stock, the issuance of Preferred Stock or rights to purchase Preferred
Stock could render more difficult, or have the effect of discouraging,
unsolicited takeover bids from third parties or the removal of incumbent
management of TMCS, or otherwise adversely affect the market price for the Class
B Common Stock. See "--Preferred Stock." Although, such provisions do not have a
substantial practical significance to investors while USAi, through its
ownership of Class A Common Stock, is in a position to effectively control all
matters affecting TMCS, such provisions could have the effect of depriving
stockholders of an opportunity to sell their shares at a premium over prevailing
market prices should USAi no longer be in such control.

Effect of Delaware Antitakeover Statute

TMCS is subject to Section 203 of the Delaware General Corporate Law, which
regulates corporate acquisitions. The law prevents certain Delaware
corporations, including those whose securities are listed for trading on the
Nasdaq National Market, from engaging under certain circumstances in a "business
combination" with any "interested stockholder" for three years following the
date that such stockholder became an interested stockholder. For purposes of the
law, a "business combination" includes, among other things, a merger or
consolidation involving TMCS and the interested stockholder and the sale of more
than ten percent of TMCS's assets. In general, the law defines an "interested
stockholder" as any entity or person beneficially owning 15% or more of TMCS's
outstanding voting stock and any entity or person affiliated with or controlling
or controlled by such entity or person. A Delaware corporation may "opt out" of
the law with an express provision in its original certificate of incorporation
or an express provision in its certificate of incorporation or bylaws resulting
from amendments approved by the holders of at least a majority of TMCS's
outstanding voting shares. TMCS has not "opted out" of the provisions of the
antitakeover law. The

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restrictions of the antitakeover law will not apply to USAi, however, because
(1) TMCS's Board of Directors approved the transaction which resulted in USAi
becoming an "interested stockholder" prior to the consummation of that
transaction and (2) at the time USAi became an "interested stockholder," the
restrictions of Section 203 did not apply to TMCS because TMCS did not have a
class of voting stock (x) listed on a national securities exchange, (y)
authorized for quotation on the Nasdaq Stock Market or (z) held of record by
more than 2,000 stockholders.

Registration Rights

The holders of approximately 470,846 shares of Class A Common Stock, based
on shares outstanding as of June 9, 1999, will have the right in certain
circumstances to request TMCS to register their shares under the Securities Act
of 1933 for resale to the public in the event TMCS initiates a registration.
Under the terms of the agreements between TMCS and the holders of such
registrable securities, if TMCS proposes to register any of its securities under
the Securities Act, such holders are entitled to notice of such registration and
are entitled to include shares of Class A Common Stock therein.

The agreements between us and Microsoft provide that we must register the
7,000,000 shares issued to Microsoft in the Sidewalk transaction in December
1999 under the Securities Act of 1933 for resale. We are also required to
register up to 4,500,000 additional shares issuable to Microsoft upon exercise
of two warrants to be issued by us to Microsoft on the same terms.

Transfer Agent

The Transfer Agent and Registrar for the TMCS Common Stock is ChaseMellon
Shareholder Services, L.L.C.

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PRICE RANGE OF TMCS CLASS B COMMON STOCK

TMCS Class B Common Stock began trading publicly on the Nasdaq National
Market on December 3, 1998 under the symbol "TMCS". The following table lists
quarterly information on the price range of the Class B Common Stock based on
the high and low reported last sale prices for the Common Stock as reported on
the Nasdaq National Market for the periods indicated below. These prices do not
include retail markups, markdowns or commissions.

<TABLE>
<CAPTION>
High Low
------ -----
<S> <C> <C>
Fiscal 1999:
Third Quarter (through August 25, 1999)........... $40.06 $25.87
Second Quarter.................................... $41.50 $22.00
First Quarter..................................... 71.12 33.56

Fiscal 1998:
Fourth Quarter.................................... $80.50 $32.69
</TABLE>

As of August 25, 1999, there were approximately 398 holders of record of
the TMCS Class B Common Stock. On August 25, 1999, the last reported sale price
on the Nasdaq National Market for the TMCS Class B Common Stock was $28.56.

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COMPARISON OF RIGHTS OF HOLDERS OF WEB MEDIA
MEMBERSHIP UNITS AND TMCS CLASS B COMMON STOCK

The rights of Web Media Unitholders are currently governed by the Web Media
Regulations, the Web Media Articles of Organization, as amended, and the Texas
Limited Liability Company Act. The rights of TMCS stockholders are currently
governed by the TMCS Restated Certificate of Incorporation, the Restated Bylaws
of TMCS and the Delaware General Corporation Law. After the completion of the
merger, the rights of Web Media Unitholders will be governed by the TMCS
Certificate of Incorporation, the TMCS Bylaws and the Delaware General
Corporation Law.

The following summary highlights similarities and differences between the
rights of Unitholders and TMCS stockholders. Because it is a summary, it is not
intended to be complete and is qualified in its entirety by reference to the
Texas limited liability company and Delaware corporation laws, the Web Media
Regulations, the Web Media Articles of Organization, as amended, the TMCS
Restated Certificate of Incorporation and the TMCS Restated Bylaws.

Management

The Web Media Regulations provide that, with limited exceptions, the Web Media
Member-Managers have full and exclusive discretion to manage and control the
business and affairs of Web Media. The Member-Managers may be removed by the
affirmative vote of a majority of the Units entitled to vote.

Under the Regulations, Unitholders have only limited voting rights on matters
affecting Web Media's business. Unitholders have voting rights with respect to
(1) the removal and replacement of Member-Managers; (2) a merger or the sale or
exchange of substantially all of Web Media's assets; (3) the dissolution of Web
Media; and (4) amendments to the Regulations or Articles of Organization.
Generally, approval of matters submitted to Unitholders requires the affirmative
vote of 56.7% of the holders of units present and entitled to vote thereon at a
meeting at which a quorum is present.

Meetings of Unitholders may be called by the President or by any two (2)
Members.

Under Delaware law, the business and affairs of a Delaware corporation are
managed by or under the direction of its board of directors, whose members are
generally elected by a plurality vote of stockholders at which a quorum is
present. Any vacancy in an existing board position may be filled by the
affirmative vote of a majority of the remaining directors, though less than a
quorum. Newly created directorships resulting from an increase in the authorized
number of directors may be filled by the TMCS board under Delaware law. Any
director or the entire TMCS board may be removed, with or without cause, by the
holders of a majority of the shares then entitled to vote.

Each share of Class B Common Stock entitles its holder to cast one vote on
matters as to which voting is permitted or required by Delaware law, including
the election of directors, amendments to the TMCS Certificate of Incorporation
and mergers and other extraordinary transactions. Stockholders are not entitled
to cumulate their votes for the election of directors. Generally, matters
requiring the vote of the common stock are approved by the vote of the holders
of a majority of the shares of common stock voting in favor of the matter at a
meeting of stockholders at which a quorum is present, except for

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matters governed by Section 203 of the Delaware General Corporation Law. Except
as otherwise provided in the TMCS Restated Certificate of Incorporation or by
applicable law, each share of Class A and Class B Common Stock has 15 votes
and one vote, respectively, on any matter submitted to a vote of the
stockholders.

Directors are elected by a plurality of the votes of shares present in person or
represented by proxy and entitled to vote at a meeting for the election of
directors if a quorum of stockholders is present. The TMCS Restated Certificate
of Incorporation permits the issuance of preferred stock. Issuances of classes
or series of preferred stock that have the right to elect a designated director
or directors could adversely affect the ability of the holders of common stock
to elect a majority of the TMCS board of directors.

TMCS's charter documents, as permitted by Delaware law, do not permit
stockholders to request an annual or special meeting.

Amendments

Amendments to the Articles of Organization or the Regulations must be approved
by 60% of the Units issued and outstanding. However, no amendment to the
Regulations with respect to a Member's capital amount or its obligations to
provide capital to Web Media will be effective without such Member's consent.

Under Delaware law, the TMCS Restated Certificate of Incorporation may be
amended upon the recommendation of the TMCS board if at least 50% of the shares
of each class of stock outstanding and entitled to vote on the proposed
amendment, voting separately, are present in person or by proxy at annual or
special meetings of stockholders and vote to approve the amendment.

Liquidation Rights

Upon the liquidation, dissolution or winding up of Web Media, holders of all
Units would be entitled to share ratably, in accordance with their percentage
interests, in any assets remaining after the satisfaction of obligations to
creditors.

In the event of the liquidation of TMCS, the holders of all classes of TMCS
common stock are entitled to share ratably in any assets of TMCS remaining after
creditors have been paid or provided for.

Limitations of Liability of Management

The Regulations have no provision with respect to limiting the liability of the
Member-Managers.

The TMCS Restated Certificate of Incorporation, as permitted by Delaware law,
eliminates the monetary liability of its directors for a breach of their
fiduciary duty as directors, except for liability (1) for any breach of the
director's duty of loyalty to TMCS or its stockholders; (2) for acts or
omissions not in good faith or that involve intentional misconduct or a
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knowing violation of law; (3) under Section 174 of the Delaware General
Corporation Law, which provides for liability of directors for unlawful payment
of dividends or unlawful stock purchases or redemptions; or (4) for any
transaction from which the director derived an improper personal benefit.

Indemnification

The Regulations provide that Web Media will indemnify and hold harmless the
Members and all Web Media officers, provided that the party's conduct was in
good faith and in a manner believed to be in, or not opposed to, the best
interests of Web Media. With respect to any criminal proceeding, these parties
are indemnified if the party had no reasonable cause to believe the conduct was
unlawful.

Section 145 of the Delaware General Corporation Law permits a corporation to
indemnify any person who is, or is threatened to be made, a party to any suit
owing to the fact that the person is or was a director, officer, employee or
agent acting on behalf of the corporation, upon a determination by the board of
directors that the person has met specified standards of conduct. Section 145 of
the Delaware General Corporation Law also provides that its indemnity provisions
are not exclusive of any other rights to indemnification or advancement of
expenses. The TMCS Restated Certificate of Incorporation requires
indemnification and advancement of expenses of any director to the fullest
extent permitted by Delaware law and permits indemnification of any officer,
employee or agent to the fullest extent permitted by Delaware law.

Derivative Actions

In accordance with Texas law, a Unitholder may institute legal action on behalf
of Web Media, referred to as a "derivative action," to recover damages from a
third party or from the Member-Managers if the Member-Managers have failed to
institute the action. In addition, a Unitholder may institute legal action on
behalf of himself and other similarly situated Unitholders, in a class action,
to recover damages from the Member-Managers for violations of their fiduciary
duties to the Unitholders.

Under Delaware law, a stockholder may bring a derivative action on behalf of
TMCS to recover a judgment in its favor if the TMCS board has failed to
institute the action. The provisions of Delaware law relating to derivative
actions are substantially similar to the provisions of Texas limited liability
company law relating to Unitholder actions.

Inspection of Books and Records

On written request and at reasonable times, a Unitholder may inspect or copy any
of Web Media's books that are required to be kept by Web Media, provided that
there is a valid business purpose related to that Unitholder's interest in Web
Media.

Delaware law provides that any stockholder of TMCS, upon written request stating
the purpose of the inspection, has the right to inspect TMCS's books and
records, provided that it is for a proper purpose related to the stockholders'
interest in TMCS.

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Distributions and Dividends

Under the Regulations, distributions on the Units must be paid each calendar
quarter to the extent that Web Media's cash on hand exceeds its current and
anticipated needs, including expenses and reserves; provided, however, that no
distribution shall be made if, at the time of the distribution, that the total
liabilities of Web Media would then exceed the fair value of Web Media's assets.
Such distributions, if any, shall be paid pro rata in accordance with each
Unitholder's capital account.

Under Delaware law, TMCS may declare and pay dividends out of surplus, or, if
there is no surplus, out of net profits for the year in which the dividend is
declared. If a dividend is paid out of net surplus, the amount of capital of the
corporation may not be less than the aggregate amount of capital represented by
the issued and outstanding stock of all classes having a preference upon the
distribution of assets. The term "surplus," under Delaware law, means the excess
of the net assets of the corporation over its stated capital. The TMCS Restated
Bylaws provide that the TMCS board of directors may declare and pay dividends on
its outstanding shares in the form of cash, property or its own shares and
according to applicable law and the TMCS Restated Certificate of Incorporation.
In addition, Delaware law provides that a corporation may redeem or repurchase
its shares only out of surplus.

Changes of Control

Neither Texas law nor the Regulations contains any special provisions that apply
to combinations, takeover attempts or other transactions with persons who have
acquired a significant percentage of Units.

Some of the provisions in the TMCS Restated Certificate of Incorporation,
including the ability of the TMCS board of directors to issue classes or series
of preferred stock, may impede a takeover attempt. TMCS must comply with the
provisions of Section 203 of the Delaware General Corporation Law, which
restricts "business combinations" involving TMCS and an "interested stockholder"
for three years following the date on which the interested stockholder acquired
15% or more of TMCS's outstanding voting stock unless applicable statutory
exceptions are satisfied.

Transferability

The Regulations permit the transfer of Units in accordance with applicable law,
provided that all Members consent. However, Units may be freely transferred upon
the death or incapacity of the holder of such Units.

Registered shares of Class B Common Stock are freely transferable, except for
shares of Class B Common Stock issued to "affiliates" of TMCS and Web Media.
Transfers of shares of stock held by affiliates are restricted by federal and
state securities laws. The Class B Common Stock is listed on the NASDAQ under
the symbol "TMCS."

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Appraisal Rights

Texas law provides that the Regulations may provide contractual appraisal rights
with respect to Units, however, the Regulations do not provide any such
contractual appraisal rights to its Unitholders.

Under Delaware law, a holder of Class B Common Stock who does not vote in favor
of a merger or consolidation of TMCS may, upon compliance with specified
procedures, be entitled to receive the fair value of the shares in cash instead
of the consideration that the stockholders would otherwise receive in a merger
or consolidation. Appraisal rights are not available in some types of mergers,
including (1) mergers in which TMCS is the surviving corporation and no vote of
its stockholders was required and (2) mergers when TMCS was then listed on a
national securities exchange or held of record by more than 2,000 holders and
the holders of common stock are not required to accept in exchange for their
shares anything other than shares of stock of the surviving corporation and, on
the effective date of the merger, those shares are listed on a national
securities exchange or held of record by more than 2,000 holders.

Fiduciary Duties

Under Texas law, the Member-Managers have fiduciary duties of good faith and
fair dealing to the Unitholders in its management of Web Media's affairs. The
duty of good faith requires the Member-Managers to deal fairly and with candor
with the Unitholders. The duty of fair dealing requires that all transactions
between the Member-Managers and Web Media be fair both in the manner by which
they are conducted and in the amount of the consideration received by Web Media
in the transaction.

Under Delaware law, the directors of TMCS have fiduciary duties of good faith,
loyalty and fair dealing to its stockholders in its management of TMCS's
affairs.

Preemptive Rights

The Regulations provide the Members with full preemptive rights such that each
Unitholder will be entitled to maintain his or her percentage interest in Web
Media if Web Media issues additional Units.

Holders of TMCS Class B Common Stock do not have preemptive rights.

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BUSINESS OF TMCS

TMCS is a leading provider of local city guides, local advertising and live
event ticketing on the Internet. CitySearch was incorporated in September 1995
and launched its first local city guide in May 1996. Ticketmaster Online was
formed in 1993 to administer the online business of Ticketmaster Corp. and began
selling live event tickets and related merchandise online in November 1996.
Prior to the merger of Ticketmaster Online and CitySearch in September 1998,
Ticketmaster Online was operated as a wholly-owned subsidiary of Ticketmaster
Corp., a leading provider of live event automated ticketing services in the
United States. The local CitySearch city guides and Ticketmaster Online live
events ticketing and merchandising distribution capabilities have been
integrated to offer online ticketing, merchandise, electronic coupons and other
transactions to a broader audience of consumers, and these activities will be
integrated with the additional services offered by CityAuction, Match.com and,
once the transaction closes, Web Media. The CitySearch city guides provide up-
to-date information regarding arts and entertainment events, community
activities, recreation, business, shopping, professional services and
news/sports/weather to consumers in metropolitan areas. Ticketmaster Online
offers consumers up-to-date information on live entertainment events and a
convenient means of purchasing tickets and related merchandise on the Web for
live events in 44 states and in Canada and the United Kingdom. Consumers can
access the Ticketmaster Online service at www.ticketmaster.com and from
CitySearch owned and operated city guides at www.citysearch.com through numerous
direct links from banners and event profiles. Subject to specified limitations,
Ticketmaster Online is the exclusive agent for Ticketmaster Corp. for the online
sale of tickets to live events presented by Ticketmaster Corp.'s clients.

CitySearch Business

CitySearch Service for Consumers

TMCS produces and delivers comprehensive local city guides on the Web,
providing up-to-date information regarding arts and entertainment events,
community activities, recreation, business, shopping, professional services and
news/sports/weather to consumers in metropolitan areas. Each local city guide
primarily consists of original content developed and designed specifically for
the Web by TMCS and its partners. The CitySearch service is topically organized
by categories, such as arts and entertainment, restaurants and bars, community,
shops and services, sports and outdoors, hotels and tourism, local news and
professional services. Within most of the city guides, consumers can search
neighborhood shopping areas, obtain maps, contact community organizations and
vendors by e-mail, and engage in bulletin board discussions with individuals
such as local public officials and celebrities. In CitySearch owned and operated
markets, consumers can also access the web sites of Ticketmaster Online,
CityAuction and Match.com through CitySearch city guides to purchase live event
tickets and related merchandise, participate in auctions and seek relationships
online. In certain markets, consumers can also access audio streams, including
recent news and other information, from local radio partners. CitySearch offers
local and regional businesses the opportunity to reach and interact with
targeted consumers. In addition, content generated by consumers through e-mail
and bulletin boards enhances the sense of community in CitySearch sites.

The CitySearch service has been launched in markets across the United
States and in selected international markets. TMCS will continue to expand the
service both in owned and operated markets and by partnering with major media
companies in other markets. These major media partners bring capital, brand
recognition, promotional strength and local knowledge to their city guides and
allow TMCS to build out its national and international network of sites faster
than it could solely through owned and operated sites. As of June 30, 1999, TMCS
had launched CitySearch sites in 31 markets, including 11 partner-led markets
and 20 owned and operated markets.

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CitySearch Service for Business Customers

TMCS creates and hosts CitySearch Web sites for local and regional
businesses and organizations for a monthly fee. TMCS offers local businesses a
wide range of options in creating Web presences, from a basic Web presence
costing as little as $60 per month to a multi-page site with additional features
and functionality costing up to $1,000 per month. Most business customers have
entered into a one- year agreement that automatically converts into a month-to-
month contract upon expiration of the initial term. By aggregating a customer's
Web site with those of numerous other businesses in a comprehensive local city
guide, TMCS provides categorical, geographic and editorial context to a
customer's Web presence to generate usage by consumers, as well as significant
Internet traffic. Based on studies conducted for it by a marketing research
firm, TMCS believes that CitySearch users are more evenly split between men and
women, better educated, slightly older and have higher annual incomes than the
typical Internet user. TMCS believes that these demographics are attractive to
its business customers.

TMCS provides an integrated solution for businesses to establish a
CitySearch Web presence, including design, photography, layout, posting of
updated information, hosting and maintenance. Businesses are able to provide a
targeted audience with current information about TMCS products and services
including photographs, prices, location, schedules of live entertainment, sales
and other relevant information. Unlike traditional media such as yellow pages
advertising, TMCS offers CitySearch business customers a certain number of free
updates each month. The business customers also receive usage reports, e-mails
from interested consumers and access to an expanded base of potential buyers
including tourists and out-of-town users. TMCS recently introduced a strategy of
bundling enhanced features and functionality, including panoramic images and
audio clips. These services, when bundled with the basic CitySearch services,
are typically priced from $190 to $1,000 per month, and have accounted for
significant increases in the average selling prices of TMCS's offerings. TMCS
believes its broad offering of services and our prices compare favorably to
other Web advertising options available to businesses. These options range from
low cost, low quality scanned- in information to free-standing custom-designed
sites that may cost in excess of $10,000 in up-front fees to produce and that
rely on significant promotion to attract traffic. By providing a high-quality
Web presence at an affordable price, TMCS believes that its services address the
demand of the large number of businesses whose online needs fall between these
market extremes.

TMCS's proprietary site design tools and production economies enable it to
build customized multi-page Web sites for customers for a minimal up-front fee.
The production of business Web sites for CitySearch owned and operated markets
and certain partner-led markets is managed centrally in its headquarters to
better control quality and cost and provide rapid production. Business Web site
creation follows a standardized process. First, sales representatives in the
field work with customers to design their sites and gather images and text. Once
content is collected, sales representatives forward this information to TMCS's
central production site in Pasadena, California where data entry personnel input
the text. Graphic designers then use TMCS's proprietary software to combine the
text and scanned images to create custom sites designed to reflect the nature
and style of each business customer. Once the Web site designers have completed
their work, the business Web site is checked for accuracy and published online
after a 14-day customer proofing period. The entire process, from the receipt of
content by TMCS to putting a site online, takes approximately one month to
complete. Each step of the sales and production process is monitored by an
enterprise management system to ensure that the process is consistent and
complete. TMCS believes the systems and processes it has developed to produce
business Web sites allow it to create higher quality, more informative sites in
a more cost-effective and timely manner than its competitors.

TMCS intends to be the leading personalized source for local information
and transactions. Its rapidly expanding city guide network now includes a broad
range of local transaction services, including tickets, hotel reservations,
merchandise, e-Commerce, employment classifieds and matchmaking to help local
consumers get things done online.

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CitySearch Strategic Alliances

TMCS has entered into partnerships and strategic alliances with third
parties in order to:

. rapidly build its national and international network of CitySearch
local city guides;

. generate licensing revenue in CitySearch partner-led markets;

. facilitate branding;

. gain access to additional content; and

. drive traffic on its network of sites.

TMCS intends to continue to negotiate further partnerships and alliances.

Newspaper and Telephony Partnerships. TMCS has entered into strategic
partnerships with major newspapers and media companies such as The Baltimore
Sun, The Dallas Morning News, the Los Angeles Times, The San Diego Union-
Tribune, Washingtonpost.Newsweek Interactive, Big Colour Pages (independent
yellow pages of Australia), The Melbourne Age, Schibsted ASA/Scandinavia Online
(Copenhagen, Oslo and Stockholm), The Sydney Morning Herald, Tele-Direct (the
yellow pages subsidiary of Bell Canada, Inc.) and the Toronto Star. In these
partner-led markets, the partner provides the capital and management, while TMCS
contributes technology, a business model, consulting services, business systems
and processes and network participation. TMCS typically receives up-front
license fees, ongoing license fees for delivery of upgrades and support, and
royalties based on revenues that the partner generates through the city guide
service. In addition, TMCS generally receives additional fees for consulting
services in connection with the launch of the partner's city guides, custom
engineering requested by particular partners, and compensation for business Web
site production, customer service, billing and hosting services. These partner
agreements are typically five to eight years in length, and contain customary
termination rights in the event of material breach or non-performance. TMCS
believes these arrangements allow it to expand its national and international
network of cities in a more rapid and cost-effective manner than a solely owned
and operated network would allow.

TMCS has also reached content sharing and linking agreements with various
companies, including the New York Daily News Online Edition and Time Out New
York. Under these agreements, its city guide sites and content partners create
co-branded areas and host certain content supplied by the content partners.

In August 1998, TMCS restructured its relationship with Toronto Star
Newspapers Limited in order to admit a new partner with significant brand, sales
and financial resources. Under the terms of the partnership agreement, Toronto
Star Newspapers Limited and Tele-Direct Inc. each hold a 45% interest in the
partnership and together operate the toronto.com Web service. TMCS holds a 10%
interest in the partnership and licenses its technology and business systems to
the partnership for use in the defined territory.

In July 1998, TMCS entered into an agreement with Classified Ventures, a
leading provider of online advertising products and services to the newspaper
industry. Classified Ventures is funded by Central Newspapers, Inc., Gannett
Co., Inc., Knight Ridder, Inc., The McClatchy Company, The New York Times
Company, The Times Mirror Company, Tribune Company and The Washington Post
Company, and has a network of over 140 affiliated newspapers in 44 states,
including 34 of the nation's top 50 markets. TMCS licensed elements of its
technology and business systems to Classified Ventures and provides services in
automotive and real estate classified advertising categories. The agreement may
be terminated effective 2001 by Classified Ventures, although it may be
terminated earlier by agreement of the parties. Certain CitySearch

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owned and operated city guides may also participate as Classified Ventures
affiliates in their respective markets.

Television and Radio Media Alliances. TMCS has entered into co- promotion
agreements with local television and radio stations in most of the CitySearch
owned and operated markets. These relationships typically offer content sharing
and co-promotion to both parties. TMCS works with each partner to develop a
multimedia Web site within the CitySearch site, while the partner offers
promotion and a recognized brand within the market. TMCS typically receives
significant on-air promotion from these television and radio stations that
increases brand awareness and drives traffic to the CitySearch site. For
example, TMCS has partnered in Salt Lake City/Utah with the CBS television
station (KUTV) as well as radio stations owned by Citadel Communications
Corporation and, in Raleigh-Durham-Chapel Hill, with the national public radio
station (WUNC) and radio stations owned by Capstar Broadcasting Corporation. In
San Francisco, TMCS has agreements with the ABC television station (KGO) and two
radio stations owned by CBS.

Marketing Agreements. TMCS has entered into both local and national
marketing agreements. For example, TMCS is a party to an agreement with American
Express which included an equity investment in TMCS. The agreement provides for
distribution of co-branded marketing materials to American Express Travel
Related Services Company, Inc. merchant customers in TMCS's local markets that
will offer merchant customers online Web site presences through its local city
guides. The parties intend to create areas within the CitySearch sites to
aggregate promotions and discounts offered to consumers by American Express
merchant customers as well as develop additional e-commerce products. In
addition, American Express is obligated to purchase sponsorships and banner
advertising on the CitySearch sites. The agreement expires in 2002, subject to
certain provisions allowing for early termination in the event of a change of
control of TMCS. TMCS intends to continue to aggressively pursue such marketing
agreements in order to attract additional business customers and increase usage
of the CitySearch service by consumers.

Content Distribution Alliances. TMCS has entered into agreements with a
number of companies to distribute its content and drive traffic to its Web
sites. For example, TMCS has entered into agreements or arrangements with
Earthlink Network, Inc., Planet Direct Corporation and Internet Travel Network
to distribute content across relevant sites.

Marketing and Sales

TMCS emphasizes marketing activities in its owned and operated markets
aimed at increasing awareness of its CitySearch local city guides for both
consumers and business customers. TMCS's roll-out teams are led by experienced
managers who prepare for launch by negotiating promotional arrangements with
local media, training a direct sales force and selling initial sites. TMCS
conducts advertising and public relations campaigns through low-cost "guerilla"
marketing efforts and its local media partners in radio, television and print
advertising to both drive business customer sales and consumer usage. TMCS also
purchases targeted advertising on Web sites such as Infoseek and Preview Travel,
as well as through traditional radio, print and outdoor media.

In partner-led markets, TMCS's marketing efforts rely substantially on the
partner's existing franchise and resources in the community. Partners typically
market their city guide services through print promotion and integration into a
pre-existing news Web site. The partner's brand is also used in conjunction with
the CitySearch brand to build credibility with local consumers. TMCS provides
its partners with a roll-out team to launch the service and ongoing support,
including assistance with recruiting, sales strategy and back office operations.

After a site has been launched, TMCS, or its partners, rely upon a direct
sales force to accelerate the momentum established by the roll-out team. As of
June 30, 1999 TMCS employed 190 sales representatives

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and IMAs in its 20 owned and operated markets. Sales representatives sell
directly to local businesses and IMA's maintain regular contact with customers
and facilitate up-selling of Web site functionality. Sales representatives in
new markets perform both selling and active customer relationship management.
Each sales representative completes an intensive training program at TMCS's
headquarters with follow-up field training. TMCS's proprietary enterprise
management system tracks sales leads and prospect status and allows sales
managers to track performance. Sales representatives participate in ongoing
training sessions in sales techniques and new products.

Operations

TMCS has created a systematic approach to market roll-out of its CitySearch
local city guides that is designed to enable it to launch its service in owned
and operated markets and to support a local service once launched. In addition,
TMCS licenses its roll-out capabilities to media companies in its partner-led
markets. TMCS has analyzed and documented the best practices associated with its
early city launches to refine and standardize its field and home office
production processes. TMCS's software systems monitor much of the sales and
customer care functions. Additionally, TMCS has built custom systems that
streamline the site creation and maintenance process.

TMCS's growing network of local city sites has allowed it to refine and
streamline the content and the roll-out process of new owned and operated sites.
TMCS refers to these new sites as "Quicksilver Sites." Quicksilver Sites
incorporate content produced by TMCS for use nationally by all its local sites,
such as movie and music reviews, with local edits to provide a broader content
base for its new sites in their start up phase. TMCS believes it realizes
economies of scale in the production of such content. The Quicksilver Sites are
focused more on arts and entertainment as a result of TMCS's analysis of traffic
patterns on its older owned and operated sites. This traffic analysis indicates
that arts and entertainment is where the majority of site visitors spend their
time. TMCS's streamlined roll-out strategy allows it to launch a new Quicksilver
Site in approximately one-half of the time needed for the launch of older owned
and operated sites. TMCS also staffs its Quicksilver Sites with less than one-
half of the employees needed to staff the older sites. TMCS attributes this to
allowing the Quicksilver Site local account managers to manage their
relationships with advertisers from start to finish and the reduced need to
generate local content due to the use of a national content feed. As a result of
the Quicksilver Site program, TMCS plans to launch new sites faster than in the
past and at less incremental cost.

Customer service operations are located in TMCS's Pasadena headquarters.
TMCS's enterprise management systems enable customer service staff to view the
customer's full profile, billing and interactive history as they take the call,
and to use the software tools to make changes to the business customer's site in
real time.

Technology

TMCS has developed and implemented a number of technologies to support its
local city guide service and business operations, including (1) an online city
guide application, (2) a set of content creation and management tools and (3) a
suite of integrated enterprise management systems.

CitySearch Online Application. TMCS's online application provides a user
interface intended to support novice online users, while providing easily
accessible advanced features for experienced Web users. The core end-user
functionality of TMCS's application includes:

. concurrently performed keyword, geographic and temporal searches;

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. personalization that permits consumers, for example, to receive
newsletters in areas of interest, and register for special offers from
TMCS business customers that have chosen to implement a one-to-one
marketing approach;

. dynamic map rendering and "nearby" functionality; and

. message boards.

TMCS employs a multi-tiered architecture, separating a standard relational
database from business rules and presentation logic. TMCS's online application
is designed to permit city guide publishers to create and to change the
appearance of the product quickly and easily. As result, TMCS believes that both
it and its partners will be able to respond readily to changes in the
marketplace and to evolving user preferences. In addition, the tiered
architecture is designed to provide for rapid development cycles and code rouse.
TMCS has made a substantial investment in its product development infrastructure
and intends to continue to release product enhancements that address changing
demands of business customers and consumers.

Content Creation and Management Tools. TMCS has created the following
applications to support editorial and advertising content production:

. SiteWorks, for design of business Web sites and editorial features;

. EditWorks, for editorial content entry;

. User Interface Tree editor, for defining and managing the site
hierarchy; and

. MediaWorks, to enable remote content partners, typically television
and radio stations, to submit content directly to the site.

These tools are designed to minimize the technical knowledge that editorial
and advertising content producers need to possess.

Enterprise Management Systems. TMCS has developed and implemented a suite
of integrated enterprise management systems designed to handle an increasing
volume of business customers. The enterprise management system consists of
third-party and internally developed applications covering sales force
automation and telemarketing, production management and tracking systems,
customer service, accounting, billing and commissions systems.

The sales force automation and production tracking systems enhance TMCS's
ability to manage the planning, scheduling, forecasting and tracking of business
Web sites, banners and other services through the various stages of design and
production. These tools enable TMCS to manage the large number of business Web
sites and banners developed simultaneously and originating from numerous cities.
TMCS believes the systems and processes it has developed to produce business Web
sites allow it to create high quality sites in a more cost-effective and timely
manner.

Ticketmaster Online Business

Ticketmaster Online Service

Ticketmaster Online is a leading online ticketing service that enables
consumers to purchase tickets for live music, sports, theater and family
entertainment events presented by Ticketmaster Corp.'s clients and related
merchandise over the Web. Consumers can access the Ticketmaster Online service
at

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www.ticketmaster.com and from CitySearch owned and operated city guides at
www.citysearch.com through numerous direct links from banners and event
profiles. In addition to these services, the Ticketmaster Online Web site
provides local information and original content regarding live events for
Ticketmaster Corp. clients throughout the United States, Canada and the United
Kingdom.

Throughout the Ticketmaster Online Web site and at the conclusion of a
confirmed ticket purchase, the consumer is prompted to purchase merchandise that
is related to a particular event, such as videos, tour merchandise and sports
memorabilia. TMCS intends to expand the types and range of merchandise that can
be ordered by consumers through the Ticketmaster Online Web site. TMCS also
intends to organize membership programs that will provide Ticketmaster Online
members with certain benefits centered around entertainment, leisure and travel
activities. Membership is expected to include participation in other activities
not generally available to the public.

Since the commencement of online ticket sales in November 1996,
Ticketmaster Online has experienced significant growth in tickets sold through
its Web site. Gross transaction dollars for ticket sales increased from
approximately $854,000 in the quarter ended December 31, 1996 to $119.7 million
in the quarter ended June 30, 1999. Similarly, tickets sold on the Ticketmaster
Online Web site in the quarter ended December 31, 1996 represented less than 1%
of total tickets sold by Ticketmaster Corp., while tickets sold online in the
quarter ended June 30, 1999 represented 13.5% of tickets sold.

Ticketmaster Corp. Clients

Ticketmaster Corp. is a leading provider of automated ticketing services in
the United States with over 3,750 domestic clients, including many of the
country's foremost entertainment facilities, promoters and sports franchises.
Ticketmaster Corp. established its market position by providing these clients
with comprehensive ticket inventory control and management, a broad distribution
network and dedicated marketing and support services. Ticket orders are received
and fulfilled through operator-staffed call centers, independent sales outlets
remote to the facility box office, and Ticketmaster Online's Web site. Revenue
is generated principally from convenience charges received by Ticketmaster Corp.
for tickets sold on its clients' behalf. Ticketmaster Corp. generally serves as
an exclusive agent for its clients and typically has no financial risk for
unsold tickets.

Ticketmaster Corp. has a comprehensive domestic distribution system that
includes approximately 2,800 remote sales outlets, covering many of the major
metropolitan areas in the United States, and 17 domestic call centers with
approximately 2,000 operator positions. Ticketmaster Corp. also operates in
Great Britain, Canada, Ireland, Mexico and Australia and, in 1998, has expanded
into France, Chile and Argentina. The number of tickets sold through
Ticketmaster Corp. has increased from approximately 29 million tickets in 1990
to approximately 70 million tickets in 1998.

TMCS believes that the Ticketmaster system for live event ticketing
transactions and its distribution capabilities enhance Ticketmaster Corp.'s
ability to attract new clients and maintain its existing client base. The
Ticketmaster system, which includes both hardware and software, is typically
installed in a client's box office and provides a single centralized inventory
control management system capable of tracking total ticket inventory for all
events, whether sales are made on a season, subscription, group or individual
ticket basis. The versatility of the Ticketmaster system allows it to be
customized to satisfy a full range of client requirements.

Ticketmaster Corp. generally enters into written agreements with its
clients under which it agrees to provide the Ticketmaster system and to serve as
the client's exclusive ticket sales agent for all sales of individual tickets
sold outside of the facility's box office for a specified period, typically five
to seven years. Under its facilities agreements, Ticketmaster Corp. generally is
granted the right to sell tickets for all live

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events presented at a facility, and installs the Ticketmaster system in the
facility's box office. Agreements with promoters generally grant Ticketmaster
Corp. the right to sell tickets for all live events presented by that promoter
at any facility, unless the facility is covered by an exclusive agreement with
another automated ticketing service company.

As part of its client agreements, Ticketmaster Corp. is generally granted
the right to collect from ticket purchasers a per ticket convenience charge on
all tickets sold other than at the box office and an additional per order
handling charge on all tickets sold by Ticketmaster Corp. other than at remote
sales outlets to partially offset the cost of fulfillment. The amount of the
convenience charge is typically determined during the contract negotiation
process, and varies based upon numerous factors, including the services to be
rendered to the client, the amount and cost of equipment to be installed at the
client's box office and the amount of advertising and/or promotional allowances
to be provided, as well as the type of event and whether the ticket is purchased
at a remote sales outlet, by telephone, through the Ticketmaster Online Web site
or otherwise. Any deviations from those amounts for any event are negotiated and
agreed upon by Ticketmaster Corp. and the client prior to the commencement of
ticket sales. During Ticketmaster Corp.'s fiscal 1998 and the first quarter
1999, the convenience charges generally ranged from $1.50 to $7.00 per ticket.
Ticketmaster Corp.'s client agreements also generally establish the amounts and
frequency of any increases in the convenience charge and handling charge during
the term of the agreement.

The agreements with some of Ticketmaster Corp.'s clients may provide for a
client to participate in the convenience charges paid by ticket purchasers for
tickets bought through Ticketmaster Corp. for that client's events. The amount
of such participation, if any, is determined by negotiation with that client.
Some agreements also may provide for Ticketmaster Corp. to make participation
advances to the client, generally recoupable by Ticketmaster Corp. out of the
client's future right to participation. In limited cases, Ticketmaster Corp.
makes an upfront, non-recoupable payment to a client for the right to sell
tickets for that client.

Clients are routinely required by contract to include the Ticketmaster name
in print, radio and television advertisements for entertainment events sponsored
by such clients. The Ticketmaster name and logo are also prominently displayed
on printed tickets and ticket envelopes.

Ticketmaster Corp. generally does not buy tickets from its clients for
resale to the public and has no financial risk for unsold tickets. In the United
Kingdom, Ticketmaster Corp. may from time to time buy tickets from its clients
for resale to the public in an amount typically not exceeding (Pounds) 1,000,000
in the aggregate, of which less than (Pounds) 300,000 is normally unsold at any
time. Ticket prices are not determined by Ticketmaster Corp. Ticketmaster
Corp.'s clients also generally determine the scheduling of when tickets go on
sale to the public and what tickets will be available for sale through
Ticketmaster Corp. Facilities and promoters, for example, often handle group and
season ticket sales in-house. Ticketmaster Corp. only sells a portion of its
clients' tickets, the amount of which varies from client to client and varies as
to any single client from year to year.

TMCS believes that the primary benefits derived by Ticketmaster Corp.'s
clients by use of the Ticketmaster System include the following:

. centralized control of total ticket inventory as well as accounting
information and market research data;

. centralized accountability for ticket proceeds;

. manageable and predictable transaction costs;

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. broader and expedited distribution of tickets;

. wide dissemination of information about upcoming events through
Ticketmaster Corp.'s call centers, Ticketmaster Online and other media
platforms;

. the ability to easily add additional performances if warranted by
demand; and

. marketing and promotional support.

If an event is canceled, Ticketmaster Corp.'s current policy is to refund
the per ticket convenience charges, but not the handling charge. Refunds of the
ticket price for a canceled event are funded by the client. To the extent that
funds then being held by Ticketmaster Corp. on behalf of the client are
insufficient to cover all refunds, the client is obligated to provide
Ticketmaster Corp. with additional funds within 24 to 72 hours after a request
by Ticketmaster Corp.

Ticketmaster License Agreement

Under TMCS's license agreement with Ticketmaster Corp., subject to
specified limitations, Ticketmaster Corp. has granted TMCS an exclusive,
perpetual, irrevocable, worldwide license to use the Ticketmaster trademark and
specified Ticketmaster Corp. databases to sell live event tickets online for
Ticketmaster Corp.'s clients. In addition, Ticketmaster Corp. authorized TMCS to
be its exclusive, perpetual, worldwide agent for such online ticket sales. The
license agreement further provides that Ticketmaster Corp. may use and permit
others to use the Ticketmaster trademark in connection with the online promotion
of ticket sales.

Ticketmaster Corp. retains the rights to sell tickets by non-online means
and to use the Ticketmaster trademark in connection with such sales. The license
agreement defines such non-online means to include:

. by telephone;

. by other voice-to-voice means or voice-to-voice recognition unit
systems;

. by non-interactive broadcast, cable and satellite television; and

. by kiosks and retail ticket outlets.

Client venues retain the rights to sell tickets at their box offices or as
otherwise provided in client venue agreements with Ticketmaster Corp.

Ticketmaster Corp. is the contracting party with client venues, promoters
and sports franchises, providing ticket inventory management, consumer
information and related data for all ticketing transactions. Ticketmaster Corp.
provides this information to Ticketmaster Online for processing of online live
event ticket sales and provides all transaction processing and fulfillment
services for online live event ticket sales. TMCS is required under the license
agreement to comply with the terms of Ticketmaster Corp.'s client agreements.
TMCS's rights, contained in the license agreement, are subject to the client
agreements. The license agreement also generally restricts TMCS from cooperating
with, offering online links to, or entering into any agreements with venues,
ticket sellers or sales agents for online sale of tickets.

Under the license agreement, TMCS pays Ticketmaster Corp. a royalty which
is a percentage of the net profit TMCS derives from online ticket sales. TMCS
also reimburses Ticketmaster Corp. for Ticketmaster Corp.'s direct expenses
related to online ticket sales.

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Under the license agreement, TMCS has also been granted the non-exclusive
right to promote and sell online specified merchandise available through
Ticketmaster Corp. Ticketmaster Corp. serves as TMCS's exclusive fulfillment
provider for the online sales of this merchandise. As long as Ticketmaster
Corp.'s fees, terms and quality of service are no less favorable than those
available to TMCS from third parties, Ticketmaster Corp. or its affiliates will
serve as TMCS's exclusive fulfillment provider for the online sales of all other
merchandise available through Ticketmaster Corp. Ticketmaster Corp. may also
solicit sponsorship and advertising for TMCS sites in a bundle with other
sponsorship and advertising opportunities offered by Ticketmaster Corp.

Ticketmaster Online Strategic Alliances

Ticketmaster Online participates in certain strategic partnerships with
leading marketing and technology partners. TMCS believes that these alliances
continue to build the Ticketmaster Online brand name and expand its promotional
opportunities.

Advertising, Sponsorship and Marketing Partnerships. Ticketmaster Online
has entered into advertising, sponsorship and marketing alliances with Internet
content and service providers and other partners. In addition, Ticketmaster
Corp. has entered into similar agreements pursuant to which Ticketmaster Online
performs services and is allocated a percentage of revenues. Ticketmaster
Online's other advertisers and marketing partners include Palm Computing
Company, United Parcel Service of America, Inc., International Business Machines
Corporation and Sprint Communications Company, Ltd. Client advertisements and
marketing opportunities are typically integrated into TMCS's Ticketmaster Online
Web site through banners and links that encourage viewers to click through for
additional information. TMCS intends to continue to pursue such advertising,
sponsorship and marketing opportunities.

Technology Partnerships. TMCS also participates in certain arrangements
with technology partners to provide enhanced features and functionality on its
Ticketmaster Online Web site. For example, TMCS's "my Ticketmaster" Web site,
which it jointly developed with Intel Corporation and launched in the first
quarter of 1999, is a personalized Web application designed to enable users to
choose categories of event information they receive based on personal
preferences and habits. This personalized and localized site has been designed
to include such features as seating charts, some of which are designed to
provide three- dimensional perspectives and driving directions to venues.

Marketing and Sales

TMCS believes that it will benefit from Ticketmaster Corp.'s continued
promotion of Ticketmaster Corp.'s brand name through Ticketmaster Corp.'s
services and advertising sales force. TMCS intends to continue to leverage the
Ticketmaster brand name, Ticketmaster Corp.'s extensive distribution
capabilities and core ticketing services in an effort to offer live event
venues, sports franchises, promoters, advertisers, sponsors and other partners a
wider variety of advertising, promotional and marketing platforms for their
products and services. Through its relationship with Ticketmaster Corp.,
advertisers have access to a full array of advertising alternatives, ranging
from online advertising vehicles such as Web sites, banners and sponsorships to
traditional advertising on ticket stock and envelopes, during telephone sales
(e.g., "music on hold" and sales scripts) and through direct mail campaigns. As
of June 30, 1999, TMCS had 16 employees dedicated to advertising and promotion
of Ticketmaster Online's services.

Operations

The Ticketmaster Online ticketing system interfaces on a real-time basis
with the host ticketing systems developed by Ticketmaster Corp. This process is
designed to ensure that, except in limited circumstances, the inventory of
tickets available online is identical to that which is available through

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Ticketmaster Corp.'s other distribution methods (e.g., telephone call centers
and independent retail outlets) and to enable consumers to order tickets on a
"best available seat" basis. Measures are taken that are designed to prevent
system failure in Ticketmaster Corp.'s computer center. Each system has a live
back-up standing ready in the event of a primary system failure. The rooms
housing the computer-related equipment are protected by computer-safe fire
protection systems. To guard against power outages, uninterruptable power
supplies are utilized. High capacity back-up generators eliminate the dependency
on public electric sources. In addition, all data is continually recorded on
back-up tape.

TMCS utilizes Secure Sockets Layer encryption technology designed to allow
users to securely transmit their personal information to the Ticketmaster Online
Web site. The decrypted data is then passed through two levels of firewalls,
using an internally developed communications protocol to the Ticketmaster Corp.
host systems where credit cards are processed and customer accounts are created.
The host systems communicate directly with bank processing centers for
instantaneous online credit card authorization and electronic deposit of credit
card receipts. Essentially, all order processing, credit card billing, order
fulfillment and consumer service functions for online ticketing orders are
handled by Ticketmaster Corp. in the same manner as orders which are placed by
telephone.

Technology

Ticketmaster Online has an extensive database of live event information,
with event information updated 12 times every hour and more than 200 times
daily. This data base contains information on more than 30,000 events and over
3,000 clients and is designed to support an easy-to-use and reliable dynamic
event calendar and ticket-buying interface to the Ticketmaster System.

The Ticketmaster Online system is deployed as a multi-tiered system of
servers that separate database functions, Web page serving functions,
transaction processing functions and ticketing system interfacing functions. The
system is built using a combination of commercial and proprietary software and
hardware and is integrated into the Ticketmaster System. All Ticketmaster Online
ticket sales occur on one of 20 geographically dispersed host systems. Credit
card authorization and deposit, inventory control for events, customer account
management and ticket printing and distribution are all handled on the
Ticketmaster System. Internet users interact with various Web servers to find an
event using various criteria including event location, event type, or performer
name. Once an event is located, users interact with forms-based HTML pages to
guide them through the ticket-buying process. The Web servers communicate via a
proprietary gateway to the host ticketing systems where the transaction actually
takes place. Since the online ticketing system interfaces in real-time with the
host ticketing systems, except in limited circumstances, the seats are identical
to those available for sale through Ticketmaster Corp.'s other distribution
systems such as call centers, outlets or box offices.

CityAuction

In March 1999, TMCS purchased CityAuction, Inc. which provides person-to-
person online auctions. In addition to national and regional auctions,
CityAuction lets users post and search in their own locality, allowing them to
trade items that would be considered too valuable or difficult to transport,
such as electronic/office equipment, furniture and automobiles.

Match.com

TMCS recently purchased Match.com, a leading on-line matching and dating
service. The acquisition closed on June 14, 1999. Match.com provides adults with
a secure, effective environment for meeting other single adults. Match.com
provides users with access to other users' personal profiles. Match.com members
are, on average, upscale, professional singles seeking meaningful romantic
relationships. Users interested in

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meeting others can send email messages to one another. Email recipients can
respond, or not, depending on their level of interest in the sender. Match.com
allows seven days of free viewing of personals, but to receive unlimited usage
and the ability to e-mail other users, users must subscribe to the service on a
month to month basis. Match.com has focused on keeping the number of users
balanced between men and women by forming relationships with women oriented
Internet sites. Match.com also expends a considerable amount of effort to keep
the site secure for use by single women.

Pending Acquisition of Microsoft's Sidewalk Assets

On July 19, 1999, we entered into an agreement to purchase the assets
associated with the entertainment city guide portion of the Sidewalk.com Web
site from Microsoft Corporation. The transaction was structured as a merger
between our wholly-owned subsidiary and a Microsoft subsidiary which holds the
Sidewalk assets. We also entered into a four year distribution agreement with
Microsoft pursuant to which we will become the exclusive provider of local city
guide content on the Microsoft Network ("MSN") and we will become the premier
provider of personals content to MSN. In addition, we and Microsoft entered into
additional cross-promotional arrangements. The transaction is expected to close
in either September or October, 1999 following regulatory approval. In
connection with these transactions, we agreed to issue 7,000,000 shares of our
Class B Common Stock and two warrants to purchase an aggregate of 4,500,000
shares of our Class B Common Stock. These shares represent approximately 9% to
13% of our equity depending on the extent to which the warrants are exercised.
The first warrant has an initial exercise price of $30 per share, which adjusts
downward by $0.0625 for each $0.0625 increase in the price of the Class B Common
Stock over $30 at the time the warrant is exercised. The second Warrant has a
fixed exercise price of $60 per share of Class B Common Stock. We granted
Microsoft certain registration rights in connection with the transaction.

The acquisition will be accounted for using the purchase method of
accounting. Although the final valuation of the acquisition and related
arrangements has not been determined, we expect that the total valuation will be
approximately $325 million. We will allocate this total valuation to the assets
acquired and the related arrangements. The portion allocated to the assets
acquired will be amortized over a period of time which we expect will not be
longer than five years.

We have been informed by Microsoft that no separate financial statements
relating to the Sidewalk assets we will acquire have been prepared. The
preparation of such financial statements would be subject to numerous
aclimations, and we believe would not be helpful to a reader's understanding of
the impact of the transaction on us because we intend to utilize the acquired
assets differently than they were used in the past. Accordingly, no financial
statements relating to the Sidewalk assets are included herein. Except for the
dilution as discussed above, the acquisition is not expected to have any
material effect on our financial condition, liquidity or capital resources.

Competition

The markets for local interactive content and services are highly
competitive. Currently, a primary competitors include Digital City,
Inc., a company wholly-owned by America Online, Inc. and Tribune Company,
Microsoft Corporation (Sidewalk) and InfoSpace. CitySearch also competes against
search engine and other site aggregation companies which primarily serve to
aggregate links to sites providing local content such as Excite, Inc.
(City.Net), Lycos, Inc. (Lycos City Guide) and Yahoo! (Yahoo! Local). In
addition, CitySearch competes against offerings from media companies, including
Cox Interactive Media, Inc., Knight Ridder, Inc. and Zip2 Corporation, as well
as offerings from several telecommunications and cable companies and Internet
service providers that provide local interactive programming such as SBC
Communications, Inc. (At Hand) and MediaOne Group, Inc. (DiveIn). There are also
numerous niche competitors which focus on a specific category or geography and
compete with specific content offerings provided by TMCS. TMCS may also compete
with online services and other Web site operators, as well as traditional media
such as television, radio and print, for a share of advertisers' total
advertising budgets. TMCS faces different competitors in most of its CitySearch
markets. For example, competitors in the San Francisco Bay Area primarily
include Microsoft Corporation (Sidewalk), America Online, Inc. (Digital City)
and Yahoo! (SF Bay). Competitors in Raleigh-Durham-Chapel Hill primarily include
the Web site operated by The Raleigh News & Observer, WRAL-TV,
trianglerestaurants.com, Digital Center (raleighonline.com), Yahoo! Local and
Internet Presentations, Inc. (citydirect.com). Furthermore, additional major
media and other companies with financial and other resources greater than TMCS's
may introduce new Internet products and services addressing these markets in the
future. There can be no assurance that TMCS's competitors will not develop
services that are superior to those of TMCS's or that achieve greater market
acceptance than its offerings.

The markets for the business of selling live events tickets and related
merchandise is highly competitive and diverse. Ticketmaster Corp.'s and
Ticketmaster Online's competitors include event facilities and promoters that
handle their own ticket sales and distribution through online and other
distribution channels, live event automated ticketing companies with Web sites
which may or may not currently offer online transactional capabilities and
certain Web-based live event ticketing companies which only conduct

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business online. Where facilities and promoters decide to utilize the services
of a ticketing company, Ticketmaster Corp. and Ticketmaster Online compete with
international, national and regional ticketing services, including TicketWeb,
Telecharge (Shubert Ticketing Services), NEXT Ticketing, Advantix, ETM
Entertainment Network, Dillard's, Prologue, Capital Tickets, Lasergate
(Lasergate Systems, Inc.) and Tickets.com. Several of Ticketmaster Corp.'s and
Ticketmaster Online's competitors have operations in multiple locations
throughout the United States and compete with Ticketmaster Corp. and
Ticketmaster Online on a national level, while others compete with Ticketmaster
Corp. and Ticketmaster Online principally in one specific geographic region.

Ticketmaster Corp. is a leading provider of live event automated ticketing
services in the United States, with over 3,000 clients, and has a widely
recognized brand name in the live event ticketing business. TMCS believes that
its right to act as Ticketmaster Corp.'s exclusive agent for online live event
ticket sales with the exclusive, worldwide right to use the Ticketmaster
trademark for such online sales will enable TMCS to compete effectively with
other online ticketing services. However, in a number of specific geographic
regions, including a number of local markets in which TMCS provides or intends
to provide its local city guide service, one or more of Ticketmaster Corp.'s and
Ticketmaster Online's competitors may serve as the primary ticketing service in
the region. TMCS believes that its Ticketmaster Online Service will experience
significant difficulty in establishing a significant online presence in such
regions and, as a result, any local city guide for such a region may be unable
to provide significant ticketing capabilities. In addition, there can be no
assurance that one or more of these regional automated ticketing companies will
not expand into other regions or nationally, which could have a material adverse
effect on TMCS's business, financial condition and results of operations.

Furthermore, some of Ticketmaster Online's competitors may have financial
and other resources greater than TMCS's and may introduce new Internet products
and services in these markets in the future. There can be no assurance that
Ticketmaster Online's competitors will not develop services superior to those of
Ticketmaster Online or achieve greater acceptance than the Ticketmaster Online
service offerings. In addition, pursuant to the TMCS license agreement with
Ticketmaster Corp., Ticketmaster Online is restricted from entering into
agreements with facilities, promoters or other ticket sellers for the online
sale of live event tickets. As a result, Ticketmaster Online is dependent on the
ability of Ticketmaster Corp. to acquire and maintain live event ticketing
rights, including online ticketing rights, with facilities and promoters and to
negotiate commercially favorable terms for such rights. Furthermore,
substantially all of the tickets sold through TMCS's Ticketmaster Online Web
site are also sold by Ticketmaster Corp. by telephone and through independent
retail outlets. These sales by Ticketmaster Corp. could have a material adverse
effect on TMCS's online ticket sales, and as a result, on our business,
financial condition and results of operations.

TMCS believes that principal competitive factors include the following:

. depth;

. quality and comprehensiveness of content;

. ease of use;

. distribution;

. search capability; and

. brand recognition.

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Many of TMCS's competitors, whether with respect to the CitySearch service
or Ticketmaster Online service, have greater financial and marketing resources
than TMCS and may have significant competitive advantages through other lines of
business and existing business relationships. There can be no assurance that
TMCS will be able to successfully compete against its current or future
competitors or that competition will not have a material adverse effect on its
business, financial condition and results of operations. Furthermore, as a
strategic response to changes in the competitive environment, TMCS may make
certain pricing, servicing or marketing decisions or enter into acquisitions or
new ventures that could have a material adverse effect on its business,
financial condition and results of operations.

Proprietary Rights

TMCS regards its copyrights, service marks, trademarks, trade dress, trade
secrets, proprietary software and similar intellectual property as critical to
its success, and relies on trademark and copyright law, trade secret protection
and confidentiality and/or license agreements with employees, customers,
partners and others to protect its proprietary rights. TMCS does not hold any
patents. TMCS pursues the registration of certain of its key trademarks and
service marks in the United States and internationally. Effective trademark,
service mark, copyright and trade secret protection may not be available or
sought by TMCS in every country in which its products and services are made
available online. TMCS has licensed in the past, and expects that it may license
in the future, certain proprietary rights, such as trademarks or copyrighted
material, to third parties. In addition, TMCS has licensed in the past, and
expects to license in the future, certain content, including trademarks and
copyrighted material, from third parties. While TMCS attempts to ensure that the
quality of its brands is maintained by such licensees, there can be no assurance
that such licensees will not take actions that might materially adversely affect
the value of TMCS's proprietary rights or reputation, which could have a
material adverse effect on its business, financial condition and results of
operations. There can be no assurance that the steps taken by TMCS to protect
its proprietary rights will be adequate or that third parties will not infringe
or misappropriate its copyrights, trademarks, trade dress and similar
proprietary rights. In addition, there can be no assurance that other parties
will not assert infringement claims, including patent infringement claims,
against TMCS. TMCS licenses the registered trademark "CitySearch" from a third
party, and there can be no assurance that it will be able to continue to license
the trademark on terms acceptable to it. The initial term of the license expires
in 2001, subject to renewal at TMCS's option. TMCS licenses the trademark
"Ticketmaster" and related trademarks from Ticketmaster Corp. pursuant to TMCS's
license agreement with them. TMCS is dependent upon Ticketmaster Corp. to
maintain and assert TMCS's rights to the trademarks licensed from Ticketmaster
Corp. and defend infringement claims, if any, relating to TMCS's use of such
marks. TMCS may be subject to legal proceedings and claims of alleged
infringement of the trademarks and other intellectual property rights of third
parties by TMCS's and its licensees or licensors. Such claims, even if not
meritorious, could result in the expenditure of significant financial and
managerial resources which could result in a material adverse effect on TMCS's
business, financial condition and results of operations.

Employees

As of June 30, 1999, TMCS employed 804 persons with respect to the
CitySearch business, including:

. 337 persons in functions related to cost of revenue, including 280
persons in design, content collection, editorial and photography, 42
persons in customer service and 15 persons in professional
services;

. 341 persons in sales and marketing;

. 58 persons in research and development; and

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. 68 persons in general and administrative areas.

As of June 30, 1999, TMCS employed 28 persons with respect to the
Ticketmaster Online business, including 14 in advertising and promotion, seven
in operations and technical support, four in graphic design and editorial and
content development and three in general and administrative services. None of
TMCS's employees is represented by a labor union, and TMCS considers its
employee relations to be good.

Properties

TMCS's headquarters are located in Pasadena, California, where it currently
leases approximately 43,000 square feet under a lease expiring in 2002. TMCS
also leases local office space in approximately 27 cities throughout the United
States and abroad. Local offices range in size from less than 1,000 square feet
to 10,000 square feet and have lease terms that range from month-to-month to
seven years. None of such leases expires later than 2004. TMCS also leases
temporary office space in Los Angeles, California, as well as office space in
additional cities throughout the United States, the United Kingdom and Canada,
in each case on a month-to-month basis from Ticketmaster Corp. on terms that
TMCS believes are at least as favorable as those it could obtain from a third
party in an arm's-length transaction. TMCS believes that its facilities are
adequate in the locations where it currently does business.

Legal Proceedings

TMCS is not currently subject to any material legal proceedings. However,
it may from time to time become a party to various legal proceedings arising in
the ordinary course of its business.

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SHARE OWNERSHIP BY PRINCIPAL STOCKHOLDERS, MANAGEMENT
AND DIRECTORS OF TMCS

TMCS Class B Common Stock

The following table sets forth, as of June 14, 1999, certain information
regarding the beneficial ownership of TMCS Class B Common Stock by (1) each
person or entity who is known by TMCS to own beneficially 5% or more of its
outstanding Class B Common Stock; (2) each of its directors; (3) its Chief
Executive Officer; and (iv) all of its directors and executive officers as a
group. The information below is shown both prior to, and following the issuance
of the maximum number of shares which could be issued in the Merger.

Prior to Merger Post Merger
---------------------------------- ----------------------------------
Shares Beneficially Shares Beneficially
Owned Voting Owned Voting
------------------------ ------------------------
Number(2) Percent(2) Power(3) Number(2) Percent(2) Power(3)
---------- ----------- ------- ---------- ----------- -------
<S> <C> <C> <C> <C> <C> <C>
Name and Address of Beneficial Owner(1)...........
USA Networks, Inc................................. 42,480,143 73.8 % 67.3% 42,480,143 77.3 % 67.1%
152 West 57th Street, 42nd Floor
New York, NY 10019
Barry Diller(4)................................... 42,480,143 73.8 67.3 42,480,143 77.3 67.3
William Gross(5).................................. 2,828,261 15.8 4.5 2,828,261 18.4 4.5
Joseph Gleberman(6)............................... 2,387,981 13.7 3.8 2,387,981 16.0 3.8
Cendant Corporation(7)............................ 1,924,777 11.3 * 1,924,777 13.3 *
9 West 57th Street
New York, NY 10019
Charles Conn(8)................................... 1,551,874 9.3 2.4 1,551,874 11.0 2.4
Thomas Unterman(9)................................ 750,413 4.7 1.2 750,413 5.7 1.2
Alan Spoon(10).................................... 748,692 4.7 1.2 748,692 5.6 1.2
Robert Kavner(11)................................. 247,031 1.6 * 247,031 1.9 *
William D. Savoy.................................. 10,000 * * 10,000 * *
Alan Citron....................................... 2,500 * * 2,500 * *
Terry Barnes...................................... 2,500 * * 2,500 * *
Eugene L. Cobuzzi(12)............................. 2,500 * * 2,500 * *
Victor A. Kaufman................................. 2,000 * * 2,000 * *
Barry Baker....................................... -- * * -- * *
All executive officers and directors as a group
(17 persons)(13)................................. 51,068,021 75.0 81.1 52,992,798 80.9 80.8
</TABLE>

______________________
* Less than 1% of the total voting power of the outstanding Class A Common
Stock and Class B Common Stock.
(1) The address of Mr. Diller and Mr. Kaufman is: c/o USA Networks, Inc., 152
West 57th Street, 42nd Floor, New York, NY 10019. Except as otherwise
indicated, the address of each of the other named individuals is: c/o
Ticketmaster Online-CitySearch, Inc., 790 E. Colorado Boulevard, Suite 200,
Pasadena, CA 91101.
(2) Pursuant to the TMCS Restated Certificate of Incorporation, shares of Class
A Common Stock are convertible at any time into an equal number of shares of
Class B Common Stock. The percentage of shares beneficially owned assumes
the conversion of all shares of Class A Common Stock beneficially owned by
the listed person, but does not assume the conversion of Class A Common
Stock owned by any other person. Beneficial ownership is determined in
accordance with the rules of the Securities and Exchange Commission and
generally includes voting or investment power with respect to securities.
Except as indicated by footnote, and subject to community property laws
where applicable, the persons named in the table above have sole voting and
investment power with respect to all shares of Common Stock shown as
beneficially owned by them. Amounts shown in the above table and the
following notes include shares issuable upon exercise of stock options to
purchase shares of Class A Common Stock which are exercisable within 60 days
of June 14, 1999.
(3) Percent of total voting power is based on one vote for each share of Class B
Common Stock and 15 votes for each share of Class A Common Stock, calculated
assuming no conversion of the Class A Common Stock by any holder. The voting
power is calculated as of June 14, 1999.
(4) Includes 42,480,143 shares of Class A Common Stock which are beneficially
owned by USAi. Mr. Diller disclaims beneficial ownership of such shares.
(5) Includes 472,562 shares of Class A Common Stock held by bill gross'
idealab!. Mr. Gross disclaims beneficial ownership of the shares held by
bill gross' idealab!.
(6) Includes 2,387,981 shares of Class A Common Stock which are held by entities
affiliated with The Goldman Sachs Group L.P. Mr. Gleberman is a managing
director of Goldman, Sachs & Co., the general partner of which is The
Goldman Sachs Group L.P. Mr. Gleberman disclaims beneficial ownership of the
shares owned by The Goldman Sachs Group L.P., except to the extent of his
pecuniary interest therein.
(7) Represents shares of Class B Common Stock owned by Cendant Intermediate
Holdings, Inc., a wholly owned subsidiary of Cendant Corporation.

80
<PAGE>

(8) Includes 1,205,000 shares of Class A Common Stock, and options to purchase
325,000 shares of Class A Common Stock and 21,874 shares of Class B Common
Stock exercisable by Mr. Conn within 60 days of June 14, 1999.
(9) Includes 743,360 shares of Class A Common Stock which are held by The Times
Mirror Company. Mr. Unterman disclaims beneficial ownership of such shares.
Also includes 7,053 shares of Class A Common Stock which are held by The
Thomas and Janet Unterman Living Trust dated 12/30/94.
(10) Includes 748,692 shares of Class A Common Stock which are held by
Washingtonpost.Newsweek Interactive Company. Mr. Spoon disclaims beneficial
ownership of such shares.
(11) Includes 115,282 shares of Class A Common Stock and options to purchase
131,749 shares of Class A Common Stock exercisable by Mr. Kavner within 60
days of June 14, 1999.
(12) Includes 2,500 shares of Class B Common Stock held in custodial accounts
for the benefit of Mr. Cobuzzi's minor children for which Mr. Cobuzzi
serves as custodian.
(13) See notes (2) through (12).

TMCS Class A Common Stock

The following table sets forth, as of June 14, 1999, certain information
relating to the beneficial ownership of TMCS Class A Common Stock by (1) each
person or entity who is known by TMCS to beneficially own 5% or more of its
outstanding Class A Common Stock; (2) each of its directors; (3) its Chief
Executive Officer; and (4) all of its directors and executive officers as a
group.

<TABLE>
<CAPTION>
Beneficially Percentage of Class
Name and Address of Beneficial Owner (1) Owned (2) (2)
- --------------------------------------------------------------------- ------------ -------------------
<S> <C> <C>
USA Networks, Inc.................................................... 42,480,143 68.1%
152 West 57/th/ Street, 42nd Floor
New York, NY 10019
Barry Diller(3)...................................................... 42,480,143 68.1
William Gross(4)..................................................... 2,828,261 4.5
Joseph Gleberman(5).................................................. 2,387,981 3.8
Charles Conn(6)...................................................... 1,530,000 2.4
Thomas Unterman(7)................................................... 750,413 1.2
Alan Spoon(8)........................................................ 748,692 1.2
Robert Kavner(9)..................................................... 247,031 *
William D. Savoy..................................................... -- --
Alan Citron.......................................................... -- --
Terry Barnes......................................................... -- --
Eugene L. Cobuzzi.................................................... -- --
Victor A. Kaufman.................................................... -- --
Barry Baker.......................................................... -- --
All executive officers and directors as a group (17 persons)(10)..... 51,022,981 81.1
</TABLE>

- -----------------------
* Less than 1% of the outstanding Class A Common Stock.
(1) The address of Mr. Diller and Mr. Kaufman is: c/o USA Networks, Inc., 152
West 57th Street, 42nd Floor, New York, NY 10019. The address of each of the
other named individuals is: c/o Ticketmaster Online-CitySearch, Inc., 790 E.
Colorado Boulevard, Suite 200, Pasadena, CA 91101.
(2) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or
investment power with respect to securities. Except as indicated by
footnote, and subject to community property laws where applicable, the
persons named in the table above have sole voting and investment power with
respect to all shares of Class A Common Stock shown as beneficially owned by
them. Percentage of class is based on 62,395,683 shares of Class A Common
Stock outstanding as of June 9, 1999. Amounts shown in the above table and
the following notes include shares issuable upon exercise of stock options
to purchase shares of Class A Common Stock which are exercisable within 60
days of June 9, 1999. Shares of Class A Common Stock may be converted at any
time into an equal number of shares of Class B Common Stock.

81
<PAGE>

(3) Includes 42,480,143 shares of Class A Common Stock beneficially owned by
USAi, as to which Mr. Diller disclaims beneficial ownership.
(4) Includes 472,562 shares of Class A Common Stock held by bill gross'
idealab!. Mr. Gross disclaims beneficial ownership of the shares held by
bill gross' idealab!.
(5) Includes 2,387,981 shares of Class A Common Stock held by entities
affiliated with The Goldman Sachs Group L.P. Mr. Gleberman is a managing
director of Goldman, Sachs & Co., the general partner of which is The
Goldman Sachs Group L.P. Mr. Gleberman disclaims beneficial ownership of
the shares owned by The Goldman Sachs Group L.P., except to the extent of
his pecuniary interest therein.
(6) Includes 325,000 shares issuable upon exercise of stock options to purchase
shares of Class A Common Stock which are exercisable by Mr. Conn within 60
days of June 14, 1999.
(7) Includes 743,360 shares of Class A Common Stock held by The Times Mirror
Company, as to which Mr. Unterman disclaims beneficial ownership, and 7,053
shares of Class A Common Stock held by The Thomas and Janet Unterman Living
Trust dated 12/30/94.
(8) Includes 748,692 shares of Class A Common Stock held by
Washingtonpost.Newsweek Interactive Company, as to which Mr. Spoon
disclaims beneficial ownership.
(9) Includes 131,749 shares issuable upon exercise of stock options to purchase
shares of Class A Common Stock which are exercisable by Mr. Kavner within
60 days of June 14, 1999.
(10) See notes (2) through (9).

USAi Common Stock

The following table sets forth, as of June 9, 1999, information relating to
the beneficial ownership of the USAi Common Stock by (1) each of TMCS's
directors; (2) TMCS's Chief Executive Officer; and (3) all of TMCS's executive
officers and directors as a group.

<TABLE>
<CAPTION>
Percentage of Total
Name and Address of Beneficial Owner (1) Number of Shares Percent of Class (2) Voting Power (3)
- ------------------------------------------------ ---------------- -------------------- -------------------
<S> <C> <C> <C>
Barry Diller(4)................................. 60,671,714 34.3% 74.7%
William Gross................................... -- -- --
Joseph Gleberman................................ -- -- --
Charles Conn.................................... -- -- --
Thomas Unterman................................. -- -- --
Alan Spoon...................................... -- -- --
Robert Kavner................................... -- -- --
William D. Savoy(5)............................. 81,744 * **
Alan Citron(6).................................. 33,781 * **
Terry Barnes(6)................................. 75,000 * **
Eugene L. Cobuzzi(6)............................ 56,952 * **
Victor A. Kaufman(6)............................ 335,000 * **
Barry Baker(7).................................. 5,300
All executive officers and directors as a group 61,259,491 34.5% 74.8%
(17 persons)...................................
</TABLE>

- ------------------
* Less than 1% of the outstanding USAi Common Stock.
** Less than 1% of the total voting power of the USAi Common Stock and the
Class B common stock of USAi, par value $.01 per share.
(1) The address of Mr. Diller, Mr. Baker and Mr. Kaufman is: c/o USA Networks,
Inc., 152 West 57th Street, 42nd Floor, New York, NY 10019. The address of
each of the other named individuals is: c/o Ticketmaster Online-CitySearch,
Inc., 790 E. Colorado Boulevard, Suite 200, Pasadena, CA 91101.
(2) The percentage of beneficial ownership listed assumes the conversion of any
shares of USAi Class B Common Stock owned by such listed person, but does
not assume the conversion of USAi Class B Common Stock owned by

82
<PAGE>

any other person. Beneficial ownership has been determined in accordance
with the rules of the Securities and Exchange Commission. Shares of USAi
Class B Common Stock are convertible at any time into an equal number of
shares of USAi Common Stock.
(3) The percentage of votes for all classes is based on one vote for each share
of USAi Common Stock and ten votes for each share of USAi Class B Common
Stock, assuming no conversion of USAi Class B Common Stock.
(4) Liberty, a wholly-owned subsidiary of TCI, Universal, Seagram, USAi and Mr.
Diller are parties to a stockholders agreement pursuant to which Liberty and
Mr. Diller have formed BDTV INC., BDTV II INC., BDTV III INC. and BDTV IV
INC., or together the "BDTV Entities," which entities, as of June 9, 1999,
held 4,000,000, 15,618,222, 4,005,182 and 800,000 shares of USAi Class B
Common Stock, respectively, and an aggregate of 22 shares of USAi Common
Stock collectively. Includes 6,715,000 shares of USAi Class B Common Stock,
and 9,090,654 shares of USAi Common Stock as to which Mr. Diller has general
voting power and which are otherwise beneficially owned by Seagram. Includes
378,322 shares of USAi Class B Common Stock, and 4,820,587 shares of USAi
Common Stock as to which Mr. Diller has general voting power and which are
otherwise beneficially owned by Liberty. Also consists of 1,029,954 shares
of USAi Common Stock owned by Mr. Diller, vested options to purchase
14,153,771 shares of USAi Common Stock, and 60,000 share of USAi Common
Stock held by a private foundation as to which Mr. Diller disclaims
beneficial ownership. Pursuant to the stockholders agreement, Mr. Diller
generally has the right to vote all of the shares of USAi stock held by the
BDTV Entities, Seagram and Liberty. These figures do not include any
unissued shares of USAi Common Stock or USAi Class B Common Stock issuable
upon exchange of the shares of Home Shopping Network, Inc. held by Liberty
HSN, Inc. and the shares of USANi LLC beneficially owned by Liberty or
Seagram.
(5) Consists of 29,000 shares of USAi Common Stock and vested options to
purchase 52,744 shares of USAi Common Stock.
(6) Consists solely of vested options to purchase shares of USAi Common Stock.
(7) Consists of 5,300 shares of USAi Common Stock.

USAi Class B Common Stock

The following table sets forth, as of June 9, 1999, information relating to
the beneficial ownership of USAi Class B Common Stock for the individuals
described in the table regarding ownership of USAi Common Stock.

<TABLE>
<CAPTION>
Number of Shares
Beneficially
Name and Address of Beneficial Owner Owned (1) Percentage of Class
- ---------------------------------------------------------------- ---------------- -------------------
<S> <C> <C>
Barry Diller(2)................................................. 31,516,726 100%
c/o USA Networks, Inc.
152 West 57th Street 42nd Floor
New York, NY 10019
</TABLE>

- -------------------
(1) All or any portion of shares of USAi Class B Common Stock may be converted
at any time into an equal number of shares of USAi Common Stock.
(2) These figures do not include any unissued shares of USAi Common Stock or
USAi Class B Common Stock issuable upon conversion of Liberty HSN's Home
Shopping shares and shares of USANi LLC beneficially owned by Liberty or
Seagram.

83
<PAGE>

MANAGEMENT OF TMCS

Executive Officers and Directors

The following table sets forth certain information regarding the executive
officers and directors of TMCS as of June 25, 1999:

<TABLE>
<CAPTION>
Name Age Position
- ----------------------------------------------- ------ ------------------------------------------
<S> <C> <C>
Alan Citron.................................... 40 Chairman of the Board
Charles Conn................................... 37 Chief Executive Officer and Director
David Hagan.................................... 39 President, Cityguide and Shared Resources
John Pleasants................................. 33 President, Ticketing Transactions
Thomas McInerney............................... 34 Chief Financial Officer, Executive Vice
President, Finance and Administration and
Treasurer
Brad Serwin.................................... 38 General Counsel, Vice President and Secretary
Barry Baker.................................... 46 Director
Terry Barnes................................... 47 Director
Eugene L. Cobuzzi.............................. 42 Director
Barry Diller................................... 57 Director
Joseph Gleberman............................... 41 Director
William Gross.................................. 40 Director
Victor A. Kaufman.............................. 56 Director
Robert Kavner(1)............................... 55 Director
William D. Savoy(1)(2)......................... 34 Director
Alan Spoon..................................... 48 Director
Thomas Unterman(2)............................. 54 Director
</TABLE>

- -----------------------
(1) Member of the Compensation Committee.
(2) Member of the Audit Committee.

Mr. Citron has served as Chairman of the Board of TMCS since September 1998
and the President of USA Interactive, a division of USAi, since July 1998. From
June 1997 until July 1998, Mr. Citron served as the President and Chief
Operating Officer of Ticketmaster Online. From January 1995 until June 1997, Mr.
Citron served as Senior Vice President--New Media of Ticketmaster Corp. From
January 1991 until January 1995, Mr. Citron was employed by the Los Angeles
Times, a division of The Times Mirror Company, as a reporter and business writer
and, commencing in 1992, as an assistant business editor in charge of
entertainment.

Mr. Conn has served as Chief Executive Officer of TMCS since September 1998
and as a director since March 1999. He has served as Chief Executive Officer of
CitySearch since he co-founded CitySearch in September 1995, served as President
of CitySearch from September 1995 to October 1996 and served as a director from
September 1995 until September 1998. From September 1990 to September 1995, he
was a consultant at McKinsey & Company, where he was elected Partner. From
September 1986 to September 1988, Mr. Conn worked with the Boston Consulting
Group in Boston and Tokyo and in 1989 with Canon, Inc. Mr. Conn holds a B.A.
from Boston University, a B.A. and M.A. from Oxford University, where he was a
Rhodes Scholar, and an M.B.A. from Harvard Business School, where he was a Baker
Scholar.

84
<PAGE>

Mr. Hagan has served as President of Cityguide and Shared Resources since
May 1999. He served as Chief Operating Officer of TMCS from January 1999 to May
1999. From April 1994 until December 1998, he served in a variety of senior
management positions with Sprint Canada, a telecommunications company, most
recently as Executive Vice President, Marketing, Sales and Service. While at
Sprint Canada, Mr. Hagan also served as President, Consumer Services Group and
as Vice President, Residential Services.

Mr. Pleasants has served as President - Ticketing and Transactions of TMCS
since May 1999. Prior to such position, Mr. Pleasants served as Executive Vice
President - New Markets from November 1998 to April 1999 and General Manager -
New Markets from November 1996 to November 1998. From September 1993 to November
1996, Mr. Pleasants served as Product Manager for PepsiCo's Frito-Lay division.
From May 1988 to August 1991, he worked as a Plant Manager and sales and
marketing executive at Hygiene Industries, a textile manufacturer. Mr. Pleasants
holds a MBA from Harvard Business School.

Mr. McInerney has served as Chief Financial Officer, Executive Vice
President, Finance and Administration and Treasurer of TMCS since May 1999 when
he joined the company. Prior to joining TMCS, Mr. McInerney was an investment
banker with Morgan Stanley Dean Witter for nine years, most recently as a
Principal. Prior to Morgan Stanley, Mr. McInerney attended Harvard Business
School from September 1988 to June 1990.

Mr. Serwin has served as General Counsel, Vice President and Secretary of
TMCS since June 1999 when he joined the company. From March 1995 to May 1999,
Mr. Serwin served as General Counsel, Senior Vice President and Secretary of
PAULA Financial, a publicly traded insurance holding company. Prior to joining
PAULA Financial, Mr. Serwin practiced law for nine years with Gibson, Dunn &
Crutcher LLP, where he specialized in transactional and securities law matters.

Mr. Baker has served as a director of TMCS since March 1999. Mr. Baker has
also served as a director of USAi since March 1999. Mr. Baker has been President
and Chief Operating Officer of USAi since March 1999. Mr. Baker was Executive
Vice President of Sinclair Broadcast Group, Inc. and served as Chief Executive
Officer designate and as a director of Sinclair Communications, Inc. from June
1996 through February 1999. From 1989 through May 1996, he was also Chief
Executive Officer of River City Broadcasting, L.P., which was acquired by
Sinclair Broadcasting.

Mr. Barnes has served as a director of TMCS since September 1998 and as the
President and Chief Executive Officer of Ticketmaster Corp. since June 1998.
From September 1995 until June 1998, Mr. Barnes was the President and Chief
Operating Officer of TM Ticketing Co. From January 1991 until September 1995,
Mr. Barnes was Vice President and General Manager of numerous subsidiaries of
Ticketmaster Corp. in the Midwest.

Mr. Cobuzzi has served as a director of TMCS since September 1998 and as
the Chief Operating Officer of Ticketmaster Corp. since June 1998. From February
1997 until June 1998, Mr. Cobuzzi was the Senior Vice President of Operations
for Ticketmaster Corp. From September 1995 until February 1997, Mr. Cobuzzi
served as an Executive Vice President of TM Ticketing Co. From January 1991
until September 1995, Mr. Cobuzzi served as an officer of numerous subsidiaries
of Ticketmaster Corp. in the Northeast. Mr. Cobuzzi, a CPA, began his career at
Ticketmaster Corp. as Controller in August 1985.

Mr. Diller has served as a director of TMCS since September 1998 and served
as a director of CitySearch from December 1997 until September 1998. Mr. Diller
has been a director and Chairman of the Board and Chief Executive Officer of
USAi since August 1995. He was Chairman of the Board and Chief Executive Officer
of QVC, Inc., from December 1992 through December 1994. From 1984 to 1992, Mr.
Diller served as the Chairman of the Board and Chief Executive Officer of Fox,
Inc. Prior to joining Fox, Inc., Mr. Diller served for ten years as Chairman of
the Board and Chief Executive Officer of Paramount Pictures Corporation. Mr.
Diller is also a director of The Seagram Company Ltd. He also serves on the
Board

85
<PAGE>

of the Museum of Television and Radio and is a member of the Board of
Councilors for the University of Southern California's School of Cinema-
Television. Mr. Diller also serves on the Board of Directors of AIDS Project Los
Angeles, the Executive Board for the Medical Sciences of the University of
California, Los Angeles and the Board of the Children's Advocacy Center of
Manhattan.

Mr. Gleberman has served as a director of CitySearch since May 1996 and of
TMCS since September 1998. He is a Managing Director in the Principal Investment
Area of Goldman, Sachs & Co., an investment banking firm, a position which he
has held since November 1996. He joined Goldman, Sachs & Co. in 1982 and has
served as a partner from November 1990 to November 1996. Mr. Gleberman also
serves as a director of Applied Analytical Industries, Inc., Biofield Corp. and
Dade International, Inc.

Mr. Gross has served as a director of CitySearch since he co-founded it in
September 1995 and of TMCS since September 1998. Since March 1996, Mr. Gross has
been Chairman of the Board, Chief Executive Officer and President of bill gross'
idealab!, a corporation which generates ideas for and creates new companies. In
1991, he founded Knowledge Adventure Inc., a corporation which developed
educational software for children, and served as its Chairman from June 1991 to
January 1997. He was a developer at Lotus Development Corporation from 1986 to
1991. Prior to joining Lotus Development Corporation, Mr. Gross founded, in
1980, GNP Loudspeaker, Inc. to manufacture and sell his patented designs. In
1995, Mr. Gross was elected to the Board of Trustees of California Institute of
Technology as the first Young Alumni Trustee. Mr. Gross also serves as a
director of goto.com, Inc.

Mr. Kaufman has served as a director of TMCS since September 1998. Mr.
Kaufman has also served as a director of USAi since December 1996. Mr. Kaufman
has served in the Office of the Chairman of USAi since January 1997 and as its
Chief Financial Officer since November 1997. Prior to that time, he served as
Chairman and Chief Executive Officer of Savoy Pictures Entertainment, Inc. from
March 1992 through December 1996 and as a director of Savoy from February 1992
through December 1996. Mr. Kaufman was the founding Chairman and Chief Executive
Officer of Tri-Star Pictures, Inc. from 1983 until December 1987, at which time
he became President and Chief Executive Officer of Tri-Star's successor company,
Columbia Pictures Entertainment, Inc. He resigned from these positions at the
end of 1989 following the acquisition of Columbia by Sony USA, Inc. Mr. Kaufman
joined Columbia in 1974 and served in a variety of senior positions at Columbia
and its affiliates prior to the founding of Tri- Star.

Mr. Kavner has served as a director of CitySearch since December 1995,
including as Chairman of the Board from March 1996 to September 1998 and as a
director of TMCS since September 1998. Mr. Kavner has served as the Chief
Executive Officer, President and a director of On Command Corporation, a
provider of hotel in-room entertainment and movies, since September 1996 and was
a consultant in the area of Internet services and content, interactive
entertainment and telecommunications from September 1995 to August 1996. From
June 1994 to September 1995, Mr. Kavner was the head of Creative Artists
Agency's business advisory group. From 1984 to 1994, Mr. Kavner held a number of
senior executive positions with AT&T, Inc. He also serves as a director of Fleet
Financial Group and Earthlink Networks, Inc.

Mr. Savoy has served as a director of TMCS since September 1998. Since
1990, Mr. Savoy has served as Vice President of Vulcan Ventures, Incorporated, a
venture capital fund. From 1987 until November 1990, Mr. Savoy was employed by
Layered, Inc., and became its President in 1988. Currently, Mr. Savoy serves as
President of Vulcan Northwest, Inc. Mr. Savoy also serves on the Advisory Board
of Dream Works SKG. Mr. Savoy serves as a director of Harbinger Corporation,
Metricom, Inc., Telescan, Inc., United States Satellite Broadcasting, Inc. and,
since July 1997, has served as a director of USAi.

Mr. Spoon has served as a director of CitySearch since December 1997 and as
a director of TMCS since September 1998. Mr. Spoon has been President of The
Washington Post Company since September 1993 and Chief Operating Officer and a
director since May 1991. Prior to that, Mr. Spoon held a

86
<PAGE>

wide variety of positions at The Washington Post Company, including President of
Newsweek from September 1989 to May 1991. He is also a director of American
Management Systems, Inc. and Human Genome Sciences, Inc.

Mr. Unterman has served as a director of CitySearch since June 1997 and as
a director of TMCS since September 1998. Since March 1998, he has served as
Executive Vice President and Chief Financial Officer and from August 1995 to
March 1998, he served as Senior Vice President and Chief Financial Officer of
The Times Mirror Company. From February 1995 to August 1995, Mr. Unterman was a
Senior Vice President and General Counsel and, from September 1992 to February
1995, was Vice President and General Counsel of The Times Mirror Company.

Board Composition

The Board of Directors TMCS is currently comprised of 13 directors, one of
whom is an officer of TMCS. Pursuant to the TMCS Restated Certificate of
Incorporation, the number of directors will be fixed from time to time by
resolution of the Board of Directors. All members of the Board of Directors are
elected annually by the TMCS stockholders. Several of the TMCS current directors
are directors, officers or employees of USAi or Ticketmaster Group.

The Board of Directors has a Compensation Committee, comprised of Messrs.
Kavner and Savoy, with Mr. Citron serving as an observer to such Committee. The
Compensation Committee makes recommendations to the Board of Directors
concerning salaries and incentive compensation for officers and employees,
including equity compensation for senior executives. In addition, the Board of
Directors has an Audit Committee, comprised of Messrs. Savoy and Unterman with
Mr. Michael Durney, who serves as the Controller for USAi as an observer, that
reviews and monitors corporate financial reporting and audits of the company, as
well as any other accounting related matters.

Director Compensation

The members of the Board of Directors are not currently compensated for
their services to TMCS other than for reimbursement of their expenses incurred
in connection with such services. In March and April 1996, Mr. Kavner received
options to purchase 50,000 shares, 10,000 shares and 81,681 shares of TMCS Class
A Common Stock under the 1996 Stock Plan at an exercise price of $0.10 per
share, $0.10 per share and $0.25 per share, respectively. Directors may receive
discretionary stock option grants pursuant to the provisions of the TMCS 1998
Stock Plan.

Compensation Committee Interlocks and Insider Participation

The Board of Directors has a Compensation Committee, comprised of Messrs.
Kavner and Savoy, with Mr. Citron serving as an observer to such Committee.
Neither of the members of the Compensation Committee is an officer or employee
of TMCS. No interlocking relationship exists between its Board of Directors or
the Compensation Committee and the board of directors or compensation committee
of any other company, nor has such an interlocking relationship existed in the
past.

Executive Compensation

The following table sets forth certain summary information concerning the
compensation awarded to, earned by or paid for services rendered during the year
ended December 31, 1998 by TMCS's Chief Executive Officer. None of its current
executive officers earned in excess of $100,000 in compensation during that
year.

87
<PAGE>

Summary Compensation Table

<TABLE>
<CAPTION>
Long-Term
Compensation
------------------
Awards
------------------
Ticketmaster
Online-CitySearch
Securities
Other Annual Underlying Options

Name and Principal Position Salary Bonus Compensation (#) (1)
- ------------------------------------------------ ------ ----- ------------ ------------------
<S> <C> <C> <C> <C>
Charles Conn
Chief Executive Officer........................ $119,750 $50,000 $ -- 350,000
</TABLE>

- ----------------------
(1) Options to purchase 200,000 shares of Class A Common Stock were granted to
Mr. Conn, pursuant to the CitySearch 1996 Stock Plan. In addition, options
to purchase 150,000 shares of Class B Common Stock were granted to Mr. Conn
pursuant to the TMCS 1998 Stock Plan.

Option Grants in 1998

The following table sets forth certain information regarding option grants
to TMCS's Chief Executive Officer during the year ended December 31, 1998.

<TABLE>
<CAPTION>
Percent of
Number of Total Potential Realizable Value at
Securities Options Assumed Annual Rates of Stock
Underlying Granted to Exercise Price Option Appreciation
Options Employees Price Per Expiration For Term (5)
---------------------------
Name Granted (#) In 1998 (3) Share (4) Date 5% 10%
- ------------------------------- ----------- ----------- --------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Charles Conn................... 200,000(1) 8.7% $ 7.00 6/17/08 $16,843,620 $27,649,916
150,000(2) 23.1% $32.69 12/17/08 8,779,215 16,883,937
</TABLE>

- ------------------
(1) These options were granted under the 1996 Stock Plan and are exercisable for
Class A Common Stock. As of December 31, 1998, 325,000 shares were vested.
(2) These options were granted under the 1998 Stock Plan and are exercisable for
Class B Common Stock. No shares were vested as of December 31, 1998.
(3) Based on options to purchase 2,288,528 and 650,000 shares granted under the
1996 Stock Plan and the 1998 Stock Plan, respectively, to TMCS employees,
including Mr. Conn, during the year ended December 31, 1998. These options
exclude options to purchase 419,231 and 0 shares of Class A Common Stock and
Class B Common Stock, respectively, that were granted to employees and
subsequently canceled during the fiscal year ended December 31, 1998.
(4) The exercise price per share of each option was equal to the fair market
value of our underlying Common Stock on the date of grant as determined by
the Board of Directors.
(5) Potential gains are calculated based on the $56.00 closing price per share
of Class B Common Stock on December 31, 1998 net of the respective exercise
price but before taxes associated with the exercise. The 5% and 10% assumed
annual rates of compounded stock appreciation are mandated by the rules of
the Securities and Exchange Commission and do not represent Ticketmaster
Online--CitySearch's estimate or projection of the future Class B Common
Stock price. Actual gains, if any, on stock option exercises are dependent
on the future market price of shares of Class B Common Stock, our future
financial performance and overall market conditions.

Option Exercises and Fiscal Year-End Values

The following table sets forth the number of shares acquired upon the
exercise of stock options during the year ended December 31, 1998 and the number
of shares covered by both exercisable and unexercisable stock options held by
TMCS's Chief Executive Officer at December 31, 1998.

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<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised In-The-
Acquired Value Options at Year-End(#) Money Options at Year-End(3)
----------------------------- ----------------------------
Name On Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- --------------------------- ----------- -------- ----------- ------------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C>
Charles Conn............... -- -- 325,000(1) 0 $16,550,000 $ 0
0 150,000(2) 0 3,496,500
</TABLE>

- -----------------
(1) These options shown were granted under the 1996 Stock Plan and are
exercisable for Class A Common Stock.
(2) These options shown were granted under the 1998 Stock Plan and are
exercisable for Class B Common Stock.
(3) Based on the December 31, 1998 closing price of the Class B Common Stock of
$56.00 per share, less the exercise price.

Employment Agreement

On May 9, 1996, CitySearch entered into an at-will employment agreement
with Mr. Conn. Pursuant to the employment agreement, in the event that
Mr. Conn's employment is terminated, he will be entitled to receive severance
payments until the earlier of (1) such time as he is employed by a recognized
company or (2) six months after termination. The severance payments will equal
his full salary for the first three months after termination and half of his
salary for the second three months after termination.

In addition, pursuant to stock option agreements between TMCS and Mr. Conn,
the vesting of his stock options was accelerated and such stock options fully
vested upon completion of the merger between Ticketmaster Online and CitySearch.
Moreover, in connection with the merger, Mr. Conn entered into a noncompetition
agreement. See "Certain Relationships and Related Transactions For TMCS -- Non-
Competition Agreement."

Employee Benefit Plans

1996 Stock Option Plan

The Board of Directors of CitySearch adopted and the stockholders
approved the 1996 Stock Plan and the reservation of 2,500,000 shares of Common
Stock thereunder on March 1, 1996. On September 18, 1996, the Board of
Directors and the stockholders of CitySearch approved an increase of 500,000
shares reserved for issuance under the 1996 Stock Plan. The Board of Directors
and the stockholders of CitySearch approved a further increase of 1,000,000
shares on November 18, 1996 and November 20, 1996, respectively. The Board of
Directors and the stockholders of CitySearch approved a final increase of
1,500,000 shares, for an aggregate of 5,500,000 shares reserved for issuance
under the 1996 Stock Plan, on June 15, 1998 and August 5, 1998, respectively.
Pursuant to the terms of the 1996 Stock Plan, the merger of Ticketmaster
Online and CitySearch and the reclassification of shares subsequent thereto,
the CitySearch Common Stock reserved for issuance under the 1996 Stock Plan
has been reclassified as Class A Common Stock. As of June 9, 1999, there were
options to purchase an aggregate of 2,656,811 shares of Class A Common Stock
outstanding under the 1996 Stock Plan. TMCS does not intend to grant any
additional options under the 1996 Stock Plan.

The 1996 Stock Plan provides for the granting to employees, including
officers and employee directors, of incentive stock options within the meaning
of Section 422 of the Internal Revenue Code and for the granting to these
employees, and consultants, including non-employee directors, of nonstatutory
stock options.

Unless determined otherwise by the administrator, an option granted under
the 1996 Stock Plan is not transferable by the optionee other than by will or
by the laws of descent or distribution, and is exercisable during the lifetime
of the optionee only by such optionee. Unless otherwise provided by the
administrator, an option granted under the 1996 Stock Plan must be exercised
within three months after termination of the optionee's status as an employee
or consultant of TMCS, or within 12 months after termination of such status by
death or disability, but in no event later than the expiration of the option
in accordance with its terms. The shares subject to options granted under the
1996 Stock Plan may be fully and immediately exercisable or may be exercisable
cumulatively over time or upon satisfaction of specified performance criteria,
as determined by the administrator. In most cases, 25% of the shares subject
to options granted under the 1996 Stock Plan are exercisable at the end of one
year with one forty-eighth of the shares subject to the option becoming
exercisable each month thereafter. The 1996 Stock Plan provides that in the
event of a merger of TMCS with or into another corporation, or a sale of
substantially all of its assets, each option shall be assumed or an equivalent
option substituted for by the successor corporation. If the outstanding
options are not assumed or substituted for by the successor corporation, the
administrator shall provide for the optionee to have the right to exercise the
option as to all of the optioned stock, including shares as to which it would
not otherwise be exercisable. If the administrator makes an option exercisable
in full in the event of a merger or sale of assets, the administrator shall
notify the optionee that the option shall be fully exercisable for a period of
15 days from the date of such notice, and the option will terminate upon the
expiration of such period.

1998 Stock Option Plan

TMCS has adopted the 1998 Stock Plan and reserved 4,000,000 shares of
Class B Common Stock for issuance thereunder. The 1998 Stock Plan provides for
the grant of incentive stock options to employees, including officers and
employee directors, and for the grant of nonstatutory stock options and stock
purchase rights, or SPRs, to employees, directors and consultants. Unless
terminated sooner, the 1998 Stock Plan will terminate automatically in
September 2008. As of June 9, 1999, there were options to purchase an
aggregate of 728,612 shares of Class B Common Stock outstanding under the 1998
Stock Plan.

The administrator of the 1998 Stock Plan has the power to determine the
terms of the options or SPRs granted, including the exercise price of the
option or SPR, the number of shares subject to each option or SPR, the
exercisability thereof, and the form of consideration payable upon such
exercise. In addition, the administrator has the authority to amend, suspend
or terminate the 1998 Stock Plan, provided that no such action may affect any
shares of Class B Common Stock previously issued and sold or any option
previously granted under the 1998 Stock Plan. The maximum number of shares
covered by options that each optionee may be granted during a fiscal year is
500,000 shares. In addition, in connection with an optionee's initial
employment with TMCS, such optionee may be granted an option covering an
additional 1,000,000 shares.

Options and SPRs granted under the 1998 Stock Plan are generally not
transferable by the optionee, and each option and SPR is exercisable during
the lifetime of the optionee only by such optionee. Options granted under the
1998 Stock Plan generally must be exercised within three months after the end
of the optionee's status as an employee, director or consultant of TMCS, or
within 12 months after such optionee's termination by death or disability, but
in no event later than the expiration of the option's term.

In the case of SPRs, unless the administrator determines otherwise, the
restricted stock purchase agreement shall grant TMCS a repurchase option
exercisable upon the voluntary or involuntary termination of the purchaser's
employment or consulting relationship with TMCS for any reason, including
death or disability. The purchase price for shares repurchased pursuant to the
restricted stock purchase agreement shall be the original price paid by the
purchaser and may be paid by cancellation of any indebtedness of the purchaser
to TMCS. The repurchase option shall lapse at a rate determined by the
administrator.

The exercise price of all incentive stock options granted under the 1998
Stock Plan must be at least equal to the fair market value of the Class B
Common Stock on the date of grant. The exercise price of nonstatutory stock
options and SPRs granted under the 1998 Stock Plan is determined by the
administrator, but with respect to nonstatutory stock options intended to
qualify as "performance-based compensation" within the meaning of Section
162(m) of the Internal Revenue Code, the exercise price must be at least equal
to the fair market value of the Class B Common Stock on the date of grant.
With respect to any participant who owns stock possessing more than 10% of the
voting power of all classes of TMCS's outstanding capital stock, the exercise
price of any incentive stock option granted must be at least equal 110% of the
fair market value on the grant date, and the term of such incentive stock
option must not exceed five years. The term of all other options granted under
the 1998 Stock Plan may not exceed ten years.

The 1998 Stock Plan provides that in the event of a merger of TMCS with
or into another corporation, or a sale of substantially all of TMCS's assets,
each option and SPR shall be assumed or an equivalent option substituted for
by the successor corporation. If the outstanding options and SPRs are not
assumed or substituted for by the successor corporation, the administrator
shall provide for the optionee to vest and to have the right to exercise the
option or SPR as to all of the optioned stock, including shares as to which it
would not otherwise be vested or exercisable. If the administrator makes an
option or SPR vested and exercisable in full in the event of a merger or sale
of assets, the administrator shall notify the optionee that the option or SPR
shall be fully exercisable for a period of 15 days from the date of such
notice, and the option or SPR will terminate upon the expiration of such
period.

1998 Employee Stock Purchase Plan

TMCS has adopted the 1998 Employee Stock Purchase Plan and reserved an
aggregate of 1,000,000 shares of Class B Common Stock thereunder. The number
of shares reserved will be increased automatically each year on the first day
of TMCS's fiscal year beginning in 2000 by an amount equal to (1) 200,000
shares of Class B Common Stock or (2) a lesser amount determined by the Board
of Directors. The Purchase Plan is intended to qualify as an employee stock
purchase plan within the meaning of Section 423 of the Internal Revenue Code.
Under the Purchase Plan, the Board of Directors may authorize participation by
eligible employees, including officers, in periodic offerings following the
commencement of the Purchase Plan. Each offering period under the Purchase
Plan will run for six months, other than the initial offering period, which
commenced on December 2, 1998 and ends on August 14, 1999. Thereafter, new
six-month offering periods will commence each February 15 and August 15.

Unless otherwise determined by the Board of Directors, employees are
eligible to participate in the Purchase Plan only if they are customarily
employed by TMCS or a subsidiary of TMCS designated by the Board of Directors
for at least 20 hours per week and for at least five months per calendar year.
Amounts deducted and accumulated by the participant are used to purchase
shares of Class B Common Stock at the end of each offering period. Employees
who participate in an offering may have up to 15% of their compensation
withheld pursuant to the Purchase Plan. The price of Class B Common Stock
purchased under the Purchase Plan will be equal to 85% of the fair market
value of the Class B Common Stock on the relevant purchase date. Shares
purchased under the Purchase Plan generally may not be sold or otherwise
disposed of for 180 days after their date of purchase. Employees may end their
participation in any offering period at any time during any offering period,
and participation ends automatically on termination of employment with TMCS.
The maximum number of shares that a participant may purchase during each
offering period is 2,000 shares. In addition, no person may purchase shares
under the Purchase Plan to the extent such person would own 5% or more of the
total combined value or voting power of all classes of the capital stock of
TMCS or any of its subsidiaries or its parent corporation, or to the extent
that such person's rights to purchase stock under all employee stock purchase
plans would accrue at a rate which exceeded $25,000 for any calendar year. The
Purchase Plan will terminate ten years from the date of adoption of the
Purchase Plan, unless terminated earlier in accordance with the provisions of
the Purchase Plan.

In the event of a proposed sale of all or substantially all the assets of
TMCS, or the merger of TMCS with or into another corporation, each outstanding
option to purchase Class B Common Stock will be assumed or an equivalent
option substituted by the successor corporation. In the event the successor
corporation does not assume or substitute for the option, the offering period
then in progress shall be shortened to a new date prior to the proposed sale
or merger. The board of directors has the authority to amend or terminate the
Purchase Plan. No such board action may adversely affect any outstanding
options to purchase Class B Common Stock under the Purchase Plan unless the
ongoing operation of the Purchase Plan would result in unfavorable accounting
consequences to TMCS.

USAi Options

In connection with prior employment with Ticketmaster Online some of
TMCS's employees were previously given options to purchase USAi Common Stock.
USAi has informed TMCS that all outstanding options to purchase shares of USAi
Common Stock held by employees of Ticketmaster Online shall remain outstanding
until the earliest to occur of the exercise thereof, the expiration thereof
and the date that the optionholder is no longer an employee of Ticketmaster
Online or another business of TMCS, and that the unvested options shall
continue to vest and become exercisable pursuant to the terms of grant until
the earlier of the expiration thereof and the date the optionholder is no
longer an employee of Ticketmaster Online or another business of TMCS.

401(k) Plan

TMCS participates in a tax-qualified employee savings and retirement
plan, or 401(k) Plan, which covers all of TMCS's full-time employees who are
at least 21 years of age and who have been employed with TMCS for at least
three months. Pursuant to the 401(k) Plan, eligible employees may defer up to
20% of their pre-tax earnings, subject to the Internal Revenue Service's
annual contribution limit. The 401(k) Plan permits additional discretionary
matching contributions by TMCS on behalf of all participants in the 401(k)
Plan in such a percentage amount as may be determined annually by TMCS's board
of directors. To date, TMCS has made no such matching contributions. The
401(k) Plan is intended to qualify under Section 401 of the Internal Revenue
Code so that contributions by employees or by TMCS to the 401(k) Plan, and
income earned on plan contributions, are not taxable to employees until
withdrawn from the 401(k) Plan, and so that contributions by TMCS, if any,
will be deductible by TMCS when made. The trustee under the 401(k) Plan, at
the direction of each participant, invests the assets of the 401(k) Plan in
any of a number of investment options.

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF TMCS

The following Management's Discussion and Analysis of Financial Condition
and Results of Operations contains forward-looking statements based upon current
expectations that involve risks and uncertainties. When used in this prospectus,
the words "intend," "anticipate," "believe," "estimate," "plan" and "expect" and
similar expressions as they relate to TMCS are included to identify forward-
looking statements. TMCS's actual results and the timing of certain events
could differ materially from those anticipated in these forward-looking
statements as a result of certain factors, including those set forth under "Risk
Factors" and elsewhere in this proxy statement/prospectus.

Overview

TMCS is a leading provider of local city guides, local advertising and live
event ticketing on the Internet. The local CitySearch city guides and
Ticketmaster Online live events ticketing and merchandise distribution
capabilities have been integrated to offer online ticketing, merchandise,
electronic coupons and other transactions to a broader audience of consumers.
CitySearch was founded in September 1995 and Ticketmaster Online launched its
online ticketing services in November 1996 as a wholly-owned subsidiary of
Ticketmaster Corp. On September 28, 1998, a wholly-owned subsidiary of
CitySearch merged into Ticketmaster Online, with Ticketmaster Online continuing
as the surviving corporation and as a wholly-owned subsidiary of CitySearch. The
merger was accounted for using the "reverse purchase" method of accounting
pursuant to which Ticketmaster Online was treated as the acquiring entity for
accounting purposes.

TMCS derives revenues from several sources: online ticketing, sales of
sponsorships and advertising and City guide services. TMCS also derives revenues
from fees generated from CityAuction transactions and subscription fees and
other revenues from Match.com transactions. TMCS views it business as being in
one segment. Integration of the ticketing and city guide business models is
ongoing.

Ticketing operations revenues are primarily comprised of convenience
charges that are charged on a per ticket purchased basis and shipping and
handling fees which are collected on a per order basis. The sale of tickets for
an event often begins several months prior to the scheduled date of the event.
Ticket operations revenue is recognized when the ticket is sold. If credit card
chargeback or refund activity is likely to occur with respect to an event, for
example, due to the cancellation of such event, an allowance is established for
potential convenience charge refunds. Merchandise sale revenues are recognized
when the products are sold.

Under a licensing agreement with Ticketmaster Corp., subject to certain
limitations, Ticketmaster Corp. has granted TMCS an exclusive, perpetual,
irrevocable, worldwide license to use the Ticketmaster trademark and certain
Ticketmaster Corp. databases to sell live event tickets online for Ticketmaster
Corp.'s clients. In addition, Ticketmaster Corp. has authorized TMCS to be
Ticketmaster Corp.'s exclusive, perpetual, worldwide agent for such online
ticket sales. The license agreement further provides that Ticketmaster Corp.
may use and permit others to use the Ticketmaster trademark connection with the
online promotion of ticket sales.

. by telephone;

. by other voice-to-voice means or voice-to-voice recognition unit
systems;

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. by non-interactive broadcast, cable and satellite television; and

. by kiosks and retail ticket outlets.

Client venues retain the rights to sell tickets at their box offices or as
otherwise provided in client venue agreements with Ticketmaster Corp.

Ticketmaster Corp. is the contracting party with client venues, promoters
and sports franchises, providing ticket inventory management, consumer
information and related data for all ticketing transactions. Ticketmaster Corp.
provides this information to TMCS for processing of online ticket sales and
provides all transaction processing and fulfillment services for online live
event ticket sales. TMCS is required under the license agreement to comply with
the terms of Ticketmaster Corp.'s client agreements. TMCS's rights, contained
in the license agreement, are subject to the client agreements. The license
agreement also generally restricts TMCS from cooperating with, offering online
links to, or entering into any agreements with venues, ticket sellers or sales
agents for online sale of tickets.

Under the license agreement, TMCS pays Ticketmaster Corp. a royalty which
is a percentage of the net profit TMCS derives from online ticket sales. TMCS
also reimburses Ticketmaster Corp. for its direct expenses related to online
ticket sales.

Under the license agreement, TMCS has also been granted the non-exclusive
right to promote and sell online certain merchandise available through
Ticketmaster Corp. Ticketmaster Corp. serves as TMCS's exclusive fulfillment
provider for the online sales of this merchandise. As long as Ticketmaster
Corp.'s fees, terms and quality of service are no less favorable than those
available to TMCS from third parties, Ticketmaster Corp. or its affiliates will
serve as TMCS's exclusive fulfillment provider for the online sales of all other
merchandise available through Ticketmaster Corp.

Pursuant to its client agreements, Ticketmaster Corp. is generally granted
the right to collect from ticket purchasers a per ticket convenience charge on
all tickets sold other than at the box office and an additional per order
handling charge on all tickets sold by Ticketmaster Corp. at other than remote
sales outlets to partially offset the cost of fulfillment. The amount of the
convenience charge is typically determined during the contract negotiation
process, and varies based upon numerous factors, including:

. the services to be rendered to the client;

. the amount and cost of equipment to be installed at the client's box
office;

. the amount of advertising and/or promotional allowances to be provided;

. the type of event; and

. whether the ticket is purchased at a remote sales outlet, by telephone,
through TMCS's Web sites or otherwise.

Sponsorship and advertising revenues are derived from local and national
advertisers and are primarily recognized ratably over the term of the promotion.
Ticketmaster Corp. may also solicit sponsorship and advertising for TMCS's Web
sites in a bundle with other sponsorship and advertising opportunities offered
by Ticketmaster Corp.

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TMCS has two primary means of providing local city guides. In TMCS's owned
and operated markets, TMCS systematically produces the majority of its own
content, hires and rapidly deploys a direct sales force to sell custom-built Web
sites as well as related services to local and regional businesses and launches
a presence in approximately three to six months. In other markets, TMCS partners
with a local media company that contracts with TMCS to assist in developing,
designing and launching a city guide. These partners license TMCS business and
technology systems and provide royalty payments to TMCS for revenues derived
from operations. In partner-led markets, TMCS partners hire and train the local
city guide staff and purchase all necessary third-party hardware and software.
TMCS currently owns and operates 20 sites and participates in the operation of
11 other partner-led sites in various metropolitan areas.

In its owned and operated city guide markets, TMCS derives revenues
primarily from subscription fees resulting from the creation, hosting and
maintenance of local business Web sites. Business customers typically enter into
one-year agreements that automatically convert to month-to-month contracts upon
expiration. TMCS recognizes revenue from sales of local business Web sites on a
monthly basis over the term of each contract as services are rendered. The
average monthly revenue from new businesses signed up in its owned and operated
markets in December 1996 was approximately $50 per customer and in December 1998
was approximately $219 per customer. To a lesser extent, TMCS derives city guide
revenue from barter agreements with television, radio and media alliances. With
barter agreements, TMCS receives television and radio broadcast advertising in
exchange for Web site design, hosting and maintenance. Barter revenue and
expense are recognized monthly over the term of each contract. For each barter
agreement, revenue and expense are equal and are recognized at a rate based on
the estimated cost of the specific services provided by TMCS.

In partner-led markets, TMCS derives licensing and royalty revenues form
the licensing of its technology and business systems, consulting services and
from providing back office and hosting services. Royalty, consulting and
technology customization revenues have not been significant to date, but are
expected to increase as a percentage of revenues as partner-led markets mature
and as more partner-led market sites are launched. Licensing revenue under
license agreements is recognized over the term of the license agreement or the
period over which the relevant services are delivered for use of TMCS's business
and technology systems. Royalty revenue is recognized as earned and is
typically a percentage of partner-led market revenues from Web site
subscriptions, banners, advertisements, sponsorships, and other ancillary
offerings. Additionally, TMCS derives revenue from providing back office
services, including business Web site design, hosting, customer service and
billing, to certain of our partners. See Note 1 of Notes to Consolidated
Financial Statements.

CityAuction derives revenues from fees paid by users listing items for sale
on the Web site as well as from advertising fees. Match.com derives revenues
from membership fees paid by users who subscribe for periods of from one month
to one year and also from advertising fees.

Goodwill and Other Intangibles

The merger of Ticketmaster Online and CitySearch and the USAi tender offer
resulted in $160.6 million of goodwill to be amortized over five years and
intangibles related to non-competition agreements entered into in connection
with the merger of $500,000, which is being amortized over 2.5 years. We
recorded an allocation of goodwill of $154.8 million, which is being amortized
over ten years, resulting from the acquisition of Ticketmaster Group by USAi.
Our acquisitions of CityAuction and Match.com resulted in an aggregate of
$70.7 million in goodwill which will be amortized through 2004. Our proposed
acquisition of One and Only would result in additional goodwill in an amount
approximating the purchase price which would be amortized through 2004. Our
proposed acquisition of the Sidewalk assets would result in amortization over a
period of not more than five years of a portion of the value of the transaction
allocated to the assets acquired.

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Results of Operations

Ticketmaster Online--CitySearch

Six Months Ended June 30, 1999 and 1998

TICKETING OPERATIONS REVENUES. Ticketing operations revenues were $27.2
million for the six months ended June 30, 1999 compared to $5.9 million for the
corresponding period in the preceding year. The increase is primarily
attributable to a significant increase in the number of tickets sold (from
1,110,000 to 4,219,000 tickets for the six months ended June 30, 1998 and 1999,
respectively). Additionally, there was an increase in average convenience charge
revenue per ticket of 18.6% from the six months ended June 30, 1998 to June 30,
1999.

SPONSORSHIP AND ADVERTISING REVENUES. Sponsorship and advertising revenues
were $2.2 million for the six months ended June 30, 1999 compared to $2.4
million for the corresponding period of the preceding year. The decrease was
primarily attributable to a decrease in sponsorship and promotion activity with
a strategic marketing partner.

CITY GUIDE AND RELATED REVENUES. City guide and related revenues were $12.1
million for the six months ended June 30, 1999 representing the CitySearch city
guide and related revenue of the CitySearch business acquired.

TICKETING OPERATIONS EXPENSES. Ticketing operations expenses consist
primarily of expenses associated with ticket fulfillment, licenses and
royalties, Web site design and layout, service and network infrastructure
maintenance and data communications. Ticketing operations expenses were $20.3
million for the six months ended June 30, 1999 compared to $3.5 million for
the corresponding period of the preceding year. Ticketing operations expenses
are primarily variable in nature and have increased during the periods presented
in conjunction with the increase in ticketing operations revenue and will
continue to increase in future periods to the extent ticketing operations
revenues increase during such periods.

CITY GUIDE AND RELATED EXPENSES. City guide and related expenses consist
primarily of the expenses associated with the design, layout, photography,
customer service and editorial resources used in the production and maintenance
of business Web sites and editorial content and network infrastructure
maintenance. This category also includes the costs of consulting services in
partner-led markets. City guide and related expenses were $10.5 million for the
six months ended June 30, 1999. City guide and related expenses are
expensed as incurred. City guide and related expenses will continue to increase
in future periods as city guide and related sales increase and as new cities are
added to the network in future periods.

SALES AND MARKETING EXPENSES. Sales and marketing expenses consist
primarily of costs related to the compensation of sales and marketing personnel,
advertising and travel. Sales and marketing expenses were $15.6 million for the
six months ended June 30, 1999 compared to $.5 million for the corresponding
period of the preceding year. The increase for the six months ended June 30,
1999 as compared to the six months ended June 30, 1998 is due primarily to the
sales and marketing costs of CitySearch for the six months ended June 30, 1999
amounting to $14.6 million and increased salary related costs and operating
support costs associated with the growth in sales and marketing activities. We
expect that sales and marketing expenses will increase in absolute dollars as we
continue to roll out our nationwide network of city guide cities.

RESEARCH AND DEVELOPMENT EXPENSES. Research and development expenses
include the costs to develop, test and upgrade the our online service and the
enterprise management systems. These costs consist primarily of salaries for
product development personnel, contract labor expense, consulting fees, software
licenses, hardware costs and recruiting fees. Research and development expenses
were $3.5 million for the six months ended June 30, 1999 which represents
primarily the research and development cost of CitySearch. We believe that
timely deployment of new and enhanced products and technology is critical to
attaining our strategic objectives and to remaining competitive. Accordingly, we
intend to continue recruiting and hiring experienced research and development
personnel and making other investments in research and development. As such,
we expect that research and development expenditures will increase in absolute
dollars in future periods. We have expensed research and development costs as
incurred.

GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses
consist primarily of administrative and senior management personnel costs.
General and administrative expenses were $5.9 million for the six months ended
June 30, 1999 compared to $1.0 million in the corresponding period of the
preceding year. The substantial increase for the six month period ended June 30,
1999 was due primarily to general and administrative expenses of CitySearch
amounting to $5.4 million. We expect that general and administrative expenses
will increase in absolute dollars.

AMORTIZATION OF GOODWILL. Amortization of goodwill consists of goodwill
associated with the USA Networks acquisition of Ticketmaster, the merger of
Ticketmaster Online and CitySearch and the acquisitions of CityAuction and
Match.com. Amortization of goodwill was $25.7 million for the six months ended
June 30, 1999 primarily relating to the merger and the Ticketmaster acquisition.
There was no associated amortization of goodwill in the prior year periods as
the Ticketmaster acquisition did not occur until the end of June 1998.
Amortization of goodwill is expected to increase as the pending acquisitions are
completed.

MERGER AND OTHER TRANSACTIONS COSTS. Merger and other transaction costs
were $2.8 million for the six month period ended June 30, 1999. These costs are
primarily as a result of advisory fees, regulatory filing fees and legal
accounting costs related to the terminated merger between ourselves, certain
assets owned by our majority shareholder and Lycos, Inc.

INTEREST INCOME, NET. Net Interest income consists primarily of interest
earned on our cash and cash equivalents, less interest expense on capital
lease obligations. We had net interest income of $2.2 million for the six months
ended June 30, 1999 and had no interest expense in the corresponding periods of
the preceding year. We invest our cash balances in short-term, investment grade,
interest-bearing securities.

INCOME TAXES. The provision for income taxes was $.1 million for the six
months ended June 30, 1999 compared to $1.5 million for the corresponding period
in the preceding year. Our effective tax rate differs from the statutory federal
income tax rate, primarily as a result of state income taxes, operating losses
not benefitted and non-deductible goodwill. We expect that our tax provision
will remain nominal for the balance of 1999 and 2000 due to the net operating
losses of CitySearch. However, certain net operating loss carryforwards,
existing at the date of the merger of Ticketmaster Online and CitySearch, will
not be available to further offset our taxable income.

-93-
<PAGE>

Eleven Months Ended December 31, 1998 and Fiscal Years Ended January 31, 1998
and 1997

Ticketing Operations Revenues. Ticketing operations revenues were $15.7
million, $6.0 million and $199,000 for the eleven months ended December 31, 1998
and for the fiscal years ended January 31, 1998 and 1997, respectively. The
increase for the eleven months ended December 31, 1998 over the year ended
January 31, 1998 (the difference of one month's operations is not considered to
materially affect the comparison of the two periods) is primarily attributable
to a significant increase in the number of tickets sold from 1,062,000 to
2,860,000 tickets.

Sponsorship and Advertising Revenues. Sponsorship and advertising revenues
were $6.8 million, $3.9 million and $1.0 million for the eleven months ended
December 31, 1998 and fiscal years ended January 31, 1998 and 1997,
respectively. The increases are primarily attributable to an increase in
sponsorship and promotion activity with strategic marketing partners. In the
eleven months ended December 31, 1998, $3.0 million is attributable to one
promotional agreement.

City Guide and Related Revenues. City guide and related revenues were $5.4
million for the eleven months ended December 31, 1998 representing the
CitySearch city guide and related revenue for the three months subsequent to the
merger of Ticketmaster Online and CitySearch.

Ticketing Operations Expenses. Ticketing operating expenses were $9.8
million, $3.5 million and $635,000 for the eleven months ended December 31, 1998
and for the fiscal years ended January 31, 1998 and 1997, respectively.
Ticketing operations expenses are primarily variable in nature and have
increased during the periods presented in conjunction with the increase in
ticketing operations revenue.

City Guide and Related Expenses. City guide and related expenses were $4.0
million for the eleven months ended December 31, 1998 representing the
CitySearch city guide and related expenses for the three months subsequent to
the merger of Ticketmaster Online and CitySearch.

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Sales and Marketing Expenses. Sales and marketing expenses were $6.8
million, $490,000 and $290,000 for the eleven months ended December 31, 1998 and
the fiscal years ended January 31, 1998 and 1997, respectively. The increase for
the eleven months ended December 31, 1998 as compared to the fiscal year ended
January 31, 1998 is due primarily to the sales and marketing costs of CitySearch
for the three months subsequent to the merger of Ticketmaster Online and
CitySearch amounting to $5.8 million and increased salary related costs and
operating support costs associated with the growth in sales and marketing
activities.

Research and Development Expenses. Research and development expenses were
$1.7 million for the eleven months ended December 31, 1998 which represents the
research and development cost of CitySearch for the three months subsequent to
the merger of Ticketmaster Online and CitySearch.

General and Administrative Expenses. General and administrative expenses
were $3.5 million, $1.7 million and $1.3 million for the eleven months ended
December 31, 1998 and fiscal years ended January 31, 1998 and 1997,
respectively. The substantial increase for the eleven months ended December 31,
1998 was due primarily to general and administrative expenses for CitySearch for
the three months subsequent to the merger of Ticketmaster Online and CitySearch
amounting to $1.7 million.

Interest Income, Net. TMCS had net interest income of $54,000 for the
eleven months ended December 31, 1998. Included in net interest income is
interest expense of $710,000 of the convertible note issued to USAi in
connection with the merger of Ticketmaster Online and CitySearch.

Income Taxes. The provision (benefit) for income taxes was $3.0 million,
$1.8 million and $(374,000) for the eleven months ended December 31, 1998 and
fiscal years ended January 31, 1998 and 1997, respectively. The provision for
income taxes for the eleven months ended December 31, 1998 primarily consists of
the provision recorded by Ticketmaster Online prior to the merger with
CitySearch. TMCS's effective tax rate differs from the statutory federal income
tax rate, primarily as a result of state income taxes and operating losses not
benefited. Tax benefits were recorded for the year ended January 31, 1997 as
there was no valuation allowance recognized against the deferred tax asset on a
stand-alone basis for that year. TMCS expects that any taxable income for 1998
and 1999 will be offset by the expected future net operating losses of
CitySearch, resulting in a nominal tax provision on a combined basis subsequent
to the merger. However, net operating loss carryforwards of CitySearch will not
be available to further offset its taxable income.

CitySearch

Revenues. CitySearch's revenues increased from $3.7 million for the nine
months ended September 30, 1997 to $11.3 million for the nine months ended
September 28, 1998, and increased from $203,000 for the year ended December 31,
1996 to $6.2 million for the year ended December 31, 1997. CitySearch did not
recognize any revenue from September 20, 1995, its date of formation, to
December 31, 1995. CitySearch has two revenue sources: (1) subscription and
services revenue and (2) licensing and royalty revenue. Subscription and
services revenue was $3.0 million and $9.5 million for the nine months ended
September 30, 1997 and September 28, 1998, respectively, and was $203,000 and
$4.9 million for the years ended December 31, 1996 and 1997 respectively.
Subscription and services revenue increased for the nine months ended September
28, 1998 as compared to the nine months ended September 30, 1997, primarily as
the result of increases in business Web site subscription revenue of $4.2
million, due to an increase in the average sales price of new business Web sites
sold from approximately $80 in September 1997 to approximately $190 in September
1998. Subscription and services revenue increased for the year ended December
31, 1997 as compared to the year ended December 31, 1996 primarily as the result
of the increases in business Web site subscription revenue of $3.2 million, due
to the launch of two new city guides and an increase in the average sales price
of new business Web sites sold from approximately $50 in December 1996

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to approximately $100 in December 1997. The increases in subscription and
services revenue for the nine months ended September 28, 1998 and for the year
ended December 31, 1997 also resulted from increases in consulting revenue of
$1.7 million and $306,000, respectively, barter revenue of $337,000 and $1.1
million, respectively, and banner revenue of $316,000 and $113,000,
respectively. Licensing and royalty revenue was $677,000 and $1.9 million for
the nine months ended September 30, 1997 and September 28, 1998, respectively,
and was $0 and $1.3 million for the years ended December 31, 1996 and 1997,
respectively. CitySearch began licensing and royalty revenue after the launch of
its initial partner-led market city guide in July 1997.

Cost of Revenues. Cost of revenues consists primarily of the expenses
associated with the design, layout, photography, customer service and editorial
resources used in the production and maintenance of business Web sites and
editorial content, network infrastructure maintenance and the costs of
consulting services in partner-led markets. Cost of revenues is expended as
incurred. CitySearch had no cost of revenues from September 20, 1995 to
December 31, 1995. Cost of revenues were $7.6 million and $10.5 million for the
nine months ended September 30, 1997 and September 28, 1998, respectively, and
were $2.9 million and $9.7 million for the years ended December 31, 1996 and
1997, respectively. The increases for the nine months ended September 28, 1998
as compared to the nine months ended September 30, 1997 and for the year ended
December 31, 1997 as compared to the year ended December 31, 1996 were due
primarily to increased personnel and freelance labor amounting to $2.3 million
and $5.2 million, respectively, required to produce and maintain the increased
number of business Web sites and amount of editorial content. The remaining
amount of the increase during the periods was due to operating support costs
associated with the growth in the business.

Sales and Marketing Expenses. Sales and marketing expenses consist
primarily of the costs related to compensation of sales and marketing personnel,
advertising, public relations, travel, sales force training and marketing
literature. Sales and marketing expenses were $13.7 million and $14.9 million
for the nine months ended September 30, 1997 and September 28, 1998,
respectively, and were $57,000, $6.4 million and $20.2 million for the period
from September 20, 1995 to December 31, 1995 and for the years ended December
31, 1996 and 1997, respectively. The increase for the nine months ended
September 28, 1998 as compared to the nine months ended September 30, 1997 was
primarily due to increased sales and marketing personnel and increased
advertising expenses. The increase for the year ended December 31, 1997 as
compared to the year ended December 31, 1996 was due primarily to increased
labor related costs of $7.6 million. The increase in the year ended December 31,
1997 was also attributable, to a lesser extent, to an increase of $2.0 million
in advertising costs. The remaining increase in the period was related to
operating costs associated with the growth in sales and marketing activities.

Research and Development Expenses. Research and development expenses
include the costs to develop, test and upgrade the CitySearch online service and
the enterprise management systems. These costs consist primarily of salaries
for product development personnel, contract labor expense, consulting fees,
software licenses, hardware costs and recruiting fees. Research and development
expenses were $4.9 million and $5.0 million for the nine months ended September
30, 1997 and September 28, 1998, respectively, and were $152,000, $2.6 million
and $7.2 million for the period from September 20, 1995 to December 31, 1995 and
for the years ended December 31, 1996 and 1997, respectively. The increases in
research and development expenses were primarily attributable to increased
staffing levels required to design, test, deploy and support expanded city guide
functionality and back-office systems. As such, TMCS expects that research and
development expenditures will increase in absolute dollars in future periods.
CitySearch has expended research and development costs as incurred.

General and Administrative Expenses. General and administrative expenses
consist primarily of administrative and executive personnel costs, fees for
professional services and the costs of in-house infrastructure to support the
operations of CitySearch. General and administrative expenses were $4.3 million

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and $5.1 million for the nine months ended September 30, 1997 and September 28,
1998, respectively, and were $104,000, $2.5 million and $5.90 million for the
period from September 20, 1995 to December 31, 1995 and for the years ended
December 31, 1996 and 1997, respectively. These increases were due primarily to
increased staffing levels to manage and support CitySearch's expanding
operations.

Merger and Other Transactions Costs. CitySearch recorded $3.1 million in
costs during the nine months ended September 28, 1998, which were primarily
related to the merger of Ticketmaster Online and CitySearch.

Interest Income, Net. Net interest income consists primarily of interest
earned on CitySearch's cash and cash equivalents, less interest expense on
capital lease obligations. CitySearch had net interest income of $104,000 and
$227,000 for the nine months ended September 30, 1997 and September 28, 1998,
respectively, and $5,000, $217,000 and $223,000 for the period from September
20, 1995 to December 31, 1995 and for the years ended December 31, 1996 and
1997, respectively. Included in net interest income during the nine months ended
September 28, 1998 is interest expense of $469,000 on the convertible note in
the principal amount of $50.0 million issued by USAi to CitySearch in connection
with the merger of Ticketmaster Online and CitySearch.

Income Taxes. The provision for income, franchise and capital taxes of
$800, $1,600 and $8,330 for the for the period from September 20, 1995 to
December 31, 1995 and for the years ended December 31, 1996 and December 31,
1997, respectively, is based solely on minimum state tax requirements.
CitySearch's effective tax rate differs from the statutory federal income tax
rate, primarily as a result of operating losses not benefited. Due to the
uncertainty surrounding the timing of realizing the benefits of its favorable
tax attributes in future tax returns, CitySearch has placed a valuation
allowance against its otherwise recognizable deferred tax assets. At December
31, 1997, CitySearch had net operating loss carryforwards for federal and state
income tax purposes of approximately $47.5 million. The federal carryforwards
expire principally in the period from 2010 to 2012, and the state carryforwards
expire principally in 2003. See Note 4 of Notes to Consolidated Financial
Statements of CitySearch, Inc. The Tax Reform Act of 1986 imposes substantial
restrictions on the utilization of net operating losses and tax credits in the
event of an "ownership change" of a corporation. CitySearch's ability to
utilize net operating loss carryforwards may be limited as a result of
"ownership change" as defined in the Internal Revenue Code. The merger of
Ticketmaster Online and CitySearch and prior issuances of CitySearch Convertible
Preferred Stock have constituted "ownership changes" that could result in
limitations on the use of net operating loss carryforwards in future periods.

Liquidity and Capital Resources

Prior to the merger of Ticketmaster Online and CitySearch, the primary
sources of liquidity for the company were cash from operations and funding from
Ticketmaster Corp. Consistent with cash management policies of Ticketmaster
Corp., the company did not maintain any cash balances prior to the date of the
merger (September 28, 1998).

Net cash used in operating activities was $14.6 million for the six months
ended June 30, 1999 and net cash provided by operating activities was $4.7
million for the six months ended June 30, 1998. Net cash used in operating
activities was $438,000 for the eleven months ended December 31, 1998, net cash
provided from operating activities was $2.9 million for the fiscal year January
31, 1998, and net cash used in operating activities was $556,000 for the year
ended January 31, 1997.

Net cash used in investing activities was $3.5 million and $.1 million for
the six months ended June 30, 1999 and June 30, 1998, respectively. Net cash
used in investing activities in these periods consisted primarily of capital
expenditures for computers, software, equipment and leasehold improvements.

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Net cash used in financing activities was $.4 million and $4.6 million for the
six months ended June 30, 1999 and 1998, respectively.

Net cash used in investing activities was $1.1 million for the eleven
months ended December 31, 1998, and was $250,000 and $189,000 for the fiscal
years ended January 31, 1998 and January 31, 1997, respectively. Net cash used
in investing activities in these periods consisted primarily of capital
expenditures for computers, software, equipment and leasehold improvements. Net
cash provided in financing activities was $50.6 million for the eleven months
ended December 31, 1998, attributable to TMCS's initial public offering and
repayment of a convertible note in the principal amount of $50.0 million which
was paid upon closing of its initial public offering. Net cash used in financing
activities was $2.7 million for the fiscal year ended January 31, 1998,
attributable to repayments to Ticketmaster Corp. for prior financing provided to
TMCS and distributions to Ticketmaster Corp. Net cash provided by financing
activities was $748,000 for the fiscal year ended January 31, 1997, attributable
to intercompany funding from Ticketmaster Corp.

At June 30, 1999, TMCS's cash and cash equivalents were $88.5 million.
Existing cash and cash equivalents are expected to be sufficient to meet working
capital and capital expenditures requirements for at least the next 12 months.
Thereafter, TMCS may be required to raise additional funds. No assurance can be
given that TMCS will not be required to raise additional financing prior to such
time. If additional funds are raised through the issuance of equity securities,
TMCS's stockholders may experience significant dilution. Furthermore, there can
be no assurance that additional financing will be available when needed or that
if available, such financing will include terms favorable to TMCS or its
stockholders. If such financing is not available when required or is not
available on acceptable terms, TMCS may be unable to develop or enhance its
products and services, take advantage of business opportunities or respond to
competitive pressures, any of which could have a material adverse effect on
TMCS's business, financial condition and results of operations.

Year 2000

The widespread use of computer programs that rely on two-digit dates to
perform computation and decision-making functions may cause computer systems,
including systems and software used by the Company and its Web services, to
malfunction prior to or in the Year 2000 and lead to significant business delays
and disruptions in the Company's business and operations in the United States
and internationally. The Company has developed a plan to minimize the impact of
this Year 2000 problem. Pursuant to such plan, the Company has established a
Year 2000 Committee consisting of senior managers from relevant functional areas
and an independent Year 2000 professional consultant. The Year 2000 Committee
has reviewed all areas of the Company's business and operations that may be
affected and has assigned responsibility for each area to individuals
knowledgeable about their respective areas. The Year 2000 Committee has made
these individuals responsible for the initial assessment of risk and initial
estimate of hardware cost, software cost and time required to achieve
compliance. The Company concluded its initial assessment in the fourth quarter
of 1998 and is commencing implementation of remediation necessary to achieve
compliance. Remediation will continue in 1999. The Company estimates that the
dollar cost of Year 2000 compliance is approximately $300,000. However, the
Company continues to review and update its assessment of remediation
requirements and costs including those associated with its recent and pending
acquisitions and actual costs could materially differ.

Several systems provided by third parties are required for the operation of
the Company's services, any of which may contain software code that is not Year
2000 compliant. These systems include server software used to operate the
Company's network servers, software controlling routers, switches and other
components of the Company's data network, disk management software used to
control the Company's data disk arrays, farewell, security, monitoring and back-
up software used by the Company, as well as desktop PC applications software. In
most cases, the Company employs widely available software applications and other
products from leading third party vendors, and expects that such vendors will
provide any required upgrades or modifications in a timely fashion. However, any
failure of third party suppliers to provide Year 2000 complaint versions of the
products used by the Company could result in a temporary disruption of the
Company's services or otherwise disrupt the Company's operations. In addition,
the Company's partners may operate their city guide sites in proximity to other
applications that may not be Year 2000 complaint. While the Company intends to
assign an individual to coordinate each partner's compliance efforts to ensure
uninterrupted operations, the Company has limited ability to influence decisions
by its partners. Non-complaint systems that adjoin partners' city guide service,
which in turn could reduce royalties or other amounts due to the Company and
could tarnish the Company's public image as a technology company. There can be
no assurance that the Company, its third party suppliers or its partners will be
Year 2000 complaint at the end of the millennium. Failure to achieve compliance
could result in complete failure or inaccessibility of the Company's or its
partners' services, and could adversely affect the Company's business, financial
condition and results of operations.

Year 2000 compliance problems could also undermine the general
infrastructure necessary to support the Company's operations. For instance, the
Company depends on third party Internet service providers for connectivity to
the Internet. Any interruption of service from the Company's Internet services.
Moreover, the effects of Year 2000 compliance deficiencies on the integrity and
stability of the Internet are difficult to predict. A significant disruption in
the ability of businesses and consumers to reliably access the Internet or
portions of it would have an adverse effect on demand for the Company's services
and adversely impact the Company's business, financial condition and results of
operations.

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Quantitative and Qualitative Disclosures about Market Risk

TMCS's exposure to market risk for changes in interest rates relates
primarily to its investment portfolio. TMCS has not used derivative financial
instruments in its investment portfolio. TMCS invests its excess cash in debt
instruments of the U.S. Government and its agencies, and in high-quality
corporate issuers and, by policy, limits the amount of credit exposure to any
one issuer. TMCS protects and preserves its invested funds by limiting default,
market and reinvestment risk.

Investments in both fixed rate and floating rate interest earning
instruments carries a degree of interest rate risk. Fixed rate securities may
have their fair market value adversely impacted due to a rise in interest rates,
while floating rate securities may produce less income than expected if interest
rates fall. Due in part to these factors, TMCS's future investment income may
fall short of expectations due to changes in interest rates or it may suffer
losses in principal if forced to sell securities which have declined in market
value due to changes in interest rates.

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BUSINESS OF WEB MEDIA

Overview

Web Media dba One & Only Network distributes classified ads through three
on-line Internet World Wide Web sites: (1) One & Only Internet Personals, a
mainstream personals classified ads site, (2) Alternative Connections, a
"Generation X" personals classified ads site and (3) Utrade.com, an online
person-to-person auction site.

Web Media's One & Only Internet Personals Web site, located at
www.oneandonly.com, is an online subscription-based personals classifieds
service. Web Media released this service in January 1996 to cater to an upscale
market of Web surfers. As of June 30, 1999, Web Media had more than 56,767
subscribers for this service.

Web Media's Alternative Connections Web site, located at
www.alternativeconnections.com, released May, 1998 is another online,
subscription-based personals classifieds service. Web Media released this
service in May 1998 to cater to a "Generation X" audience. As of June 30,
1999, Web Media had approximately 9,050 subscribers for this service.

Web Media actively monitors the content on both One & Only Internet
Personals and Alternative Connections in order to maintain its appeal to an
upscale, highly educated and affluent audience. Web Media does not allow
obscene content to be posted on its sites. Web Media also censors text on One &
Only Internet Personals to a "PG" level, text on Alternative Connections to an
"R" level and images on all sites to a "G" level. Web Media monitors its sites
to a pre-established standard. Its systems search for questionable content in
new listings and score each listing. A customer service representative must
also approve each listing before it is put on a site.

Both One & Only Internet Personals and Alternative Connections generate
substantially all of their revenue from membership subscription fees. Visitors
can browse posted listings, create and post a romance profile, add a picture and
record a voice message in its database of personal ads without having to pay a
fee. However, in order to respond to a romance profile, a customer must
purchase either a membership in the AYCE Club ("All You Can E-mail Club") for
One & Only Internet Personals or a Premier Pass for Alternative Connections.

Web Media's subscription fees begin at $24.95 per month for month-to-month
subscriptions with discounts for longer-term subscriptions. Web Media also
offers three, six and twelve month subscriptions.

In December 1998 Web Media released its latest classifieds Web site,
Utrade.com. Utrade.com, located at http://www.utrade.com, is a person-to-person
auction service primarily featuring consumer goods. Utrade.com only assists
transactions between buyers and sellers and does not own any of the merchandise
offered.

Web Media earns revenue from both a listing fee and a commission paid by
the seller. Listing fees depend on the price of the item. However, to date Web
Media has waived the listing fee on unsold items in order to increase listings
and traffic on the site. Commission revenue is based on the sales price of the
item sold, ranging from a small percentage for inexpensive items (up to $25) to
a slightly higher percentage for more expensive items (greater than $1,000).

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Web Media strives to make its Utrade.com Web site user friendly with an
emphasis on customer service. For instance, it has included simple "how to"
instructions to encourage first-time buyers and sellers to participate in the
online auction format.

Marketing

Web Media has positioned its Internet Personals services as "premium"
offerings by emphasizing:

. the quality of its technology;

. the speed of access on its Web sites;

. the quality of its customer service;

. the size and depth of its databases;

. its upscale marketing message;

. its editorial policy; and

. its ad screening policy.

Web Media has also positioned Utrade.com as a "premium" auction site. It
does this by offering services that other similar Web sites do not offer. For
instance, this site offers thumbnail pictures accompanying each listing. This
procedure allows a user to quickly see and read a brief description of each item
before clicking to access the entire listing.

Since May 1997, Web Media has marketed and distributed its Web sites
through its associates program, the One & Only Network
(www.oneandonlynetwork.com). Visitors access its Web sites through a link on a
Web site participating in the associates program, referred to as an Associate,
or by directly accessing the sites. Associates market and distribute Web
Media's sites through their own Web sites. Associates receive a 15% to 20%
commission for revenue generated by customers that they have referred to Web
Media.

By becoming Associates, companies gain access to Web Media's technology,
customer service, billing systems and database of personals and auction
classifieds listings, in addition to earning a commission. Web Media encourages
and provides the tools for Associates to customize content and geographic
segmentation for the participating Web site. Competing programs generally
provide standard links with no customization.

The breadth and diversity of the Associates network enhances the quality of
Web Media's classifieds databases. As Associates refer customers, new content
including profiles, pictures, voice files and auction merchandise is added to
these databases. As the databases develop in depth and variety, Web Media
becomes able to offer a more interesting and encompassing content to its
customers and Associates.

Web Media expends significant resources on customer service for its
Associates in order to retain them and maintain the effectiveness of its
network. Web Media strives to assist Associates in establishing their customized
sites and answering questions over the phone or through e-mail. Web Media also
sponsors Associate community-building events, such as a weekly newsletter, a
monthly "conference call" and special give-aways and promotional gifts for top
producers.

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Competition

Web Media operates in the dynamic and rapidly expanding market of the
Internet. The market for Internet services and products, particularly associate
programs and online classifieds, is intensely competitive. Since there are few
barriers to entry to this market, competition is rapidly increasing as the
number of online content and service providers increases. Web Media believes
that the critical factors for its success include:

. providing high-quality, easy-to-use products and services;

. maintaining a large base of registered users; and

. creating strong brand recognition for its products and services.

Web Media's competitors include traditional matchmaking services,
newspapers, 1-900 numbers and other online services such as Match.com (recently
acquired by TMCS), Yahoo!Personals, [email protected], American Singles, Friend
Finder and Matchmaker.com. Many of its existing competitors, as well as a
number of potential new competitors, have greater financial, sales and marketing
resources, larger customer bases and databases and may have longer, more
established media relationships. There can be no assurance that Web Media will
be able to compete successfully against current and future competitors or that
competitive pressures will not materially adversely affect its business,
financial condition and results of operations.

Intellectual Property

Web Media's ability to compete and its continued success will depend in
part upon its existing proprietary technologies and the development of
additional proprietary technologies. Therefore, Web Media seeks to protect its
technologies and brand name by seeking patent and trademark registrations and by
monitoring and seeking to prevent the unauthorized use of its technologies and
marks. Web Media also enters into confidentiality agreements with its employees,
consultants and key contributors and generally controls access to and
distribution of its proprietary content and information.

Despite these precautions, it may be possible for a third party to copy or
otherwise obtain and use Web Media's products or technology without
authorization. In addition, effective copyright, trademark and trade secret
protection may be unavailable or limited in some foreign countries. The global
nature of the Internet makes it virtually impossible to control the ultimate
destination of Web Media's products. Web Media's continued success depends
significantly upon its ability to prevent unauthorized reproduction or use of
its trade names, products and services.

Employees

As of June 30, 1999, Web Media had 68 full-time employees and 2 full-time
contractors, including 36 in customer service and sales, 24 in software
development and network operations and 10 in management and administration. Web
Media considers its relationships with its employees to be good. None of its
employees are covered by collective bargaining agreements.

Facilities

Web Media's corporate headquarters, where it maintains its communication
and computer hardware systems, are located in a leased facility consisting of
approximately 14,200 square feet of office space in Dallas, Texas. The leases
covering 11,200 square feet expire in July 2001 and the leases covering 3,000
square feet expire in October 1999. Web Media believes the existing space will
not be adequate through that

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period. Therefore it is in the process of negotiating additional suitable space
that is available nearby. A system failure at this location could adversely
affect the performance of Web Media's services.

Legal Proceedings

Web Media is not a party to any material legal proceedings.

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UNIT OWNERSHIP BY PRINCIPAL UNITHOLDERS AND MANAGEMENT
OF WEB MEDIA

Web Media Units

The following table sets forth, as of June 14, 1999, certain information
regarding the beneficial ownership of Web Media Units by (1) each person or
entity who is known by Web Media to own beneficially 5% or more of its
outstanding Units; (2) each of its Members-Managers; (3) its Chief Executive
Officer; and (4) all of its Member-Managers and executive officers as a group.

<TABLE>
<CAPTION>
Shares Beneficially
Owned Voting
-----------------------------
Number(1) Percent(1) Power
----------- ---------- ------
<S> <C> <C> <C>
David Kennedy (2)................................. 1,000,000 33.3% 33.3%
William Bunker (2)................................ 1,000,000 33.3 33.3
R. Glenn Wiggins (2).............................. 1,000,000 33.3 33.3
All executive officers and Member-Managers as a
group (3 persons)(1)............................. 3,000,000 100.0 100.0
</TABLE>

- ---------------------
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or
investment power with respect to securities. Except as indicated by
footnote, and subject to community property laws where applicable, the
persons named in the table above have sole voting and investment power with
respect to all Units shown as beneficially owned by them.

(2) The address for each person is: c/o Web Media Ventures, LLC dba One & Only
Network, 5307 East Mockingbird Lane, Suite 102, Dallas, Texas 75206.

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MANAGEMENT OF WEB MEDIA

Executive Officers and Member-Managers

The following table sets forth certain information regarding the executive
officers and Member-Managers of Web Media as of June 25, 1999:

Name Age Position
- --------------------- ----- ----------------------------
David Kennedy 33 Member-Manager and President
William Bunker 30 Member-Manager and Chairman
R. Glenn Wiggins 62 Member-Manager and Secretary

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

Mr. Kennedy is Web Media's President and co-founder and heads finance, planning
and direct marketing operations. Before founding Web Media, Mr. Kennedy was a
Senior Manager at Deloitte & Touche working with technology start-ups and
venture capital clients. He was also editor of the Texas Venture Report, a
survey of venture capital activity in Texas. Mr. Kennedy is a CPA and author of
the book, "Business Planning for Online Services." Mr. Kennedy earned a
Bachelor's of Business Administration in accounting from the University of Texas
in Austin and a Master's of Business Administration from Southern Methodist
University.

Mr. Bunker is Web Media's Chairman and co-founder and heads the technology and
operations functions. Prior to founding Web Media, Mr. Bunker worked for a
Dallas investment company. In 1994, Mr. Bunker founded one of the first
nationwide ISPs. Mr. Bunker, a former U.S. Marine, earned a Bachelor's of
Science in industrial engineering from Mississippi State University.

Mr. Wiggins has served as Web Media's secretary since February 1996. Mr.
Wiggins is the President and founder of Wiggins & Company, an international
employee benefits and insurance company, and has served as its President since
its inception. Mr. Wiggins obtained a BBA from the University of North Texas
and is an investor and counselor for several high-tech start-up companies,
including Web Media.

Member-Managers

The affairs of Web Media are conducted by Member-Managers, currently consisting
of the three Members of Web Media. The Member-Managers are elected annually by
the Unitholders of Web Media. The Member-Managers may be removed by a vote of a
majority of the Unitholders of Web Media.

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS OF WEB MEDIA

Management's Discussion and Analysis of Financial Condition and Results of
Operations should be read in conjunction with the financial statements of Web
Media, including related footnotes, included elsewhere herein. All statements
contained herein that are not historical facts, including but not limited to,
statements regarding anticipated future capital requirements, Web Media's future
development plans, its intent to broaden its customer base, its ability to
obtain debt, equity or other financing, and its ability to generate cash from
operations, are based on current expectations. These statements are forward
looking in nature and involve a number of risks and uncertainties. These risks
and uncertainties include general economic conditions, new competition, future
regulation of electronic commerce, the reliability of Internet technologies and
the size and nature of the Internet and online classified ad market.

Overview

Web Media began its first Internet World Wide Web site, One & Only Internet
Personals, in January 1996. Web Media introduced its Alternative Connections
site in May 1998 and Utrade.com site in December 1998. One & Only Internet
Personals generated approximately 94% of Web Media's revenue in 1998.

In May 1997, Web Media launched its associates program. In October 1998,
Web Media expanded its associates program to include a two-tier Associate
referral program called "Opportunity Plus."

Web Media collects revenue from its personals classifieds customers in the
form of monthly subscriptions, which may be paid on a month-to-month basis or on
a discounted, longer-term basis. Web Media initially defers subscription sales
and recognizes revenue on a straight-line basis over each individual
subscription period. The unearned portion of revenues are presented as deferred
revenue. Most sales are made by credit card, although Web Media also accepts
personal checks. Utrade.com customers pay a fee to list an auction item and a
fee when the item is sold. However, Web Media has waived the listing fee for
unsuccessful auctions to date in order to build listings and traffic on the
site. Auction revenue is recognized as earned. Customers generally are granted
refunds up to 30 days after a sale.

Cost of sales includes merchant card bank fees and commissions paid to web
site developers participating in the Web Media's revenue sharing programs.
Deferred costs of sales are those costs directly attributed to revenue remaining
deferred.

Depreciation and amortization includes depreciation on Web Media's
equipment, primarily computer hardware, and amortization of Web Media's
capitalized software costs.

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Results of Operations

For Six Months Ended June 30, 1999 and 1998

Revenues. Revenues increased 226% to $4.4 million for the first six months of
1999 from $1.3 million in the first six months of 1998. The increase was
primarily due to higher sales generated from Web Media's One & Only Internet
Personals web site and resulting increased traffic, increased subscriber base
and a 43% price increase in March 1999. Additionally, Web Media realized
$776,000 in revenues in the first six months of 1999 from its Alternative
Connections site that was released in May 1998.

Gross Margin. Gross margin for the six months ended June 30, 1999 and 1998 was
$3.4 million and $1.1 million respectively, an increase of 210%. As a
percentage of total revenues, gross margin remained relatively constant at 77%
in the first six months of 1999 compared to 81% in the first six months of 1998.

Marketing and Public Relations Expenses. Marketing and public relations expenses
include expenses to acquire associates (primarily online advertisements and
promotional bounties) and the costs associated with public relations efforts.
Marketing and public relations expense decreased to $250,000, or 6% of revenues,
in the first six months of 1999 from $351,000, or 26% of revenues, in the first
six months of 1998. This decrease was primarily the result of the introduction
of Web Media's two-tier associates program, Opportunity Plus, in late 1998. This
marketing program has reduced the acquisition costs of new associates to Web
Media's associate program by providing an incentive for existing associates to
recruit new associates. Web Media expects the costs of both marketing and public
relations expenses and associate acquisition costs to increase in the future in
both dollars and as a percentage of sales.

Computer Operations Expenses. Computer operations expenses include Internet
connection costs and computer supplies. Computer operations expenses increased
to $158,000, or 4% of revenues, in the first six months of 1999 from $47,000, or
4% of revenues, in the first six months of 1998. The increase is primarily
attributable to increased data line costs to support an increase in Web site
traffic and a larger subscription base.

Salaries and Benefits Expenses. Salaries and benefits reflect the costs of Web
Media's employees. Salaries and benefits expenses increased to $1.5 million, or
34% of revenues, in the first six months of 1999 from $364,000, or 27% of
revenues, in the first six months of 1998. The increase is primarily
attributable to increased staff levels to support the expanded subscription base
and to support Alternative Connections, released in May 1998, and Utrade.com,
released in December 1998.

General and Administrative Expenses. General and administrative expenses include
rent, telephones, professional expenses and other general expenses. General and
administrative expenses increased to $304,000, or 7% of revenues, in the first
six months of 1999 from $94,000, or 7% of revenues, in the first six months of
1998. These increases were primarily attributable to increases in professional
fees, facilities expenses and increased investments in internal systems to
support the expanded business.

Depreciation and Amortization Expenses. Depreciation and amortization expenses
increased to $216,000, or 5% of revenues, in the first six months of 1999 from
$52,000, or 4% of revenues, in the first six months of 1998. The increase is
primarily attributable to increased capital expenditures throughout 1998 and
1999 necessary to support an increase in Web site traffic and subscription base.

Other Expenses. Other Expenses include travel, meal, and miscellaneous
expenses. Other expenses increased to $112,000, or 3% of revenues, in the first
six months of 1999 from $3,000, or 0.2% of revenues, in the first six months of
1998. The increase is primarily attributable to transaction/acquisition costs
incurred in 1999 relating to the TMCS-Web Media merger.

Provision for State Income Taxes. Web Media reported an income tax provision of
$39,000 for the first six months of 1999, compared with an income tax
provision of $11,000 in the corresponding period of the prior year. The income
tax provision is attributable to state income taxes. Since Web Media is a
Limited

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<PAGE>

Liability Corporation (treated as a partnership for US income tax purposes), no
federal income taxes are paid by Web Media.

Years ended December 31, 1998 and 1997

Revenues. Revenues increased 506% to $3.8 million for 1998 from $631,000 in
1997. The increase was primarily due to higher sales generated from Web Media's
One & Only Internet Personals Web site as a result of increased traffic and
subscriber base, and the full-year effect of a price increase in November 1997
for a one-month subscription from $9.95 to $14.95. Additionally, Web Media
realized $220,000 in revenues for its Alternative Connections site that was
released in May 1998.

Gross Margin. Gross margin for the years ended December 31, 1998 and 1997 was
$3.0 million and $516,000 respectively, an increase of 489%. As a percentage of
total sales, gross margin remained relatively constant at 80% for the year 1998
compared to 82% for the year 1997.

Marketing and Public Relations Expenses. Marketing and public relations expense
increased to $701,000, or 18% of revenues, in 1998 from $69,000, or 11% of
revenues, in 1997. The increase is primarily the result of advertising
expenditures in 1998 as Web Media aggressively pursued a strategy of attracting
members to its associates program.

Computer Operations Expenses. Computer operations expenses increased to
$142,000, or 4% of revenues, in 1998 from $53,000, or 8% of revenues, in 1997.
The increase is primarily attributable to increased data line costs to support
an increase in Web site traffic and a larger subscription base.

Salaries and Benefits Expenses. Salaries and benefits expenses increased to
$1.2 million, or 32% of revenues, in 1998 from $249,000, or 39% of revenues, in
1997. The increase is primarily attributable to increased staff levels to
support the increased subscription base and to support Alternative Connections,
released in May 1998, and Utrade.com, released in December 1998.

General and Administrative Expenses. General and administrative expenses
increased to $291,000, or 8% of revenues, in 1998 from $67,000, or 11% of
revenues, in 1997. The increase was primarily attributable to increases in
facilities expenses and investments in internal systems to support the expanded
business.

Depreciation and Amortization Expenses. Depreciation and amortization expenses
increased to $179,000, or 5% of revenues, in 1998 from $18,000, or 3% of
revenues, in 1997. The increase was primarily attributable to increased capital
expenditures throughout 1998 necessary to support an increase in Web site
traffic and a larger subscription base.

Provision for State Income Taxes. Web Media reported an income tax provision of
$22,000 in 1998, compared with an income tax provision of $2,000 in 1997.

Liquidity and Capital Resources

At June 30, 1999, Web Media had cash of $1.2 million, but a working capital
deficit of $280,000 and total members' equity of $1.2 million. Excluding
deferred revenue of $1.5 million and prepaid costs (deferred costs of sales) of
$292,000, Web Media had working capital surplus of approximately $887,000 at
June 30, 1999. While deferred revenue reflects a delay in recognition of revenue
in accordance with subscription agreements, cash is collected at the time of
sale.

Net cash provided by operating activities was $1.8 million and $563,000 for
the first six months of 1999 and 1998, respectively. The increase in cash
provided by operating activities was primarily due to

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<PAGE>

increasing sales during the same periods. Investing activities used cash of
$768,000 and $334,000 primarily for capital expenditures and software
development in the first six months of 1999 and 1998, respectively. Financing
activities used cash of $247,000 in the first six months of 1999 primarily due
to distributions to Unitholders (owners) and repayment of debt, offset by
proceeds from long-term debt. In the first six months of 1998, financing
activities generated $74,000 primarily due to proceeds from long-term debt.

Net cash provided by operating activities was $1.3 million in 1998,
compared to net cash provided by operating activities of $220,000 in 1997. This
increase in cash provided by operating activities was primarily due to
increasing sales during the same periods. Net cash used in investing activities
was $945,000 and $166,000 in 1998 and 1997, respectively. In each year, cash
was used in investing activities to purchase property and equipment and to
develop software. Net cash used by financing activities was $3,000 in 1998,
compared to net cash generated by financing activities of $59,000 in 1997. This
decrease was principally due to the return of capital to an original investor in
the amount of $90,000 in 1998.

As of June 30, 1999, Web Media's principal sources of liquidity were cash
of $1.2 million. Management believes that expected cash flow from operations
and existing cash balances will be sufficient to meet Web Media's currently
anticipated working capital and capital expenditure requirements for at least
the next 12 months. If existing cash balances and cash generated from
operations are insufficient to satisfy Web Media's requirements, Web Media may
seek to sell additional equity or debt securities or to obtain additional credit
facilities. There can be no assurance that additional funding will be available
on favorable terms, if at all.

Impact of Year 2000 Issues

The Year 2000 issue results from computer programs written using two digits
to recognize a year (e.g., 1997 is recognized by the two digits 97). When the
two digits 00 are used in a computer program, the year recognized generally will
be the year 1900 rather than the year 2000. Potential areas of exposure to Year
2000 issues include products purchased from third parties, computers, software,
telephone systems and other equipment used by Web Media.

Web Media has reviewed its internal computer programs and systems to
prepare for problems associated with the Year 2000. Further, Web Media has
assessed the extent to which its non-information technology systems are not Year
2000 compliant and the related remediation required to bring those systems into
compliance. With the installation of a Year 2000 system upgrade in progress and
expected to be completed prior to December 31, 1999, Web Media expects that all
internal financial and operating systems will be Year 2000 compliant.

Web Media's management believes that all of Web Media's proprietary
applications are Year 2000 compliant. However, Web Media could be affected by
Year 2000 issues associated with its customers. To the extent such third-party
systems are not fully Year 2000 compliant, there can be no assurance that
potential systems interruptions or the cost necessary to update software would
not have a material adverse effect on Web Media's business, financial condition
or results of operations.

Web Media has initiated discussions with third parties with whom it has
material relationships to identify and assess the risk posed to Web Media by
their Year 2000 issues. At this time, Web Media is unable to estimate the
extent of the risk it faces from third parties' failure to effectively address
Year 2000 issues.

Management presently believes that Year 2000 issues will not pose
significant operational problems. However, if Web Media is unable to make all
of its internal financial and operating systems and proprietary applications
Year 2000 compliant, or if third parties with whom Web Media has material
relationships fail to

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<PAGE>

make their systems and products Year 2000 compliant, these failures could have a
material adverse effect on Web Media's operations, financial condition or
results of operations.

The discussion of Web Media's efforts and management's expectations
relating to Year 2000 compliance are forward-looking statements. Web Media's
ability to achieve Year 2000 compliance and the costs associated therewith,
could be adversely impacted by, among other things, the availability and cost of
programming and testing resources, vendors' ability to modify proprietary
software and unanticipated problems identified in the ongoing compliance review.

Recent Accounting Pronouncements

In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities" ("SFAS 133"). SFAS 133 establishes accounting and
reporting standards for derivative instruments, including certain derivative
instruments embedded in other contracts and for hedging activities. It requires
that entities recognize all derivatives as either assets or liabilities in the
statement of financial position and measures those instruments at fair value.
The accounting for changes in the fair value of a derivative depends on the
intended use of the derivative and the resulting designation. Management
believes that the adoption of SFAS 133 will not have a material effect on Web
Media's results of operations, financial position, capital resources or
liquidity.

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<PAGE>

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS FOR TMCS

Private Placements of Securities

On September 22, 1995, CitySearch issued an aggregate of 6,622,857 shares
of CitySearch Common Stock to Mr. Gross, a co-founder of CitySearch and director
of TMCS, for services provided to CitySearch and aggregate proceeds of $5,000.
On December 9, 1995, CitySearch repurchased 2,000,000 shares of such CitySearch
Common Stock from Mr. Gross for an aggregate price of $1,510. On October 11,
1995 CitySearch sold an aggregate of 4,233,500 shares of CitySearch Common Stock
to Mr. Conn, Thomas Layton, Jeffrey Brewer and certain other key employees for
aggregate proceeds of $84,670. These shares, together with shares of CitySearch
Common Stock issued to Mr. Gross, are referred to as Founders' Stock. The
Founders' Stock was reclassified as Class A Common Stock after the merger of
Ticketmaster Online and CitySearch in September 1998.

Between May 15, 1996 and July 31, 1996, CitySearch issued and sold an
aggregate of 3,261,024 shares of Series C Preferred Stock, or 3,170,356 shares
of TMCS's Class A Common Stock pursuant to the reclassification of shares
subsequent to the merger of Ticketmaster Online and CitySearch, at a per share
price of $3.4665. Entities affiliated with Goldman, Sachs & Co. purchased
2,596,278 shares of these shares (or 2,465,686 shares of Class A Common Stock)
for an aggregate purchase price of $9.0 million. Mr. Gleberman, a director of
the Company, is a Managing Director in the Principal Investment Area of Goldman,
Sachs & Co.

Between December 13, 1996 and October 22, 1997, CitySearch issued and sold
an aggregate of 4,430,313 shares of Series D Preferred Stock (or 4,297,824
shares of TMCS's Class A Common Stock) at a per share price of $6.5251. These
sales included the following:

. 766,272 shares (or 743,360 shares of Class A Common Stock) were sold to The
Times Mirror Company for an aggregate purchase price of $5.0 million;

. 475,085 shares (or 460,873 shares of Class A Common Stock) were sold to
entities affiliated with Goldman, Sachs & Co. for an aggregate purchase price
of $3.1 million; and

. 459,763 shares (or 446,015 shares of Class A Common Stock) were sold to
Washingtonpost.Newsweek Interactive Company for an aggregate purchase price
of $3.0 million.

Mr. Unterman, a director of TMCS, is an Executive Vice President and Chief
Financial Officer of The Times Mirror Company. Mr. Gleberman, a director of
TMCS, is Managing Director in the Principal Investment Area of Goldman, Sachs &
Co. Mr. Spoon, a director of TMCS, is President, Chief Operating Officer and a
director of The Washington Post Company.

Between November 11, 1997 and November 26, 1997, CitySearch issued and sold
an aggregate of 4,714,286 shares of Series E Preferred Stock (or 4,655,347
shares of Class A Common Stock) at a per share price of $7.00. USAi purchased
2,857,143 of these shares (or 2,821,428 shares of Class A Common Stock) for an
aggregate purchase price of $20.0 million. Mr. Diller, a director of TMCS, is
Chairman and Chief Executive Officer of USAi. Mr. Kaufman and Mr. Baker, who are
directors of TMCS, are directors and executive officers of USAi. In addition,
306,509 shares (or 302,677 shares of Class A Common Stock) were sold to
Washingtonpost.Newsweek Interactive Company for an aggregate purchase price of
$2.1 million.

On May 26, 1998, CitySearch issued and sold an aggregate of 1,000,000
shares of Series E Preferred Stock (or 987,500 shares of Class A Common Stock)
at a per share price of $7.00. USAi purchased 428,571 of these shares (or
423,213 shares of Class A Common Stock) for an aggregate purchase price of $3.0
million.

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Transactions with Affiliates

USAi, Ticketmaster Corp. and Related Entities

In May 1997, CitySearch entered into a cross-promotional agreement with
Ticketmaster Online. Pursuant to the agreement, Ticketmaster Online agreed to
provide banner advertising promoting CitySearch's owned and operated city sites
on the Ticketmaster Online Web site, to provide access to Ticketmaster Online
ticket and information Web pages and to provide "music-on-hold" and/or direct
mail opportunities from Ticketmaster Corp. CitySearch agreed to provide
promotion of the Ticketmaster name and logo in selected advertising and
marketing materials, to co-produce with Ticketmaster Online broadcast
advertising, to provide banner advertising promoting Ticketmaster Online on the
CitySearch Web sites and to promote Ticketmaster Corp. events and publications.
This agreement terminated on October 31, 1998.

CitySearch, USAi, Ticketmaster Online and various affiliates were parties
to the reorganization agreement relating to the merger of Ticketmaster Online
and CitySearch. In addition, pursuant to this agreement, USAi purchased
1,997,502 shares of Class A Common Stock from TMCS stockholders in a tender
offer which was completed in November 1998. Concurrently with the execution of
the agreement, USAi loaned $50 million in cash to CitySearch in exchange for a
convertible note. The convertible note was repaid in full following the
completion of the initial public offering of Ticketmaster Online- CitySearch in
December 1998.

In August 1998, Ticketmaster Online, Ticketmaster Corp. and USAi entered
into a license agreement. See "Business--Ticketmaster Online Business -
Ticketmaster License Agreement."

TMCS expects that, both within and outside the ordinary course of business,
TMCS and its affiliates, other than USAi and its controlled affiliates, on the
one hand, and USAi and its affiliates, other than TMCS and its controlled
affiliates, on the other hand, will engage in various transactions, including
pursuant to the license agreement with Ticketmaster Corp. TMCS expects that
these transactions will result in terms that are at least as favorable as those
that could be obtained from a third party, where applicable.

In February 1999, TMCS entered into an agreement providing for the
combination of Ticketmaster Online-CitySearch, Lycos, Inc. and USAi's Home
Shopping, Ticketmaster and Internet Shopping Network/First Auction businesses.
The transaction was terminated by mutual agreement in May 1999.

Other Affiliates

In June 1997, CitySearch entered into a license and services agreement with
The Los Angeles Times, Inc., a division of The Times Mirror Company. The
agreement provides for the license of CitySearch's intellectual property and
consulting services in exchange for an up-front license fee, ongoing royalties
based on the revenues generated by the city guide developed by the parties and
fees for consulting services. The agreement contains customary termination
provisions for material breach or non-performance. Mr. Unterman, a director of
TMCS, is Executive Vice President and Chief Financial Officer of The Times
Mirror Company.

In September 1997, Ticketmaster Online entered into an agreement with The
Los Angeles Times, Inc. providing for Ticketmaster Online to create and maintain
a co-branded Web site with ticketing capabilities and information on local live
events. Under the agreement, Ticketmaster Online is required to pay to The Los
Angeles Times, Inc. 50% of net merchandising revenue from the co-branded Web
site.

In November 1997, CitySearch entered into a license and services agreement
with Washingtonpost.Newsweek Interactive Company. The agreement provides for the
license of TMCS's intellectual property and consulting services in exchange for
an up-front license fee, ongoing royalties based

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<PAGE>

on the revenues generated by the city guide developed by the parties and fees
for consulting services. The agreement contains customary termination provisions
for material breach or non-performance. Mr. Spoon, a director of the Company, is
the President and a director of The Washington Post Company, the parent of
Washington- post.Newsweek Interactive Company.

Acceleration of Stock Options

Mr. Conn is a party to stock option agreements under the TMCS 1996 Stock
Plan pursuant to which Mr. Conn was granted options to purchase 125,000 shares
and 200,000 shares of CitySearch Class A Common Stock at exercise prices of
$2.00 per share and $7.00 per share. These stock option agreements provide that
in the event of a substantial merger or a board approved acquisition of
CitySearch, all outstanding, unvested stock options will vest upon completion of
such event. Upon consummation of the merger between Ticketmaster Online and
CitySearch, 277,085 shares subject to unvested options held by Mr. Conn
immediately vested. Additionally, Mr. Conn is a party to stock option agreements
under the TMCS 1998 Stock Plan, pursuant to which he was granted options to
purchase 150,000 shares of our Class B Common Stock at an exercise price of
$32.69 per share. This stock option agreement between TMCS, provides that in the
event of a substantial merger or a board approved acquisition of TMCS, all
outstanding, unvested stock options will vest upon completion of such event.

Non-Competition Agreement

In connection with the execution of the agreement for the merger of
Ticketmaster Online and CitySearch, Mr. Conn entered into a non-competition
agreement with CitySearch, Ticketmaster Corp. and Ticketmaster Online. The
agreement provides that Mr. Conn will not, for a period of 30 months from the
date of the agreement, directly engage in or assist any activity that is the
same or materially competes with the local city guide business on the Web or the
business of the sale of tickets to live events through any distributed channels.
Mr. Conn received $250,000 from Ticketmaster Corp. in connection with the
execution of his agreement. In addition, Mr. Conn may not solicit senior
employees or customers, advertisers or clients of CitySearch or Ticketmaster
Online or any of their respective subsidiaries for a period of one year
following the date of the termination of his employment with us for any reason.

TMCS also entered into an employment agreement with Mr. Conn which provides
for certain severance payments upon termination of employment. See "Executive
Compensation--Employment Agreement."

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LEGAL MATTERS

The validity of the shares of TMCS Class B Common Stock offered by this
proxy statement/prospectus will be passed upon for TMCS by Wilson Sonsini
Goodrich & Rosati, Professional Corporation.

EXPERTS

The consolidated financial statements of Ticketmaster Online-CitySearch,
Inc. and CitySearch, Inc. and the financial statements of Web Media Ventures,
L.L.C. appearing in this Proxy Statement of Ticketmaster Online-CitySearch,
Inc., which is referred to and made a part of this Prospectus and Registration
Statement, have been audited by Ernst & Young LLP, independent auditors, to the
extent indicated in their reports thereon appearing elsewhere herein and in the
Registration Statement. Such financial statements have been included herein in
reliance upon such reports given on the authority of such firm as experts in
accounting and auditing.

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WHERE YOU CAN FIND MORE INFORMATION

TMCS files annual, quarterly and special reports, proxy statements and
other information with the Securities and Exchange Commission. You may read and
copy these materials at the public reference facilities maintained by the SEC at
Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, as well as at the
SEC's regional offices at 500 West Madison Street, Suite 1400, Chicago, Illinois
60661 and 7 World Trade Center, Suite 1300, New York, New York 10048. You may
also obtain copies of these materials from the SEC at prescribed rates by
writing to the Public Reference Section of the SEC, 450 Fifth Street, N.W.,
Washington, D.C. 20549.

Please call the SEC at 1-800-SEC-0330 for more information on the public
reference rooms. You can also find TMCS's SEC filings at the SEC's Web site at
http://www.sec.gov.

TMCS filed a registration statement on Form S-4 to register with the SEC
the TMCS Class B Common Stock to be issued to Web Media Unitholders in the
merger. This proxy statement/prospectus is a part of that registration
statement and constitutes a prospectus of TMCS in addition to being a proxy
statement of Web Media. As permitted by the SEC's rules, this proxy
statement/prospectus does not contain all the information you can find in the
registration statement or the exhibits to the registration statement.

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INDEX TO FINANCIAL STATEMENTS OF TMCS

<TABLE>

<S> <C>
Unaudited Pro Forma Condensed Combined Financial Statements
Introduction.................................................................................. F-3
Unaudited Pro Forma Condensed Combined Statement of Operations of TMCS and CitySearch, Inc.
for the year ended December 31, 1998........................................................ F-4
Notes to Unaudited Pro Forma Condensed Combined Financial Statements.......................... F-5
Unaudited Condensed Consolidated Statements of Ticketmaster Online-CitySearch, Inc.
Unaudited condensed consolidated balance sheets as of December 31, 1998 and June 30, 1999..... F-7
Unaudited condensed consolidated statements of operations for the six months ended June
30, 1998 and 1999........................................................................... F-8
Unaudited condensed consolidated statements of cash flows for the six months ended June
30, 1998 and 1999........................................................................... F-9
Notes to unaudited condensed consolidated financial statements................................ F-10

Ticketmaster Online-CitySearch, Inc. (Ticketmaster Online)
Report of Independent Auditors................................................................ F-13
Balance sheets at January 31, 1998 and December 31, 1998...................................... F-14
Statements of operations for the years ended January 31, 1997 and 1998 and the eleven months
ended December 31, 1998..................................................................... F-15
Statements of stockholders' equity for the years ended January 31, 1997 and 1998 and the
eleven months ended September 30, 1998....................................................... F-16
Statements of cash flows for the years ended January 31, 1997 and 1998 and the eleven months
ended December 31, 1998...................................................................... F-18
Notes to Financial Statements................................................................. F-19

CitySearch, Inc.
Report of independent auditors................................................................ F-36
Consolidated Balance sheets at December 31, 1996 and 1997 and at September 28, 1998
(unaudited).................................................................................. F-37
Consolidated statements of operations for the period from September 20, 1995 (date of
formation) to December 31, 1995, the years ended December 31, 1996 and 1997 and the nine
months ended September 30, 1997 and September 28, 1998 (unaudited)........................... F-38
Consolidated statements of stockholders' equity (deficit) for the period from September 20,
1995 (date of formation) to December 31, 1995, the years ended December 31, 1996 and 1997
and the nine months ended September 28, 1998 (unaudited)..................................... F-39
Consolidated statements of cash flows for the period from September 20, 1995 (date of
formation) to December 31, 1995, the years ended December 31, 1996 and 1997 and the nine
months ended September 30, 1997 and September 28, 1998 (unaudited)........................... F-40
Notes to consolidated financial statements.................................................... F-43

</TABLE>

F-1
<PAGE>

INDEX TO FINANCIAL STATEMENTS OF WEB MEDIA VENTURES, L.L.C.

<TABLE>
<S> <C>
Web Media Ventures, L.L.C. dba One & Only Network
Report of Independent Auditors................................................................. F-56
Balance sheets at December 31, 1997 (unaudited) and 1998 and June 30, 1999 (unaudited)......... F-57
Statements of income for the years ended December 31, 1997 (unaudited) and 1998 and six
months ended June 30, 1998 (unaudited) and 1999 (unaudited)................................... F-58
Statements of members' equity for the years ended December 31, 1997 (unaudited) and 1998 and
for the six months ended June 30, 1999 (unaudited)............................................ F-59
Statements of cash flows for the years ended December 31, 1997 (unaudited) and 1998 and six
months ended June 30, 1998 (unaudited) and 1999 (unaudited)................................... F-60
Notes to financial statements.................................................................. F-61
</TABLE>

F-2
<PAGE>

UNAUDITED PRO FORMA CONDENSED COMBINED
FINANCIAL STATEMENTS OF TMCS AND CITYSEARCH, INC.

The following unaudited pro forma condensed combined statement of
operations (the "Condensed Statement") has been prepared to give effect to the
merger of Ticketmaster Online and CitySearch, Inc. (the "Merger"), which was
effective September 28, 1998, and the Tender Offer (as described below). In
addition, the Condensed Statement has been prepared to give effect to the
Ticketmaster Transaction (as described below) and the license agreement entered
into by Ticketmaster Online, Ticketmaster Corp. and USAi in connection with the
Merger (the "Ticketmaster License Agreement.") The Merger was accounted for
using the "reverse purchase" method of accounting, pursuant to which
Ticketmaster Online was treated as the acquiring entity for accounting purposes,
and the assets and liabilities of CitySearch were recorded at their respective
fair values under the purchase method of accounting.

The Condensed Statement reflects certain assumptions regarding the Merger
and the Tender Offer and is based on the historical consolidated financial
statements of the respective entities. The Condensed Statement, including the
notes thereto, are qualified in their entirety by reference to and should be
read in conjunction with, the audited financial statements of CitySearch, Inc.
and Ticketmaster Online-CitySearch, Inc., including the notes thereto, which are
included in this Prospectus. The unaudited financial statements of Ticketmaster
Online-CitySearch, Inc. for the year ended December 31, 1998 were derived from
the historical financial information of Ticketmaster Online-CitySearch, Inc.
which has been adjusted to reflect a change in year end to December 31.

The unaudited pro forma condensed combined statement of operations for the
year ended December 31, 1998 reflects the unaudited consolidated statement of
operations of CitySearch for the nine-month period ended September 28, 1998,
combined with the unaudited results of operations of Ticketmaster Online-
CitySearch, Inc. for the year ended December 31, 1998 (including the pro forma
effects of the USAi's acquisition of all the outstanding equity of Ticketmaster
Group in June 1998 (the "Ticketmaster Transaction").

On October 2, 1998 USAi commenced a tender offer ("the Tender Offer") to
purchase up to 20% of each stockholder's Common Stock at a per share purchase
price of $8.67 in cash, up to an aggregate of 2,924,339 shares. Upon expiration
of the Tender Offer on November 3, 1998, USAi purchased 1,997,502 shares of
Common Stock.

TMCS is in the process of evaluating the fair value of assets acquired and
liabilities assumed in order to make a final allocation of the excess purchase
price, including allocation to the intangibles other than goodwill. Accordingly,
the purchase accounting information is preliminary and has been made solely for
the purpose of developing such unaudited pro forma condensed combined financial
information. Based on current information the preliminary determination of the
costs in excess of the net assets acquired and the allocation to goodwill should
not materially differ from the final determination.

The Condensed Statement is presented for illustrative purposes only and is
not necessarily indicative of the results of operations which would have
actually been reported for the year ended December 31, 1998 had the Merger and
Ticketmaster Transaction occurred as of January 1, 1998, nor is the Condensed
Statement necessarily indicative of future results of operations.

F-3
<PAGE>

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS OF TICKETMASTER
ONLINE-CITYSEARCH, INC.
Year Ended December 31, 1998
(In Thousands, Except Per Share Data)

<TABLE>
<CAPTION>
Ticketmaster Pro Forma Online and
Historical Online Pro Adjusted CitySearch
Ticketmaster Forma Ticketmaster Historic Pro Forma Pro Forma
Online Adjustments Online CitySearch Adjustments Combined
------------ ------------ ------------ ---------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Ticketing Operations................. $ 16,366 $ -- $ 16,366 $ -- $ -- $ 16,366
Sponsorship and advertising.......... 7,099 -- 7,099 360 -- 7,459
City guide and related............... 5,375 -- 5,375 10,957 -- 16,332
-------- -------- -------- -------- ---------- --------
28,840 -- 28,840 11,317 -- 40,157
Costs and expenses:
Ticketing operations................. 10,269 -- 10,269 -- 2,613 (2) 12,132
(750)(3)
City guide and related............... 4,021 -- 4,021 10,491 -- 14,512
Sales and marketing.................. 6,895 -- 6,895 14,902 -- 21,797
Research and development............. 1,728 -- 1,728 5,000 -- 6,728
General and administrative........... 3,670 -- 3,670 5,104 (573)(3) 8,201
Amortization of goodwill............. 16,275 7,439(1) 23,714 -- 23,991 (4) 47,705
Merger and other transaction
costs.............................. 11 -- 11 3,101 -- 3,112
-------- -------- -------- -------- ---------- --------
42,869 7,439 50,308 38,598 25,281 114,187
-------- -------- -------- -------- ---------- --------
Income (loss) from operations......... (14,029) (7,439) (21,468) (27,281) (25,281) (74,030)
Interest income....................... 867 -- 867 995 -- 1,862
Interest expense...................... (813) -- (813) (768) 1,151(5) (430)
-------- -------- -------- -------- ---------- --------
Income/(loss) before provision for
income taxes......................... (13,975) (7,439) (21,414) (27,054) (24,130) (72,598)
Provision for income taxes............ 2,993 -- 2,993 -- (2,993)(6) --
-------- -------- -------- -------- ---------- --------
Net income (loss)..................... $(16,968) $ (7,439) $(24,407) $(27,054) $ (21,137) $(72,598)
======== ======== ======== ======== ========== ========
Basic and diluted net loss
per share............................. $ (0.38) $ (1.16)
======== ========
Shares used to compute basic and
diluted net loss per share........... 44,525 62,682
======== ========
</TABLE>

See accompanying notes to the unaudited pro forma condensed combined financial
statements.

F-4
<PAGE>

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED
FINANCIAL STATEMENTS

Merger Costs

Merger costs and the preliminary determination of the unallocated excess of
Merger costs over net assets acquired are set forth below (in thousands):

<TABLE>
<S> <C>
Initial investment at cost...................................................................... $ 23,000
Value of portion of CitySearch acquired in the Merger........................................... 120,864
Shares purchased under the Tender Offer......................................................... 17,318
Estimated transaction costs (including non-competition agreements).............................. 2,464
--------

Total acquisition costs...................................................................... 163,646
Net assets acquired............................................................................. (2,517)
--------
Unallocated excess of acquisition cost over net assets acquired................................. $161,129
========
</TABLE>

The initial investment at cost represents the previous purchases of shares
of Series E Preferred Stock by USAi, which were converted into 3,244,641 shares
of Class A Common Stock in connection with the Merger, which, prior to the
Merger, represented approximately 11.8% of the CitySearch outstanding equity.

The value of the non-monetary exchange between Ticketmaster Online and
CitySearch was valued by Ticketmaster Online based on the fair value of the
50.7% of CitySearch acquired in the transaction. The fair value of CitySearch
before the Merger was $238.4 million based on an assumed fair value of $8.67 per
share of CitySearch's Common Stock outstanding at September 28, 1998, including
outstanding stock options under the treasury method. The fair value of
CitySearch attributable to outstanding shares of Common Stock at September 28,
1998 was $218.9 million and the fair value of CitySearch attributable to
outstanding stock options at September 28, 1998, under the treasury stock
method, was $19.5 million. The assumed fair value of the CitySearch Common Stock
of $8.67 per share is based on the Tender Offer consideration per share
determined in a negotiated transaction.

Based on current information the preliminary determination of the costs in
excess of the net assets acquired and the allocation to goodwill should not
materially differ from the final determination.

Pro Forma Adjustments

(1) Reflects amortization expense resulting from the increase in goodwill and
other intangible assets recorded in June 1998. The adjustment to the
statement of operations for the year ended December 31, 1998 represents six
months of amortization expense to adjust the six months of amortization
expense already recorded in the historical statement of operations.
Additional goodwill of $154.8 million represents a preliminary allocation
of goodwill resulting from USAi's acquisition of Ticketmaster Group, which
is being amortized straight line over ten years.

(2) Represents a royalty that would have been required to be paid to
Ticketmaster Corp. under the Ticketmaster License Agreement had the
Ticketmaster License Agreement been in effect. Under the agreement,
Ticketmaster Online is required to pay Ticketmaster Corp. a royalty based
on a percentage of the net profit it derives from online ticket sales.

F-5
<PAGE>

(3) Represents certain costs allocated from Ticketmaster Corp. to Ticketmaster
Online which are now covered under the license fee (see note 2).

(4) Reflects additional amortization expense resulting from the increase in
goodwill and other intangible assets due to the Merger. The unallocated
excess of acquisition costs over net assets acquired has been preliminarily
allocated as follows: $500,000 to intangibles related to the Non-
Competition Agreements, which is being amortized over 2.5 years, and $160.6
million to goodwill, which is being amortized over five years.

(5) Reflects elimination of interest expense resulting from the Convertible
Note issued in connection with the Merger since the Convertible Note was
repaid from the proceeds of the offering.

(6) Represents income tax benefit of the Merger, as taxable income of
Ticketmaster Online is offset by tax losses of CitySearch.

(7) For the year ended December 31, 1998, the calculation of shares used in
calculating basic and diluted pro forma loss per share adjusts the
44,525,000 historical weighted average shares of Ticketmaster Online-
CitySearch, Inc. to reflect the 25,248,000 shares of CitySearch outstanding
at December 31, 1997 (including 14,624,000 shares of Preferred Stock as if
converted) and the weighted average number of the shares of common stock
issued by CitySearch during the period from January 1, 1998 through
September 28, 1998.

F-6
<PAGE>

TICKETMASTER ONLINE-CITYSEARCH, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)

<TABLE>
<CAPTION>
December 31, June 30,
1998 1999
------------ -----------
ASSETS (see note 1) (unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents............................................ $106,910 $ 88,494
Accounts receivable.................................................. 1,249 2,151
Related party receivable............................................. 813 1,512
Due from licensees................................................... 1,440 2,975
Prepaid expenses..................................................... 777 1,702
-------- --------
Total current assets................................................ 111,189 96,834
Computers, software, equipment and leasehold improvements, net........ 5,893 9,135
Goodwill and other intangibles, net................................... 299,643 344,715
-------- --------
Total assets........................................................ $416,725 $450,684
======== ========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable..................................................... $ 2,734 $ 2,864
Accrued expenses..................................................... 4,551 7,366
Deferred revenue..................................................... 1,882 2,677
Current portion of capital lease obligations......................... 1,331 1,125
-------- --------
Total current liabilities........................................... 10,498 14,032
Other long-term liabilities........................................... 1,557 1,314
Capital lease obligations, net of current portion..................... 1,082 766
Stockholders' equity:
Class A Common Stock, $0.01 par value: Authorized shares
--100,000,000 at June 30, 1999 Issued and outstanding--63,291,653
and 60,727,223 at December 31, 1998 and June 30, 1999, respectively 633 607
Class B Common Stock--$0.01 par value; Authorized
shares--250,000,000 at June 30, 1999 Issued and
outstanding--8,167,000 and 13,946,015 at December 31, 1998 and
June 30, 1999, respectively......................................... 82 139
Class C Common Stock--$0.01 par value: Authorized shares--2,883,506
at June 30, 1999 Issued and outstanding--none....................... -- --
Additional paid-in capital........................................... 418,918 490,527
Accumulated deficit.................................................. (16,045) (56,701)
-------- --------
Total stockholders' equity.......................................... 403,588 434,572
-------- --------
Total liabilities and stockholders' equity.......................... $416,725 $450,684
======== ========
</TABLE>

See accompanying notes.

F-7
<PAGE>

TICKETMASTER ONLINE-CITYSEARCH, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)

<TABLE>
<CAPTION>
Six Months Ended June 30,
----------------------------
1998 1999
-------- ---------
(unaudited)
<S> <C> <C>
Revenues:
Ticketing operations........................................................... $ 5,947 $ 27,178
Sponsorship and advertising.................................................... 2,444 2,209
City guide and related......................................................... -- 12,112
------- --------
Total revenues.............................................................. 8,391 41,499
Operating costs and expenses
Ticketing operations........................................................... 3,451 20,307
City guide and related......................................................... -- 10,468
Sales and marketing............................................................ 470 15,578
Research and development....................................................... -- 3,538
General and administrative..................................................... 1,007 5,907
Amortization of goodwill....................................................... -- 25,689
Merger and other transaction costs............................................. -- 2,771
------- --------
Total costs and expenses.................................................... 4,928 84,258
------- --------
Income (loss) from operations................................................... 3,463 (42,759)
Interest income (expense) net................................................... -- 2,237
------- --------
Income (loss) before income taxes............................................... 3,463 (40,522)
Income tax provision............................................................ 1,511 134
------- --------
Net income (loss)............................................................... $ 1,952 $(40,656)
======= ========
Basic and diluted net income (loss) per share................................... $ 0.05 $ (0.56)
======= ========
Shares used to compute basic and diluted net income (loss) per share........... 37,238 72,249
======= ========
</TABLE>

See accompanying notes.

F-8
<PAGE>

TICKETMASTER ONLINE-CITYSEARCH, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)

<TABLE>
<CAPTION>
Six Months Ended June 30,
-------------------------------
1998 1999
------------- --------------
(unaudited)
<S> <C> <C>
Operating activities
Net income (loss).......................................................... $ 1,952 $ (40,656)
Depreciation and amortization........................................... 78 27,537
Changes in operating assets and liabilities:
Accounts receivable.................................................. (16) (721)
Related parties receivable........................................... -- (699)
Due from licensees................................................... -- (1,535)
Prepaid expenses..................................................... 60 (694)
Accounts payable..................................................... 42 (898)
Accrued expenses..................................................... 191 2,524
Related party payable................................................ -- 0
Deferred revenue..................................................... 2,395 576
----------- ------------
Net cash used in operating activities............................. 4,702 (14,566)
Investing activities
Capital expenditures....................................................... (121) (3,228)
Deferred purchase price of subsidiary...................................... -- (223)
----------- ------------
Net cash used in investing activities............................. (121) (3,451)
Net proceeds from (distributions to) Ticketmaster Corp.................... (4,581) --
Net proceeds from exercise of options and warrants........................ -- 1,132
Costs of initial public offering.......................................... -- (836)
Payments on capital leases................................................ -- (726)
----------- ------------
Net cash used in financing activities............................. (4,581) (430)
Net cash acquired in CityAuction Merger.................................... -- 13
Net cash acquired in Match.com Merger...................................... -- 18
----------- ------------
Net increase (decrease) in cash and cash equivalents....................... -- (18,416)
Cash and cash equivalents at beginning of period........................... -- 106,910
----------- ------------
Cash and cash equivalents at end of period................................. $ -- $ 88,494
=========== ============
</TABLE>

See accompanying notes.

F-9
<PAGE>

TICKETMASTER ONLINE-CITYSEARCH, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Note 1--The Company and Summary of Significant Accounting Policies

Description of Business

Ticketmaster Online-CitySearch, Inc. (the "Company") has combined
CitySearch and Ticketmaster Online to create a leading provider of local city
guides, local advertising and live event ticketing on the Internet. The Company
is integrating its local CitySearch city guides with its Ticketmaster Online
live events ticketing and merchandise distribution capabilities to offer online
ticketing, merchandise, electronic coupons and other transactions to a broader
audience of consumers.

Basis of Presentation

Prior to the Merger (as defined below), Ticketmaster Multimedia Holdings,
Inc. (the predecessor company) ("Ticketmaster Online") was a wholly owned
subsidiary of Ticketmaster Corporation ("Ticketmaster Corp."). Ticketmaster
Corp. is a wholly owned subsidiary of Ticketmaster Group, Inc. ("Ticketmaster
Group"), which is a wholly owned subsidiary of USA Networks, Inc. ("USAi").

In July 1997, USAi acquired a controlling interest in Ticketmaster Group
through the issuance of shares of USAi common stock (the "Ticketmaster
Acquisition"). In June 1998, USAi completed its acquisition of Ticketmaster
Group in a tax-free merger (collectively with the Ticketmaster Acquisition, the
"Ticketmaster Transaction"), pursuant to which each outstanding share of
Ticketmaster Group common stock not owned by USAi was exchanged for 1.126 shares
of USAi common stock. A portion of the Ticketmaster Group acquisition cost has
been allocated to the assets acquired and liabilities assumed of Ticketmaster
Online based on the fair value of the respective portion of Ticketmaster Online
acquired in the Ticketmaster Transaction.

On September 28, 1998, pursuant to an Amended and Restated Agreement and
Plan of Reorganization dated as of August 12, 1998 (the "Merger Agreement"), by
and among CitySearch, Inc. ("CitySearch"), USAi, Ticketmaster Group,
Ticketmaster Online and Tiberius, Inc., a wholly-owned subsidiary of CitySearch,
Tiberius was merged with and into Ticketmaster Online, with Ticketmaster Online
continuing as the surviving corporation and as a wholly-owned subsidiary of
CitySearch (the "Merger"). In connection with the Merger Agreement, all issued
and outstanding shares of Ticketmaster Online's Common Stock held by
Ticketmaster Corp. were converted into an aggregate of 37,238,000 shares of
CitySearch Common Stock and such shares were subsequently reclassified as Class
A Common Stock of the Company. The Merger was accounted for using the "reverse
purchase" method of accounting, pursuant to which Ticketmaster Online was
treated as the acquiring entity for accounting purposes, and the assets acquired
and liabilities assumed of CitySearch were recorded at their respective fair
values. The accompanying financial statements prior to the Merger reflect the
financial position, results of operations and cash flows of Ticketmaster Online.
The accompanying financial statements, subsequent to the Merger, include the
assets and liabilities of CitySearch and the results of operations of CitySearch
from September 29, 1998.

The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the

F-10
<PAGE>

TICKETMASTER ONLINE-CITYSEARCH, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do
not include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. Operating results for the
six month period ended June 30, 1999 are not necessarily indicative of the
results that may be expected for the year ended December 31, 1999.

The balance sheet at December 31, 1998 has been derived from the audited
financial statements at that date but does not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements.

For further information, refer to the consolidated financial statements and
footnotes thereto included in the Company's annual report on Form 10-K for the
year ended December 31, 1998.

Pro Forma Financial Data (Unaudited)

The following unaudited pro forma information presents a summary of results
of the Company assuming the Merger, the Ticketmaster Transaction and the tender
offer by USAi to purchase shares of Common Stock from CitySearch stockholders in
connection with the Merger had occurred as of January 1, 1998, with pro forma
adjustments to give effect to amortization of goodwill, certain other
adjustments to conform to the terms of the License and Services Agreement dated
August 12, 1998 by and among Ticketmaster Corp., Ticketmaster Online and USAi
(the "Ticketmaster License Agreement"), and the related income tax effects. The
pro forma information also gives effect to the Company's change in year end from
January 31, to December 31. The pro forma financial information is not
necessarily indicative of the results of operations as they would have been had
the transactions been effective on January 1, 1998.

<TABLE>
<CAPTION>
Six Months Ended
June 30, 1998
-------------------
(in thousands)
<S> <C>
Revenues.................................... $ 15,189
Net loss.................................... $ (37,417)
Net loss per share.......................... $ (.61)
</TABLE>

Basic and Diluted Earnings (Loss) per Share

Basic earnings (loss) per share are determined by dividing the net earnings
or (loss) by the weighted average shares of Common Stock outstanding during the
period. Diluted earnings (loss) per share are determined by dividing the net
earnings or (loss) by the weighted average shares of Common Stock outstanding
plus the dilutive effects of stock options, warrants and other convertible
securities. Basic and diluted earnings (loss) per share are the same for the six
months ended June 30, 1999 because the effects of outstanding stock options are
antidilutive. Basic and dilutive earnings (loss) per share are the same for the

F-11
<PAGE>

TICKETMASTER ONLINE-CITYSEARCH, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

six months ended June 30, 1998 because there were no dilutive securities
outstanding during those periods.

The number of shares used in computing basis and diluted earnings (loss)
per share for the six months ended June 30, 1998 represent the number of shares
of CitySearch Common Stock exchanged in the Merger.

Reclassifications

Certain reclassifications have been made to the prior year's balances to
conform to the current year presentation.

Note 2 -- BUSINESS COMBINATIONS

Acquisition of CityAuction, Inc.

On March 29, 1999, the Company completed the acquisition of CityAuction,
Inc. ("CityAuction"), a person-to-person online auction community. In connection
with the acquisition, the Company issued an aggregate of approximately 800,000
shares of its Class B Common Stock for all the outstanding capital stock of
CityAuction, Inc. representing an aggregate purchase price of $27.2 million. The
acquisition was accounted for using the purchase method of accounting which
resulted in approximately $28.1 million of goodwill which is amortized over five
years. The results of operations of CityAuction are included in the accompanying
statement of operations from the date of acquisition.

Acquisition of Match.com, Inc.

On June 14, 1999, the Company completed the acquisition of Match.com, Inc
("Match.com"), an Internet personals company. In connection with the
acquisition, the Company issued 1,924,777 shares of Class B Common Stock to the
former owners of Match.com representing a total purchase price of approximately
$43.3 million. The acquisition was accounted for using the purchase method of
accounting which resulted in approximately $42.6 million of goodwill which is
amortized over five years. The results of operations of Match.com are included
in the accompanying statement of operations from the date of acquisition.

Pending Acquisition of One and Only

On June 10, 1999, the Company, Web Media Ventures, L.L.C. ("Web Media" or
"One and Only"), a Texas limited liability company (d/b/a One & Only Network),
William Bunker, David Kennedy and Glenn Wiggins entered into a Reorganization
Agreement pursuant to which the Company will purchase all the outstanding
limited liability company units ("Units") of One and Only for shares of the
Company's Class B Common Stock. One and Only is an Internet personals company
distributing its services through a network of affiliated Internet sites. The
Company has the option to pay cash or issue shares of Class B Common Stock in
exchange for all of the One and Only Units. The initial target purchase price
for the One and Only Units is $40.6 million of the Company's Class B Common
Stock, of which $30.0 million of Class B Common Stock is payable upon the
closing of the transaction and $2.2 million of Class B Common Stock is payable
in two quarterly installments with the remainder of the target purchase price
due 270 days after the closing of the transaction. The target purchase price is
subject to a 10% increase or decrease based on, among other things, the
achievement of certain 1999 calendar revenue targets of One and Only. The number
of shares of Class B Common Stock to be issued in the acquisition will be
determined by dividing the portion of the purchase price, as adjusted, then
currently payable under the terms of the agreement, by the average closing price
of the Class B Common Stock shortly before the closing of the acquisition and
shortly before each subsequent payment date, subject to certain minimum and
maximum share prices. The final purchase price to be recorded will also depend
on the price of the Class B Common Stock at the date of closing. The closing of
the acquisition is subject to several conditions, including but not limited to
the effectiveness of a registration statement filed by the Company with respect
to the Class B Common Stock to be issued in the transaction. The acquisition
will be accounted for using the purchase method of accounting. It is expected
that the acquisition will result in goodwill in an amount approximating the
purchase price that will be amortized by the Company over a period of five
years. This transaction is expected to close during the third quarter of
1999.

Pending Acquisition of Microsoft's Sidewalk Assets

On July 19, 1999, we entered into an agreement to purchase the assets
associated with the entertainment city guide portion of the Sidewalk.com Web
site from Microsoft Corporation. The transaction was structured as a merger
between our wholly-owned subsidiary and a Microsoft subsidiary which holds the
Sidewalk assets. We also entered into a four year distribution agreement with
Microsoft pursuant to which we will become the exclusive provider of local city
guide content on the Microsoft Network "MSN" and we will become the premier
provider of personals content to MSN. In addition, we and Microsoft entered into
additional cross-promotional arrangements. The transaction is expected to close
in either September or October, 1999 following regulatory approval. In
connection with these transactions, we agreed to issue 7,000,000 shares of our
Class B Common Stock and two warrants to purchase an aggregate of 4,500,000
shares of our Class B Common Stock. These shares represent approximately 9% to
13% of our equity depending on the extent to which the warrants are exercised.
The first warrant has an initial exercise price of $30 per share, which adjusts
downward by $0.0625 for each $0.0625 increase in the price of the Class B Common
Stock over $30 at the time the warrant is exercised. The second Warrant has a
fixed exercise price of $60 per share of Class B Common Stock. We granted
Microsoft certain registration rights in connection with the transaction.

The acquisitions will be accounted for using the purchase method of
accounting. Although the final valuation of the acquisition and related
arrangements has not been determined, we expect that the total valuation will be
approximately $325 million. We will allocate this total valuation to the assets
acquired and the related arrangements. The portion allocated to the assets
acquired will be amortized over a period of time which we expect will not be
longer than five years.

F-12

<PAGE>

REPORT OF INDEPENDENT AUDITORS

Board of Directors
Ticketmaster Online-CitySearch, Inc.

We have audited the accompanying consolidated balance sheets of
Ticketmaster Online (the Predecessor) and Ticketmaster Online-CitySearch, Inc.
(the Company) as of January 31, 1998 and December 31, 1998, respectively, and
the related consolidated statements of operations, stockholder's equity and cash
flows for each of the two years in the period ended January 31, 1998 and the
eleven month period ended December 31, 1998. These financial statements are in
the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Ticketmaster
Online-CitySearch, Inc., as the Predecessor and successor companies at January
31, 1998 and December 31, 1998, and the consolidated results of their operations
and their cash flows for each of the two years in the period ended January 31,
1998 and the eleven month period ended December 31, 1998, in conformity with
generally accepted accounting principles.

/s/ ERNST & YOUNG LLP

Woodland Hills, California
January 29, 1999

F-13

<PAGE>

TICKETMASTER ONLINE-CITYSEARCH, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)

<TABLE>
<CAPTION>
Predecessor
-----------------
December 31, 1998 January 31, 1998
----------------- -----------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents............................................. $ 106,910 $ --
Accounts receivable (net of allowance for doubtful accounts of $58
and $0 respectively)................................................. 1,249 167
Related party receivable............................................... 813 --
Due from licensees..................................................... 1,440 --
Prepaid expenses....................................................... 777 124
-------------- -------------
Total current assets............................................... 111,189 291
Computers, software, equipment and leasehold improvements, net......... 5,893 397
Goodwill and other intangibles, net.................................... 299,643 --
-------------- -------------
Total assets....................................................... $ 416,725 $ 688
============== =============

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable...................................................... $ 2,734 $ 158
Accrued expenses...................................................... 4,551 144
Deferred revenue...................................................... 1,882 89
Current portion of capital lease obligations.......................... 1,331 --
-------------- -------------
Total current liabilities.......................................... 10,498 391
Other long-term liabilities............................................ 1,557 8
Capital lease obligations, net of current portion...................... 1,082 --
Stockholders' equity:
Preferred stock, $0.01 par value
Authorized shares--$2,000,000 at December 31, 1998
Issued and outstanding--none.......................................... -- --
Common stock, no par value;
Authorized shares--1,000 at January 31, 1998 and none at December 31,
1998
Issued and outstanding--none.......................................... -- --
Class A Common stock, $0.01 par value;
Authorized shares--100,000,000 at December 31, 1998
Issued and outstanding--63,291,653 at December 31, 1998............... 633 --
Class B Common stock, $0.01 par value;
Authorized shares--250,000,000 at December 31, 1998
Issued and outstanding--8,167,000 at December 31, 1998................ 82 --
Class C Common stock, $0.01 par value;
Authorized shares--2,883,506 at December 31, 1998
Issued and outstanding--none.......................................... -- --
Due to (from) Ticketmaster Corp -- (1,113)
Additional paid-in capital............................................. 418,918 --
Retained earnings (deficit)............................................ (16,045) 1,402
-------------- -------------
Total stockholders' equity (deficit)............................... 403,588 289
-------------- -------------
Total liabilities and stockholders' equity......................... $ 416,725 $ 688
============== =============
</TABLE>

F-14

<PAGE>

TICKETMASTER ONLINE-CITYSEARCH, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)

<TABLE>
<CAPTION>
Eleven Months
Ended
December 31, Year Ended January 31,
-----------------------------------
1998 1998 1997
------------------ ----------------- ---------------
<S> <C> <C> <C>
Revenues:
Ticketing operations............................................. $ 15,743 $ 5,972 $ 199
Sponsorship and advertising...................................... 6,754 3,933 997
City guide and related........................................... 5,376 -- --
-------- ------- -------
Total revenues.............................................. 27,873 9,905 1,196
Operating costs and expenses:
Ticketing operations............................................. 9,842 3,522 635
City guide and related........................................... 4,021 -- --
Sales and marketing.............................................. 6,834 490 290
Research and development......................................... 1,728 -- --
General and administrative....................................... 3,495 1,719 1,260
Amortization of goodwill......................................... 16,275 -- --
-------- ------- -------
Total costs and expenses.................................... 42,195 5,731 2,185
-------- ------- -------
Income (loss) from operations.................................... (14,322) 4,174 (989)
Interest income.................................................. 867 -- --
Interest expense................................................. (813) -- --
-------- ------- -------
54 -- --
-------- ------- -------
Income (loss) before income taxes................................ (14,268) 4,174 (989)
Income tax provision (benefit)................................... 2,951 1,827 (374)
-------- ------- -------
Net income (loss)................................................ $(17,219) $ 2,347 $ (615)
======== ======= =======
Basic and diluted net income (loss) per share.................... $ (0.38) $ 0.06 $ (0.02)
======== ======= =======
Shares used to compute basic and diluted net income
(loss) per share................................................. 45,201 37,238 37,238
======== ======= =======
</TABLE>

See accompanying notes.

F-15

<PAGE>

TICKETMASTER ONLINE-CITYSEARCH, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(In thousands)

<TABLE>
<CAPTION>
Class A Class B
Common Stock Common Stock Common Stock
----------------- ------------------ ----------------
Shares Amount Shares Amount Share Amount
-------- -------- -------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Balance at February 1, 1996 1 $ -- -- $ -- -- $ --
Accounts receivable transferred to
Ticketmaster Corp -- -- -- -- -- --
Operating charges transferred from
Ticketmaster Corp., net of federal income tax
allocation -- -- -- -- -- --
Net loss -- -- -- -- -- --
------ ------ ------ ------ ----- ------
Balance at January 1, 1997 1 -- -- -- -- --
Accounts receivable transferred to
Ticketmaster Corp. -- -- -- -- -- --
Operating charges transferred from
Ticketmaster Corp., net of federal income tax
allocation -- -- -- -- -- --
Net income -- -- -- -- -- --
------ ------ ------ ------ ----- ------
Balance at January 31, 1998 1 $ -- -- $ -- -- $ --
====== ====== ====== ====== ===== ======

Allocation of initial capitalization as a result -- $ -- -- $ --
of the Ticketmaster Acquisition by USAi
Allocation of basis of Tax-free Merger of
Ticketmaster by USAi -- -- -- --
Stock exchanged in connection with CitySearch
Merger (37,238) and USAi's initial investment
in CitySearch at cost. 40,483 405 -- --
Contribution of tendered CitySearch Common
Stock from USAi to Ticketmaster -- -- -- --
Contribution of CitySearch Common Stock
from USAi to Ticketmaster 22,003 220 -- --
Exercise of stock options and warrants 923 9 -- --
Initial public offering of Class B Common Stock -- -- 8,050 81
Class A shares converted to Class B (117) (1) 117 1
Net loss -- -- -- --
------ ------ ----- ------
Balance at December 31, 1998 63,292 $ 633 8,167 $ 82
====== ====== ===== ======
</TABLE>

See accompanying notes.

F-16

<PAGE>

TICKETMASTER ONLINE-CITYSEARCH, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(In thousands)

<TABLE>
<CAPTION>
Due to (from Additional Retained
Paid-in Earnings
Ticketmaster Capital (Deficit) Total
-------------- --------------- ----------------- ---------------
<S> <C> <C> <C> <C>
Balance at February 1, 1996............................... $ 684 $ -- $ (330) $ 354
Accounts receivable transferred to
Ticketmaster Corp...................................... (1,088) -- -- (1,088)
Operating charges transferred from
Ticketmaster Corp., net of federal income
tax allocation......................................... 1,838 -- -- 1,838
Net loss.................................................. -- -- (615) (615)
------- -------- -------- --------

Balance at January 1, 1997................................ 1,434 -- (945) 489
Accounts receivable transferred to
Ticketmaster Corp...................................... (9,953) -- -- (9,953)
Operating charges transferred from
Ticketmaster Corp., net of federal
income tax allocation.................................. 7,406 -- -- 7,406
Net income................................................ -- -- 2,347 2,347
------- -------- -------- --------
Balance at January 31, 1998............................... $(1,113) $ -- $ 1,402 $ 289
======= ======== ======== ========

Allocation of initial capitalization as a
result of the Ticketmaster Acquisition
by USAi................................................ $ -- $ 22,834 $ 1,174 $ 24,008
Allocation of basis of Tax-free Merger of
Ticketmaster by USAi................................... -- 126,170 -- 126,170
Stock exchanged in connection with
CitySearch Merger (37,238) and USAi's
initial investment in CitySearch at cost............... -- 145,923 -- 146,328
Contribution of tendered CitySearch
Common Stock from USAi to
Ticketmaster........................................... -- 17,318 -- 17,318
Contribution of CitySearch Common
Stock from USAi to Ticketmaster........................ -- 1,100 -- 1,320
Exercise of stock options and warrants.................... -- 1,600 -- 1,609
Initial public offering of Class B
Common Stock........................................... -- 103,973 -- 104,054
Class A shares converted to Class B....................... -- -- -- --
Net loss.................................................. -- -- (17,219) (17,219)
------- -------- -------- --------
Balance at December 31, 1998.............................. $ == $418,918 $(16,045) $403,588
======= ======== ======== ========
</TABLE>

See accompanying notes.

F-17

<PAGE>

TICKETMASTER ONLINE-CITYSEARCH, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

<TABLE>
<CAPTION>
Eleven Months
Ended Predecessor
December 31, Year Ended January 31,
----------------- --------------------------
1998 1998 1997
----------------- ----------- -----------
<S> <C> <C> <C>
Operating activities
Net income (loss).................................................... $(17,219) $ 2,347 $ (615)
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depreciation and amortization........................................ 17,411 268 51
Changes in operating assets and liabilities:
Accounts receivable.......................................... (818) (41) (108)
Related parties receivable................................... (184) -- --
Due from licensee............................................ 27 -- --
Prepaid expenses............................................. (475) 30 51
Accounts payable............................................. 36 158 --
Accrued expenses............................................. (196) 87 65
Deferred revenue............................................. 969 89 --
Deferred rent................................................ 11 -- --
-------- --------- -------
Net cash provided by (used in) operating activities.................. (438) 2,938 (556)

Investing activities
Capital expenditures................................................. (1,034) (250) (189)
Deferred purchase price of subsidiary................................ (112) -- --
-------- --------- -------
Net cash used in investing activities................................ (1,146) (250) (189)
Financing activities
Net proceeds from (distributions to) Ticketmaster Corp............... (5,549) (2,691) 748
Net proceeds from exercise of options and warrants................... 1,609 -- --
Net proceeds from initial public offering............................ 104,989 -- --
Payments on capital leases........................................... (324) -- --
Payment on convertible promissory note............................... (50,000) -- --
Other, net........................................................... (108) -- --
-------- --------- -------
Net cash provided by (used in) financing activities.................. 50,617 (2,691) 748
Net cash acquired in CitySearch Merger............................... 57,877 -- --
-------- --------- -------
Net increase (decrease) in cash and cash equivalents................. 106,910 (3) 3
-------
Cash and cash equivalents at beginning of period..................... -- 3 --
-------- --------- -------
Cash and cash equivalents at end of period........................... $106,910 $ $ 3
======== ========= =======
Supplemental statement of cash flow information Noncash
investing and financing information:
Acquisition of CitySearch, Inc.
Fair value of assets acquired (including cash and cash equivalents
of $57,877 and goodwill)........................................... $226,339 $ -- $ --
Less:
Fair value of liabilities assumed.................................... 61,373 -- --
Issuance of Class A Common Stock..................................... 147,648 -- --
Contribution of tendered CitySearch Common Stock from USAi to
Ticketmaster........................................................ 17,318 -- --
-------- --------- -------
Cash paid............................................................ $ -- $ -- $ --
======== ========= =======
</TABLE>

See accompanying notes.

F-18

<PAGE>

TICKETMASTER ONLINE-CITYSEARCH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1998

1. Organization and Business

Basis of Presentation and Merger

Prior to the Merger (as defined below), Ticketmaster Multimedia Holdings,
Inc. (the predecessor company) (Ticketmaster Online) was a wholly owned
subsidiary of Ticketmaster Corporation (Ticketmaster Corp.). Ticketmaster Corp.
is a wholly owned subsidiary of Ticketmaster Group, Inc. (Ticketmaster Group),
which is a wholly owned subsidiary of USA Networks, Inc. (USAi).

In July 1997, USAi acquired a controlling interest in Ticketmaster Group
through the issuance of shares of USAi common stock (Ticketmaster Acquisition by
USAi). In June 1998, USAi completed its acquisition of Ticketmaster Group in a
tax-free merger (Tax-free Merger and collectively with the Ticketmaster
acquisition is the Ticketmaster Transaction), pursuant to which each outstanding
share of Ticketmaster Group common stock not owned by USAi was exchanged for
1.126 shares of USAi common stock. A portion of the Ticketmaster Group
acquisition cost has been allocated to the assets acquired and liabilities
assumed of Ticketmaster Online based on the fair value of the respective portion
of Ticketmaster Online acquired in the Ticketmaster Transaction.

On September 28, 1998, pursuant to an Amended and Restated Agreement and
Plan of Reorganization dated as of August 12, 1998 (the Merger Agreement), by
and among CitySearch, Inc. (CitySearch), USAi, Ticketmaster Group, Ticketmaster
Online and Tiberius, Inc. (Tiberius), a wholly-owned subsidiary of CitySearch,
Tiberius was merged with and into Ticketmaster Online, with Ticketmaster Online
continuing as the surviving corporation and as a wholly-owned subsidiary of
CitySearch (the Merger). In connection with the Merger Agreement, all issued and
outstanding shares of Ticketmaster Online's Common Stock held by Ticketmaster
Corp. were converted into an aggregate of 37,238,000 shares of CitySearch Common
Stock and such shares were subsequently reclassified as Class A Common Stock of
the Company. The Merger was accounted for using the "reverse purchase" method of
accounting, pursuant to which Ticketmaster Online was treated as the acquiring
entity for accounting purposes, and the assets acquired and liabilities assumed
of CitySearch were recorded at their respective fair values. The accompanying
financial statements prior to the Merger reflect the financial position, results
of operations and cash flows of Ticketmaster Online. The accompanying financial
statements, subsequent to the Merger, include the assets and liabilities of
CitySearch and the results of operations of CitySearch from September 29, 1998
through December 31, 1998. In connection with the Merger the name of the
combined company was changed from CitySearch, Inc. to Ticketmaster Online-
CitySearch, Inc. (the Company). References throughout these financial statements
to Ticketmaster Online and CitySearch relate to the individual businesses of
Ticketmaster Online and CitySearch, respectively.

F-19

<PAGE>

TICKETMASTER ONLINE-CITYSEARCH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1998

The Merger costs and the determination of the excess of Merger costs over
net assets acquired are set forth below (in thousands):

<TABLE>
<S> <C>
Initial investment at cost........................................................ $ 23,000
Value of portion of CitySearch acquired in the Merger............................. 120,864
Tender offer...................................................................... 17,318
Estimated transaction costs (including non-competition agreements)................ 2,464
--------
Total Merger costs................................................................ 163,646
Net identifiable assets acquired.................................................. (2,517)
--------
Excess of Merger cost over net assets acquired.................................... $161,129
========
</TABLE>

The value of the non-monetary exchange between Ticketmaster Online and
CitySearch was determined by Ticketmaster Online based on the fair value of the
50.7% of CitySearch acquired in the transaction. The fair value of CitySearch
before the Merger was $238.4 million based on an assumed fair value of $8.67 per
share of CitySearch's Common Stock outstanding at September 28, 1998, including
outstanding stock options under the treasury method. The fair value of
CitySearch attributable to outstanding shares of Common Stock at September 28,
1998 was $218.9 million and the fair value of CitySearch attributable to
outstanding stock options at September 28, 1998, under the treasury stock
method, was $19.5 million.

On October 2, 1998 USAi commenced a tender offer (the Tender Offer) to
purchase up to 20% of each CitySearch stockholder's Common Stock at a per share
purchase price of $8.67 in cash, up to an aggregate of 2,924,339 shares. The
Tender Offer expired on November 3, 1998 and 1,997,502 shares were tendered for
purchase for a total of $17,318,000.

In connection with the Merger Agreement, Ticketmaster Online also entered
into a License and Services Agreement (the License Agreement) with Ticketmaster
Corp. and USAi to remain perpetually in effect unless terminated as allowed
under the License Agreement. For a license fee, Ticketmaster Corp. granted
Ticketmaster Online, among other things, the exclusive worldwide right to use
the trademarks of Ticketmaster Corp. in connection with the sale of tickets and
merchandise via electronic interactive services.

Pro Forma Financial Data (Unaudited)

The following unaudited pro forma information presents a summary of results
of the Company assuming the Merger, Ticketmaster Transaction and the Tender
Offer had occurred as of January 1, 1997, with pro forma adjustments to give
effect to amortization of goodwill, certain other adjustments to conform to the
terms of the License Agreement, and the related income tax effects. The pro
forma information also gives effect to the Company's change in year end from
January 31, to December 31. The pro forma financial information is not
necessarily indicative of the results of operations as they would have been had
the transactions been effective on January 1, 1997.

F-20

<PAGE>

TICKETMASTER ONLINE-CITYSEARCH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1998

<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------------------
1998 1997
--------------------- --------------------
(in thousands, except per share data)
<S> <C> <C>
Revenues............................................. $ 40,157 $ 15,479
Net loss............................................. (72,598) (80,357)
Net loss per share................................... (1.16) (1.44)
</TABLE>

Business

Prior to the Merger, Ticketmaster Online was a wholly-owned subsidiary of
Ticketmaster Corp. which is a leading provider of automated ticketing services
in the United States, with clients including many of the country's most well-
known entertainment facilities, promoters and professional sports franchises.
Ticketmaster Online was formed in December 1993 to administer the online
business of Ticketmaster Corp. There were no costs and expenses incurred by
Ticketmaster Online until June 1995. Ticketmaster Online commenced online ticket
sales in November 1996 providing a ticketing outlet via the World Wide Web (Web)
which gives users access to live event tickets and event information.
Ticketmaster Online's operations are the online distribution mechanism for
Ticketmaster Corp., which utilizes Ticketmaster Corp.'s business relationships
and brand name.

CitySearch was organized on September 20, 1995. CitySearch produces and
delivers comprehensive local city guides on the Web, providing up-to-date
information regarding arts and entertainment events, community events, community
activities, recreation, business, shopping, professional services and
news/sports/weather to consumers in metropolitan areas. CitySearch designs and
produces custom-built Web sites and related services for local businesses,
aggregates them in a local city guide environment and provides business
customers the ability to regularly update and expand their sites.

CitySearch has two primary means of providing its local city guides. In its
"owned and operated" markets CitySearch systematically produces the majority of
its own content, hires and deploys a direct sales force to sell custom-built
business Web sites as well as related services to local and regional businesses,
and launches a presence in the market. In its partner-led markets, CitySearch
contracts with a local media company to provide assistance in developing,
designing and launching a city guide. Under these contracts, the partners
license CitySearch's business and technology systems and pay a license fee and
make royalty payments to CitySearch based on certain revenues generated by the
media partners from the operation of their sites and pay CitySearch for
additional consultation and design services not provided for under the license
fee.

Customers include hotels, restaurants, taverns, movie theaters, museums and
retail stores. The Company currently owns and operates sites in Austin, TX,
Nashville, TN, New York, NY, Portland, OR, Raleigh-Durham-Chapel Hill, NC, Salt
Lake City, UT, and San Francisco, CA. Through partnership and licensing
agreements, the Company has an internet presence in Baltimore, MD, Dallas, TX,
Los Angeles, CA, Washington D.C., Melbourne and Sydney, Australia, Toronto,
Canada, Copenhagen, Denmark, and Stockholm, Sweden.

F-21

<PAGE>

TICKETMASTER ONLINE-CITYSEARCH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1998

2. Summary of Significant Accounting Policies

Ticketmaster Online Basis of Presentation

Prior to the merger, the accompanying consolidated financial statements
present the financial position, operating results and cash flows of the
predecessor company, Ticketmaster Online, a wholly owned subsidiary of
Ticketmaster Corp. The financial statements include revenues related to the
convenience and handling charges in connection with tickets sold via the
Internet and advertising sales on Ticketmaster Online's web site. Costs of
ticketing revenues have been allocated from Ticketmaster Corp. to Ticketmaster
Online on a per ticket sold basis. The financial statements include operating
expenses which have been allocated to Ticketmaster Online by Ticketmaster Corp.
on a specific identification basis. Further, Ticketmaster Online shares certain
employees and other resources with Ticketmaster Corp. Allocations from
Ticketmaster Corp. for indirect expenses for such shared resources have been
made primarily on a proportional cost allocation method based on tickets sold
and related revenues. Management believes these allocations are reasonable and
that such expenses would not differ materially had Ticketmaster Online operated
on a stand-alone basis for all periods presented. The financial statements of
Ticketmaster Online prior to the merger do not necessarily reflect the results
of operations or financial position that would have existed had Ticketmaster
Online been an independent company.

Segments

Based on the Company's integration and management strategies, the Company
operates in one business segment.

Change in Year-End

The statements of operations and cash flows for the eleven months ended
December 31, 1998 reflect a change in Ticketmaster Online's year-end as a result
of the purchase of Ticketmaster Group by USAi.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of
the Company and its wholly-owned subsidiaries. All significant intercompany
amounts have been eliminated.

Estimates Used in the Preparation of Consolidated Financial Statements

The preparation of consolidated financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the consolidated financial
statements and the accompanying notes. Actual results could differ from those
estimates, although management does not believe that any differences would
materially affect the Company's consolidated financial position or results of
operations.

F-22

<PAGE>

TICKETMASTER ONLINE-CITYSEARCH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1998

Revenue Recognition

Revenue from advertising and sponsorship agreements is recognized when the
service is provided or over the term of the promotion. Revenue from the sale of
tickets is recognized when tickets are sold.

City guide and related revenues include revenue from the sale of
subscriptions for custom-built business Web sites (designed and developed by
CitySearch) in its owned and operated markets, the performance of consultation
and design services, and licensing and royalty revenues from the sale of
licenses for the use of CitySearch's business and technology systems in its
partner-led markets. License and royalty revenue is less than ten percent of
consolidated revenue.

The Company recognizes subscription revenues over the period the services
are provided. Royalty revenues are recognized when earned based on the revenues
generated by the license or based on the minimum royalty provisions in the
contract. Revenues from consultation and design services are recognized as the
services are provided.

Revenues from the sale of licenses for use of the Company's business and
technology systems to its partner-led markets are generally recognized over the
term of the license agreement or the period over which the relevant services are
delivered. The Company's license agreements have terms ranging from three to
nine years.

Deferred revenue primarily consists of prepayments of subscription services
and licensing agreements, advertising and sponsorship revenue, and revenue from
Web site support agreements with joint venture partners of Ticketmaster Corp.
Web site support is recognized straight line over the life of the agreement.

Cash and Cash Equivalents

The Company considers all highly liquid investments with a maturity of
three months or less when purchased to be cash equivalents. The Company places
its cash deposits with high-credit quality financial institutions.

Accounts Receivable

Concentration of credit risk with respect to trade receivables is limited
based on the size and diversity of Ticketmaster Online's clients and the large
number and geographic dispersion of CitySearch customers. The Company generally
does not require collateral; however, credit losses have generally been within
management's expectations and have not been significant.

Computers, Software, Equipment and Leasehold Improvements

Computers, software, equipment and leasehold improvements are stated at
cost and depreciated using the straight-line method over the estimated useful
lives of the assets, which range from three to seven years. Assets acquired
under capitalizable lease arrangements are recorded at the present value of the
minimum lease payments. Amortization of assets capitalized under capital leases
and leasehold improvements are computed

F-23

<PAGE>

TICKETMASTER ONLINE-CITYSEARCH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1998

using the straight-line method over the life of the asset or term of the lease,
whichever is shorter, and is included in depreciation expense.

Research and Development

Research and development expenditures are charged to operations as
incurred. Based on the Company's product development process, technological
feasibility is established upon completion of a working model. Costs incurred by
the Company between completion of the working model and the point at which the
product is ready for general release have been insignificant.

Goodwill and Other Intangibles

Goodwill of $154.8 million represents amounts allocated to Ticketmaster
Online from the purchase of Ticketmaster Group by USAi and is being amortized by
the straight-line method over ten years.

As a result of the Merger and the Tender Offer, the Company recorded
goodwill of $160.6 million, which is being amortized using the straight-line
method over five years, and intangibles relating to non-competition agreements
of $500,000, which is being amortized using the straight-line method over 2.5
years.

Accumulated amortization at December 31, 1998 was $16.3 million.

Due to (from) Ticketmaster Corp.

Due to (from) Ticketmaster Corp. includes amounts payable to Ticketmaster
Corp. primarily for operations and working capital requirements, offset by
amounts receivable for cash collected by Ticketmaster Corp. The balances were
primarily the result of Ticketmaster Online's participation in Ticketmaster
Corp.'s central cash management system, wherein all of Ticketmaster Online's
cash receipts were collected by Ticketmaster Corp. and all cash disbursements
were funded by Ticketmaster Corp. Other transactions include Ticketmaster
Online's pro rata share of the current portion of Ticketmaster Corp.'s
consolidated income tax liability and other administrative expenses incurred by
Ticketmaster Corp. on behalf of Ticketmaster Online prior to the Merger. Such
amounts payable do not have specific repayment terms and do not bear interest.
At January 31, 1998 and 1997, such intercompany balances have been included as a
component of stockholders' equity as it was not the original intention of
Ticketmaster Online or Ticketmaster Corp. to settle such balances in cash. Most
of the due to (from) Ticketmaster Corp. amount was reclassified as additional
paid-in capital in connection with the Merger.

An analysis of transactions in the due to (from) Ticketmaster Corp. account
for each of the two years ended January 31, 1998 and the eleven months ended
December 31, 1998 follows:

F-24

<PAGE>

TICKETMASTER ONLINE-CITYSEARCH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1998

<TABLE>
<CAPTION>
December 31 January 31
---------------- ----------------------------------
1998 1998 1997
---------------- ----------------------------------
<S> <C> <C> <C>
Balance at beginning of year.................................... $ (1,113) $ 1,434 $ 684
Ticketing revenues transferred to Ticketmaster Corp prior to
the merger..................................................... (11,551) (9,953) (1,088)
Operating charges transferred from Ticketmaster Corp. prior to
the merger..................................................... 6,263 5,579 2,212
Share of Ticketmaster Corp.'s current federal income tax
provision (benefit) prior to the merger........................ -- 1,827 (374)
Balance transferred to additional paid-in capital in connection
with the Merger................................................ 6,013 -- --
Amounts transferred to related party receivable................. 388 -- --
-------- ------- -------
Balance at end of year.......................................... $ -- $(1,113) $ 1,434
======== ======= =======
Average balance during the year................................. $ (557) $ 161 $ 1,059
======== ======= =======
</TABLE>

Income Taxes

Prior to the Merger, Ticketmaster Online's results have been included in
Ticketmaster Corp.'s consolidated federal and state income tax returns. The
income tax provision was calculated and deferred tax assets and liabilities were
recorded as if Ticketmaster Online had operated as an independent company. Prior
to the Merger Ticketmaster Corp. paid all taxes for Ticketmaster Online and, as
such, income taxes payable and deferred tax assets have been included in due to
(from) Ticketmaster Corp. Subsequent to the Merger, the Company will file its
Federal and State income tax returns on a stand-alone basis.

Deferred tax assets and liabilities are recognized with respect to the tax
consequences attributable to the differences between the financial statement
carrying values and tax bases of assets and liabilities. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which these temporary differences are expected to be
recovered or settled. Further, the effect on deferred tax assets and liabilities
of a change in tax rates is recognized in income in the period that includes the
enactment date.

Basic and Diluted Earnings (Loss) per Share

Basic earnings (loss) per share are determined by dividing the net earnings
or (loss) by the weighted average shares of Common Stock outstanding during the
period. Diluted earnings or (loss) per share are determined by dividing the net
earnings or (loss) by the weighted average shares of Common Stock outstanding
plus the dilutive effects of stock options, warrants, and other convertible
securities. Basic and diluted earnings (loss) per share are the same for the
eleven month period ended December 31, 1998 because the effects of outstanding
stock options are antidilutive. Basic and diluted earnings (loss) per share are
the same for the years ended January 31, 1998 and 1997 because there were no
dilutive securities outstanding during those periods.

F-25

<PAGE>

TICKETMASTER ONLINE-CITYSEARCH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1998

The number of shares used in computing basic and diluted earnings (loss)
per share for the eleven month period ended December 31, 1998 includes the
number of shares of CitySearch Common Stock exchanged in the Merger plus shares
of Class A Common Stock of City Search outstanding and the number of shares of
Class B Common Stock issued from the date of the Merger through December 31,
1998 calculated on a weighted average basis. The number of shares used in
computing basic and diluted earnings (loss) per share for the years ended
January 31, 1998 and 1997 represents the number of shares of CitySearch Common
Stock exchanged in the Merger.

Financial Instruments

The estimated fair values of cash, accounts receivable, accounts payable,
and accrued expenses approximate their carrying value because of the short term
maturity of these instruments or the stated interest rates are indicative of
market interest rates.

Advertising Costs

Advertising costs are expensed as incurred. For the eleven month period
ended December 31, 1998, advertising costs amounted to $1,540,000. There were no
advertising costs for the years ended January 31, 1998 and 1997.

During 1998 CitySearch maintained several barter arrangements whereby the
Company has assisted in the design of a Web site in exchange for broadcast
advertising. The fair value of services provided and the services received in
the barter arrangement is not readily determinable and therefore is not used to
measure the value of the broadcast advertising received. The Company valued
these barter transactions at $349,000 for the period from the date of the Merger
through December 31, 1998, based on the estimated cost of the specific services
provided by the Company. Such amounts are included in City guide and related
revenue as well as recognized in sales and marketing expense in the accompanying
consolidated statements of operations. Reciprocal noncash barter advertising on
the Internet is not valued in the consolidated financial statements because of
the immateriality of the associated costs and the indeterminable fair value.

Impairment of Long-Lived Assets and Long-Lived Assets to Be Disposed Of

The Company periodically reviews long-lived assets and certain identifiable
intangibles for impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable. Recoverability of
assets to be held and used is measured by a comparison of the carrying amount of
an asset to future net cash flows (on an undiscounted basis) expected to be
generated by the asset. If such assets are considered to be impaired, the
impairment to be recognized is measured by the amount by which the carrying
amount of the assets exceeds the fair value of the assets.

Stock-based Compensation

Statement of Financial Accounting Standards No. 123, "Accounting for Stock-
Based Compensation" (SFAS 123), suggests that stock awards granted subsequent to
January 1, 1995, be recognized as compensation expense based on their fair value
at the date of grant. Alternatively, a company may use Accounting Principles
Board Opinion No. 25 (APB 25), "Accounting for Stock Issued to Employees," and

F-26

<PAGE>

TICKETMASTER ONLINE-CITYSEARCH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1998

disclose pro forma results of operations which would have resulted from
recognizing such awards at their fair value. The Company will continue to
account for stock-based compensation under APB 25 and make the required pro
forma disclosures for compensation (see Note 7). Under APB 25 compensation
expense is calculated based on the difference between the exercise price and the
fair market value of the underlying stock on the date of grant. There was no
compensation expense applicable under APB 25.

Reclassifications

Certain reclassifications have been made to the prior years' balances to
conform to the current year presentation.

3. Computers, Software, Equipment and Leasehold Improvements

Computers, software, equipment and leasehold improvements consisted of the
following:
<TABLE>
<CAPTION>
December 31, January 31,
1998 1998
-------------------------- ------------------------
<S> <C> <C>
Computers and software.......................................... $ 6,860 $ 532
Furniture and fixtures.......................................... 141 20
Leasehold improvements.......................................... 215 33
------- -----
7,216 585
Less accumulated depreciation and amortization.................. (1,323) (188)
------- -----
$ 5,893 $ 397
======= =====
</TABLE>

Depreciation and amortization expense was $1,136,000, $124,000 and $49,000
for the eleven month period ended December 31, 1998 and the years ended January
31, 1998 and 1997, respectively.

4. Income Taxes

The provision (benefit) for income taxes consisted of the following:
<TABLE>
<CAPTION>
Eleven Months Predecessor
Ended Year Ended
December 31, January 31,
------------------- ------------------------------------
1998 1998 1997
------------------- ------------------------------------
(in thousands)
Current:
<S> <C> <C> <C>
Federal........................................................ $2,624 $1,445 $(340)
Foreign........................................................ 82 -- --
State.......................................................... 754 395 (46)
------ ------ -----
3,460 1,840 (386)

Deferred:
Federal........................................................ (478) (13) 12
State.......................................................... (31) -- --
------ ------ -----
(509) (13) 12
------ ------ -----
Total income tax provision (benefit)............................ $2,951 $1,827 $(374)
====== ====== =====
</TABLE>
F-27

<PAGE>

TICKETMASTER ONLINE-CITYSEARCH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1998

The following is a reconciliation of the statutory federal income tax rate
to the Company's effective income tax rate:

<TABLE>
<CAPTION>
Eleven Months
Ended Years Ended
December 31, January 31,
------------------- -------------------------------
1998 1998 1997
------------------- -------------------------------
<S> <C> <C> <C>
Statutory federal income tax expense (benefit).................. (35)% 34% (34)%
Tax provision for earnings included in Ticketmaster Corp.
consolidated return............................................ 20 -- --
Non-deductible goodwill amortization............................ 37 -- --
State income tax expense (benefit).............................. -- (9) (6)
Other........................................................... (1) 1 2
---- ---- ----
21% 44% (38)%
==== ==== ====
</TABLE>

Significant components of the Company's deferred tax assets and liabilities
as of December 31, 1998 are as follows (in thousands):

<TABLE>
<CAPTION>
Deferred tax liabilities
<S> <C>
Depreciation.................................................. $ 400
Software development.......................................... 824
--------
Total deferred tax liabilities................................ 1,224

Deferred tax assets
Net operating loss carryforwards.............................. 31,482
Research and development carryforwards........................ 468
Vacation accruals............................................. 250
Deferred revenue.............................................. 600
Other......................................................... 124
--------

Total deferred tax assets....................................... 32,924
Valuation allowance............................................. (31,700)
--------
$ --
========
</TABLE>

Deferred taxes at January 31, 1998 were not significant. The valuation
allowance increased by $1.7 million during the eleven-month period. The
valuation allowance recorded in connection with the CitySearch Merger was
approximately $30 million. If the related deferred tax assets become realizable
in the future, the reversal of the valuation allowance will be recorded as a
reduction of goodwill. The Company had net operating loss carryforwards for
federal and state income tax purposes at December 31, 1998 of approximately
$78,704,000 which had been generated by CitySearch. The federal carryforwards
expire principally in the period from 2010 to 2018, and the state carryforwards
expire principally in 2003. Utilization of the net operating loss carryforwards
is subject to limitations as a result of ownership changes as defined in the
Internal Revenue Code. Furthermore, the net operating loss carryforwards, to the
extent not otherwise limited, can only be used to offset the future taxable
income of CitySearch.

F-28

<PAGE>

TICKETMASTER ONLINE-CITYSEARCH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1998

5. Defined Contribution Plans

Ticketmaster Online participates in the Ticketmaster Corp. 401(k) defined
contribution plan (the 401(k) Plan), covering substantially all Ticketmaster
Online employees, which contains an employer matching feature of 25% up to a
maximum of 6% of the employee's compensation. Ticketmaster Online's contribution
for the 401(k) Plan year ended December 31, 1997 was $12,000.

In July 1997, CitySearch established a defined contribution plan for
certain qualified employees as defined in the plan. Participants may contribute
from 1% to 20% of pretax compensation subject to certain liabilities. The plan
does provide for certain discretionary contributions by the Company as defined
in the plan. No Company contributions were made for the year ended December 31,
1997. As a result of the merger, Ticketmaster Online employees will be
incorporated into their balance from the 401(k) plan into the CitySearch plan.

6. Related Party Transactions

Ticketmaster Online was part of a consolidated group and, as such, had
significant transactions with related entities.

In connection with the Merger, the Company entered into a license agreement
with Ticketmaster Corp. (the License Agreement) under which the Company is
required to pay Ticketmaster Corp. a royalty based on a percentage of the net
profit the Company derives from online ticket sales. Ticketing operations cost
includes $1,519,000 of royalty fees incurred under the License Agreement for the
eleven months ended December 31, 1998. Included in related party receivable is
$346,000 representing unpaid ticketing revenue, net of amounts due to
Ticketmaster Corp. for direct expenses and royalty fees under the License
Agreement.

Concurrently with the execution of the Merger Agreement, the Company
received a $50 million loan from USAi in exchange for a convertible promissory
note (Convertible Note). The Convertible Note, in the principal amount of $50
million, bore interest at a rate per annum of 7.00%. On December 10, 1998, the
Company repaid the Convertible Note and paid total interest of $1,151,000
covering the period August 13 to December 31, 1998. Interest expense on the
Convertible Note was $710,000 during the eleven month period ended December 31,
1998.

On June 28, 1996, Ticketmaster Online entered into an agreement expiring on
December 31, 2003, with an affiliate of its then majority shareholder, whereby
in exchange for services rendered in connection with the development of
Ticketmaster Online's Web site, Ticketmaster Online will pay royalties equaling
5% of net profit (as defined) from ticket convenience charges and 10% of net
profit (as defined) from merchandise sold through its Web site (net of defined
deductions). The agreement calls for an annual minimum royalty payment of
$100,000 per year. Royalty expense incurred for the eleven month period ended
December 31, 1998 and the years ended January 31, 1998 and 1997 amounted to
$477,000, $138,000 and $50,000, respectively.

Revenues from affiliated companies for the eleven month period ended
December 31, 1998 and for the fiscal years January 31, 1998 and 1997, amounted
to $491,000, $583,000 and $21,000, respectively,

F-29

<PAGE>

TICKETMASTER ONLINE-CITYSEARCH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1998

primarily for Web site development and support and license fee revenue. Included
in related party receivables at December 31, 1998 was $467,000 receivable from
these affiliated companies.

7. Stockholders' Equity and Stock Options

Stockholders' equity reflects the exchange of 1,000 shares of Common Stock
of Ticketmaster Online for 37,238,000 shares of CitySearch Common Stock
(subsequently reclassified as Class A Common Stock of the Company) and the
recording of the predecessor basis and outstanding shares of CitySearch Common
Stock (subsequently reclassified as Class A Common Stock of the Company) in
connection with the Merger. Holders of each share of Class A Common Stock have
15 votes. Each share of Class A Common Stock will automatically convert into one
share of Class B Common Stock upon a "transfer," as defined, of such share
except for transfers to certain parties. Holders of Class B Common Stock have
rights in the Company's Restated Certificate of Incorporation similar to holders
of Class A Common Stock except each share of Class B Common Stock carries one
vote. Holders of Class C Common Stock have no voting rights. In December 1998,
the Company completed its initial public offering of 8,050,000 shares of Class B
Common Stock resulting in the receipt of net proceeds of $104,054,000.

Preferred Stock

The Company is authorized to issue 2,000,000 shares of Preferred Stock. The
Board of Directors is authorized, subject to limitations prescribed by Delaware
law, to provide for the issuance of shares of Preferred Stock in one or more
series, to establish from time to time the number of shares to be included in
each such series, to fix the powers, designations, preferences and rights of the
shares of each wholly unissued series and designate any qualifications,
limitations or restrictions thereon, and to increase or decrease the number of
shares of any such series (but not below the number of shares of such series
then outstanding) without any further vote or action by the stockholders.

1996 Stock Option Plan

The CitySearch 1996 Stock Option Plan (1996 Stock Plan) authorized members
of management to grant non-statutory stock options or incentive stock options to
employees and consultants of the Company and its subsidiaries. As of December
31, 1998 the maximum number of shares of Common Stock to be issued under the
Plan was 5,500,000 shares. Options granted under the 1996 Stock Plan are
exercisable at various dates over their ten-year life and vest principally 25%
after the first year and ratably over the remaining vesting period which is
generally another three years. At December 31, 1998 there were options to
purchase 3,247,587 shares of the Company's Class A Common Stock outstanding at a
weighted average exercise price of $4.79 per share. Options to purchase 114,432
shares of Class A Common Stock were available for future grants at December 31,
1998.

1998 Stock Option Plan

The Company has adopted the 1998 Stock Plan and reserved 4,000,000 shares
of Class B Common Stock of the Company for issuance thereunder. The 1998 Stock
Plan provides for the grant of incentive stock options to employees (including
officers and employee directors) and for the grant of nonstatutory stock

F-30

<PAGE>

TICKETMASTER ONLINE-CITYSEARCH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1998

options and stock purchase rights ("SPRs") to employees, directors and
consultants. Unless terminated sooner, the 1998 Stock Plan will terminate
automatically in September 2008. At December 31, 1998, there were options to
purchase 650,000 shares of the Company's Class B Common Stock outstanding at a
weighted average exercise price of $19.76 per share. Options to purchase
3,350,000 shares of Class B Common Stock were available for future grants at
December 31, 1998.

1998 Employee Stock Purchase Plan

The Company has adopted the Purchase Plan and reserved an aggregate of
1,000,000 shares of Class B Common Stock thereunder. The number of shares
reserved will be increased automatically each year on the first day of the of
the Company's fiscal year beginning in 2000 by an amount equal to (i) 200,000
shares of Class B Common Stock or (ii) a lesser amount determined by the Board
of Directors. The Purchase Plan is intended to qualify as an employee stock
purchase plan within the meaning of Section 423 of the Code. Under the Purchase
Plan, the Board of Directors may authorize participation by eligible employees,
including officers, in periodic offerings following the commencement of the
Purchase Plan. Each offering period under the Purchase Plan will run for six
months, other than the initial offering period, which commenced in December 1998
and will end on August 14, 1999. Thereafter, new six-month offering periods will
commence each February 15 and August 15.

Stock Option Table

The following table summarizes certain information related to options for
Common Stock:
<TABLE>
<CAPTION>
Weighted
Number of Price Per Average
Shares Share Exercise Price
------------ ------------- ---------------------
(in thousands)
<S> <C> <C> <C>
Options assumed in Merger....................................... 3,905 $0.10 to $8.67 $ 3.66
Granted during the period September 29 and
December 31, 1998.............................................. 938 8.67 to 32.69 16.35
----- --------------- ------
Forfeited...................................................... (124) 0.50 to 8.67 4.23
Exercised...................................................... (821) 0.10 to 0.75 9.19
----- ---------------- ------

Outstanding at December 31, 1998................................ 3,898 $0.10 to $32.69 $ 7.28
===== ================ =======
</TABLE>

F-31

<PAGE>

TICKETMASTER ONLINE-CITYSEARCH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1998

Additional information with respect to outstanding options as of December
31, 1998 is as follows:

<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
- ----------------- ------------------------------------------------------------ ------------------------------------
Weighted
Weighted Average Weighted
Range of Exercise Number of Average Exercise Remaining Number of Average Exercise
Prices Shares Price Contractual Life Shares Price
- ----------------- -------------- ------------------- --------------------- -------------- ------------------
(in thousands) (in thousands)
<S> <C> <C> <C> <C> <C>
$0.10 to $2.00 1,111 $ 1.19 8.14 705 $1.14
3.00 to 7.00 1,656 6.15 9.40 692 6.59
8.00 to 32.69 1,131 14.93 9.86 40 8.15
0.10 to 32.69 3,898 1,437
===== =====
</TABLE>

Pro forma information regarding the effect on operations is required by
SFAS 123, and has been determined as if the Company had accounted for its
employee stock options under the fair value method of that statement. Pro forma
information includes options granted subsequent to the Merger using the Black-
Scholes method at the date of grant based on the following assumptions:

1988
------------
Expected life (years) 1 year
Risk-free interest rate 5.14%
Dividend yield --
Volatility 75.00%

This option valuation model requires input of highly subjective
assumptions. Because the Company's employee stock options have characteristics
significantly different from those of traded options, and because changes in the
subjective input assumptions can materially affect the fair value estimate, in
management's opinion, the existing model does not necessarily provide a reliable
single measure of the fair value of its employee stock options.

For purposes of pro forma disclosures, the estimated fair value of the
options is amortized to expense over the option's vesting period. The Company's
pro for ma information follows:

<TABLE>
<CAPTION>
Eleven Months Ended
December 31, 1998
--------------------
(in thousands)
<S> <C>
Net loss, as reported $(17,219)
Pro forma net loss (17,479)
Basic and diluted historical loss per share $ (0.38)
Pro forma basic and diluted loss per share (0.39)
</TABLE>

The effects of applying SFAS 123 in this pro forma disclosure are not
indicative of future amounts as the options include only three months of grants
from the date of the Merger. Additional awards in future years

F-32

<PAGE>

TICKETMASTER ONLINE-CITYSEARCH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1998

are anticipated. The weighted-average fair value of options granted during the
eleven month period ended December 31, 1998 was $8.65, for options granted with
an exercise price equal to the deemed fair market value, at the date of grant,
of the underlying Common Stock.

8. Commitments

Leases

The Company has noncancelable capital lease obligations for computers and
equipment and leases its facilities and other office equipment under
noncancelable operating lease agreements expiring through 2004. Certain of the
Company's leases provide for free rent and escalations. The Company is
responsible for other costs such as property taxes, insurance, maintenance and
utilities.

The following is a schedule of future minimum lease payments at December
31, 1998:
<TABLE>
<CAPTION>
Operating Leases Capital Leases
----------------------- ----------------------
(in thousands)
Year-ended December 31:
<S> <C> <C>
1999........................................................... $1,219 $1,599
2000........................................................... 1,189 967
2001........................................................... 1,095 207
2002........................................................... 342 23
2003........................................................... 252 --
Thereafter..................................................... 112 --
------ ------
$4,209 $2,796
======
Less amount representing interest............................... (383)
------
Net present value of net minimum lease payments (including
approximately $1,331 payable currently)........................ $2,413
======
</TABLE>
During the eleven month period ended December 31, 1998 and the years ended
January 31, 1998 and 1997, rent expense allocated from Ticketmaster Corp. and
related to other leased facilities amounted to $593,000 and $149,000 and
$42,000, respectively. The total costs and accumulated amortization of
equipment under capital leases amounted to $2,769,000 and $360,000 respectively,
as of December 31, 1998.

9. Subsequent Events

Acquisition of CityAuction, Inc.

On March 29, 1999, the Company completed the acquisition of CityAuction,
Inc. ("CityAuction"), a person-to-person online auction community. In
connection with the acquisition, the Company issued an aggregate of
approximately 800,000 shares of its Class B Common Stock for all the outstanding
capital stock of CityAuction, Inc. representing an aggregate purchase price of
$27.2 million. The acquisition was accounted for using the purchase method of
accounting which resulted in $28.2 million of goodwill that will be amortized
over 5 years. The results of operations of CityAuction are included in the
accompanying statement of operations from the date of acquisition.

F-33

<PAGE>

TICKETMASTER ONLINE-CITYSEARCH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1998

10. Subsequent Events Unaudited

Merger with Lycos

On February 8, 1999, USAi and USANi LLC, Lycos, Inc. ("Lycos"), the
Company, USA Interactive, Inc. ("Newco") and two wholly-owned subsidiaries of
Newco entered into agreements relating to the combination of Lycos, the Company
(383) and certain of USAi's assets in an entity to be controlled by USAi. On May
12, 1999, the parties jointly announced that they had agreed by mutual consent
to terminate these agreements. The agreement terminating the transaction
requires Lycos to pay $25.5 million to USAi and $9.5 million to the Company if
prior to July 15, 1999, Lycos entered into an agreement with respect to or under
certain circumstances, becomes subject to, certain acquisition proposals. In
addition, subject to certain exceptions, USAi and the Company each has agreed
that until July 15, 1999 it will not acquire Lycos stock or make any proposals
to acquire Lycos. Any transaction charges related to the termination will be
recorded in the second quarter.

Acquisition of Match.com, Inc.

On June 14, 1999, the Company completed the acquisition of Match.com, Inc.
an Internet personals company. In connection with the acquisition the Company
issued 1,924,777 shares of Class B Common Stock to the former owners of
Match.com representing a total purchase price of approximately $45.0 million.
The acquisition was accounted for using the purchase method of accounting which
resulted in approximately $47.5 million of goodwill that will be amortized over
five years.

Pending Acquisition of Web Media

On June 10, 1999, Ticketmaster Online-CitySearch, Web Media Ventures,
L.L.C. ("Web Media"), a Texas limited liability company (d/b/a One & Only
Network), William Bunker, David Kennedy and Glenn Wiggins entered into
Reorganization Agreement pursuant to which the Company will purchase all the
outstanding Units of Web Media for shares of the Company's Class B Common Stock.
Web Media is an Internet personals company distributing its services through a
network of affiliated Internet sites. The Company has the option to pay cash or
issue shares of Class B Common Stock in exchange for all of the Web Media Units.
The initial target purchase price for the Web Media Units is $40.6 million of
the Company's Class B Common Stock, of which $30 million of Class B Common Stock
is payable upon the closing of the transaction and $2,195,000 of Class B Common
Stock is payable in two quarterly installments with the remainder of the target
purchase price due 270 days after the closing of the transaction. The target
purchase price is subject to a 10% increase or decrease based on, among other
things, the achievement of certain 1999 calendar revenue targets of Web Media.
The number of shares of Class B Common Stock to be issued in the acquisition
will be determined by dividing the portion of the purchase price, as adjusted,
currently payable under the terms of the agreement, by the average closing price
of the Class B Common Stock shortly before the closing of the acquisition and
shortly before each subsequent payment date, subject to certain minimum and
maximum share prices. The final purchase price to be recorded will also depend
on the price of the Class B Common Stock at the date of closing. The closing of
the acquisition is subject to several conditions, including but not limited to
the effectiveness of a registration statement to be filed by Ticketmaster
Online-CitySearch with respect to the Class B Common Stock to be issued in the
transaction. The acquisition will be accounted for using the

F-34

<PAGE>

TICKETMASTER ONLINE-CITYSEARCH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1998

purchase method. The acquisition will result in goodwill in an amount
approximating the purchase price that will be amortized by Ticketmaster Online-
CitySearch over a period of five years.

Pending Acquisition of Microsoft's Sidewalk Assets

F-35

<PAGE>

REPORT OF INDEPENDENT AUDITORS

Board of Directors and Stockholders
CitySearch, Inc.

We have audited the accompanying consolidated balance sheets of CitySearch,
Inc. as of December 31, 1996 and 1997 and the related statements of operations,
stockholders' equity, and cash flows for the period from September 20, 1995
(date of formation) to December 31, 1995 and for each of the two years in the
period ended December 31, 1997. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of CitySearch,
Inc. at December 31, 1996 and 1997, and the consolidated results of its
operations and its cash flows for the period from September 20, 1995 (date of
formation) to December 31, 1995 and for each of the two years in the period
ended December 31, 1997 in conformity with generally accepted accounting
principles.

/s/ ERNST & YOUNG LLP

Los Angeles, California
March 11, 1998, except for Note 10
as to which the date is September 28, 1998

F-36

<PAGE>

CITYSEARCH, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
<TABLE>
<CAPTION>
December 31, September 28,
----------------------- -----------------
1996 1997 1998
---------- -------- -----------------
(unaudited)
ASSETS
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents.................................................... $ 7,527 $ 25,227 $ 57,877
Accounts receivable, net of allowance for doubtful accounts of $0 in
1996, $25 in 1997 and $72 in 1998........................................ 34 100 264
Due from licensees........................................................... -- 57 1,467
Due from licensees - related party........................................... -- 136 206
Prepaid expenses and other current assets.................................... 249 119 178
-------- -------- --------
Total current assets......................................................... 7,810 25,639 59,992
Computers, software, equipment and leasehold improvements:
Computers and software....................................................... 2,074 7,716 9,236
Furniture and equipment...................................................... 391 194 194
Leasehold improvements....................................................... 194 275 248
Enterprise system development in process..................................... 1,315 -- --
3,974 8,185 9,678
Accumulated depreciation..................................................... (329) (2,169) (4,461)
-------- -------- --------
3,645 6,016 5,217
Intangible asset, net of accumulated amortization of $422 in 1996............. 1,915 -- --
-------- -------- --------
Total assets................................................................. $ 13,370 $ 31,655 $ 65,209
======== ======== ========

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable............................................................. $ 1,975 $ 2,197 $ 2,540
Accrued payroll and related liabilities...................................... 174 664 1,270
Other accrued liabilities.................................................... 991 760 2,398
Deferred subscription and license revenue.................................... 327 1,836 1,936
Current portion of obligations under capital leases.......................... 86 807 908
-------- -------- --------
Total current liabilities.................................................... 3,553 6,264 9,052
Deferred rent................................................................. 33 189 203
Deferred purchase price of subsidiary......................................... 1,336 891 446
Obligations under capital leases, net of current portion...................... 82 1,340 1,671
Convertible promissory note payable to a related party........................ -- -- 50,000
Commitments
Redeemable Convertible Preferred Stock, $0.01 par value, Series C, D and E:
Authorized shares - 12,500 at December 31, 1997
Issued and outstanding - 4,706 at December 31, 1996 and 12,406 at
December 31, 1997 and none at September 28, 1998
Liquidation preference -- $20,731 at December 31, 1996 and $73,212 at
December 31, 1997........................................................... 20,309 70,882 --
Stockholders' equity (deficit):
Convertible Preferred Stock, $0.01 par value, Series A and B:
Authorized shares - 2,241 at December 31,1997
Issued and outstanding - 1,948 at December 31, 1996 and 2,016 at December 31,
1997 and none at September 30, 1998
Liquidation preferences - $2,165 at December 31, 1996 and $2,610 at
December 31, 1997......................................................... 2,165 2,610 --
Common Stock, $0.01 par value:
Authorized shares - $75,000 at December 31, 1997 and September 30, 1998
Issued and outstanding shares - 8,814 at December 31, 1996 and 9,540 at
December 31, 1997 472 1997 and 25,248 at September 8, 1998.................. 97 472 82,582
Deferred compensation......................................................... -- (262) (960)
Accumulated deficit........................................................... (14,205) (50,731) (77,785)
-------- -------- --------
Total stockholders' equity (deficit)........................................ (11,943) (47,911) 3,837
-------- -------- --------
Total liabilities and stockholders' equity (deficit)........................ $ 13,370 $ 31,655 $ 65,209
======== ======== ========
</TABLE>

See accompanying notes to consolidated financial statements.

F-37

<PAGE>

CITYSEARCH, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)

<TABLE>
<CAPTION>
Period from
September 20, 1995
(date of formation
to December 31 Year Ended December 31, Nine Months Ended
----------------- ------------------------- ----------------------------
September 30, September 28,
1995 1996 1997 1997 1998
----------------- ------------------------- ------------ ---------------
Revenues:
<S> <C> <C> <C> <C> <C>
Subscription and services.................... $ -- $ 203 $4,612 $ 2,781 $9,122
Subscription and services-related party...... -- -- 301 205 336
Licensing and royalty........................ -- -- 528 499 698
Licensing and royalty--related party......... -- -- 743 178 1,161
------ -------- -------- -------- --------
Total revenues............................. -- 203 6,184 3,663 11,317
Costs and expenses:
Cost of revenues............................. -- 2,908 9,688 7,612 10,491
Sales and marketing.......................... 57 6,369 20,172 13,716 14,902
Research and development..................... 152 2,563 7,182 4,949 5,000
General and administrative................... 104 2,475 5,883 4,263 5,104
Merger and other transactions costs.......... -- -- -- -- 3,101
------ -------- -------- -------- --------
Total costs and expenses................... 313 14,315 42,925 30,540 38,598
------ -------- -------- -------- --------
Loss from operations.......................... (313) (14,112) (36,741) (26,877) (27,281)
Interest income............................... 5 229 494 279 995
Interest expense.............................. -- (12) (271) (175) (768)
------ -------- -------- -------- --------
5 217 223 104 227
------ -------- -------- -------- --------
Loss before provision for income taxes........ (308) (13,895) (36,518) (26,773) (27,054)
Provision for income taxes.................... -- 2 8 -- --
------ -------- -------- -------- --------
Net loss...................................... $ (308) $(13,897) $(36,526) $(26,773) $(27,054)
====== ======== ======== ======== ========
Historical basic and diluted net loss per $(0.04) $(1.58) $(3.86) $(2.84) $(2.73)
share......................................... ====== ======== ======== ======== ========

Pro forma basic and diluted net loss per $(1.96) $(1.51) $(1.10)
share......................................... ======== ======== ========

Shares used to compute historical basic and 7,895 8,786 9,452 9,431 9,923
diluted net loss per share................... ====== ======== ======== ======== ========
Shares used to compute pro forma 18,660 17,764 24,547
basic and diluted net loss per share.......... ======== ======== ========

</TABLE>

See accompanying notes to consolidated financial statements.

F-38

<PAGE>

CITYSEARCH, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
(In thousands)

<TABLE>
<CAPTION>
Convertible
Preferred Stock
(Series A and B) Common Stock Deferred Accumulated
------------------ ------------------ ------------- -------------
Shares Amount Shares Amount Compensation Deficit Total
------------------ ------------------ ------------- ------------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Initial issuance of Common Stock,
September 20, 1995.................... -- $ -- 6,623 $ 5 -- $ -- $ 5
Repurchase of Common Stock............ -- -- (2,000) (2) -- -- (2)
Issuance of Common Stock.............. -- -- 4,233 85 -- -- 85
Issuance of Convertible Preferred
Stock................................. 1,791 1,620 -- -- -- -- 1,620
Net loss.............................. -- -- -- -- -- (308) (308)
------ ------- ------ ------- ------- -------- --------
Balance at December 31, 1995.......... 1,791 1,620 8,856 88 -- (308) 1,400
Repurchase of Common Stock............ -- -- (116) (2) -- -- (2)
Exercise of stock options............. -- -- 74 11 -- -- 11
Issuance of Series B Convertible
Preferred Stock....................... 157 545 -- -- -- -- 545
Net loss.............................. -- -- -- -- -- (13,897) (13,897)
------ ------- ------ ------- ------- -------- --------
Balance at December 31, 1996.......... 1,948 2,165 8,814 97 -- (14,205) (11,943)
Exercise of stock options............. -- -- 726 103 -- -- 103
Issuance of Series B Convertible
Preferred Stock....................... 68 445 -- -- -- -- 445
Deferred compensation................. -- -- -- 272 (272) -- --
Amortization of deferred compensation. -- -- -- -- 10 -- 10
Net loss.............................. -- -- -- -- -- (36,526) (36,526)
------ ------- ------ ------- ------- -------- --------
Balance at December 31, 1997.......... 2,016 2,610 9,540 472 (262) (50,731) (47,911)
Exercise of stock options unaudited... -- -- 517 159 -- -- 159
Issuance of Series B Convertible
Preferred Stock (unaudited)........... 64 446 -- -- -- -- 446
Deferred compensation (unaudited)..... -- -- -- 1,054 (1,054) -- --
Conversion of Preferred Stock
(unaudited)........................... (2,080) (3,056) 15,191 80,897 -- -- 77,841
Amortization of deferred compensation
(unaudited).......................... -- -- -- -- 356 -- 356
Net loss (unaudited).................. -- -- -- -- -- (27,054) (27,054)
------ ------- ------ ------- ------- -------- --------
Balance at September 28, 1998
(unaudited)........................... -- $ -- 25,248 $82,582 $ (960) $(77,785) $ 3,837
====== ======= ====== ======= ======= ======== ========
</TABLE>

See accompanying notes to consolidated financial statements.

F-39

<PAGE>

CITYSEARCH, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)

<TABLE>
<CAPTION>
Period from
September 20, 1995
(date of formation
to December 31 Year Ended December 31, Nine Months Ended
----------------- ----------------------- ---------------------------------------
1995 1996 1997 September 30, 1997 September 28, 1998
----------------- ----------------------- ------------------ --------------------
Operating activities (unaudited)
<S> <C> <C> <C> <C> <C>
Net Loss......................................... $ (308) $(13,897) $(36,526) $(26,773) $(27,054)
Adjustments to reconcile net loss to net cash
used in operating activities:
Equity interest in loss from partnership........ -- -- 259 113 --
Write-down of investment in partnership......... -- -- 321 321 --
Depreciation.................................... 5 325 1,841 1,087 2,291
Amortization.................................... -- 422 1,915 1,436 --
Change in operating assets and liabilities, net
of assets acquired and liabilities assumed:
Accounts receivable........................... -- (34) (67) (62) (163)
Due from licensees............................ -- -- (57) (177) (1,410)
Due from licensees--related party............. -- -- (136) (9) (70)
Prepaid expenses and other current
assets.......................................... -- (249) 129 (53) (59)
Accounts payable.............................. 90 2,537 317 (763) 370
Accrued payroll and related liabilities....... -- -- 489 616 607
Other accrued liabilities..................... -- -- (221) 193 1,638
Deferred subscription and license revenue..... -- 327 1,510 1,174 100
Deferred rent................................. -- 33 157 79 14
Deferred Compensation......................... -- -- -- -- 356
------ -------- -------- ------- --------

Net cash used in operating activities............ (213) (10,536) (30,069) (22,818) (23,380)
Investing activities
Purchase of software, equipment and leasehold....
Improvements.................................... (82) (3,547) (1,391) (1,098) (171)
Investment in partnership........................ -- -- (580) (324) --
------ -------- -------- -------- --------
Net cash used in investing activities............ (82) (3,547) (1,971) (1,422) (171)
Financing Activities
Payments on capital leases....................... -- (121) (840) (372) (917)
Exercise of stock options........................ -- 11 103 84 159
Issuance of Common Stock......................... 90 -- -- -- --
Repurchases of Common Stock...................... (2) (2) -- -- --
Convertible promissory not payable to a related
party........................................... -- -- -- -- 50,000
Issuance of Convertible Preferred Stock, net..... 1,620 20,309 50,477 18,274 6,959
------ -------- -------- -------- --------
Net cash provided by financing activities........ 1,708 20,197 49,740 17,986 56,201
------ -------- -------- -------- --------
Net increase (decrease) in cash and cash
equivalents..................................... 1,413 6,114 17,700 (6,254) 32,650
Cash and cash equivalents at beginning of
period........................................... -- 1,413 7,527 7,527 25,227
------ -------- -------- -------- --------
Cash and cash equivalents at end of period....... $1,413 $ 7,527 $ 25,227 $ 1,273 $ 57,877
====== ======== ======== ======== ========
</TABLE>

F-40

<PAGE>

<TABLE>
<S> <C> <C> <C> <C> <C>
Supplemental disclosure of cash flow information: $ -- $ 12 $ 271 $ 169 $ 329
Cash paid for:
Interest......................................
Income taxes................................. $ 1 $ 2 $ 8 $ -- $ --
</TABLE>

See accompanying notes to consolidated financial statements.

F-41

<PAGE>

CITYSEARCH, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, except share data)

Non-Cash Investing and Financing Activities

During 1996 and 1997, the Company purchased computers and office equipment
under financing leases totaling $288 and $2,820, respectively.

On June 19, 1996, the Company acquired Metrobeat, Inc. in exchange for an
initial payment of Series B Convertible Preferred Stock valued at $544. During
the year ended December 31, 1997 and the nine months ended September 30, 1998,
the Company made its second and third annual installment of Series B Convertible
Preferred Stock valued at $445 and $445, respectively, pursuant to the
acquisition. The remaining purchase price of $446 is payable in two annual
installments, principally of Series B Convertible Preferred Stock.

During 1997, the Company issued 14,670 shares of Series D Redeemable
Convertible Preferred Stock valued at $96 as payment for accrued advertising and
recruiting fees.

During the nine months ended September 30, 1997 and September 28, 1998, the
Company purchased computers and office equipment under financing leases totaling
$1,836 and $1,350, respectively.

See accompanying notes to consolidated financial statements.

F-42

<PAGE>

CITYSEARCH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Information at September 28, 1998 and for the Nine Months Ended
September 30, 1997 and September 28, 1998 is Unaudited)

1. Description of Business and Summary of Significant Accounting Policies

The Company and Basis of Presentation

CitySearch, Inc. (the Company), a Delaware corporation, was organized on
September 20, 1995. The Company and its wholly-owned subsidiaries, Metrobeat,
Inc. (Metrobeat) and CitySearch Ontario, Inc. (CitySearch Ontario), produce and
deliver comprehensive local city guides on the World Wide Web (the Web),
providing up-to-date information regarding arts and entertainment events,
community activities, recreation, business, shopping, professional services and
news/sports/weather to consumers in metropolitan areas. Each local city guide
consists primarily of original content developed and designed specifically for
the Web by the Company and its media partners. The Company designs and produces
custom-built Web sites and related services for local businesses, aggregates
them in a local city guide environment and provides business customers the
ability to regularly update and expand their sites.

The Company has two primary means of providing its local city guides. In
its owned and operated markets the Company systematically produces the majority
of its own content, hires and rapidly deploys a direct sales force to sell
custom- built business Web sites as well as related services to local and
regional businesses and launches a presence in the market. In its other markets,
the Company contracts with a local media company to provide assistance in
developing, designing and launching a city guide. Under these contracts, the
partners license the Company's business and technology systems and pay a license
fee and make royalty payments to the Company based on certain revenues generated
by the media partner from the operation of their sites and pay the Company for
additional consultation and design services not provided for under the license
fee.

Subscription and services revenues include revenue generated from the sale
of subscriptions for custom-built business Web sites (designed and developed by
the Company) and advertising on its owned and operated city guides on the
Internet, and the performance of consultation and design services. Licensing and
royalty revenues include revenues generated from the sale of licenses for the
use of the Company's business and technology systems in its partner-led markets
and the receipt of royalty payments under its license agreements. See Revenue
Recognition.

The cost of designing and developing custom-built business Web sites in the
Company's owned and operated markets and the cost of providing other design and
consultation services including the cost of developing, designing and launching
a city guide in partner-led-markets is included, as incurred, in the cost of
revenues. The cost of developing, designing and launching a city guide, that is
not separately billable under license agreements as services revenue in the
Company's partner-led markets, is not significant and is included, as incurred,
in the cost of revenues. Any ongoing customer support or upgrades, after the
launch of the Web site that is not separately billable under the licensing
contract is insignificant.

Customers include restaurants, taverns, movie theaters, museums and retail
stores. The Company currently owns and operates sites in Austin, TX, Nashville,
TN, New York, NY, Portland, OR, Raleigh-Durham-Chapel Hill, NC, Salt Lake City,
UT, Los Angeles, CA, and San Francisco, CA. Through partnership and licensing
agreements, the Company has an internet presence in Washington D.C., Melbourne
and Sydney, Australia, and Toronto, Canada.

F-43

<PAGE>

CITYSEARCH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Information at September 28, 1998 and for the Nine Months Ended
September 30, 1997 and September 28, 1998 is Unaudited)

The Company has experienced operating losses and negative cash flows from
operations since its formation on September 20, 1995. Since its formation, the
Company has raised significant capital through the sale of Convertible Preferred
Stock to outside investors and expects to continue to raise capital in 1998. The
Company has also successfully licensed its product domestically and
internationally generating additional revenue streams.

Management anticipates that its investment in new markets and technology
will result in operating losses in the near term but believes that anticipated
revenues, existing cash, cash equivalents, working capital and new capital
contributions will be sufficient to fund operations over the next year.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of
the Company and its wholly-owned subsidiaries, Metrobeat and CitySearch Ontario.
All significant intercompany amounts have been eliminated.

Interim Financial Information

The accompanying balance sheet as of September 28, 1998, the statements of
operations and cash flows for the nine months ended September 30, 1997 and
September 28, 1998 and the statement of changes in shareholders equity (deficit)
for the nine months ended September 28, 1998 are unaudited. References to the
nine months ended September 28, 1998 refer to the period from January 1, 1998
through September 28, 1998. In the opinion of management, the statements have
been prepared on the same basis as the audited financial statements and include
all adjustments, consisting of normal recurring adjustments, necessary for the
fair statement of interim periods. The data disclosed in these notes to the
financial statements for these periods is also unaudited. The results of
operations and cash flows for the interim period are not necessarily indicative
of the results to be expected for any other interim future period.

Estimates Used in the Preparation of Consolidated Financial Statements

Revenue Recognition

The Company recognizes subscription revenues over the period the services
are provided. Licensing revenue, under agreements entered into prior to December
31, 1997, for partner-led markets is recognized upon the completion of the
delivery and installation of the business and technology systems and training of
partner personnel in each partner-led-market. Royalty revenues are recognized
when earned based on the revenues generated by the license or based on the
minimum royalty provisions in the contract. Revenue from consultation and design
services is

F-44

<PAGE>

CITYSEARCH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Information at September 28, 1998 and for the Nine Months Ended
September 30, 1997 and September 28, 1998 is Unaudited)

recognized as the services are provided. Advertising revenues, which have not
been significant, are recognized as earned and are included in subscription and
service revenues. Any ongoing customer support costs or upgrades, after the
launch of the Web site, that are not separately billable under the licensing
contract are insignificant.

Effective January 1, 1998, the Company adopted Statement of Position 97-2
(SOP 97-2), "Software Revenue Recognition," which impacts the manner companies
recognize revenue on sales and licensing of software. The Company, during 1997,
accounted for licensing of its software under the provisions of SOP 91- 1. The
Company does not sell certain undelivered elements under its license agreements
separately and, accordingly, under the provisions of SOP 97-2 revenues from the
sale of licenses for use of the Company's business and technology systems to its
partner-led markets are recognized over the term of the license agreement or the
period over which the relevant services are delivered. The Company's license
agreements have terms ranging from five to nine years.

Licensing and royalty revenues, on a pro forma basis, for the year ended
December 31, 1997, and the nine months ended September 30, 1997 and September
28, 1998 would have been $253,000, $132,000 and $783,000, respectively, had SOP
97-2 been effective January 1, 1997. SOP 97-2 is not expected to have a material
effect on revenues from royalties, services, and subscriptions.

Deferred revenues arise upon the prepayment of subscription services and
license agreements.

Cash Equivalents

The Company considers all highly liquid investments with a maturity of
three months or less when purchased to be cash equivalents.

Concentration Of Credit Risk

Financial instruments that potentially subject the Company to
concentrations of credit risk consist principally of trade accounts receivable
and cash deposits at financial institutions. Concentration of credit risk with
respect to trade receivables is limited due to the large number of customers and
their geographic dispersion. The Company requires no collateral from its
customers.

The Company places its cash deposits with high-credit quality financial
institutions. At times, balances in the Company's cash accounts may exceed the
Federal Deposit Insurance Corporation (FDIC) limit.

Computers, Software, Equipment and Leasehold Improvements

F-45

<PAGE>

CITYSEARCH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Information at September 28, 1998 and for the Nine Months Ended
September 30, 1997 and September 28, 1998 is Unaudited)

Research and Development

Merger and Other Transactions Costs

Merger and other transactions costs consist of costs related to the Merger,
costs related to an initial public offering that was cancelled and costs related
to a previous merger transaction that was not consummated.

Advertising Costs

Advertising costs are expensed as incurred. Advertising costs for the years
ended December 31, 1996 and 1997, amounted to $1,305,859 and $2,464,641,
respectively. There was no advertising expense for the period from September 20,
1995 (date of formation) to December 31, 1995.

During 1996 and 1997 the Company entered into several barter arrangements
whereby the Company has assisted in the design of a Web site in exchange for
broadcast advertising. The fair value of services provided and the services
received in the barter arrangement is not readily determinable and therefore is
not used to measure the value of the broadcast advertising received. The Company
valued these barter transactions at $60,000 and $1,158,000 for the years ended
December 31, 1996 and 1997, respectively, based on the estimated cost of the
specific services provided by the Company. Such amounts are included in
subscription and services revenue as well as recognized in sales and marketing
expense in the accompanying consolidated statements of operations. Reciprocal
noncash barter advertising on the Internet is not valued in the consolidated
financial statements because of the immateriality of the associated costs and
the indeterminable fair value.

Pro Forma and Historical Net Loss Per Share

Pro forma net loss per share is computed using the weighted average number
of shares of Common Stock outstanding. Common equivalent shares from Convertible
Preferred Stock (using the if converted method) have been included in the
computation when dilutive, except that the Convertible Preferred Stock which
converted into Common Stock in connection with the Merger is included as if
converted at the original date of issuance, for both basic and diluted net loss
per share, even though inclusion is antidilutive, based on the conversion price
disclosed in Note 6.

Historical net loss per share is computed as described above except that it
excludes the Convertible Preferred Stock because it is antidilutive for periods
which incurred a net loss.

Intangible Asset

F-46

<PAGE>

CITYSEARCH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Information at September 28, 1998 and for the Nine Months Ended
September 30, 1997 and September 28, 1998 is Unaudited)

The intangible asset is stated at cost and consists of goodwill resulting
from the purchase of Metrobeat in June 1996 (see Note 2).

Impairment of Long-Lived Assets and Long-Lived Assets to Be Disposed Of

In accordance with Statement of Financial Accounting Standards Board No.
121, "Accounting for the Impairment of Long-Lived Assets and Long-Lived Assets
to Be Disposed Of," the Company periodically reviews long-lived assets and
certain identifiable intangibles for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. Recoverability of assets to be held and used is measured by a
comparison of the carrying amount of an asset to future net cash flows (on an
undiscounted basis) expected to be generated by the asset. If such assets are
considered to be impaired, the impairment to be recognized is measured by the
amount by which the carrying amount of the assets exceeds the fair value of the
assets.

Stock-Based Compensation

Statement of Financial Accounting Standards No. 123, "Accounting for Stock-
Based Compensation" (SFAS 123), requires that stock awards granted subsequent to
January 1, 1995, be recognized as compensation expense based on their fair value
at the date of grant. Alternatively, a company may use Accounting Principles
Board Opinion No. 25 (APB 25), "Accounting for Stock Issued to Employees," and
disclose pro forma results of operations which would have resulted from
recognizing such awards at their fair value. The Company will continue to
account for stock-based compensation under APB 25 and make the required pro
forma disclosures for compensation (see Note 8). Under APB 25 compensation
expense is calculated based on the difference between the exercise price and the
fair market value of the underlying stock on the date of grant. The amount of
compensation expense calculated under APB 25 is recognized over the vesting
period of the options.

Reclassifications

Certain reclassifications have been made to the prior years' balances to
conform to the current year presentation.

2. Acquisition of Metrobeat

On June 19, 1996, the Company purchased Metrobeat for approximately
$2,337,300. The Company assumed net liabilities of $456,303 and issued 157,074
shares of Series B Convertible Preferred Stock valued at $544,497. During the
year ended December 31, 1997 and the nine months ended September 28, 1998, the
Company made its second and third annual installment of Series B Convertible
Preferred Stock valued at $445,495 and $445,494, respectively. The remaining
purchase price of $445,506 is payable in one annual installment, principally of
Series B Convertible Preferred Stock. The remaining installment has been
recorded as a deferred purchase price liability in the accompanying consolidated
balance sheets. The transaction was accounted for using the purchase method of
accounting. The excess of the purchase price over the net assets acquired has
been allocated to goodwill and was initially to be amortized over three years.
Effective January 1, 1997, the Company reassessed the future life of the
goodwill recorded in connection with the Metrobeat

F-47

<PAGE>

CITYSEARCH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Information at September 28, 1998 and for the Nine Months Ended
September 30, 1997 and September 28, 1998 is Unaudited)

acquisition and concluded the remaining life was one year. Accordingly, the
unamortized goodwill as of December 31, 1996 was fully amortized to expense in
1997.

3. Investment in Partnership

On February 17, 1997, CitySearch Ontario entered into a partnership,
Toronto Star CitySearch (the Partnership), with others to launch CitySearch
sites in Canada. CitySearch Ontario contributed the Company's technology through
a licensing agreement valued by the other partners at $390,500 and cash of
$319,171 in exchange for a 20% interest in the partnership. The other partners
collectively contributed cash of $2,811,600 in exchange for the remaining 80%
interest. Profits are shared in accordance with the respective Partnership
interests. Losses are allocated to one of the other partners up to a cumulative
loss limit, and thereafter losses of the partnership shall be allocated to
CitySearch Ontario and the other partners at a ratio of 10% and 90%,
respectively. CitySearch Ontario is committed to funding up to 10% of any losses
of the Partnership. In August 1998, the Company entered into a series of
agreements which effectively admitted a new party to the Partnership, reduced
the Company's interest in the Partnership to 10% and terminated its commitment
to fund any losses of the Partnership.

Summarized unaudited financial information of Toronto Star CitySearch as of
and for the year ended December 31, 1997 is as follows (in thousands):

As of December 31, 1997:
Current assets............................................. $ 1,520
Total liabilities.......................................... 2,006
Partners' capital.......................................... 758
For the period ended December 31, 1997:
Revenues................................................... $ 123
Loss from operations....................................... (2,658)
Net loss................................................... (2,806)

CitySearch Ontario carries its investment in Toronto Star CitySearch at
zero. CitySearch Ontario's share of partnership losses ($258,937) is included in
costs of revenues and sales and marketing expenses.

4. Income Taxes

Deferred tax assets and liabilities are determined based on differences
between the financial reporting and tax bases of assets and liabilities measured
using the enacted tax rates and laws that will be in effect when the differences
are expected to reverse. Deferred tax expense is determined by the change in the
net asset or liability for deferred taxes.

The provision for income, franchise and capital taxes of $800, $1,600 and
$8,330 is based solely on minimum state tax requirements. The Company's
effective tax rate differs from the statutory federal income tax rate, primarily
as a result of operating losses not benefited.

F-48

<PAGE>

CITYSEARCH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Information at September 28, 1998 and for the Nine Months Ended
September 30, 1997 and September 28, 1998 is Unaudited)

The tax effect of temporary differences resulted in net deferred income tax
assets and liabilities at December 31 are as follows:

<TABLE>
<CAPTION>
1996 1997
-------- --------
(in thousands)
<S> <C> <C>
Deferred tax assets:
Net operating loss and tax credits....................... $ 5,485 $ 21,239
Various accruals......................................... 58 636
Deferred rent............................................ 14 77
-------- --------
5,557 21,952
Less valuation allowance................................. (5,103) (19,650)
-------- --------
Net deferred tax assets................................... 454 2,302
Deferred tax liabilities:
Federal benefit for state income taxes................... (427) (1,499)
Excess of tax depreciation and amortization.............. (27) (803)
-------- --------
Deferred tax liabilities.................................. (454) (2,302)
-------- --------
$ -- $ --
======== ========
</TABLE>

Due to the uncertainty surrounding the timing of the realization of the
benefits from its favorable tax attributes in future tax returns, the Company
has placed a valuation allowance against its otherwise recognizable deferred tax
assets. The Company had federal and state operating loss carryforwards of
$47,450,000 at December 31, 1997. The federal carryforwards expire principally
in the period from 2010 to 2012, and the state carryforwards expire principally
in 2003. The Company has generated tax credit carryforwards for federal and
state purposes in the amounts of $329,723 and $107,353, respectively, at
December 31, 1997. Utilization of the above carryforwards is subject to
utilization limitations which may inhibit the Company's ability to use
carryforwards in the future.

The following table reconciles the provision for taxes based on income
before taxes to the statutory federal income tax rate of 35%:

Period from September 20, 1995 (date of formation ) to December 31, 1995

<TABLE>
<CAPTION>
Period from
September 20,
1995 (date of
formation) to
December 31, Year Ended December 31,
-----------------------------
1995 1996 1997
------------ ------------ ------------
(in thousands)
<S> <C> <C> <C>
Tax benefit at statutory rate............................. $ (108) $ (4,864) $ (12,781)
Increase related to:
State taxes, net of federal benefit....................... 1 1 5
</TABLE>

F-49

<PAGE>

CITYSEARCH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Information at September 28, 1998 and for the Nine Months Ended
September 30, 1997 and September 28, 1998 is Unaudited)

<TABLE>
<S> <C> <C> <C>
Meals and entertainment.................................. 1 17 30
Amortization of goodwill.................................. -- 143 670
Foreign operations........................................ -- -- 203
Valuation reserve on deferred taxes....................... 106 4,705 11,881
------------ ------------ ------------
$ -- $ 2 $ 8
============ ============ ============
</TABLE>

5. Commitments

Leases

The Company entered into noncancelable capital lease obligations for
computers and equipment during the year ended December 31, 1997. In addition,
the Company leases its facilities and other office equipment under noncancelable
operating lease agreements expiring through 2004. Certain of the Company's
leases provide for free rent and escalations. The Company is responsible for
other costs such as property taxes, insurance, maintenance and utilities.

The following is a schedule of future minimum lease payments:

<TABLE>
<CAPTION>
Operating Capital
Leases Leases
-------- --------
(in thousands)
<S> <C> <C>
December 31:
1998............................................................. $ 1,321 $ 1,115
1999............................................................. 1,191 1,028
2000............................................................. 1,167 517
2001............................................................. 1,043 4
2002............................................................. 265 --
Thereafter....................................................... 332 --
-------- --------
$ 5,319 $ 2,664
========
Less amount representing interest................................. 517
--------
Net present value of net minimum lease payments (including. $ 2,147
approximately $807 payable currently)............................ ========
</TABLE>

Computers, software and equipment under capital leases had an original cost
basis of $288,419 and $2,819,842 at December 31, 1996 and 1997, respectively.
The net book value of the related computers, software and equipment was $231,267
and $2,157,717 at December 31, 1996 and 1997, respectively.

Rent expense related to operating leases was $7,800, $291,000 and
$1,372,000 for the period from September 20, 1995 (date of formation) to
December 31, 1995 and for the years ended December 31, 1996 and 1997,
respectively.

6. Convertible Preferred Stock

At December 31, 1997 and September 28, 1998, the Company was authorized to
issue 14,741,082 and 15,741,082 shares, respectively, of Convertible Preferred
Stock with a par value of $0.01 per share. The Company has designated 1,791,173
shares as Series A Convertible Preferred

F-50

<PAGE>

CITYSEARCH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Information at September 28, 1998 and for the Nine Months Ended
September 30, 1997 and September 28, 1998 is Unaudited

Stock; 450,000 shares as Series B Convertible Preferred Stock; 3,261,024 shares
as Series C Redeemable Convertible Preferred Stock; 4,430,313 shares as Series D
Redeemable Convertible Preferred Stock; and 5,808,572 shares as Series E
Redeemable Convertible Preferred Stock.

Convertible Preferred Stock issued and outstanding as of December 31, 1997
and September 28, 1998 are as follows:

<TABLE>
<CAPTION>
As Converted
Amount (Net Original Per Effective Per
Shares of issuance Share Share Common
Outstanding cost) Issuance Price Stock Price Date First Issued
----------- ------------ -------------- ------------- -----------------
<S> <C> <C> <C> <C> <C>
Series A.......................... 1,791 $ 1,620 $ 0.904 $ 0.904 October 31, 1995
Series B.......................... 157 545 3.467 3.467 June 19, 1996
Series B.......................... 68 445 6.525 6.525 June 19, 1997
Series B.......................... 64 445 7.000 7.00 June 21, 1998
Series C.......................... 3,261 11,261 3.467 3.57 May 15, 1996
Series D.......................... 4,431 28,265 6.525 6.73 December 13, 1996
Series E.......................... 4,714 31,356 7.000 7.09 November 10, 1997
Series E.......................... 1,000 6,959 7.000 7.09 May 26, 1998
------ ----------
15,486 $ 80,896
====== ==========
</TABLE>

Convertible Preferred Stock contains a liquidation preference of an amount
per share equal to the price for which such share of Convertible Preferred Stock
was originally issued, adjusted for any stock dividends, combinations or splits
with respect to such shares, plus any declared and unpaid dividends on the
Convertible Preferred Stock. The Series C Redeemable Convertible Preferred Stock
contains a May 2006 mandatory redemption provision. The Series D and Series E
Redeemable Convertible Preferred Stock contain mandatory redemption provisions
with a minimum of an 80% favorable vote, by the holders, beginning December
2004.

Each share of Convertible Preferred Stock shall be, at the option of the
holder, convertible at any time into the number of shares of Common Stock as
determined by dividing the original issue price by the conversion price, as
defined. At the date of issuance, the conversion price for each series of
Convertible Preferred Stock was equal to the original per share issuance price.
The conversion price is subject to adjustment for stock splits and stock
combinations of outstanding Common Stock. The conversion price for Series C, D
and E Redeemable Convertible Preferred Stock, is also adjusted for the
forfeiture of Common Stock options outstanding from the date of issuance to the
date of conversion. The Convertible Preferred Stock has an automatic conversion
feature which provides for each share of Convertible Preferred Stock to be
automatically converted into shares of Common Stock based on the then effective
conversion price immediately upon the closing of an underwritten public offering
pursuant to an effective registration statement under the Securities Act of
1933, as amended, covering the offer and sale of shares of Common Stock priced
above $7.70 per share, with aggregate net proceeds to the Company of not less
than $20,000,000. At September 28, 1998, on an unaudited pro forma basis, giving
effect to Common Stock option forfeitures through June 30, 1998,

F-51

<PAGE>

CITYSEARCH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Information at September 28, 1998 and for the Nine Months Ended
September 30, 1997 and September 28, 1998 is Unaudited

each share of Series A and B Convertible Preferred Stock, and Series C, D and E
Redeemable Convertible Preferred Stock, was convertible into approximately 1.0,
1.0, .972, .970 and .988 shares of Common Stock, respectively.

The as-converted effective per share Common Stock price presented in the
table above represents the effective price paid by the holders of the
Convertible Preferred Stock for each share of Common Stock to be obtained upon
conversion. The Convertible Preferred Stock was converted into 15,191,189 shares
of Common Stock upon consummation of the Merger and share reclassification
discussed in Note 10.

7. Stock Options

The Company has adopted the 1996 Stock Option Plan (1996 Stock Plan) which
authorizes members of management to grant non-statutory stock options or
incentive stock options to employees and consultants of the Company and its
subsidiaries. As of December 31, 1997 and September 28, 1998 the maximum number
of shares of Common Stock to be issued under the plan was 4,000,000 and
5,500,000 shares, respectively. All options granted under the 1996 Stock Plan
have been made at prices not less than fair market value of the stock at the
date of grant. Options granted under the 1996 Stock Plan are exercisable at
various dates over their ten-year life. Options granted under the 1996 Stock
Plan vest principally 25% after the first year and ratably over the remaining
vesting period.

The following table summarizes certain information related to options for
Common Stock:

<TABLE>
<CAPTION>
Weighted
Average
Number of Exercise
Shares Price Per Share Price
-------- ----------------- --------
(in thousands)
<S> <C> <C> <C>
Balance at January 1, 1996 --
Granted during 1996......................... 3,221 $ 0.10 to $ 0.75 $ 0.25
Forfeited................................... 314 0.10 to 0.75 0.15
Exercised................................... 74 0.10 to 0.75 0.16
--------
Outstanding at December 31, 1996............. 2,833 0.10 to 0.75 0.26
Granted during 1997......................... 1,110 0.75 to 3.00 1.83
Forfeited................................... 485 0.10 to 2.00 0.64
Exercised................................... 726 0.10 to 2.00 0.15
--------
Outstanding at December 31, 1997............. 2,732 0.10 to 3.00 0.86
Granted..................................... 1,999 3.00 to 8.67 6.36
Forfeited................................... 322 0.10 to 8.00 2.12
Exercised................................... 517 0.10 to 7.00 0.32
--------
Outstanding at September 28, 1998............ 3,892 0.10 to 8.67 3.66
========
</TABLE>

F-52

<PAGE>

CITYSEARCH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Information at September 28, 1998 and for the Nine Months Ended
September 30, 1997 and September 28, 1998 is Unaudited

Options granted during the year ended December 31, 1997 and the nine months
ended September 28, 1998 resulted in a total compensation amount of $272,000 and
$1,054,000, respectively, and were recorded as deferred compensation in
stockholders equity. The deferred compensation amount will be recognized as
compensation expense over the vesting period. During the year ended December 31,
1997 and the nine months ended September 28, 1998, such compensation expense
amounted to $10,000 and $356,000, respectively. Options outstanding at December
31, 1996 and 1997 were exercisable for 1,100,000 and 1,135,500 shares of Common
Stock, respectively.

Common Stock available for future grants at December 31, 1996 and 1997 were
1,093,500 and 544,500 shares, respectively.

Additional information with respect to outstanding options as of December
31, 1997 is as follows:

<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
------------------------------------------------------ ----------------------------------
Weighted-Average

Range of Number Weighted-Average Remaining Number Weighted- Average
Exercise Prices of Shares Exercise Price Contractual Life of Shares Exercise Price
- -------------- -------------- -------------- -------------- -------------- --------------
(in thousands) (in thousands)
<S> <C> <C> <C> <C> <C>
$ 0.10 to 0.25 1,206 $ 0.13 8.18 885 $ 0.12
0.50 to 0.75 631 0.61 8.83 168 0.57
2.00 to 3.00 895 2.02 9.76 83 2.00
----- -----
0.10 to 3.00 2,732 1,136
===== =====
</TABLE>

In connection with the Series E Redeemable Convertible Preferred Stock
issuance in November 1997, the Company granted warrants to a private placement
selling agent to purchase 94,286 shares of Series E Redeemable Convertible
Preferred Stock at an exercise price of $8.75 per share in exchange for
services. The warrants expire upon a closing of an initial public offering or
five years from the grant date, whichever is earlier. The fair value of these
warrants was not material at the date of issuance and therefore was included in
the amount of Series E Redeemable Convertible Preferred Stock reflected in the
accompanying balance sheet.

Pro forma information regarding the effect on operations is required by
SFAS 123, and has been determined as if the Company had accounted for its
employee stock options under the fair value method of that statement. The fair
value for these options was estimated at the date of grant using the minimum-
value method, which utilizes a near-zero volatility factor.

<TABLE>
<CAPTION>
1996 1997
------- -------
<S> <C> <C>
Expected life (years) 6 years 5 years
Risk-free interest rate.............................................. 6.30% 6.30%
Dividend yield....................................................... -- --
</TABLE>

F-53

<PAGE>

CITYSEARCH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Information at September 28, 1998 and for the Nine Months Ended
September 30, 1997 and September 28, 1998 is Unaudited)

For purposes of pro forma disclosures, the estimated fair value of the
options is amortized to expense over the option's vesting period. The Company's
pro forma information follows:

<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------
1996 1997
---------- ----------
(in thousands)
<S> <C> <C>
Net loss, as reported............................................. $ (13,897) $ (36,526)
Pro forma net loss................................................ (13,953) (36,608)
Pro forma basic and diluted historical loss per share............. $ (1.59) $ (3.87)
Pro forma basic and diluted loss per share........................ (1.10) (1.96)
</TABLE>

The effects of applying SFAS 123 in this pro forma disclosure may not be
indicative of future amounts. Additional awards in future years are anticipated.
The weighted-average fair value of options granted during the years ended
December 31, 1996 and 1997 was $0.19 and $0.56, respectively, for options
granted with an exercise price equal to the deemed fair market value, at the
date of grant, of the underlying Common Stock. The weighted-average fair value
of options, granted with an exercise price less than the deemed fair market
value, at the date of grant, of the underlying Common Stock during 1997 was
$1.04.

8. Defined Contribution Plan

In July 1997, the Company established a defined contribution plan for
certain qualified employees as defined in the plan. Participants may contribute
from 1% to 20% of pretax compensation subject to certain liabilities. The plan
does provide for certain discretionary contributions by the Company as defined
in the plan. No Company contributions were made for the year ended December 31,
1997.

9. Related Party Transactions

Included in subscription and service-related party and license and royalty-
related party revenues for the year ended December 31, 1997 and the nine months
ended September 28, 1998 is approximately $1,044,000 and $1,497,000 of revenues,
respectively, generated under the Company's license agreements with stockholders
or other related parties. Included in due from licensees at December 31, 1997
and September 28, 1998 is $136,000 and $206,000, respectively, due from
stockholders and other related parties.

F-54

<PAGE>

CITYSEARCH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Information at September 28, 1998 and for the Nine Months Ended
September 30, 1997 and September 28, 1998 is Unaudited)

10. Merger and Related Events

On September 28, 1998 pursuant to an Amended and Restated Agreement and
Plan of Reorganization, dated as of August 12, 1998 (the Merger Agreement) by
and among the Company, USA Networks, Inc. (USAi), Ticketmaster Group, Inc.
(Ticketmaster Group), a wholly-owned subsidiary of USAi, Ticketmaster Corp., a
wholly-owned subsidiary of Ticketmaster Group, Ticketmaster Online and Tiberius,
Inc. (Tiberius), a wholly-owned subsidiary of CitySearch, Inc., whereby Tiberius
was merged with and into Ticketmaster Online, with Ticketmaster Online
continuing as the surviving corporation and as a wholly- owned subsidiary of
CitySearch, Inc. Under the Merger Agreement, the Company issued 37,238,000
shares of the Company's Common Stock in exchange for 100% of the outstanding
common stock of Ticketmaster Online. The Merger was accounted for using the
"reverse purchase" method of accounting, pursuant to which Ticketmaster Online
will be treated as the acquiring entity and for accounting purposes the assets
acquired and liabilities assumed of the Company will be recorded at their
respective fair values. Pursuant to the Merger Agreement, USAi, the indirect
parent of Ticketmaster Online, commenced a tender offer (the Tender Offer) to
purchase up to 2,924,339 shares of the Company's Common Stock for $8.67 per
share. The Tender Offer is scheduled to expire 20 days after its commencement.
The Merger Agreement contains a put option which provides that in the event of
consummation of the Merger, if a Qualified IPO, as defined, is not closed within
twelve, eighteen and twenty-four months following the date of the Merger
Agreement, the holders of the Company's Common Stock could, subject to certain
conditions, require USAi to commence an exchange offer for all the then-
outstanding shares of Common Stock.

In addition, concurrently with the execution of the Merger Agreement, the
Company received a $50 million loan from USAi in exchange for the convertible
promissory note (the Convertible Note). The Convertible Note, in the principal
amount of $50 million, bears interest at a rate per annum of 7.00% and, after
consummation of the Merger, is generally due and payable on the earlier to occur
of (a) August 13, 2005 or (b) 20 days following the closing of a Qualified IPO,
as defined.

Upon consummation of the Merger, the Company amended its Certificate of
Incorporation and Bylaws to provide for, among other things, the authorization
of 100,000,000 shares of Class A Common Stock, 250,000,000 shares of Class B
Common Stock and 2,883,506 shares of Class C Common Stock. In addition, upon
consummation of a share reclassification immediately following the Merger, each
share of the Company's outstanding Common Stock was converted into one share of
Class A Common Stock entitled to 15 votes per share.

In connection with the Merger, all the Convertible Preferred Stock
outstanding converted into Common Stock. Such shares of Common Stock were
subsequently reclassified as shares of Class A Common Stock.

F-55

<PAGE>

REPORT OF INDEPENDENT AUDITORS

The Board of Unitholders and Membership Interest Holders
Web Media Ventures, L.L.C.

We have audited the accompanying balance sheet of Web Media Ventures, L.L.C., as
of December 31, 1998, and the related statements of income, members' equity, and
cash flows for the year then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Web Media Ventures, L.L.C., at
December 31, 1998, and the results of its operations and its cash flows for the
year then ended, in conformity with generally accepted accounting principles.

/s/ ERNST & YOUNG LLP

Dallas, Texas
February 26, 1999

F-56

<PAGE>

WEB MEDIA VENTURES, L.L.C.
dba ONE & ONLY NETWORK

BALANCE SHEETS

<TABLE>
<CAPTION>
December 31,
---------------------------------- June 30,
1997 1998 1999
-------------- -------------- --------------
(unaudited) (unaudited)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash $ 113,653 $ 498,468 $ 1,248,664
Prepaid costs................................ 27,698 131,299 291,719
Other receivables............................ 730 - -
-------------- -------------- --------------

Total current assets.......................... 142,081 629,767 1,540,383

Property and equipment, net................... 48,587 632,320 1,159,325
Software development costs, net of
amortization of $13,593, $128,083, and
$222,336 in 1997, 1998 and 1999,
respectively................................. 90,552 267,223 267,030
Other assets.................................. 9,567 15,032 40,607
-------------- -------------- --------------
Total assets.................................. $ 290,787 $ 1,544,342 $ 3,007,345
============== ============== ==============

LIABILITIES AND MEMBERS' EQUITY
Current liabilities:
Accounts payable............................. $ 49,128 $ 237,364 $ 268,996
Accrued liabilities.......................... 15,517 67,708 92,770
Deferred revenue............................. 138,489 678,449 1,458,587
Current portion of long-term debt............ - 34,266 -
-------------- -------------- --------------
Total current liabilities.................... 203,134 1,017,787 1,820,353

Long-term debt............................... - 52,608 -
Deferred rent................................ - 12,508 16,999
-------------- -------------- --------------
Total liabilities............................ 203,134 1,082,903 1,837,352

Members' equity (10,000,000 membership
interests authorized, 3,000,000 membership
interests issued and outstanding):
Contributed capital......................... 100,000 10,000 51,000
Retained earnings (accumulated deficit)..... (12,347) 451,439 1,118,993
-------------- -------------- --------------
Total members' equity......................... 87,653 461,439 1,169,993
-------------- -------------- --------------
Total liabilities and members' equity......... $ 290,787 $ 1,544,342 $ 3,007,345
============== ============== ==============
</TABLE>

See accompanying notes.

F-57

<PAGE>

WEB MEDIA VENTURES, L.L.C.
dba ONE & ONLY NETWORK

STATEMENTS OF INCOME

<TABLE>
<CAPTION>
Years ended Six months ended
December 31, June 30,
---------------------------------- ----------------------------------
1997 1998 1998 1999
-------------- -------------- -------------- --------------
(unaudited) (unaudited) (unaudited)
<S> <C> <C> <C> <C>
Revenues......................... $ 631,035 $ 3,826,179 $ 1,348,659 $ 4,399,050

Cost of revenues................. 114,729 784,363 255,322 1,012,405
-------------- -------------- -------------- --------------

Gross margin..................... 516,306 3,041,816 1,093,337 3,386,645
-------------- -------------- -------------- --------------

Operating expenses:
Marketing and public relations.. 68,864 701,297 350,898 250,431
Computer operations............. 53,259 141,572 47,268 158,221
Salaries and benefits........... 249,059 1,213,984 363,735 1,483,411
General and administrative...... 66,548 291,379 93,821 304,132
Depreciation and amortization... 18,134 179,435 52,143 216,029
-------------- -------------- -------------- --------------
Total operating expenses......... 455,864 2,527,667 907,865 2,412,224
-------------- -------------- -------------- --------------

Operating income................. 60,442 514,149 185,472 974,421

Interest expense, net............ (8,460) (9,413) (3,764) (6,171)
Other expense.................... (7,216) (19,096) (3,120) (111,928)
-------------- -------------- -------------- --------------

Income before state income tax... 44,766 485,640 178,588 856,322

Provision for state income tax... 1,928 21,854 10,657 38,534
-------------- -------------- -------------- --------------

Net income....................... $ 42,838 $ 463,786 $ 167,931 $ 817,788
============== ============== ============== ==============
</TABLE>

See accompanying notes.

F-58

<PAGE>

WEB MEDIA VENTURES, L.L.C.
dba ONE & ONLY NETWORK

STATEMENTS OF MEMBERS' EQUITY

<TABLE>
<CAPTION>
Retained
Number of Earnings
Membership Contributed (Accumulated
Interests Capital Deficit) Total
-----------------------------------------------------------------
<S> <C> <C> <C> <C>
Balance at December 31, 1996 (unaudited).. 3,000,000 $ - $ (55,185) $ (55,185)
Capital contribution (unaudited)......... - 200,000 - 200,000
Return of capital (unaudited)............ - (100,000) - (100,000)
Net income (unaudited)................... - - 42,838 42,838
-----------------------------------------------------------------

Balance at December 31, 1997 (unaudited).. 3,000,000 $ 100,000 $ (12,347) $ 87,653
Return of capital........................ - (90,000) - (90,000)
Net income............................... - - 463,786 463,786
-----------------------------------------------------------------

Balance at December 31, 1998.............. 3,000,000 $ 10,000 $ 451,439 461,439
Return of capital (unaudited)............ - (10,000) - (10,000)
Stock option compensation expense
(unaudited)............................ - 51,000 - 51,000
Distribution to members (unaudited)...... - - (150,234) (150,234)
Net income (unaudited)................... - - 817,788 817,788
-----------------------------------------------------------------

Balance at June 30, 1999 (unaudited)...... 3,000,000 $ 51,000 $ 1,118,993 $1,169,993
=================================================================

</TABLE>

See accompanying notes.

F-59

<PAGE>

WEB MEDIA VENTURES, L.L.C.
dba ONE & ONLY NETWORK

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
Year ended December 31 Six months ended June 30,
-------------------------------- --------------------------------
1997 1998 1998 1999
------------ ------------ ------------ ------------
(unaudited) (unaudited) (unaudited)
<S> <C> <C> <C> <C>
Operating activities
Net income.................................. $ 42,838 $ 463,786 $ 167,931 $ 817,788
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization............. 18,134 179,435 52,143 216,029
Deferred revenues......................... 120,886 539,960 269,568 780,138
Prepaid costs............................. (29,435) (103,601) (53,914) (160,420)
Deferred rent............................. - 12,508 - 4,491
Stock option compensation expense......... - - - 51,000
Changes in operating assets and
liabilities:
Other receivables....................... 12,259 730 400 -
Accounts payable........................ 39,420 188,236 14,509 31,632
Accrued liabilities..................... 15,517 52,191 112,140 25,062
------------ ------------ ------------ ------------
Net cash provided by operating activities... 219,619 1,333,245 562,777 1,765,720

Investing activities
Purchase of property and equipment.......... (52,879) (648,430) (176,340) (648,347)
Software development costs capitalized...... (103,897) (291,409) (151,256) (94,494)
Other....................................... (9,064) (5,465) (6,829) (25,575)
------------ ------------ ------------ ------------
Net cash used in investing activities....... (165,840) (945,304) (334,425) (768,416)

Financing activities
Proceeds from long-term debt................ 40,862 115,174 115,174 100,000
Repayment of long-term debt................. (81,488) (28,300) (11,060) (186,874)
Proceeds from capital contribution.......... 200,000 - - -
Return of capital........................... (100,000) (90,000) (30,000) (10,000)
Distributions to members.................... - - - (150,234)
------------ ------------ ------------ ------------
Net cash provided by (used in) financing
activities................................. 59,374 (3,126) 74,114 (247,108)

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

Increase in cash............................ 113,153 384,815 302,466 750,196
Cash at beginning of period................. 500 113,653 113,653 498,468
------------ ------------ ------------ ------------
Cash at end of period....................... $ 113,653 $ 498,468 $ 416,119 $ 1,248,664
============ ============ ============ ============

Cash paid during the period for interest.... $ - $ 19,150 $ 4,381 $ 6,279
============ ============ ============ ============
</TABLE>

See accompanying notes.

F-60

<PAGE>

WEB MEDIA VENTURES, L.L.C.
dba ONE & ONLY NETWORK

NOTES TO FINANCIAL STATEMENTS

1. Organization and Summary of Significant Accounting Policies

Web Media Ventures, L.L.C. dba One & Only Network (the Company) distributes
online classified ads over the Internet. The Company operates in a single
business segment with a majority of its revenue generated from customers
residing in North America.

Unaudited Financial Information

The financial statements with respect to December 31, 1997 and the year
then ended, and June 30, 1999 and 1998 and the six month periods then ended, are
unaudited; however, in the opinion of management, such financial statements
reflect all adjustments (consisting only of normal recurring adjustments)
necessary for a fair presentation of the financial position and results of
operations for such periods. The accompanying interim unaudited financial
statements have been prepared in accordance with generally accepted accounting
principles for interim financial information. Accordingly, they do not include
all of the information and footnotes required by generally accepted accounting
principles for complete financial statements. Operating results for the six
months ended June 30, 1999, are not necessarily indicative of the results that
may be expected for the entire year or for any future period.

Cash and Cash Equivalents

The Company considers all highly liquid investments with initial maturities
of three months or less to be cash equivalents. Included in cash equivalents are
credit card holdback reserves amounting to approximately $16,000, $79,000, and
$157,000 at December 31, 1997, 1998 and June 30, 1999, respectively.

Concentration of Credit Risk

Financial instruments which potentially subject the Company to credit risk
consist primarily of cash and cash equivalents. The Company maintains cash and
cash equivalents with various major financial institutions. At times, such
amounts may exceed the insured limits. The Company limits the amount of credit
exposure with any one financial institution and believes that no significant
concentration of credit risk exists with respect to cash investments.

Revenue Recognition

Revenues consist primarily of subscription fees charged to customers for
access to the Company's Internet World Wide Web sites. Revenue is recognized
using the straight-line method over the period the services are provided.
Deferred revenue consists of monthly subscription fees collected in advance.
Costs directly related to obtaining revenue are deferred and recognized using
the straight-line method over the period the services are provided. Refunds are
provided upon request by a customer generally up to 30 days subsequent to a
sale.

F-61

<PAGE>

WEB MEDIA VENTURES, L.L.C.
dba ONE & ONLY NETWORK

NOTES TO FINANCIAL STATEMENTS (continued)

The Company sells to customers primarily in North America. Revenues from
customers outside of North America approximated 2% and 11% for the years ended
December 31, 1997 and 1998, and 11% and 12% for the six month periods ended June
30, 1998 and 1999, respectively.

Cost of Sales

Cost of sales includes merchant card bank fees and commissions paid to web
site developers participating in the Company's revenue sharing programs.

Advertising Costs

Advertising costs are expensed upon first showing. Advertising expense of
approximately $64,000 and $656,000 for the years ended December 31, 1997 and
1998, and $338,000, and $217,000 for the six month periods ended June 30, 1998
and 1999, respectively, is included in marketing and public relations
expense.

Property and Equipment

Property and equipment are recorded at cost. Depreciation of property and
equipment, other than leasehold improvements, is provided over the estimated
useful lives of the respective assets (ranging from three to seven years) using
the straight-line method. Leasehold improvements are amortized on a straight-
line basis over the shorter of the respective lease term or estimated useful
life of the asset.

Software Development Costs

In March 1998, the AICPA issued Statement of Position (SOP) 98-1,
Accounting for Costs of Computer Software Developed for or Obtained for
Internal-Use. The SOP, which has been adopted as of January 1, 1998, requires
the capitalization of certain costs in connection with developing or obtaining
internal-use software. Costs capitalized include direct labor and fringe
benefits.

Prior to the adoption of SOP 98-1, the Company capitalized certain costs in
connection with developing or obtaining internal-use software using a method
consistent with SOP 98-1. Adopting the SOP during 1998 had no effect on net
income for the year ended December 31, 1998.

Amortization of capitalized software is recognized on a project-by-project
basis, using the straight-line method over periods not exceeding two years,
commencing the month after the date of the project completion. Amortization
expense was $14,000 and $114,000 for the years ended December 31, 1997 and 1998,
and $33,000 and $94,000 for the six month periods ended June 30, 1998 and 1999,
respectively.

F-62

<PAGE>

WEB MEDIA VENTURES, L.L.C.
dba ONE & ONLY NETWORK

NOTES TO FINANCIAL STATEMENTS (continued)

Option Plan Compensation

The Company has elected to account for compensation to employees under the
Company's option plan using the fair value method prescribed in Financial
Accounting Standards Board Statement No. 123, Accounting for Stock-Based
Compensation ("Statement 123"). Accordingly, compensation cost for membership
interest options is measured at the date of grant based on an estimate of the
fair value of the options determined using the minimum value option pricing
model. Compensation expense is recognized when, in the Company's best judgment,
performance targets specified in the award will be achieved.

Use of Estimates

In preparing the financial statements, management is required to make
estimates and assumptions that affect the reported amounts of assets and
liabilities as of the date of the financial statements and revenues and expenses
for the period. Actual results could differ significantly from those estimates.

Comprehensive Income

Because the Company has no items of other comprehensive income, net income
equals comprehensive income.

2. Property and Equipment

Property and equipment consisted of the following:

<TABLE>
<CAPTION>
Useful December 31, June 30,
Lives 1997 1998 1999
---------- ----------- ----------- -----------
(Years) (unaudited) (unaudited)
<S> <C> <C> <C> <C>
Computer hardware 5 $ 39,080 $ 509,966 $ 836,558
Purchased software 3 9,426 121,250 203,805
Office furniture and equipment 7 4,373 51,576 167,152

Leasehold improvements 3 - 18,163 141,787
----------- ----------- -----------
52,879 700,955 1,349,302
Less accumulated depreciation
and amortization (4,292) (68,635) (189,977)
----------- ----------- -----------
$ 48,587 $ 632,320 $ 1,159,325
=========== =========== ===========
</TABLE>

F-63

<PAGE>

WEB MEDIA VENTURES, L.L.C.
dba ONE & ONLY NETWORK

NOTES TO FINANCIAL STATEMENTS (continued)

3. Leases

As of December 31, 1998, the Company was obligated under various
noncancelable operating lease agreements for facilities and equipment. During
1998, the Company entered into a lease for office space which included a rent
escalation clause. A summary of future minimum lease payments, including leases
entered into subsequent to December 31, 1998, follows:

Rental expense under noncancelable operating leases for facilities and
equipment was approximately $23,131 and $111,000 for the years ended December
31, 1997 and 1998, respectively.

4. Long-term Debt

Long-term debt consists of the following:

<TABLE>
<CAPTION>
December 31,
1998
------------

<S> <C>
11% note payable in monthly installments of
$1,968 including interest, maturing January
2001 $ 43,810
11% note payable in monthly installments of
$1,811 including interest, maturing March
2001 43,064
--------
86,874
Less current portion 34,266
--------
$ 52,608
========
</TABLE>

At December 31, 1998, the Company had an unused line of credit of $140,000
with interest at the prime rate published in The Wall Street Journal (8.5% as of
December 31, 1998).

F-64

<PAGE>

WEB MEDIA VENTURES, L.L.C.
dba ONE & ONLY NETWORK

NOTES TO FINANCIAL STATEMENTS (continued)

The Company's long-term debt and line of credit are secured by
substantially all of the assets of the Company and are guaranteed by the holders
of member interests.

During June 1999, the line of credit was terminated, and all debt was
repaid.

5. Members' Equity

The Company is organized as a limited liability company with a single class
of members (Members) which holds membership interests in the Company. A
membership interest (Membership Interest) is a unit of ownership in the Company,
analogous to a share of stock, which represents a unit of interest in rights to
distributions, allocations and information of the Company. Each outstanding
Membership Interest is entitled to one vote. An assigned Membership Interest
entitles the assignee to receive applicable distributions but does not
automatically cause the assignee to become a Member. An assignee becomes a
Unitholder by additionally obtaining written consent of all Unitholders and
complying with the Regulations. Until the assignee becomes a Member, the
assignor continues to hold the rights and powers of a Member.

Unitholders have full preemptive rights. The Company retains the right to
acquire Membership Interests obtained through transfers not authorized by the
Unitholders at fair market value, as determined by two qualified appraisals.

All items of income, loss, deduction and credit of the Company are
allocated on a pro rata basis among the Unitholders in accordance with the
Members' capital contributions to the Company, as defined. Distributions are
first reimbursed to Unitholders for cash capital contributions or advances to
the Company and then allocated in accordance with the Members' sharing ratios,
as defined (generally equivalent to the Members' percentage ownership of the
Company). The Company will dissolve upon the earliest to occur of (i) written
consent of all Members, (ii) March 7, 2046, or (iii) a Unitholder becoming
bankrupt.

6. Employee Retirement Plan and Profit Sharing Plan

In 1997 and 1998, the Company provided retirement benefits to eligible
employees through a money purchase pension plan and a profit sharing plan
(collectively, the Plans). Under the Plans, employees were eligible to
participate after two years of service. Contributions to eligible employees were
determined at the sole discretion of the Board of Members. The Company
contributed a total of $18,000, $60,000, and $18,000 under the Plans during the
years ended December 31, 1997 and 1998, and for the six months ended June 30,
1998, respectively. These plans were terminated on December 15, 1998.

7. Option Plan

On January 1, 1998, the Company's Board of Directors approved a membership
interest option plan whereby the Company may award to employees options to
purchase up to 300,000 Membership Interests in the Company. During 1998, a total
of 110,000 options were granted at exercise prices ranging from $.40 to $1.38
per Membership Interest. The weighted average exercise

F-65

<PAGE>

WEB MEDIA VENTURES, L.L.C.
dba ONE & ONLY NETWORK

NOTES TO FINANCIAL STATEMENTS (continued)

price of all options outstanding is $.85 per Membership Interest. All of these
options remain outstanding at December 31, 1998. The options expire ten years
from the date of grant. The options granted do not vest and are not exercisable
until either of two performance conditions are achieved: (i) an initial public
offering (IPO) of the Company's equity or (ii) the sale of the Company. Options
vest ratably over four years from the date of grant if the Company completes an
IPO. The options become fully vested upon a sale of the Company.

The fair value accounting provided for under Statement 123 requires use of
option valuation models that were not developed for use in valuing employee
membership interest options. In addition, option valuation models require the
input of highly subjective assumptions. The fair values of the options were
estimated at the dates of grant using a minimum value method option pricing
model with the following weighted-average assumptions: risk-free interest rate
of 5%; no dividend yield; no volatility in the Company's Membership Interests;
and a weighted-average expected life of four years.

The estimated fair value of options granted in 1998 is approximately
$51,000. However, no compensation expense was recognized during 1998 as in the
Company's best estimate it was not yet likely the awards would be earned. During
June 1999, upon signing a reorganization agreement for sale of the Company (see
Note 8), the Company estimated that the performance conditions would be attained
and recognized stock compensation expense of $51,000.

8. Sale of the Company.

On June 10, 1999, the Company and certain of its officers entered into a
reorganization agreement with Ticketmaster Online-CitySearch, Inc. ("TMCS"), a
leading online ticketing and city guide service. Under the terms of the
reorganization agreement, TMCS will purchase all of the Company's outstanding
Membership Interests in exchange for, at TMCS's option, approximately $40.6
million of TMCS's Class B common stock ("TMCS's stock") or cash. The purchase
price is subject to a 10% increase or decrease based on, among other things, the
achievement of certain calendar 1999 revenue targets of the Company. Further,
the number of shares of TMCS's stock to be issued will be determined by dividing
the average closing price of TMCS's stock shortly before the closing of the
acquisition and shortly before each subsequent payment date, as defined, into
the portion of the purchase price, as adjusted, currently payable subject to
certain minimum and maximum share prices. The final purchase price to be
recorded will also depend on the price of TMCS's stock at the date of closing.
The closing of the acquisition is subject to several conditions, including but
not limited to, the effectiveness of a registration statement to be filed by
TMCS with respect to TMCS's stock to be issued in the transaction.

F-66

<PAGE>

Execution Copy June 10, 1999
================================================================================

AGREEMENT AND PLAN OF REORGANIZATION

Dated as of June 10, 1999

================================================================================

A-1
<PAGE>

TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 1 THE MERGER.......................................................................................... 6

1.1 Merger; Effective Time.............................................................................. 6
1.2 Closing............................................................................................. 7
1.3 Effects of the Merger............................................................................... 7
1.4 Articles of Incorporation; Bylaws; Directors; Officers.............................................. 7

SECTION 2 EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES.................................................. 7

2.1 Effect on Capital Stock............................................................................. 7
2.2 Exchange of Certificates............................................................................ 11

SECTION 3 REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND
THE MEMBERS......................................................................................... 13

3.1 Organization, Standing and Corporate Power.......................................................... 13
3.2 Company Capital Structure........................................................................... 13
3.3 Subsidiaries........................................................................................ 14
3.4 Authority/Noncontravention.......................................................................... 14
3.5 Financial Statements................................................................................ 15
3.6 Absence of Certain Changes or Events................................................................ 16
3.7 Litigation.......................................................................................... 16
3.8 Contracts........................................................................................... 17
3.9 Compliance With Laws................................................................................ 18
3.10 Absence of Changes in Benefit Plans; Employment Agreements; Labor Relations......................... 18
3.11 ERISA Compliance.................................................................................... 18
3.12 Taxes............................................................................................... 19
3.13 No Excess Parachute Payments........................................................................ 19
3.14 Title to Properties................................................................................. 20
3.15 Intellectual Property............................................................................... 20
3.16 Year 2000 Compliance................................................................................ 21
3.17 Voting Requirements................................................................................. 22
3.18 Payments............................................................................................ 22
3.19 Transactions with Related Parties................................................................... 22
3.20 Restrictions on Business Activities................................................................. 22
3.21 Accounts Receivable; Inventory...................................................................... 23
3.22 Minute Books........................................................................................ 23
3.23 Environmental Matters............................................................................... 23
3.24 Insurance........................................................................................... 24
3.25 Warranties; Indemnities............................................................................. 24
</TABLE>

A-2
<PAGE>

TABLE OF CONTENTS
(continued)

<TABLE>
<CAPTION>
Page
----
<S> <C>
3.26 Information Supplied............................................................................... 24
3.27 Representations Complete........................................................................... 25

SECTION 4 REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB................................................... 25

4.1 Organization, Standing and Corporate Power......................................................... 25
4.2 Authority/Noncontravention......................................................................... 26
4.3 Capitalization; Ownership of Shares................................................................ 27
4.4 SEC Documents; Parent Financial Statements......................................................... 27
4.5 Parent Common Stock................................................................................ 28
4.6 Information Supplied............................................................................... 28

SECTION 5 COVENANTS.......................................................................................... 28

5.1 Conduct of Business of the Company................................................................. 28
5.2 No Solicitation.................................................................................... 30
5.3 Preparation of Registration Statements............................................................. 31
5.4 Member Approval.................................................................................... 32
5.5 Access to Information.............................................................................. 33
5.6 Confidentiality.................................................................................... 33
5.7 Expenses........................................................................................... 33
5.8 Public Disclosure.................................................................................. 33
5.9 Consents........................................................................................... 34
5.10 Reasonable Efforts................................................................................. 34
5.11 Notification of Certain Matters.................................................................... 34
5.12 Blue Sky Laws...................................................................................... 34
5.13 Noncompetition Agreement; Voting and Employment Arrangements....................................... 34
5.14 Listing of Parent Common Stock..................................................................... 35
5.15 Affiliate Agreement................................................................................ 35
5.16 Brokers or Finders................................................................................. 36
5.17 Tax Returns........................................................................................ 36
5.18 Distributions to Members........................................................................... 36
5.19 Employees; Employee Benefits....................................................................... 36
5.20 Post-Closing Operations of the Company............................................................. 36

SECTION 6 CONDITIONS TO THE MERGER........................................................................... 37

6.1 Conditions to Obligations of Each Party to Effect the Merger....................................... 37
6.2 Additional Conditions to the Obligations of Parent and Sub......................................... 38
6.3 Additional Conditions to Obligations of Company.................................................... 39
6.4 Effect of Waiver................................................................................... 39
</TABLE>

A-3
<PAGE>

TABLE OF CONTENTS
(continued)

<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 7 INDEMNIFICATION.................................................................................... 40

7.1 General Indemnification............................................................................ 40
7.2 Limitation and Expiration.......................................................................... 40
7.3 Indemnification Procedures......................................................................... 41
7.4 Right of Set-off................................................................................... 44
7.5 Members' Representative............................................................................ 44
7.6 Survival of Representations, Warranties and Covenants.............................................. 45

SECTION 8 TERMINATION, AMENDMENT AND WAIVER.................................................................. 45

8.1 Termination........................................................................................ 45
8.2 Effect of Termination.............................................................................. 47
8.3 Amendment.......................................................................................... 47
8.4 Extension; Waiver.................................................................................. 47
8.5 Notice of Termination.............................................................................. 47

SECTION 9 MISCELLANEOUS...................................................................................... 47

9.1 Notices............................................................................................ 47
9.2 Interpretation..................................................................................... 49
9.3 Counterparts....................................................................................... 50
9.4 Entire Agreement; Assignment....................................................................... 50
9.5 Severability....................................................................................... 50
9.6 Other Remedies..................................................................................... 50
9.7 Governing Law...................................................................................... 50
9.8 Further Assurances................................................................................. 50
9.9 Absence of Third Party Beneficiary Rights.......................................................... 51
9.10 Mutual Drafting.................................................................................... 51
9.11 Further Representations............................................................................ 51
</TABLE>

A-4
<PAGE>

INDEX TO EXHIBITS

Exhibit A Agreement of Merger to be attached following execution

Exhibit B Form of Noncompetition Agreements

Exhibit C Reserved

Exhibit D Affiliate Agreements to be attached following execution

A-5
<PAGE>

AGREEMENT AND PLAN OF REORGANIZATION

THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made and
entered into as of June 10, 1999 among Ticketmaster Online - CitySearch, Inc., a
Delaware corporation ("Parent"), Web Media Ventures, LLC, a Texas limited
liability company (dba One & Only Network) (the "Company"), and William Bunker,
David Kennedy and Glenn Wiggins, members of the Company (collectively, the
"Members" and individually, a "Member").

BACKGROUND

A. The Boards of Directors of each of the Company and Parent believe it
is in the best interests of each company and their respective owners that the
Company and TM Acquisition Corporation, a Texas corporation to be formed by the
Parent as a wholly-owned subsidiary of Parent ("Sub"), combine into a single
company through the merger of Sub with and into the Company (the "Merger")
pursuant to the terms of this Agreement and, in furtherance thereof, have
approved the Merger.

B. Pursuant to the Merger, all of the issued and outstanding membership
units, of the Company (the "Units") shall be converted into the right to receive
shares of Class B Common Stock, $.01 par value, of Parent (the "Parent Common
Stock"), or in certain instances the right to receive cash of the Parent.

NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth herein, the parties agree as follows:

SECTION 1

THE MERGER

1.1 Merger; Effective Time. Subject to the terms and conditions of this
----------------------
Agreement and an Agreement of Merger the form of which will be prepared and
attached hereto within five business days after the date hereof and which will
be in a form mutually acceptable to all Parties hereto (the "Merger Agreement"),
Sub will be merged into the Company (the "Merger") in accordance with the Texas
Limited Liability Company Act (the "Texas Act"). The Merger Agreement will
provide, among other things, the mode of effecting the Merger and the manner and
basis of converting each issued and outstanding Unit for the Purchase Price (as
defined in Section 2.1(d) below).

Subject to the provisions of this Agreement and the Merger Agreement,
the Merger Agreement, together with required officers' certificates, shall be
filed in accordance with the Texas Act on the Closing Date (as defined in
Section 1.2). The Merger shall become effective upon confirmation of such
filing of the Merger Agreement and such officers' certificates (the date of

A-6
<PAGE>

confirmation of such filing is referred to as the "Effective Date" and the time
of confirmation of such filing is referred to as the "Effective Time").

1.2 Closing. The closing of the Merger (the "Closing") will take place as
-------
soon as practicable on the first business day after satisfaction or waiver of
the latest to occur of the conditions set forth in Section 6 (the "Closing
Date"), at the offices of Wilson Sonsini Goodrich & Rosati, 650 Page Mill Road,
Palo Alto, California 94304-1050, unless a different date or place is agreed to
in writing by the parties hereto.

1.3 Effects of the Merger. At the Effective Time, the separate existence
---------------------
of Sub shall cease and Sub shall be merged with and into the Company, and the
effects of the Merger shall be as provided in this Agreement, the Merger
Agreement and the applicable provisions of the Texas Act. The Company after the
Merger is sometimes referred to as the "Surviving Corporation." Without limiting
the generality of the foregoing, and subject thereto, at the Effective Time, all
the property, rights, privileges, powers and franchises of the Company and Sub
shall vest in the Surviving Corporation, and all debts, liabilities, obligations
and duties of the Company and Sub shall become the debts, liabilities,
obligations and duties of the Surviving Corporation.

1.4 Articles of Incorporation; Bylaws; Directors; Officers. At the
------------------------------------------------------
Effective Time, (i) the Regulations of the Company shall be the Regulations of
the Surviving Corporation; (ii) the directors of Sub shall be the managing
members of the Surviving Corporation and will hold office from the Effective
Time until their respective successors are duly elected or appointed and
qualified in the manner provided in the Regulations of the Surviving
Corporation, as the same may be amended from time to time or otherwise as
provided by law; and (iii) the officers as set forth in the Merger Agreement
shall be the initial officers of the Surviving Corporation.

SECTION 2

EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES

2.1 Effect on Capital Stock. As of the Effective Time, by virtue of the
Merger and without any action on the part of the holder of any shares of capital
stock of the Company:

(a) Capital Stock of Sub. Each issued and outstanding share of
--------------------
capital stock of Sub shall be converted into one validly issued, fully paid and
non-assessable Unit of the Surviving Corporation. Each stock certificate of Sub
evidencing ownership of any such shares shall evidence ownership of Units of the
Surviving Corporation.

(b) Cancellation of Certain Units of the Company. All Units of the
--------------------------------------------
Company that are owned directly or indirectly by the Company shall be canceled
and no stock of Parent or other consideration shall be delivered in exchange
therefor.

(c) Conversion of Units of the Company. Subject to Sections 2.1(e),
----------------------------------
(f) (g), (h) and (i) below, each issued and outstanding Unit of the Company
(other than Units to be canceled

A-7
<PAGE>

pursuant to Section 2.1(b)), that are issued and outstanding immediately prior
to the Effective Time shall automatically be canceled and extinguished and
converted, without any action on the part of the holder thereof, into the right
to receive the Purchase Price (as defined in Section 2.1(d)) divided by the
number of Units (including Units subject to issuance upon exercise of
outstanding options, warrants or other rights) outstanding immediately prior to
the Effective Time (excluding Units to be canceled pursuant to Section 2.1(b)).
All such Units, when so converted, shall no longer be outstanding and shall
automatically be canceled and retired and shall cease to exist, and each holder
of a certificate representing any such Units shall cease to have any rights with
respect thereto, except the right to receive the Purchase Price in consideration
therefor upon the surrender of such certificate in accordance with Section 2.2
of this Agreement. The distribution of each installment of the Purchase Price
(as set forth in Section 2.1(e)) shall be paid to the Members prorated based
upon their respective holdings of Units divided by all outstanding Units
(including Units subject to issuance upon exercise of outstanding options,
warrants or other rights) at the Closing.

(d) Purchase Price. The aggregate purchase price (the "Purchase
--------------
Price") to be paid by Parent in the Merger for all outstanding Units of the
Company and rights therefor will be equal to $40,650,000, provided that the
Company's accrued but not deferred revenues for calendar year 1999, determined
in accordance with generally accepted accounting principles (the "Company
Accrued Revenues") equal $9 million. If the Company Accrued Revenues are more
than $9 million, then the Purchase Price shall be $40,650,000 plus an amount
equal to $4.065 for each $1 in Company Accrued Revenues above $9 million. If
the Company Accrued Revenues are less than $9 million, then the Purchase Price
shall be $40,650,000 minus an amount equal to $4.065 for each$1 in Company
Accrued Revenues below $9 million. Notwithstanding the preceding sentence, in
no event shall the Purchase Price be less than $36,585,000 nor greater than
$44,715,000. The final determination of the Purchase Price shall be based upon
an audit of the Company's 1999 financial statements to be performed by the
independent accounting firm of Ernst & Young (the "Audited Financial
Statements"). Parent and the Members agree to use their best efforts and to
cooperate fully with such auditors to complete the audit by March 1, 2000 (the
date of delivery of the auditor's report and the audited financial statements is
referred to as the "Determination Date."). The amount of the Company's Accrued
Revenues as set forth in the Audited Financial Statements shall be final and
non-appealable by the parties hereunder for purposes of calculating the Purchase
Price in the manner set forth above.

(e) Purchase Price Payments. Subject to Sections 2.1(f), (g), (h)
-----------------------
and (i) below, the Purchase Price shall be payable by Parent to the Members in
shares of Parent Common Stock as follows:

(i) At the Closing, Parent shall deliver at the places indicated
by the Members a number of shares of Parent Common Stock equal to $30 million
divided by the Value (as defined below in this Section 2.1(e)); provided,
however, that in no event shall the total shares of Parent Common Stock to be
delivered at the Closing be more than 1,442,308 shares or less than 961,539
shares.

A-8
<PAGE>

(ii) Subsequent installments of the Purchase Price shall be
paid as follows (each such payment date referred to herein as a "Payment Date"):

(A) On the dates that are 90 days and 180 days after
the Closing, Parent shall deliver at the places indicated by the Members a
number of shares of Parent Common Stock equal to $2,195,000 divided by the
Value; provided, however, that in no event shall the total shares of Parent
Common Stock to be delivered on either date be more than 168,847 shares or less
than 56,283 shares.

(B) On the date that is the later of (i) 270 days
after the Closing or (ii) the date the Company's 1999 audit is completed, Parent
shall deliver at the places indicated by the Members a number of shares of
Parent Common Stock equal to the Remaining Purchase Price (as defined below)
divided by the Value: provided, however, that in no event shall the Value used
for this purpose be more than $39 per share or less than $13 per share.

(C) The term "Remaining Purchase Price" means the
Purchase Price determined as pursuant to Section 2.1(d) minus $34,390,000.

(D) The value of the Parent Common Stock (the "Value")
with respect to the payments due on the Closing Date and each Payment Date shall
be determined based upon the average closing price per share of Parent Common
Stock on the Nasdaq National Market (or other National Securities Exchange as
defined below) over the five consecutive trading days ending on the trading day
two days preceding the Closing Date or the respective Payment Date.

(iii) Prior to the Closing, the Parties will enter into an
escrow agreement with a mutually acceptable commercial bank (the "Escrow Agent")
pursuant to which an escrow account will be established (the "Escrow") the
purpose of which is to hold a portion of the Purchase Price for the benefit of
Parent in the event Parent is entitled to indemnification hereunder. The cash
and securities in Escrow will be released to the Members on the first
anniversary of the Closing Date unless released prior thereto to the Parent
pursuant to Section 7.4 (a) hereof or unless the release date is deferred
pursuant to Section 7.4 (b).

(A) There shall be no escrow of the payment made at
Closing or at the first Payment Date after Closing.

(B) The entire number of shares distributed as the
payment made on the second Payment Date after Closing will be deposited into the
Escrow; provided however that in the event the Value of the shares issued on the
second Payment Date after Closing exceeds $4,065,000, only that number of shares
with a Value equal to $4,065,000 will be deposited into the Escrow with the rest
distributed to the Members pro rata.

(C) That portion of the shares distributed as the
payment made on the last Payment Date with a Value which, when added to the
Value of the shares already in Escrow (determined as of the date such shares
were first placed into Escrow) (and/or the cash already in Escrow), equals
$4,065,000 will be deposited into the Escrow with the rest of such shares
distributed

A-9
<PAGE>

to the Members pro rata. The Value of the shares held in Escrow will not be
readjusted thereafter for any purpose.

(D) Pursuant to the terms of the Escrow, the Members
will be entitled to cause the Escrow Agent to sell all or any portion of the
shares deposited into Escrow so long as (i) in the case of the shares deposited
in Escrow from the second Payment Date, all of the aggregate net proceeds are
deposited into the Escrow and (ii) in the case of the shares deposited in Escrow
from the last Payment Date, an aggregate portion of the net proceeds of such
sales are retained in the Escrow which, when added to the value of the shares or
cash remaining in Escrow equals at least $4,065,000; provided, however, that if
the proceeds from the sale of all of the shares held in Escrow is less than
$4,065,000, the Members will not be obligated to add additional cash or other
securities to the Escrow to increase the value of the Escrow to $4,065,000;
provided, further, however, that if the aggregate proceeds of such sale, which
when added to the value of the cash and securities in the Escrow exceed
$4,065,000 the Escrow will distribute such excess to the Members pro rata. Also
pursuant to the terms of the Escrow, the Members will be entitled to cause the
Escrow Agent to invest all or any portion of the proceeds of the cash in Escrow
in any investment grade debt security with a maturity of one year or less.

(f) Right to Pay Cash in Lieu of Parent Common Stock. Parent shall
------------------------------------------------
have the right to elect, in its sole discretion, to pay any portion of any
installment of the Purchase Price in cash rather than Parent Common Stock. If
Parent elects to pay cash for a portion of the Purchase Price on any Payment
Date, it shall notify the Members' Representative (as defined in Section 7.5) in
writing of its election no later than three days prior to the Payment Date. In
addition, Parent shall have the obligation to pay an installment of the Purchase
Price in cash rather than Parent Common Stock if (i) three days prior to the
respective payment date the Class B Common Stock of Parent has ceased trading on
either the Nasdaq National Market, the New York Stock Exchange or another
national securities market (a "National Securities Exchange") or (ii) prior to
the respective payment date, Parent has merged or otherwise been acquired by a
company whose securities are not listed or trading on a National Securities
Exchange. The Parties agree that in the event of such a merger or acquisition
by a publicly held company, subject to all of the other terms and conditions
herein, such survivor or acquiror will be obligated to pay installments in its
publicly traded common stock or in cash.

(g) Reserved.
--------

(h) Dissenters' Rights. Any Units held by a holder who has properly
------------------
exercised dissenters' rights for such Units in accordance with the Texas Act and
who, as of the Effective Time, has not effectively withdrawn or lost such
dissenters' rights ("Dissenting Shares") shall not be converted into Parent
Common Stock but shall be converted into the right to receive such consideration
as may be determined to be due with respect to such Dissenting Shares pursuant
to the Texas Act. The Company shall give Parent prompt notice of any demand
received by the Company to require the Company to purchase Units, and Parent
shall have the right to participate in all negotiations and proceedings with
respect to such demand. The Company agrees that, except with the prior written
consent of Parent, or as required under the Texas Act, it will not voluntarily
make

A-10
<PAGE>

any payment with respect to, or settle or offer to settle, any such purchase
demand. Each holder of Dissenting Shares (a "Dissenting Member") who, pursuant
to the provisions of the Texas Act, becomes entitled to payment of the value of
Units shall receive payment therefor (but only after the value therefor shall
have been agreed upon or finally determined pursuant to such provisions). In the
event of legal obligation, after the Effective Time, to deliver a portion of the
Purchase Price to any holder of Units who shall have failed to make an effective
purchase demand or shall have lost its status as a Dissenting Member, Parent
shall issue and deliver, upon surrender by such Dissenting Member of such
holder's certificate or certificates representing Units, the portion of the
Purchase Price to which such Dissenting Member is then entitled under this
Section 2.1 and the Merger Agreement.

(i) Fractional Shares. No fractional shares of Parent Common Stock
-----------------
shall be issued, but in lieu thereof each holder of Units who would otherwise be
entitled to receive a fraction of a share of Parent Common Stock shall receive
from Parent an amount of cash equal to the per share market Value of Parent
Common Stock (as determined in Section 2.1(e) with respect to each payment date
of the Purchase Price) multiplied by the fraction of a share of Parent Common
Stock to which such holder would otherwise be entitled. The fractional share
interests of each Member shall be aggregated, so that no Member shall receive
cash in an amount greater than the value of one full share of Parent Common
Stock.

(j) Stock Options. At the Effective Time, no Company Unit Options
-------------
(as defined in Section 3.2) shall be outstanding.

2.2 Exchange of Certificates.
------------------------

(a) Exchange Agent. Prior to the Effective Time, Parent shall act,
--------------
or at its election shall designate a bank or trust company, reasonably
acceptable to the Company, to act as exchange agent (the "Exchange Agent") in
the Merger.

(b) Parent to Provide Common Stock. Prior to the Effective Time and
------------------------------
prior to each Payment Date, Parent shall deliver to the Exchange Agent in
accordance with this Section 2, the shares of Parent Common Stock or cash
issuable pursuant to Section 2.1 in exchange for the outstanding Units, as well
as cash in an amount sufficient for payment in lieu of fractional shares
pursuant to Section 2.1(i).

(c) Exchange Procedures. Subject to other arrangements mutually
agreed upon by the Parties, prior to the Effective Time, the Surviving
Corporation shall cause to be mailed to each holder of record of a certificate
or certificates which immediately prior to the Effective Time represented
outstanding Units (the "Certificates") whose shares are being converted into
Parent Common Stock pursuant to Section 2.1 and the Merger Agreement, (i) a
letter of transmittal (which shall specify that delivery shall be effected, and
risk of loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent and shall be in such form and have such other
provisions as Parent may reasonably specify) and (ii) instructions for use in
effecting the surrender of the Certificates in exchange for the Purchase Price.
Upon surrender of a Certificate for

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<PAGE>

cancellation to the Exchange Agent or to such other agent or agents as may be
appointed by Parent, together with such letter of transmittal, duly executed,
the holder of such Certificate shall be entitled to receive in exchange therefor
the portion of the Purchase Price to which he is entitled pursuant to Section
2.1. The Certificate so surrendered shall forthwith be canceled. In the event of
a transfer of ownership of Units which is not registered on the transfer records
of the Company, the appropriate portion of the Purchase Price may be delivered
to a transferee if the Certificate representing such capital stock of the
Company is presented to the Exchange Agent and accompanied by all documents
required to evidence and effect such transfer and to evidence that any
applicable stock transfer taxes have been paid. Until surrendered as
contemplated by this Section 2.2, each Certificate shall be deemed at any time
after the Effective Time to represent the right to receive a portion of the
Purchase Price as provided by this Section 2 and the provisions of the Texas
Act.

(d) No Further Ownership Rights in Units of the Company. The
---------------------------------------------------
Purchase Price delivered and deliverable by the Parent upon the surrender for
exchange of Units in accordance with the terms hereof shall be deemed to have
been delivered in full satisfaction of all rights pertaining to such Units and
following the Effective Time, the Certificates shall have no further rights to,
or ownership in, Units. There shall be no further registration of transfers on
the Unit transfer books of the Surviving Corporation of the Units which were
outstanding immediately prior to the Effective Time. If, after the Effective
Time, Certificates are presented to the Surviving Corporation for any reason,
they shall be canceled and exchanged as provided in this Section 2.

(e) Lost, Stolen or Destroyed Certificates. In the event any
--------------------------------------
certificates evidencing Units shall have been lost, stolen or destroyed, the
Exchange Agent shall make payment in exchange for such lost, stolen or destroyed
certificates, upon the making of an affidavit of that fact by the holder
thereof, such portion of the Purchase Price as the holder is entitled; provided,
however, that Parent may, in its discretion and as a condition precedent to the
issuance thereof, require the owner of such lost, stolen or destroyed
certificates to deliver a bond in such sum as it may reasonably direct as
indemnity against any claim that may be made against Parent or the Exchange
Agent with respect to the certificates alleged to have been lost, stolen or
destroyed.

(f) No Liability. Notwithstanding anything to the contrary in this
------------
Section 2.2, none of the Exchange Agent, the Surviving Corporation or any party
hereto shall be liable to a holder of Units for any amount paid to a public
official pursuant to any applicable abandoned property, escheat or similar law.

(g) Dissenting Shares. The provisions of this Section 2.2 shall also
-----------------
apply to Dissenting Shares that lose their status as such, except that the
obligations of Parent under this Section 2.2 shall commence on the date of loss
of such status.

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<PAGE>

SECTION 3

REPRESENTATIONS AND WARRANTIES OF
THE COMPANY AND THE MEMBERS

Except as disclosed in writing in a disclosure letter referring
specifically to the representations and warranties in this Agreement that
specifically identifies the section and subsection to which such disclosure
relates and that is delivered to Parent by the Company and the Members and
certified by a duly authorized officer of the Company and the Members as
contemplated below (the "Company Schedules"), each of the Company and the
Members severally and not jointly represents and warrants to Parent as set forth
below.

Notwithstanding anything to the contrary contained herein, if the Company
has not, as of the date hereof (the "Signing Date"), completed and/or delivered
one or more of the Sections in the Company Schedules referred to in this
Agreement and required to be delivered by the Company pursuant hereto, then the
Company shall be permitted to complete and deliver such Sections in the Company
Schedules to the Parent after the Signing Date, but in no event later than five
business days from the Signing Date. The Parent shall be deemed to have
accepted any such revised or newly delivered Sections to the Company Schedules
unless within four business days after receipt thereof it shall have delivered
to the Company a notice terminating this Agreement. If the Parent's approval of
such revised or newly delivered Sections in the Company Schedule is granted or
is deemed granted, any Sections in the Disclosure Schedule attached hereto as of
the Signing Date and delivered by the Company which have subsequently been
revised shall be deemed to be amended in accordance with such revised Sections
in the Company Schedules as of the Signing Date and such late-delivered Sections
in the Company Schedules shall be deemed delivered by the Company as of the
Signing Date.

3.1 Organization, Standing and Corporate Power. The Company is a limited
------------------------------------------
liability company duly organized, validly existing and in good standing under
the laws of the jurisdiction of its organization and has all requisite corporate
power and authority to carry on its business as now being conducted. The Company
is duly qualified to do business and is in good standing in each jurisdiction in
which the nature of its business or the ownership, leasing or operation of its
properties makes such qualification necessary, other than in jurisdictions where
the failure to be so qualified or not be in good standing would have a Material
Adverse Effect on the Company. The Company has delivered to the Parent complete
and correct copies of its Regulations.

3.2 Company Capital Structure.
-------------------------

(a) The capital of the Company consists of 3,000,000 Units which are
issued and outstanding. All of such outstanding Units have been issued in
compliance with all applicable federal and state securities laws. There are no
voting agreements or voting trusts with respect to any of the outstanding Units.
The outstanding Units are held by the persons and in the amounts set forth in
Section 3.2 of the Company Schedules.

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<PAGE>

(b) The Company has reserved 300,000 Units for issuance to employees
and consultants pursuant to the Company's Unit Option Plan (the "Company's Unit
Option Plan"), of which options to purchase 110,000 Units have been granted as
of the date of this Agreement (the "Company Unit Options") and 190,000 Units
remain available for future grant under the plan. Section 3.2 (b) of the Company
Schedules sets forth for each outstanding Company Unit Option the name of the
holder of such option, the number of Units subject to such option, the exercise
price of such option and the vesting schedule for such option, including the
extent vested to date. No Company Unit Options shall be outstanding as of the
Closing. Except for the Company Unit Options described in Section 3.2 (b) of
the Company Schedules, there are no options, warrants, calls, rights,
commitments or agreements of any character, written or oral, to which the
Company is a party or by which it is bound obligating the Company to issue,
deliver, sell, repurchase or redeem, or cause to be issued, delivered, sold,
repurchased or redeemed, any Units or obligating the Company to grant, extend,
accelerate the vesting of, change the price of, otherwise amend or enter into
any such option, warrant, call, right, commitment or agreement. The Company's
Unit Options have been issued in compliance with all applicable federal and
state securities laws. As a result of the Merger, Parent will be the record and
beneficial owner of all outstanding Units and rights to acquire Units of the
Company.

3.3 Subsidiaries. The Company does not have and has never had any
------------
subsidiaries and does not otherwise own and has never otherwise owned any shares
of capital stock or any interest in, or control, directly or indirectly, any
other corporation, partnership, association, joint venture or other business
entity.

3.4 Authority/Noncontravention. The Company has the requisite corporate
--------------------------
power and authority to execute and deliver this Agreement and, subject to the
approval and adoption of this Agreement and approval of the Merger by the
Members, to consummate the transactions contemplated by this Agreement. The
execution, delivery and performance of this Agreement by the Company and the
Members and the consummation by the Company and the Members of the transactions
contemplated by this Agreement 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 to
consummate the transactions contemplated hereby, subject, in each case, to the
approval and adoption of this Agreement and approval of the Merger by the
Company's Members. This Agreement has been duly executed and delivered by the
Company and the Members and constitutes a valid and binding obligation of the
Company and the Members, enforceable against them in accordance with its terms.
The execution and delivery of this Agreement do not, and subject to the approval
and adoption of this Agreement and approval of the Merger by the Company's
Members as required in connection with this Agreement and the transactions
contemplated by this Agreement, the consummation of the transactions
contemplated by this Agreement and compliance with the provisions of this
Agreement will not, conflict with, or result in any violation 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 to loss
of a material benefit or require any consent, approval or authorization under,
or result in the creation of any pledges, claims, liens, charges, encumbrances
and security interests of any kind or nature whatsoever (collectively, "Liens")
in or upon any of the properties or assets of the Company or the Members

A-14
<PAGE>

under, any provision of (a) the Regulations of the Company, (b) any loan or
credit agreement, bond, debenture, note, mortgage, indenture, lease or other
material contract, commitment, agreement, arrangement, obligation, undertaking,
instrument, permit, concession, franchise or license applicable to the Company
or the Members or any of their respective properties or assets (including,
without limitation, any of the contracts of the Company set forth in the Company
Schedules) or (c) subject to the governmental filings and other matters referred
to in the following sentence, any statute, law, ordinance, rule or regulation or
judgment, order or decree, in each case, applicable to the Company or its
properties or assets, other than, in the case of clauses (b) and (c), any such
conflicts, violations, defaults, rights, or Liens or other occurrences that
individually or in the aggregate would not have a Material Adverse Effect on the
Company. No consent, approval, order or authorization of, or registration,
declaration or filing with, any Federal, state or local, domestic or foreign,
government or any court, administrative agency or commission or other
governmental authority or agency, domestic or foreign (a "Governmental Entity"),
is required by or with respect to the Company or the Members in connection with
the execution and delivery of this Agreement by the Company or the Members or
the consummation by the Company of the Merger or the other transactions
contemplated by this Agreement, except for (a) the receipt of a valid exemption
from the registration requirements of the Securities Act of 1933, as amended
(the "Securities Act"), (b) the filing of the Agreement of Merger with the Texas
Secretary of State and appropriate documents with the relevant authorities of
other states in which the Company is qualified to do business and (c) such other
consents, approvals, orders, authorizations, registrations, declarations and
filings the failure of which to be obtained or made individually or in the
aggregate would not have a Material Adverse Effect on the Company or impair the
ability of the Company to perform its obligations under this Agreement.

3.5 Financial Statements.
--------------------

(a) The Company has previously furnished to Parent true and complete
copies of the following financial statements of the Company (the "Financial
Statements"):

(i) audited balance sheet as of December 31, 1998, certified
by Ernst & Young;

(ii) audited statement of operations and cash flows for the
year ended December 31, 1998, certified by Ernst & Young;

(iii) the unaudited balance sheet (the "Company Balance Sheet")
as of March 31, 1999 (the "Balance Sheet Date"); and

(iv) the unaudited statement of operations and cash flows for
the three-month period ended March 31, 1999.

(b) The Financial Statements were prepared in accordance with GAAP
(except in the case of the unaudited financial statements, for normal and
recurring year-end adjustments and the omission of footnote information) and
were prepared on the basis of the books and records of the Company (in each
case, as of the date of such Financial Statements) and present fairly, in all

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<PAGE>

material respects, the financial position of the Company as of the dates thereof
and the results of its operations and changes in cash flows and stockholders'
equity for the periods then ended in conformity with GAAP.

(c) As of the Balance Sheet Date, the Company did not have any
indebtedness, obligations or liabilities of any kind (whether accrued, absolute,
contingent or otherwise, and whether due or to become due or asserted or
unasserted), which were not fully reflected in, reserved against or otherwise
described in the Company Balance Sheet that would be required to be disclosed on
a balance sheet prepared as of the Balance Sheet Date in conformity with GAAP
applied on a basis consistent with the Company Financial Statements. Since the
Balance Sheet Date, the Company has not incurred any indebtedness, obligations
or liabilities of any kind (whether accrued, absolute, contingent or otherwise,
and whether due or to become due or asserted or unasserted) that would be
required to be disclosed on a balance sheet prepared as of the date hereof in
conformity with GAAP applied on a basis consistent with the Company Financial
Statements, other than those incurred in the ordinary course of business
consistent with past practice, none of which would have a Material Adverse
Effect on the Company.

3.6 Absence of Certain Changes or Events. Except as set forth in Section
------------------------------------
3.6 of the Company Schedules, since the Balance Sheet Date and until the date
hereof, the Company has conducted its businesses only in the ordinary course
consistent with past practice, and there has not been (a) any Material Adverse
Effect with respect to the Company, (b) any declaration, setting aside or
payment of any dividend on, or other distribution (whether in cash, stock or
property) with respect to any of the Units, (c) any split, combination,
reclassification or repurchase of any of the Units or any issuance or the
authorization of any issuance of any other securities in respect of, in lieu of
or in substitution for Units, (d) (i) any granting by the Company to any officer
of the Company of any increase in compensation, except in the ordinary course of
business consistent with past practice or as required under employment
agreements in effect as of the date hereof, (ii) any granting by the Company to
any officer of the Company of any increase in severance or termination pay,
except as was required under any employment, severance or termination agreement
in effect as of the date hereof, or (iii) any entry by the Company into (A) any
currently effective employment, severance, termination or indemnification
agreement, or consulting agreement (other than in the ordinary course of
business consistent with past practice), with any current or former officer,
director, employee or consultant or (B) any agreement with any current or former
officer, director, employee or consultant the benefits of which are contingent,
or the terms of which are materially altered, upon the occurrence of a
transaction involving the Company of the nature contemplated by this Agreement,
(e) any damage, destruction or loss, whether or not covered by insurance, that
individually or in the aggregate would have a Material Adverse Effect on the
Company, (f) any change in accounting methods, principles or practices by the
Company, except insofar as may have been required by a change in GAAP (g) any
tax election that individually or in the aggregate would have a Material Adverse
Effect on the Company or (h) any material liabilities or obligations of the
Company which are not required under GAAP to be recorded on the Company's
financial statements.

3.7 Litigation. There is no suit, claim, action, proceeding or, to the
----------
knowledge of the Company, investigation, pending or, to the knowledge of the
Company, threatened, against or

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<PAGE>

affecting the Company, nor is there any judgment, order, decree or injunction of
any Governmental Entity or arbitrator outstanding against, or, to the knowledge
of the Company, investigation by any Governmental Entity involving, the Company.

3.8 Contracts. Except as set forth in Section 3.8 of the Company
---------
Schedules, as of the date hereof, the Company is not a party to, nor are any of
its properties or assets bound by, any currently binding (i) contracts, licenses
or agreements, with respect to any intellectual property with a value or cost in
excess of $50,000, (ii) any employment or consulting agreement or contract (or
commitment to enter into any such agreement or contract) with an employee or
individual consultant or salesperson or consulting or sales agreement or
contract (or commitment to enter into any such agreement or contract) with a
firm or other organization in excess of $50,000 annually, (iii) any agreement or
plan, including, without limitation, any Unit option plan, Unit appreciation
rights plan or Unit purchase plan, any of the benefits of which will be
increased, or the vesting of benefits of which will be accelerated, by the
occurrence of any of the transactions contemplated by this Agreement or the
value of any of the benefits of which will be calculated on the basis of any of
the transactions contemplated by this Agreement, (iv) any fidelity or surety
bond or completion bond, (v) any lease of personal property having a value
individually in excess of $50,000, (vi) any agreement of indemnification,
agreement providing for reimbursement of payments or providing a right of
rescission, hold harmless or guaranty, or any obligation or liability with
respect to infringement of the intellectual property rights of another person,
in excess of, or entered into in connection with a transaction in excess of
$50,000, (vii) any agreement, contract or commitment containing any covenant
limiting the freedom of such party, any of its subsidiaries or the Surviving
Corporation to engage in any line of business or to compete with any person,
(viii) any agreement, contract or commitment relating to capital expenditures
and involving future payments by such party or any of its subsidiaries in excess
of $50,000 in one or in a series of transactions, (ix) any agreement, contract
or commitment relating to the disposition or acquisition of assets or any
interest in any business enterprise outside the ordinary course of business, (x)
any mortgages, indentures, loans or credit agreements, security agreements or
other agreements or instruments relating to the borrowing of money or extension
of credit, (xi) any purchase order or contract for the purchase of materials
involving in excess of $50,000, (xii) any construction contracts, (xiii)
contracts that relate to corporate governance, the voting or transfer of any
equity securities of such party, the registration of any securities of such
party under the Securities Act or that grants any redemption or preemptive
rights or (xiv) any other agreement, contract or commitment that involves
$50,000 or more or is not cancelable without penalty within thirty (30) days
(collectively, the "Contracts"). The Company has delivered or otherwise made
available to Parent true, correct and complete copies of the Contracts listed in
Section 3.8 of the Company Schedules, together with all amendments,
modifications and supplements thereto, a memorandum of all material oral
contracts to which the Company is a party, and all side letters to which the
Company is a party affecting the obligations of any party thereunder. The
Company is not in violation of or in default (with or without notice or lapse of
time, or both) under any lease, permit, concession, franchise, license or any
other Contract, commitment, agreement, arrangement, obligation or understanding
to which it is a party or by which it or any of its properties or assets is
bound. As of the Closing, after giving effect to the Merger and the transactions
contemplated hereby, the Surviving Corporation, shall be entitled to all of the
benefits under the agreements (as the same may be amended) set forth on Section
3.8 of the Company

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<PAGE>

Schedules to which the Company is entitled on the date hereof, except as may be
adversely affected by agreements (as the same may be amended) to which Parent is
a party on the date hereof.

3.9 Compliance With Laws. The Company is in compliance with all statutes,
--------------------
laws, ordinances, rules, regulations, judgments, orders and decrees of any
Governmental Entity applicable to its business or operations, except for
instances of possible noncompliance that individually or in the aggregate would
not have a Material Adverse Effect on the Company, impair in any material
respect the ability of the Company to perform its obligations under this
Agreement or prevent or materially delay the consummation of any of the
transactions contemplated by this Agreement. The Company has in effect all
Federal, state and local, domestic and foreign, governmental consents,
approvals, orders, authorizations, certificates, filings, notices, permits,
franchises, licenses and rights (collectively "Permits") necessary for it to
own, lease or operate its properties and assets and to carry on its business as
now conducted and there has occurred no violation of, or default under, any such
Permit, except for the lack of Permits and for violations of, or defaults under,
Permits which lack, violation or default individually or in the aggregate would
not have a Material Adverse Effect on the Company.

3.10 Absence of Changes in Benefit Plans; Employment Agreements; Labor
-----------------------------------------------------------------
Relations. Since the Balance Sheet Date and until the date hereof, there has
- ---------
not been any termination, adoption, amendment or agreement to amend in any
material respect by the Company any bonus, pension, profit sharing, deferred
compensation, incentive compensation, stock ownership, stock purchase, stock
appreciation, restricted stock, stock option, phantom stock, performance,
retirement, vacation, severance, disability, death benefit, hospitalization,
medical or other material plan, arrangement or understanding providing benefits
to any current or former officer, director or employee of such party or any of
its subsidiaries (collectively, "Benefit Plans"). Except as set forth in Section
3.10 of the Company Schedules, as of the date hereof there exist no currently
binding employment, severance or termination agreements or consulting agreements
between the Company and any current or former officer of the Company. There are
no collective bargaining or other labor union agreements to which the Company is
a party or by which it is bound. The Company has not encountered any labor union
organizing activity, nor had any actual or threatened employee strikes, work
stoppages, slowdowns or lockouts.

3.11 ERISA Compliance.
----------------

(a) Section 3.11(a) of the Company Schedules contains a list of all
"employee pension benefit plans" (as defined in Section 3(2) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")) (sometimes
referred to herein as "Pension Plans"), "employee welfare benefit plans" (as
defined in Section 3(l) of ERISA) and all other Benefit Plans maintained or
contributed to by the Company or any person or entity that, together with the
Company, is treated as a single employer under Section 414(b), (c), (m) or (o)
of the Internal Revenue Code (the "Code") (a "Commonly Controlled Entity") for
the benefit of any current or former officers, directors or employees of the
Company. The Company has made available to Parent true, complete and correct
copies of (i) each Benefit Plan (or, in the case of any unwritten Benefit Plans,
descriptions thereof), (ii) the most recent annual report on Form 5500 required
to be filed with the

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<PAGE>

Internal Revenue Service (the "IRS") with respect to each Benefit Plan (if any
such report was required), (iii) the most recent summary plan description for
each Benefit Plan for which such summary plan description is required and (iv)
each trust agreement and group annuity contract relating to any Benefit Plan.
Each Benefit Plan has been administered in accordance with its terms, except
where the failure to so administer would not, individually or in the aggregate,
have a Material Adverse Effect on the Company. The Company and all the Benefit
Plans are all in compliance with applicable provisions of ERISA and the Code,
except for instances of possible noncompliance that would not, individually or
in the aggregate, have a Material Adverse Effect on the Company.

(b) Each of the Pension Plans has been the subject of a determination
letter (or its equivalent) from the IRS to the effect that such Pension Plan is
qualified and exempt from United States Federal income taxes under Sections
401(a) and 501(a), respectively, of the Code, and no such determination letter
(or its equivalent) has been revoked nor has any event occurred since the date
of its most recent determination letter (or its equivalent) or application
therefor that would adversely affect its qualification or materially increase
its costs.

(c) Neither the Company nor any Commonly Controlled Entity of the
Company has maintained, contributed to or been obligated to contribute to any
Benefit Plan that is subject to Title IV of ERISA.

(d) No officer or employee of the Company will be entitled to any
additional compensation or benefits or any acceleration of the time of payment
or vesting of any compensation or benefits under any Benefit Plan as a result of
the transactions contemplated by this Agreement or any benefits under any
Benefits Plan the value of which will be calculated on the basis of any of the
transactions contemplated by this Agreement.

3.12 Taxes. The Company has paid or withheld all Taxes it is required to
-----
pay or withhold. The Company has not been delinquent in the payment of any Tax.
No audit or other examination of any Return of the Company is presently in
progress, nor has the Company been notified of any request for such an audit or
other examination. There are (and as of immediately following the Closing there
will be) no Liens on the Assets of the Company relating to or attributable to
Taxes. The Company has no knowledge of any basis for the assertion of any claims
which, if adversely determined, would result in a Lien on the Company.

The Members shall pay all and any of sales and use tax imposed by any
state, and any local taxes imposed on the Members or the Company, as a result of
the Merger. Nothing in this Agreement alters the obligations of the Members to
pay federal, state, and local income or other Taxes, if any, attributable to
their allocable share of the Company's operations prior to the Closing,
including without limitation those Taxes attributable to the Member's income for
the short year ending immediately prior to the Closing as if the Members were to
close the Company's books on that day, none of which are to be assumed by
Parent.

3.13 No Excess Parachute Payments. Except as disclosed on the Company
----------------------------
Schedules, no amount that could be received (whether in cash or property or the
vesting of property) in

A-19
<PAGE>

connection with any of the transactions contemplated by this Agreement by any
employee, officer or director of the Company who is a "disqualified individual"
(as such term is defined in proposed Treasury Regulation Section 1.280G-1) under
any employment, severance or termination agreement, other compensation
arrangement or Benefit Plan currently in effect would be an "excess parachute
payment" (as such term is defined in Section 280G(b)(1) of the Code). No such
person is entitled to receive any additional payment from the Company, the
Surviving Corporation or any other person (a "Parachute Gross-Up Payment") in
the event that the excise tax of Section 4999(a) of the Code is imposed on such
person. The Company has not granted to any officer, director or employee of the
Company any right to receive any Parachute Gross-Up Payment. The Members agree
to reimburse the Company for any Parachute Gross-Up Payment which it may become
obligated to pay as a result of the Merger, if any.

3.14 Title to Properties.
-------------------

(a) The Company has good and marketable title to, or valid leasehold
interests in, all of its properties and assets except for such as are no longer
used or useful in the conduct of its business or as have been disposed of in the
ordinary course of business and except for defects in title, easements,
restrictive covenants and similar encumbrances that individually or in the
aggregate would not have a Material Adverse Effect on the Company. All such
material assets and properties, other than assets and properties in which the
Company has a leasehold interest, are free and clear of all Liens (other than
Liens for current taxes not yet due and payable), except for Liens that
individually or in the aggregate would not have a Material Adverse Effect on the
Company.

(b) The Company has complied in all material respects with the terms
of all leases to which it is a party and under which it is in occupancy, all
such leases are in full force and effect and have been made available to the
Parent. The Company enjoys peaceful and undisturbed possession under all such
leases.

3.15 Intellectual Property.
---------------------

(a) Except as set forth in the Company Schedules, the Company owns,
or has the right to use, sell or license all intellectual property necessary or
required for the conduct of its business as presently conducted and as presently
contemplated (such intellectual property and the rights thereto are collectively
referred to as the "Company IP Rights").

(b) Section 3.15 of the Company Schedules sets forth with respect to
the intellectual property of the Company: (i) for each patent and patent
application, the number, normal expiration date, title and priority information
for each country in which such patent has been issued, or, the application
number, date of filing, title and priority information for each country, (ii)
for each trademark, trade name, domain name or service mark, whether or not
registered, the date first used, and, if registered, the application serial
number or registration number, the class of goods covered, the nature of the
goods or services, the countries in which the names or mark is used and the
expiration date for each country in which a trademark has been registered and
(iii) for each copyright for which registration has been sought, whether or not
registered, the date of creation and first

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<PAGE>

publication of the work, the number and date of registration for each country in
which a copyright application has been registered.

(c) The Company has taken, or prior to the Closing shall have taken,
all reasonable steps necessary or appropriate (including, entering into
appropriate confidentiality, nondisclosure agreements with officers, Members,
independent contractors working more than 1/2 of their professional time for the
Company as of the Closing Date and full-time and part-time employees
(collectively, the "Covered Persons")) to safeguard and maintain the secrecy and
confidentiality of, and the proprietary rights in, the Company IP Rights. A list
of all the Covered Persons is set forth in Section 3.15 of the Company
Disclosure Schedule.

(d) The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby will not constitute a
breach of any instrument or agreement governing any Company IP Right, will not
cause the forfeiture or termination or give rise to a right of forfeiture or
termination of any Company IP Right or impair the right of the Company, the
Surviving Corporation or the Parent to use, sell or license any Company IP Right
or portion thereof.

(e) (i) Neither the manufacture, marketing, license, sale or
intended use of any product or technology currently licensed or sold by the
Company to third parties violates any license or agreement between the Company
and any third party or infringes any proprietary right of any other party; and
(ii) there is no pending or, to the knowledge of the Company, threatened claim
or litigation contesting the validity, ownership or right to use, sell, license
or dispose of any Company IP Right or operate the Company's business.

3.16 Year 2000 Compliance.
--------------------

(a) All of the current or past products and services offered by the
Company to third parties, including each item of hardware, software, or
firmware, any system, equipment, or products consisting of or containing one or
more thereof, any and all enhancements, upgrades, customizations, modifications,
maintenance and the like are Year 2000 Compliant (as defined below). The
Company is not subject to any pending or threatened claim, regulatory action,
processing or investigation concerning the Year 2000 Compliance of its
respective products, services or operations, and, to the knowledge of the
Company, there is no basis for any such claim, regulatory action, investigation
or proceeding. To the knowledge of the Company, as of the Closing, all of the
internal management information systems (including hardware, firmware, operating
system software, utilities, and applications software) and all facilities and
systems used in the ordinary course of business by or on behalf of the Company,
including payroll, accounting, billing/receivables, customer service, human
resources, and e-mail systems used by the Company, are Year 2000 Compliant. To
the knowledge of the Company, as of the Closing, all vendors of products or
services to the Company, and its respective products, services and operations,
are Year 2000 Compliant, and each such vendor will continue to furnish its
products or services to the Company, without interruption or material delay, on
and after January 1, 2000.

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<PAGE>

(b) For purposes of this Agreement, "Year 2000 Compliant" means that
(i) the products, services, or other items (s) at issue accurately process,
provide and/or receive all date/time data (including calculating, comparing, and
sequencing) within, from, into, and between centuries (including the twentieth
and twenty-first centuries and the years 1999 and 2000), including leap year
calculations, and (ii) neither the performance nor the functionality nor the
Company's provision of the products, services, and other item (s) at issue will
be affected by any dates/times prior to, on, after, or spanning January 1, 2000.
The design of the products, services, and other item (s) at issue includes
proper date/time data century recognition and recognition of 1999 and 2000,
calculations that accommodate single century and multi-century formulae and
date/time values before, on, after spanning January 1, 2000, and date/time data
interface values that reflect the century, 1999, and 2000.

3.17 Voting Requirements. The affirmative vote of the Members executing
-------------------
this Agreement are the only votes of the Company necessary to approve and adopt
this Agreement and approve the transactions contemplated hereby.

3.18 Payments. Neither the Company nor any of its representatives acting
--------
on its behalf have, directly or indirectly, paid or delivered any fee,
commission or other sum of money or property, however characterized, to any
finder, agent, government official or other party, in the U.S. or any other
country which the Company knows or has reason to believe to have been illegal
under any federal, state or local laws of the U.S. or any other country having
jurisdiction. Neither the Company nor any of its representatives acting on its
behalf, have accepted or received any unlawful contributions, payments, gifts or
expenditures.

3.19 Transactions with Related Parties. Except as set forth on the Company
---------------------------------
Schedules, no Related Party (as defined below) of the Company has (a) borrowed
or loaned money or other property to the Company which has not been repaid or
returned, (b) any currently enforceable contractual or other claims, express or
implied, of any kind whatsoever against the Company or (c) has any material
economic interest in any property currently used by the Company or any
subsidiary thereof. For purposes of this Agreement, (i) "Related Party" means as
to any person, any of such person's officers and directors, any Affiliate
thereof or the respective officers and directors of any such Affiliate, or any
other person in which any of the foregoing persons have any direct or material
indirect interest, (ii) "Affiliate" of a person means any other person which
directly or indirectly controls, is controlled by, or is under common control
with, such person and includes each of the Members, and (iii) "control"
(including, with correlative meaning, the terms "controlled by" and "under
common control with"), as used with respect to any person, means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of such person, whether through the ownership of voting
securities, by contract or otherwise.

3.20 Restrictions on Business Activities. There is no agreement
-----------------------------------
(noncompete, grant of exclusivity or otherwise), commitment, judgment,
injunction, order or decree to which the Company is a party or otherwise binding
upon the Company which has or reasonably could be expected to have the effect of
prohibiting or impairing any business practice of the Company as presently

A-22
<PAGE>

conducted, any acquisition of property (tangible or intangible) by the Company
or the conduct of business by the Company as presently conducted.

3.21 Accounts Receivable; Inventory.
------------------------------

(a) The Company has made available to Parent a list of all accounts
receivable of the Company reflected on the Balance Sheet ("Accounts Receivable")
along with a range of days elapsed since invoice.

(b) All Accounts Receivable of the Company were incurred in the
ordinary course of business. The Company has no reason to believe that a
material amount of the Accounts Receivable not collected as of the Closing will
not be collectable subsequent to the Closing. No person has any Lien on any of
such Accounts Receivable and no request or agreement for deduction or discount
has been made with respect to any of such Accounts Receivable.

(c) All of the inventories of the Company reflected on the Balance
Sheet and the Company's books and records on the date of this Agreement were
purchased, acquired or produced in the ordinary and regular course of business
and in a manner consistent with the Company's regular inventory practices and
are set forth on the Company's books and records in accordance with the
practices and principles of the Company consistent with the method of treating
said items in prior periods.

3.22 Minute Books. The minute books of the Company made available to
------------
counsel for Parent are the only minute books of the Company and contain an
accurate summary of all meetings of managers (or committees thereof) and Members
or actions by written consent since the date of incorporation of the Company.

3.23 Environmental Matters.
---------------------

(a) Except as set forth in Section 3.23 of the Company Schedules, to
the knowledge of the Company, no underground storage tanks and no amount of any
substance that has been designated by any Governmental Entity or by applicable
federal, state, local or other applicable law to be radioactive, toxic,
hazardous or otherwise a danger to health or the environment, including, without
limitation, PCBs, asbestos, petroleum, urea-formaldehyde and all substances
listed as hazardous substances pursuant to the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended, or defined as a
hazardous waste pursuant to the United States Resource Conservation and Recovery
Act of 1976, as amended, and the regulations promulgated pursuant to said laws,
but excluding office and janitorial supplies properly and safely maintained (a
"Hazardous Material"), are present in, on or under any property, including the
land and the improvements, ground water and surface water thereof, that the
Company has at any time owned, operated, occupied or leased.

(b) To the knowledge of the Company, the Company has not transported,
stored, used, manufactured, disposed of, released or exposed its employees or
others to Hazardous Materials in violation of any law in effect on or before the
Closing Date, nor has the Company disposed of,

A-23
<PAGE>

transported, sold, or manufactured any product containing a Hazardous Material
(collectively, "Company Hazardous Materials Activities") in violation of any
rule, regulation, treaty or statute promulgated by any Governmental Entity in
effect prior to or as of the date hereof to prohibit, regulate or control
Hazardous Materials or any Hazardous Material Activity.

(c) To the knowledge of the Company, the Company currently holds all
environmental approvals, permits, licenses, clearances and consents (the
"Environmental Permits") necessary for the conduct of the Company's Hazardous
Material Activities and other business of the Company as such activities and
business are currently being conducted other than any Environmental Permits, the
lack of which would not, individually or in the aggregate, have a Material
Adverse Effect. All Environmental Permits are in full force and effect. The
Company (A) is in compliance with all material terms and conditions of the
Environmental Permits and (B) is in compliance in all material respects with all
other limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules and timetables contained in the laws of all
Governmental Entities relating to pollution or protection of the environment or
contained in any regulation, code, plan, order, decree, judgment, notice or
demand letter issued, entered, promulgated or approved thereunder.

(d) No action, proceeding, revocation proceeding, amendment
procedure, writ, injunction or claim is pending, or to the knowledge of the
Company, threatened, concerning any Environmental Permit, Hazardous Material or
any Company Hazardous Materials Activity. The Company is not aware of any fact
or circumstance which could involve the Company in any environmental litigation
or impose upon the Company any material environmental liability.

3.24 Insurance. Section 3.24 of the Company Schedules lists all insurance
---------
policies and fidelity bonds covering the assets, business, equipment,
properties, operations, employees, officers and directors of the Company. There
is no claim by the Company pending under any of such policies or bonds as to
which coverage has been questioned, denied or disputed by the underwriters of
such policies or bonds. All premiums due and payable under all such policies and
bonds have been paid and the Company is otherwise in material compliance with
the terms of such policies and bonds (or other policies and bonds providing
substantially similar insurance coverage). The Company has not received any
notice that the insurers intend to terminate or materially increase the premiums
payable under any of such policies.

3.25 Warranties; Indemnities. Section 3.25 of the Company Schedules sets
-----------------------
forth a list of all agreements containing warranties and indemnities relating to
products sold or services rendered by the Company, and no warranty or indemnity
has been given by the Company which differs therefrom in any material respect.
Section 3.25 of the Company Schedules also indicates all warranty and indemnity
claims in excess of $5,000 made against the Company.

3.26 Information Supplied. The information supplied by the Company for
--------------------
inclusion in the Registration Statements on Form S-4 to be filed with the
Securities and Exchange Commission ("SEC") by Parent in connection with the
issuance of the Parent Common Stock in or as a result of the transactions
contemplated hereby (the "Form S-4") and any other registration statement on any

A-24
<PAGE>

applicable form to be filed with the SEC to facilitate the resale of shares
issued to the Members hereunder (collectively, the "Registration Statements"),
shall not at the time the respective Registration Statement is declared
effective contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein not misleading. The information supplied by the Company for
inclusion in the proxy statement/prospectus to be sent to the Members of the
Company in connection with the meeting of the Company's Members to consider the
transactions contemplated by this Agreement (the "Members' Meeting") (such proxy
statement/prospectus as amended or supplemented is referred to as the "Proxy
Statement/Prospectus") shall not at the date the Proxy Statement/Prospectus is
first mailed to the Members, at the time of the Members' Meeting and at the
Effective Time, and the information supplied by the Company for inclusion in any
prospectus to be used in connection with any Registration Statement filed by the
Parent to facilitate the resale of shares issued hereunder by affiliates of the
Company (a "Prospectus") shall not at the date such Prospectus is first
delivered to offerees and at the effective date of such Prospectus, be false or
misleading with respect to any material fact required to be stated therein, or
omit to state any material fact required to be stated therein or necessary in
order to make the statements made therein, in the light of the circumstances
under which they are made, not misleading. Notwithstanding the foregoing, the
Company and the Members make no representation or warranty with respect to any
information about, or supplied or omitted by, the Parent which is contained in
any of the foregoing documents.

3.27 Representations Complete. None of the representations or warranties
------------------------
made by the Company, nor any document, written information, statement, financial
statement, certificate, schedule or exhibit prepared or furnished by the Company
or its representatives pursuant to this Agreement or in connection with the
transactions contemplated hereby, when taken as a whole, contains or will
contain at the Effective Time, any untrue statement of a material fact, or omits
or will omit at the Effective Time to state any material fact necessary in order
to make the statements contained herein or therein, in the light of the
circumstances under which made, not misleading. To the knowledge of the Company,
there is no event, fact or condition that has resulted in, or could reasonably
be expected to result in, a Material Adverse Effect that has not been set forth
in this Agreement or in the Company Schedules.

SECTION 4

REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB

Except as disclosed in writing in a disclosure letter referring
specifically to the representations and warranties in this Agreement that
specifically identifies the section and subsection to which such disclosure
relates and that is delivered to the Company by the Parent and certified by a
duly authorized officer of the Parent prior to the date of this Agreement the
("Parent Schedules"), Parent represents and warrants to the Company as follows:

4.1 Organization, Standing and Corporate Power. The Parent is, and Sub,
------------------------------------------
once formed will be, a corporation duly organized, validly existing and in good
standing under the laws of
A-25
<PAGE>

the jurisdiction of its organization and has or will have as of the Closing Date
all requisite corporate power and authority to carry on its business as now
being conducted. The Parent is, and Sub as of the Closing Date will be, duly
qualified to do business and is in good standing in each jurisdiction in which
the nature of its business or the ownership, leasing or operation of its
properties makes such qualification or licensing necessary, other than in such
jurisdictions where the failure to be so qualified or licensed or be in good
standing individually or in the aggregate would not have a Material Adverse
Effect on Parent. Parent has delivered to the Company completed correct copies
of its Certificate of Incorporation and Bylaws.

4.2 Authority/Noncontravention. The Parent has, and as of the Closing
--------------------------
Date Sub will have the requisite corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated by this
Agreement. The execution, delivery and performance of this Agreement by the
Company and the consummation by each of the Parent and Sub of the transactions
contemplated by this Agreement have been, or as of the Closing Date will be,
duly authorized by all necessary corporate action on the part of each of the
Parent and Sub and no other corporate proceedings on the part of each of the
Parent and Sub is, or will be, necessary to authorize this Agreement or to
consummate the transactions contemplated hereby. This Agreement has been, or as
of the Closing Date will be, duly executed and delivered by each of the Parent
and Sub and constitutes or will constitute valid and binding obligations of
Parent and Sub, enforceable against the Parent and Sub in accordance with its
terms. The execution and delivery of this Agreement do not, and the consummation
of the transactions contemplated by this Agreement and compliance with the
provisions of this Agreement will not, conflict with, or result in any violation
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 to loss of a material benefit or require any consent, approval or
authorization under, or result in the creation of any Liens in or upon any of
the properties or assets of the Parent under, any provision of (a) the
Certificate of Incorporation or Bylaws of the Parent or the certificates of
incorporation or bylaws (or similar organizational documents) of any of its
subsidiaries, (b) any loan or credit agreement, bond, debenture, note, mortgage,
indenture, lease or other material contract, commitment, agreement, arrangement,
obligation, undertaking, instrument, permit, concession, franchise or license
applicable to Parent or its properties or assets or (c) subject to the
governmental filings and other matters referred to in the following sentence,
any statute, law, ordinance, rule or regulation or judgment, order or decree, in
each case, applicable to Parent or its properties or assets, other than, in the
case of clauses (b) and (c), any such conflicts, violations, defaults, rights,
or Liens or other occurrences that individually or in the aggregate would not
have a Material Adverse Effect on Parent. No consent, approval, order or
authorization of, or registration, declaration or filing with, any Governmental
Entity is required by or with respect to the Parent or Sub in connection with
the execution and delivery of this Agreement by Parent or Sub or the
consummation by Parent or Sub of the Merger or the other transactions
contemplated by this Agreement, except for (a) the receipt of a valid exemption
from the registration requirements of the Securities Act, (b) the filing of the
Agreement of Merger with the California Secretary of State and appropriate
documents with the relevant authorities of other states in which Parent is
qualified to do business and (c) such other consents, approvals, orders,
authorizations, registrations, declarations and filings the failure of which to
be obtained or made individually or in

A-26
<PAGE>

the aggregate would not have a Material Adverse Effect on the Parent or impair
the ability of Parent or Sub to perform their obligations under this Agreement.

4.3 Capitalization; Ownership of Shares. The authorized capital stock of
-----------------------------------
Parent consists of (i) 352,883,506 shares of common stock of which 100 million
shares are designated as shares of Class A common stock, par value $.01 per
share ("Parent Class A Common Stock"), 250 million shares are designated as
shares of Parent Class B Common Stock, 2,883,506 shares are designated as shares
of Class C common stock, par value $.01 per share ("Parent Class C Common
Stock"), and (ii) 2 million shares of preferred stock, par value $.01 per share,
of Parent ("Parent Preferred Stock" and, together with Parent Class A Common
Stock, Parent Class B Common Stock and Parent Class C Common Stock, "Parent
Capital Shares"). As of May 4, 1999, 63,175,984 shares of Parent Class A Common
Stock were issued and outstanding and no shares thereof were held in treasury,
9,247,109 shares of Parent Class B Common Stock were issued and outstanding no
shares thereof were held in treasury, no shares of Parent Class C Common Stock
were issued and outstanding or held in treasury, and no shares of Parent
Preferred Stock were outstanding or held in treasury. All of the Parent Capital
Shares have been duly authorized, validly issued, fully paid and nonassessable
and free of preemptive rights with no liability attaching to the ownership
thereof. As of the date of this Agreement, except pursuant to this Agreement,
the outstanding Parent Class A Common Stock, the obligation to issue Class B
Common Stock to the equity holders of Match.com upon the closing of the
acquisition of that company by the Parent or its wholly-owned subsidiary and the
terms of stock options issued pursuant to the 1998 Employee Stock Purchase Plan
and the CitySearch, Inc. 1996 Stock Option Plan as in effect as of the date
hereof (the "Parent Stock Plans"), the Parent does not have and is not bound by
any outstanding subscriptions, options, warrants, calls, commitments or
agreements of any character calling for the purchase or issuance of any shares
of Parent Capital Stock or any other equity securities of Parent or any
securities representing the right to purchase or otherwise receive any Parent
Capital Shares. As of the date hereof, no Parent Capital Shares were reserved
for issuance, except for (i) shares of Parent Class B Common Stock reserved for
issuance upon the exercise of stock options pursuant to the Parent Stock Plans,
(ii) shares of Parent Class B Common Stock reserved for issuance upon conversion
of the outstanding shares of Parent Class A Common Stock; and (iii) shares
reserved for issuance or which Parent otherwise is committed to issue in respect
of the transactions contemplated by a definitive agreement to acquire Match.com.
Since May 4, 1999, Parent has not issued any shares of its capital stock or any
securities convertible into or exercisable for any shares of its capital stock,
except for options issued in the ordinary course of business and shares of Class
B Common Stock issued upon the routine exercise of options issued in the
ordinary course.

4.4 SEC Documents; Parent Financial Statements. Parent has furnished or
------------------------------------------
made available to the Company a true and complete copy of its Annual Report on
Form 10-K for the fiscal year ended December 31, 1998 and its Report on Form 10-
Q for the three-months ended March 31, 1999 (the "SEC Documents"), which Parent
filed under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), with the SEC. As of their respective dates, the SEC Documents complied in
all material respects with the requirements of the Exchange Act and did not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements made therein,
in light of the circumstances in which they were

A-27
<PAGE>

made, not misleading. There has been no change in the Parent's operations
resulting in a Material Adverse Effect of the Parent since March 31, 1999. The
financial statements of Parent, including the notes thereto, included in the SEC
Documents (the "Parent Financial Statements") comply as to form in all material
respects with applicable accounting requirements and with the published rules
and regulations of the SEC with respect thereto, have been prepared in
accordance with GAAP consistently applied (except as may be indicated in the
notes thereto or, in the case of unaudited statements, as permitted by
applicable rules and regulations of the SEC) and fairly present the consolidated
financial position of Parent at the dates thereof and of its operations and cash
flows for the periods then ended (subject, in the case of unaudited statements,
to normal, recurring audit adjustments). There has been no change in Parent
accounting policies except as described in the notes to the Parent Financial
Statements. Parent has no material obligations other than (i) those set forth in
the Parent Financial Statements and (ii) those not required to be set forth in
the Parent Financial Statements under generally accepted accounting principles.

4.5 Parent Common Stock. The shares of Parent Common Stock, when issued
-------------------
in the Merger in compliance with this Agreement, will be validly issued, fully
paid and nonassessable. Such shares will be issued in compliance with applicable
state and federal securities laws.

4.6 Information Supplied. The information supplied by the Parent for
--------------------
inclusion in the Registration Statements shall not at the time the respective
Registration Statement is declared effective contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein not misleading. The
information supplied by the Parent for inclusion in the Proxy
Statement/Prospectus shall not at the date the Proxy Statement/Prospectus is
first mailed to the Members, at the time of the Members' Meeting and at the
Effective Time, and the information supplied by the Parent for inclusion in any
other Prospectus shall not at the date such Prospectus is first delivered to
offerees and at the effective date of such Prospectus, be false or misleading
with respect to any material fact required to be stated therein, or omit to
state any material fact required to be stated therein or necessary in order to
make the statements made therein, in the light of the circumstances under which
they are made, not misleading. Notwithstanding the foregoing, the Parent makes
no representation or warranty with respect to any information about, or supplied
or omitted by, the Members or the Company which is contained in any of the
foregoing documents. The Parent agrees to defend and hold the Members harmless
from any violation of this representation and warranty.

SECTION 5

COVENANTS

5.1 Conduct of Business of the Company. Subject to the provisions of
----------------------------------
Section 5.18 hereof, during the period from the date of this Agreement and
continuing until the earlier of the termination of this Agreement or the
Effective Time, the Company shall carry on its business in the usual, regular
and ordinary course in substantially the same manner as conducted prior to the
date of this Agreement and, to the extent consistent with such business, use all
commercially reasonable

A-28
<PAGE>

efforts consistent with past practice and policies to preserve intact its
present business organization, keep available the services of its present
officers and key employees and preserve its relationships with customers,
suppliers, distributors, licensors, licensees, and others having business
dealings with it, with the objective that its goodwill and ongoing business
shall be unimpaired at the Effective Time. The Company shall promptly notify
Parent of any event or occurrence not in the ordinary course of business of the
Company. Except as expressly contemplated by this Agreement or disclosed in the
Company Schedules, the Company shall not, without the prior written consent of
Parent:

(a) Declare or pay any Units distributions (whether in cash, stock or
property) in respect of any of its Units, or split, combine or reclassify any of
its Units, or issue or authorize the issuance of any other securities in respect
of, in lieu of or in substitution for shares of its Units, or repurchase or
otherwise acquire, directly or indirectly, any Units;

(b) Issue, deliver or sell, authorize or propose the issuance,
delivery or sale of, or purchase or propose the purchase of, any Units or
securities convertible into, or subscriptions, rights, warrants or options to
acquire, or other agreements or commitments of any character obligating it to
issue any such shares or other convertible securities or authorize or propose
any change in its equity capitalization;

(d) Acquire or agree to acquire by merging or consolidating with, or
by purchasing a substantial portion of the assets of, or by any other manner,
any business or any corporation, partnership, association or other business
organization or division thereof, or otherwise acquire or agree to acquire any
assets which are material, individually or in the aggregate, to the Company;

(e) Sell, lease, license, pledge or otherwise dispose of or encumber
any of its properties or assets except in the ordinary course of business
consistent with past practice (including without limitation any indebtedness
owed to it or any claims held by it);

(f) Except in the ordinary course of business consistent with past
practice, incur any indebtedness for borrowed money or guarantee any such
indebtedness or issue or sell any debt securities or guarantee, endorse or
otherwise become responsible for the obligations of others, or make loans or
advances;

(g) Pay, discharge or satisfy in an amount in excess of $10,000 in
any one case any claim, liability or obligation (absolute, accrued, asserted or
unasserted, contingent or otherwise), other than the payment, discharge or
satisfaction in the ordinary course of business consistent with past practice of
liabilities reflected or reserved against in the Company's Financial Statements
or those incurred after the Balance Sheet Date in the ordinary course of
business;

(h) Adopt or amend any employee benefit or employee unit purchase or
employee option plan, or enter into any employment contract, pay any special
bonus or special remuneration to

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<PAGE>

any director or employee, or increase the salaries or wage rates of its officers
or employees other than in the ordinary course of business, consistent with past
practice, or change in any material respect any management policies or
procedures;

(i) Commence a lawsuit other than for the routine collection of
bills;

(j) Transfer or license to any person or entity or otherwise extend,
amend or modify in any material respect any rights to the Company IP Rights or
enter into grants to future patent rights, other than in the ordinary course of
business;

(k) Except in the ordinary course of business with prior notice to
Parent, violate, amend or otherwise modify the terms of any of the Company's
contracts binding on the Company as set forth in Section 3.8 of the Company
Schedules;

(l) Revalue any of its assets, including without limitation, writing
down the value of inventory or writing off notes or accounts receivable other
than in the ordinary course of business and consistent with past practice;

(m) Make any material tax election other than in the ordinary course
of business and consistent with past practice, change any material tax election,
adopt any material tax accounting method other than in the ordinary course of
business and consistent with past practice, change any material tax accounting
method, file any material tax return (other than any estimated tax returns,
payroll tax returns or sale tax returns) or any amendment to a material tax
return, enter into any closing agreement, settle any tax claim or assessment, or
consent to any tax claim or assessment, without the prior written consent of the
Parent, which consent will not be reasonably withheld;

(n) Engage in any activities or transactions that are outside the
ordinary course of its business consistent with past practice;

(o) Fail to pay or otherwise satisfy its monetary obligations as they
become due, except such as are being contested in good faith; or waive or commit
to waive any rights of substantial value; or cancel, materially amend or renew
any insurance policy; or

(p) Enter into any material contract;

(q) Take, or agree (in writing or otherwise) to take, any of the
actions described in Sections 5.1(a) through (p) above, or any action which
would make any of the representations or warranties of the Company and the
Members contained in this Agreement untrue or incorrect or result in any of the
conditions to the Merger set forth in Section 6 not being satisfied.

5.2 No Solicitation.
---------------

(a) Unless and until the termination of this Agreement pursuant to
the provisions of Section 8.1, neither the Company nor the Members will (nor
will the Company or the Members permit any of the Company's officers, directors,
agents, representatives or affiliates to) directly or

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<PAGE>

indirectly, take any of the following actions with any party other than Parent
and its designees: (a) solicit, encourage, initiate or conduct discussions with
or engage in negotiations with any person, or take any other action intended or
designed to facilitate the efforts of any person, relating to the possible
acquisition of the Company (whether by way of merger, purchase of capital stock,
purchase of assets or otherwise) or any portion of its capital stock or assets
(each of the foregoing, an "Acquisition"), (b) provide any information to, or
otherwise cooperate with, facilitate or encourage any effort or attempt by any
person to do or seek any Acquisition, (c) enter into an agreement with any
person, providing for any Acquisition of the Company or (d) make or authorize
any statement, recommendation or solicitation in support of any possible
Acquisition other than by Parent. In addition to the foregoing, if the Company
or any Member receives any offer or indication of interest regarding any
Acquisition, the Company or the Member (as the case may be) shall immediately
notify Parent thereof, including the specific terms of such each such offer,
indication of interest or request, including the identity of the third party.

(b) Except as contemplated in this Agreement in connection with the
transactions contemplated by this Agreement, for a period of one year following
a termination of this Agreement pursuant to Section 8.1, neither Parent nor Sub
shall directly or indirectly solicit for employment or employ any employee of
the Company as of the date of this Agreement or any employee hired by the
Company after the date of this Agreement.

5.3 Preparation of Registration Statements.
--------------------------------------

(a) The Company shall promptly provide to Parent and the counsel for
inclusion in the Form S-4 and, if utilized, any other registration statement on
which shares issued to the Members are registered for resale, in a form
reasonably satisfactory to Parent and its counsel, such information concerning
the Company, its operations, capitalization, technology, capital ownership and
other material as Parent or its counsel may reasonably request. The Company
shall furnish to Parent all information concerning the Company and the Members
as may be reasonably requested in connection with any action contemplated by
this Section 5.3.

(b) As promptly as practicable after the date hereof, but in no event
longer than 45 days from the date hereof, Parent and the Company shall prepare
and file with the SEC the Form S-4 and any other documents required by the
Exchange Act or the Securities Act of 1933, as amended, in connection with the
Merger and the resale by affiliates of the Company of Parent Common Stock
received at the Closing pursuant to the Merger. Each of Parent and the Company
shall use its reasonable best efforts to have the Form S-4 declared effective
under the Securities Act as promptly as practicable after such filing. Parent
shall also take any action required to be taken under any applicable state
securities or "blue sky" laws in connection with the issuance of the Parent
Common Stock in the Merger. The Parent will pay all of the costs relating to
this registration statement except that the Members agree to pay (and not charge
the Company) the cost of separate securities counsel for the Company and/or the
Members, if any, and the cost of services provided by the Company's accountants
in connection with such registration statement.

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<PAGE>

(c) As promptly as practicable after the satisfaction of the
conditions required by this paragraph 5.3(c), the Parent will register for
resale the shares of Parent Common Stock to be distributed to the Members on the
last Payment Date either (i) on Form S-3 , (or at the Parent's option, add such
shares to an existing registration statement filed by the Parent by an
appropriate amendment to Form S-1 or Form S-3, as the case may be) or (ii) by
amending the prospectus forming a part of the Form S-4, at the Parent's option,
and maintain such registration statement (or addition to an existing
registration statement) or updated prospectus for at least 30 days after the
later of effectiveness or the applicable Payment Date if the following
conditions are met:

(i) The average weekly trading volume of the Parent's Common
Stock on a National Securities Exchange for the eight weeks ending on the date
30 days prior to the expected date of the last Payment Date would be
insufficient to allow the Members, individually, to sell all of the shares
expected to be distributed to them on the last Payment Date under Rule 145 under
the Securities Act of 1933, as amended ("Rule 145"), within a 90 day period
absent such registration; and

(ii) The Members' Representative shall have provided the Parent
with written notice that the Members desire such registration to go forward; and

(iii) The Parent shall not have elected to pay all or such
portion of the installment to be paid on the last Payment Date in cash such that
the Members cannot, individually, sell all of the shares expected to be
distributed to them on the last Payment Date under Rule 145 absent such
registration.

(d) The Members will pay all of the expenses relating to a
registration, addition to an existing registration or a prospectus update
pursuant to Section 5.3(c), which obligation will be capped at $30,000.

(e) In the event that any registration statement, or prospectus
contained therein, which the Parent causes to be effective under Section 5.3(c)
shall become materially deficient and the Parent shall have given written notice
of same to the Members' Representative, the Members will immediately cease use
of such registration statement or prospectus upon receipt of such notice until
such time as the Parent shall have amended the registration statement or
prospectus to cure such deficiency. The Parent shall be obligated to take
action to cure such deficiency promptly. The 30 day period during which the
registration statement is required to be available will be extended by the
number of days that use of the registration statement is suspended under this
Section 5.3(e).

5.4 Member Approval. The Company will call the Members' Meeting to be
---------------
held as promptly as practicable for the purpose of obtaining the Member approval
required in connection with the transactions contemplated hereby and by the
Merger Agreement and shall use all reasonable efforts to obtain such approval.
In connection with the Members Meeting, the Company shall submit materials to
its Members (the "Member Materials") in compliance with federal and state laws
and shall include information regarding the Company, the terms of the Merger and
this Agreement and the unanimous recommendation of the Board of Members of the
Company in favor

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<PAGE>

of the Merger. The Member Materials shall further include an investment
representation statement and questionnaire in the form provided to the Company
by Parent, as well as Parent's SEC Documents and other information regarding the
Parent and the Company as may be required to comply with Federal and state
securities laws. The Company shall provide the Member Materials to Parent for
its review and approval prior to distributing the Member Materials to the
Company's Members. The Company shall coordinate and cooperate with the Parent
with respect to the timing of the Members' Meeting. The Company shall not change
the date of the Members' Meeting without the prior written consent of the
Parent, nor shall the Company adjourn the Members' Meeting without the prior
written consent of the Parent, unless such adjournment is due to the lack of a
quorum, in which case the Chairman of the Members' Meeting shall announce at
such meeting the time and place of the adjourned meeting.

5.5 Access to Information. Upon reasonable notice, the Company shall
---------------------
afford Parent and its accountants, counsel and other representatives, reasonable
access during normal business hours during the period prior to the Effective
Time to (a) all of the Company's properties, books, contracts, commitments and
records, and (b) all other information concerning the business, properties and
personnel (subject to restrictions imposed by applicable law) of the Company as
Parent may reasonably request, including without limitation access upon
reasonable request to the Company's employees, customers and vendors for due
diligence inquiry. The Company agrees to provide to Parent and its accountants,
counsel and other representatives copies of internal financial statements,
business plans and projections promptly upon request. No information or
knowledge obtained in any investigation pursuant to this Section 5.5 or
otherwise shall affect or be deemed to modify any representation or warranty
contained herein or the conditions to the obligations of the parties to
consummate the Merger.

5.6 Confidentiality. Each of the parties agrees to keep such information
---------------
or knowledge obtained in any investigation pursuant to Section 5.5, or pursuant
to the negotiation and execution of this Agreement or the effectuation of the
transactions contemplated hereby, confidential pursuant to the prior existing
mutual Nondisclosure Agreement by and between Parent and the Company (the
"Confidentiality Agreement").

5.7 Expenses. Subject to the provisions of Section 5.3, whether or not
--------
the Merger is consummated, all fees and expenses incurred in connection with the
Merger including, without limitation, all legal, accounting, financial advisory,
consulting and all other fees and expenses of third parties incurred by a party
in connection with the negotiation and effectuation of the terms and conditions
of this Agreement and the transactions contemplated hereby, shall be the
obligation of the (i) Parent with respect to all such fees and expenses incurred
by Parent and (ii) by the Members with respect to all such fees and expenses
(including the fees of Donaldson, Lufkin and Jenrette) incurred by the Company
or the Members; provided, however, that if the Merger is not consummated, the
Members may, in their sole discretion, cause the Company to pay expenses
incurred in connection with the transaction.

5.8 Public Disclosure. Unless otherwise required by law, prior to the
-----------------
Effective Time, no disclosure (whether or not in response to an inquiry) of the
subject matter of this Agreement shall be

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<PAGE>

made by any party hereto unless approved by Parent and the Company prior to
release, provided that such approval shall not be unreasonably withheld,
subject, in the case of Parent, to Parent's obligation to comply with applicable
securities laws.

5.9 Consents. Each of Parent, the Company and each Member shall promptly
--------
apply for or otherwise seek, and use its reasonable efforts to obtain, all
consents and approvals required to be obtained by it for the consummation of the
Merger, and the Company and the Members shall use all reasonable efforts to
obtain all consents, waivers and approvals under any of the Company's
agreements, contracts, licenses or leases in order to preserve the benefits
thereunder for the Surviving Corporation and otherwise in connection with the
Merger. All of such Company consents and approvals are set forth in Section 5.9
of the Company Schedules.

5.10 Reasonable Efforts. Subject to the terms and conditions provided in
------------------
this Agreement, each of the parties hereto shall use all reasonable efforts to
take promptly, or cause to be taken, all actions, and to do promptly, or cause
to be done, all things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions contemplated
hereby to obtain all necessary waivers, consents and approvals and to effect all
necessary registrations and filings and to remove any injunctions or other
impediments or delays, legal or otherwise, in order to consummate and make
effective the transactions contemplated by this Agreement for the purpose of
securing to the parties hereto the benefits contemplated by this Agreement;
provided that Parent shall not be required to agree to any divestiture by Parent
or the Company or any of Parent's subsidiaries or affiliates of shares of
capital stock or of any business, assets or property of Parent or its
subsidiaries or affiliates or the Company or its affiliates, or the imposition
of any material limitation on the ability of any of them to conduct their
businesses or to own or exercise control of such assets, properties and stock.

5.11 Notification of Certain Matters. The Company shall give prompt notice
-------------------------------
to Parent, and Parent shall give prompt notice to the Company, of (i) the
occurrence or non-occurrence of any event, the occurrence or non-occurrence of
which may cause any representation or warranty of the Company and the Members,
on the one hand, and Parent on the other, contained in this Agreement to be
untrue or inaccurate in any material respect at or prior to the Effective Time
and (ii) any failure of the Company, each Member or Parent, as the case may be,
to comply with or satisfy any covenant, condition or agreement to be complied
with or satisfied by it hereunder; provided, however, that the delivery of any
-------- -------
notice pursuant to this Section 5.12 shall not limit or otherwise affect any
remedies available to the party receiving such notice.

5.12 Blue Sky Laws. Parent shall take such steps as may be necessary to
-------------
comply with the securities and blue sky laws of all jurisdictions which are
applicable to the issuance of Parent Common Stock pursuant hereto. The Company
shall use its best efforts to assist Parent as may be necessary to comply with
the securities and blue sky laws of all jurisdictions which are applicable in
connection with the issuance of Parent Common Stock pursuant hereto.

5.13 Noncompetition Agreement; Voting and Employment Arrangements. Upon
------------------------------------------------------------
execution of this Agreement, Parent and each of the Members shall execute and
deliver the

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<PAGE>

noncompetition agreements in the form attached as Exhibit B (the "Noncompetition
---------
Agreements"). Each Member hereby agrees to vote all of their Units in favor of
the Merger and the other transactions contemplated herein at the Members Meeting
and at any adjournments and postponements thereof, or pursuant to an Unanimous
Written Consent . Each Member further agrees to take any action and execute any
document deemed necessary or advisable by Parent to effect such vote, including
without limitation the execution of an irrevocable proxy in compliance with
applicable laws. Each Member agrees not to transfer, sell exchange, pledge or
otherwise dispose of or encumber any of his Units, or to make any offer or
agreement relating thereto, at any time prior to the termination of this
Agreement (other than consummation of the Merger). The Noncompetition Agreements
shall become effective as of the Effective Time. The Parent and Messrs. Kennedy
and Bunker agree to negotiate in good faith the terms of employment agreements
or offer letters which will be mutually acceptable to the parties prior to the
Closing. Such agreements will include, among other matters, agreements about
Messrs. Kennedy and Bunker's salaries and benefits (which will be commensurate
with those of similarly situated Parent executives) and grants of options to
purchase Parent Common Stock.

5.14 Listing of Parent Common Stock. The shares of Parent Common Stock to
------------------------------
be issued by Parent in the Merger shall be qualified and listed on the Nasdaq
National Market as of the Effective Time.

5.15 Affiliate Agreement. The Members are the only persons who are, in the
-------------------
reasonable judgment of the Company and the Members, an affiliate of the Company
within the meaning of Rule 145 (an "Affiliate") . Each Member agrees to
negotiate in good faith and execute an Affiliate Agreement with the Parent and
the Sub, in customary form, within five business days from the date hereof,
which agreements will be attached hereto following execution hereof. Parent
shall be entitled to place appropriate legends on the certificates evidencing
any Parent Common Stock to be received by the Affiliate pursuant to the terms of
this Agreement, and to issue appropriate stop transfer instructions to the
transfer agent for Parent Common Stock, consistent with the terms of the
Affiliate Agreements.

Parent will use its best efforts to comply with the reporting
requirements of the Exchange Act after the Effective Time. Upon being informed
in writing by any Affiliate that such person intends to sell any shares of
Parent Common Stock acquired in the transactions contemplated by this Agreement
under Rule 145, Parent will certify in writing to such person that it has been
subject to the reporting requirements of the Exchange Act for at least 90 days
and it has filed all of the reports required to be filed by it under the
Exchange Act to enable such person to sell such person's Parent Common Stock
acquired in the transactions contemplated by this Agreement under Rule 145.
Parent will further supply such person with any information in its possession
which he or she may reasonably request in connection with any such proposed
sale. If any of the certificates representing any Parent Common Stock acquired
in the transactions contemplated by this Agreement are presented to Parent's
transfer agent for registration of transfer in connection with any sale
theretofore made under paragraph (d) of Rule 145,

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<PAGE>

Parent will promptly instruct its transfer agent to register such transfer and
to issue one or more new certificates free of any stop transfer order or
restrictive legend.

5.16 Brokers or Finders. Except for payments to be made by the Members to
------------------
Donaldson, Lufkin and Jenrette, each of Parent, Sub, the Company and the Members
represents that no agent, broker, investment banker or other firm or person is
or will be entitled to any broker's or finder's fee or any other commission or
similar fee in connection with any of the transactions contemplated by this
Agreement.

5.17 Tax Returns. The Company shall timely file all federal and state
-----------
income tax returns for taxable periods ending on or prior to the Effective Time
and have paid or will pay all Taxes attributable to such periods. Such returns
will be prepared and filed in accordance with applicable law and in a manner
consistent with past practices and shall be subject to review and approval by
Parent. After the Effective Time, Parent and the Company, on the one hand, and
the Members, on the other hand, will make available to the other, as reasonably
requested, all information, record or documents relating to the liability for
Taxes of the Company for all periods prior to or including the Effective Time
and will preserve such information, records or documents until the expiration of
any applicable statute of limitations or extensions thereof.

5.18 Distributions to Members. Notwithstanding anything herein to the
------------------------
contrary, the Members will be entitled prior to or at Closing to distribute from
the Company to themselves an amount (the "Distribution") equal to (i) the
Company's net income (determined in accordance with GAAP continuously applied)
for the period January 1, 1999 through and including the Closing Date, plus (ii)
an amount equal to those transaction-related expenses expensed under GAAP by the
Company prior to and including the Closing Date which are included in the
determination of the Company's net income and which are assumed from the Company
by the Members. The parties agree to work together in good faith to mutually
agree upon the calculation of the Distribution prior to the date the
Distribution is made.

5.19 Employees; Employee Benefits. On and after the Closing Parent shall
----------------------------
provide the employees of the Company with salaries and incentive opportunities
no less favorable in the aggregate than those provided to Parent's employees in
no less comparable positions as of the date hereof and to provide employees of
the Company benefit plans, programs and arrangements on the terms described in
Section 5.19 of the Parent Schedules. Notwithstanding anything in this Agreement
to the contrary, all employees of the Company shall remain at will employees
following the Closing.

5.20 Post-Closing Operations of the Company. Parent and the Members agree
--------------------------------------
that without the prior consent of Parent and the Member Representative, neither
Parent nor the Members will take any action during calendar year 1999 which will
materially change the manner in which the Company is operated after the Closing.

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<PAGE>

SECTION 6

CONDITIONS TO THE MERGER

6.1 Conditions to Obligations of Each Party to Effect the Merger. The
------------------------------------------------------------
respective obligations of each party to this Agreement to effect the Merger
shall be subject to the satisfaction or written waiver at or prior to the
Effective Time of the following conditions:

(a) Member Approval. This Agreement, the agreements contemplated
---------------
hereunder and the Merger and other transactions contemplated hereby and thereby
shall have been approved and adopted by the affirmative vote or consent of the
Members, in person or by proxy, at the Members Meeting contemplated by Section
5.4, in compliance with applicable law and the Company's Regulations.

(b) Form S-4. The Form S-4 shall have become effective under the
--------
Securities Act and shall not be the subject of any stop order or proceedings
seeking a stop order.

(c) Listing. The shares of Parent Common Stock to be issued in
-------
connection with the Merger shall be qualified and listed on the Nasdaq National
Market.

(d) No Injunctions or Restraints on Conduct of Business. No
---------------------------------------------------
temporary restraining order, preliminary or permanent injunction or other order
issued by any court of competent jurisdiction or other legal or regulatory
restraint or provision challenging Parent's proposed acquisition of the Company,
or limiting or restricting Parent's conduct or operation of the business of the
Company (or its own business) following the Merger shall be in effect, nor shall
any proceeding brought by an administrative agency or commission or other
governmental authority or instrumentality, domestic or foreign, seeking any of
the foregoing be pending.

(e) Litigation. There shall be no action, suit, claim or proceeding
----------
of any nature pending, or overtly threatened, against the Parent, Sub or the
Company, their respective properties or any of their officers or directors,
arising out of, or in any way connected with, the Merger or the other
transactions contemplated by the terms of this Agreement, or that could
materially and adversely affect the business, assets, liabilities, financial
condition, results of operations or prospects of the Company.

(f) Lease Consents. The landlord of the Company's headquarters
--------------
facility shall have consented to the Merger in accordance with the terms of
applicable leases.

(g) Hart-Scott-Rodino. All applicable waiting periods following the
-----------------
filing of necessary Hart-Scott-Rodino filings, if any, shall have run without
notification of further review by regulatory authorities.

(h) Escrow Agreement. The Parties and the Escrow Agent shall have
----------------
entered into an agreement governing the Escrow upon terms reasonably acceptable
to all parties thereto.

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<PAGE>

(i) Employment Arrangements. The Parent and Messrs. Kennedy and
-----------------------
Bunker shall have agreed upon employment agreements and/or offer letters which
set forth the terms under which such person will be employed by the Parent which
terms shall be reasonably acceptable to all parties thereto.

6.2 Additional Conditions to the Obligations of Parent and Sub. The
----------------------------------------------------------
obligations of Parent and Sub to consummate and effect this Agreement and the
transactions contemplated hereby shall be subject to the satisfaction or written
waiver at or prior to the Effective Time of each of the following conditions,
any of which may be waived, in writing, exclusively by Parent:

(a) Representations, Warranties and Covenants. The representations
-----------------------------------------
and warranties of the Company and the Members in this Agreement shall be true
and correct in all material respects on and as of the date of this Agreement and
(except to the extent such representations and warranties speak of an earlier
date) as of the Closing Date as though such representations and warranties were
made on and as of such time and the Company and the Members shall have performed
and complied in all material respects with all covenants, obligations and
conditions of this Agreement required to be performed and complied with by each
of them as of the Closing Date. Parent shall have been provided with a
certificate dated as of the Closing Date executed on behalf of the Company by
its Chief Executive Officer and Chief Financial Officer to such effect.

(b) Legal Opinion. Parent shall have received a legal opinion from
-------------
Jenkens & Gilchrist, legal counsel to the Company, in form and substance
reasonably acceptable to the Parent and its counsel.

(c) Board of Directors Approval. The Parent's Board of Directors
---------------------------
shall have approved the Merger and the transactions contemplated herein;
provided, that in the event this condition is not satisfied by June 23, 1999 at
the close of business then the Parent and the Company have termination rights
under Section 8.1(h)

(d) No Dissenters. Holders of more than 5% of the outstanding Units
-------------
shall not have exercised, nor shall they continue to have the right to exercise,
appraisal rights with respect to the transactions contemplated by this
Agreement.

(e) Resignation of Managers. The managers of the Company in office
-----------------------
immediately prior to the Effective Time of the Merger shall have resigned as
managers of the Surviving Corporation effective as of the Effective Time of the
Merger.

(f) Affiliate Agreements. Parent shall have received from the
--------------------
Affiliates of the Company an executed Affiliate Agreement which shall be in full
force and effect.

(g) Proprietary Information Agreements. The Company shall have
----------------------------------
entered into proprietary information agreements in a form satisfactory to Parent
with each of the persons listed in Section 3.15 of the Company Disclosure
Schedule.

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<PAGE>

(h) Members' Representative. The Members shall have designated one
-----------------------
of them as the Members' Representative (as defined) hereunder.

(i) Technical Documentation. The Company shall have created a set of
-----------------------
manuals documenting the technical architecture of its computer hardware and
software systems in form and substance reasonably acceptable to the Parent.

(j) Alternative Connections. The Company shall have obtained a
-----------------------
perpetual, non-exclusive license to use the service mark "Alternative
Connections" for online dating services from the Chicago, Illinois based
company known as "Alternative Connections" at no post-closing cost to the
Company (or, with the Parent's prior consent the Company shall have made other
acceptable arrangements for this mark) or, in the alternative, taken all actions
reasonably necessary to cease using the service mark "Alternative Connections"
in connection with the Company's operations and commenced using a different name
which shall be reasonably approved in advance by the Parent.

(k) UCC-3. The Company shall have obtained a release of the UCC-1
-----
Financing Statement filed by Compass Bank.

6.3 Additional Conditions to Obligations of Company. The obligations of
-----------------------------------------------
the Company to consummate and effect this Agreement and the transactions
contemplated hereby shall be subject to the satisfaction or written waiver at or
prior to the Effective Time of each of the following conditions, any of which
may be waived, in writing, exclusively by the Company:

(a) Representations, Warranties and Covenants. The representations
-----------------------------------------
and warranties of Parent in this Agreement shall be true and correct in all
material respects on and as of the date of this Agreement and (except to the
extent such representations and warranties speak of an earlier date) as of the
Closing Date as though such representations and warranties were made on and as
of such time and Parent shall have performed and complied in all material
respects with all covenants (including the obligation to deliver the Parent
Common Stock to be delivered hereunder in certificate or book entry form as
directed by the Members), obligations and conditions of this Agreement required
to be performed and complied in all respects material with by it as of the
Closing Date. The Company shall have been provided with a certificate dated as
of the Closing Date and executed on behalf of Parent by an executive officer of
Parent to such effect.

(b) Legal Opinion. The Company shall have received a legal opinion
-------------
from Wilson, Sonsini, Goodrich & Rosati, legal counsel to Parent, in form and
substance reasonably acceptable to the Company, the Members and their counsel.

(c) Release of Personal Guarantees. The Members shall have been
------------------------------
released from all personal guarantees to which they are party relating to the
Company's operations or the Parent shall have agreed to indemnify the Members
for all obligations under such guarantees.

6.4 Effect of Waiver. To the extent a condition herein above is waived in
----------------
writing, the party which was responsible for satisfaction of such condition
shall have no further liability to the other parties for failure to satisfy such
condition.

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<PAGE>

SECTION 7

INDEMNIFICATION

7.1 General Indemnification. The Members covenant and agree to indemnify,
-----------------------
defend, protect and hold harmless Parent and the Surviving Corporation and their
respective officers, directors, employees, Members, assigns, successors and
affiliates (individually, an "Indemnified Party" and collectively, "Indemnified
Parties") from, against and in respect of:

(a) all liabilities, losses, claims, damages, punitive damages,
courses of actions, lawsuits, administrative proceedings (including informal
proceedings), investigations, audits, demands, assessments, adjustments,
judgments, settlement payments, deficiencies, penalties, fines, interest
(including interest from the date of such damages) and costs and expenses
(including without limitation reasonable attorneys' fees and disbursements of
every kind, nature and description) (collectively, "Damages") suffered,
sustained or incurred by the Indemnified Persons in connection with, resulting
from or arising out of, directly or indirectly:

(i) any breach of any representation or warranty of the Company
or the Members set forth in this Agreement or any certificate, document or
instrument delivered by or on behalf of the Company or the Members in connection
herewith;

(ii) any nonfulfillment of any covenant or agreement on the part
of the Company or the Members in this Agreement; and

(iii) the operation of the "Alternative Connections" portion of
the Company's business prior to Closing to the extent such Damages are owed to
the Chicago, Illinois based company known as "Alternative Connections"; and

(b) any and all Damages incident to any of the foregoing or to the
enforcement of this Section 8.1.

7.2 Limitation and Expiration. Notwithstanding the above:
-------------------------

(a) There shall be no liability for indemnification under Section 7.1
unless the aggregate amount of Damages exceeds $200,000 (the "Indemnification
Threshold"), in which event the liability for indemnification will apply to the
entire aggregate amount of Damages in excess of the first $200,000. The maximum
liability for indemnification under this Section 7.1 shall be $10.0 million
except with respect to Claims (as defined below) relating to any breach of the
representations and warranties set forth in Section 3.12 (Taxes), 3.15
(Intellectual Property) and 3.23 (Environmental Matters) or for Claims relating
to fraud or willful misconduct. Any Damages payable pursuant to this Section 7
shall be a several and not joint obligation of the Members. The
indemnification provided with respect to the Alternative Connections matter
shall not be subject to the $200,000 deductible.

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<PAGE>

(b) The indemnification obligations under this Section 7 shall
terminate as follows:

(i) with respect to claims or demands (a "Claim") relating to a
breach of the representations and warranties set forth in Section 3.12 (Taxes),
3.15 (Intellectual Property) and 3.23 (Environmental Matters), 3.26 (Information
Supplied) or fraud or willful misconduct, upon the later of the expiration of
the applicable statute of limitations period or the final resolution of any and
all such Claims pending as of such date; and

(ii) with respect to all other Claims for indemnification under
this Section 7, upon the later of the first anniversary of the Closing Date or
the final resolution of any such claims pending as of the first anniversary.

The term "Indemnification Deadline Date" refers to the expiration date
of the applicable statute of limitations period with respect to Claims under
clause (i) above and the first anniversary with respect to claims under clause
(ii) above. The term "Pending Claims" refers to the pending claims described in
clauses (i) and (ii) above. From and after the applicable Indemnification
Deadline Date, the indemnification obligations under this Section 7 shall
survive only to the extent of Pending Claims.

(c) Notwithstanding anything in this Agreement to the contrary, all
claims for Damages pursuant to the indemnification or other remedy provisions of
this Agreement that are received by Parent or Sub from the Company or the
Members shall first be set off against cash in the Escrow, next against
securities in the Escrow, next against future payments to be received pursuant
to this Agreement under the procedures set forth in Section 7.4, and only in the
event the Escrow and all future payments to be received are insufficient to
cover such Damages shall the Company have the right to pursue other remedies
against such parties. In addition to the right to recovery from the Escrow and
the right of set-off set forth in this Section 7.3(c), Parent shall have the
right to any and all equitable remedies available under law.

7.3 Indemnification Procedures. All Claims for indemnification under this
--------------------------
Section 7 shall be asserted and resolved as follows:

(a) In the event the Indemnified Party has a Claim hereunder which
does not involve a Claim being asserted against or sought to be collected by a
third party, the Indemnified Party shall with reasonable promptness send a Claim
Notice (as defined in Section 7.3(c) below) with respect to such Claim to the
Member Representative (as defined in Section 7.5 below). If the Member
Representative does not notify the Indemnified Party within 45 days from the
date of receipt of such Claim Notice that the Members dispute such Claim, the
amount of such Claim shall be conclusively deemed a liability of the Members
hereunder. In case the Member Representative shall object in writing to any
Claim made in accordance with this Section 7.3(a), the Indemnified Party shall
have fifteen (15) days to respond in a written statement to the objection of the
Member Representative. If after such fifteen (15) day period there remains a
dispute as to any Claims, the parties shall attempt in good faith for sixty (60)
days to agree upon the rights of the respective parties

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<PAGE>

with respect to each of such Claims. If the parties should so agree, a
memorandum setting forth such agreement shall be prepared and signed by both
parties. If no such agreement can be reached after good faith negotiation,
either party may demand arbitration of the matter unless the amount of the
damage or loss is at issue in pending litigation with a third party, in which
event arbitration shall not be commenced until such amount is ascertained or
both parties agree to arbitration; and in either such event the matter shall be
settled by arbitration conducted by three arbitrators. Parent and the Members'
Representative shall each select one arbitrator, and the two arbitrators so
selected shall select a third arbitrator, each of which arbitrators shall be
independent and have at least ten years relevant experience. The arbitrators
shall set a limited time period and establish procedures designed to reduce the
cost and time for discovery while allowing the parties an opportunity, adequate
in the sole judgment of the arbitrators, to discover relevant information from
the opposing parties about the subject matter of the dispute. The arbitrators
shall rule upon motions to compel or limit discovery and shall have the
authority to impose sanctions, including attorneys fees and costs, to the extent
as a court of competent law or equity, should the arbitrators determine that
discovery was sought without substantial justification or that discovery was
refused or objected to without substantial justification. The decision of a
majority of the three arbitrators as to the validity and amount of any Claim in
such Claim Notice shall be binding and conclusive upon the parties to this
Agreement. Such decision shall be written and shall be supported by written
findings of fact and conclusions which shall set forth the award, judgment,
decree or order awarded by the arbitrators.

(b) Judgment upon any award rendered by the arbitrators may be
entered in any court having jurisdiction. Any such arbitration shall be held in
Los Angeles County, California under the rules then in effect of the American
Arbitration Association. For purposes of this Section 7.3, in any arbitration
hereunder in which any claim or the amount thereof stated in the Claim Notice is
at issue, the Indemnified Party shall be deemed to be the Non-Prevailing Party
in the event that the arbitrators award such Indemnified Party less than the sum
of one-half (1/2) of the disputed amount plus any amounts not in dispute;
otherwise, the Indemnifying Party shall be deemed to be the Non-Prevailing
Party. The Non-Prevailing Party to an arbitration shall pay its own expenses,
the fees of each arbitrator, the administrative costs of the arbitration, and
the expenses, including without limitation, reasonable attorneys' fees and
costs, incurred by the other party to the arbitration.

(c) In the event that any Claim for which the Members would be liable
to an Indemnified Party hereunder is asserted against an Indemnified Party by a
third party, the Indemnified Party shall with reasonable promptness notify the
Member Representative of such Claim, including a copy of the Claim made if the
Claim was made in writing, specifying the nature of such claim and the amount or
the estimated amount thereof to the extent then feasible (which estimate shall
not be conclusive of the final amount of such Claim) (the "Claim Notice"). The
Member Representative shall have 30 days from the receipt of the Claim Notice
(the "Notice Period") to notify the Indemnified Party (i) whether or not the
Member Representative disputes the Members' liability to the Indemnified Party
hereunder with respect to such Claim and (ii) if the Member Representative does
not dispute such liability, whether or not the Member Representative desires, at
the sole cost and expense of the Members, to defend against such Claim, provided
that the Member is hereby authorized (but not obligated) prior to and during the
Notice Period to file any

A-42
<PAGE>

motion, answer or other pleading and to take any other action which the Member
Representative shall deem necessary or appropriate to protect the Members'
interests. In the event that the Member Representative notifies the Indemnified
Party within the Notice Period that the Member Representative does not dispute
the Members' obligation to indemnify hereunder and desires to defend the
Indemnified Party against such Claim and except as hereinafter provided, the
Member Representative shall have the right to defend by appropriate proceedings,
which proceedings shall be diligently settled or prosecuted by the Member
Representative to a final conclusion; provided that, unless the Indemnified
--------
Party otherwise agrees in writing, the Member Representative may not settle any
matter (in whole or in part) unless such settlement includes a complete and
unconditional release of the Indemnified Party. If the Indemnified Party desires
to participate in, but not control, any such defense or settlement the
Indemnified Party may do so at the Indemnified Party's sole cost and expense. If
the Member Representative elects not to defend the Indemnified Party against
such Claim, whether by failure of the Member Representative to give the
Indemnified Party timely notice as provided above or otherwise, then the
Indemnified Party, without waiving any rights against the Members, may settle or
defend against any such Claim in the Indemnified Party's sole discretion and the
Indemnified Party shall be entitled to recover from the Members the amount of
any settlement or judgment and, on an ongoing basis, all indemnifiable costs and
expenses of the Indemnified Party with respect thereto, including interest from
the date such costs and expenses were incurred.

(d) Notwithstanding Section 7.4(b) above, the Indemnified Party shall
have the right to control or assume (as the case may be) the defense of any
Claim and the amount of any judgment or settlement and the reasonable costs and
expenses of defense shall be included as part of the indemnification obligations
of the Members hereunder if any Claim seeks material prospective relief which,
in the reasonable opinion of the Indemnified Party, could have a material
adverse effect on the assets, liabilities, financial condition, results of
operations or business prospects of Parent and the Indemnified Party shall have
given the Member Representative written notice of the same. If the Indemnified
Party should elect to exercise such right, the Member Representative shall have
the right to participate in, but not control, the defense of such claim or
demand at the sole cost and expense of the Members. Notwithstanding the
foregoing, the Indemnified Party shall not settle any Claim without the written
consent of the Member Representative, which consent shall not be unreasonably
withheld.

(e) Nothing herein shall be deemed to prevent the Indemnified Party
from making a Claim, and an Indemnified Party may make a Claim hereunder, for
potential or contingent claims or demands provided the Claim Notice sets forth
the specific basis for any such potential or contingent claim or demand to the
extent then feasible and the Indemnified Party has reasonable grounds to believe
that such a claim or demand may be made.

(f) The Indemnified Party's failure to give reasonably prompt notice
to the Member Representative of any actual, threatened or possible claim or
demand which may give rise to a right of indemnification hereunder shall not
relieve the Members of any liability which the Members may have to the
Indemnified Party unless the failure to give such notice materially and
adversely prejudiced the Members.

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<PAGE>

(g) The parties will make appropriate adjustments for any tax
benefits, tax detriments or insurance proceeds in determining the amount of any
indemnification obligation under Section 7, provided that the Member
--------
Representative shall not be obligated to seek any payment pursuant to the terms
of any insurance policy.

7.4 Right of Set-off.
----------------

(a) Any amounts payable by the Members to Parent pursuant to the
indemnification provisions of this Section 7 shall be paid, to the extent funds
or securities are available, by distribution of amounts or securities from the
Escrow. Parent shall be entitled to cause itsfuture payment obligations
hereunder to be made into Escrow to the extent it in good faith determines that
such an indemnification amount may be owed to it pursuant to this Section 7 in
excess of the amount in Escrow; provided, however, if a final determination is
made subsequently in accordance with the provisions of this Section 7 that
Parent is not entitled to such excess indemnification amount, such amount shall
be payable out of Escrow to the Members promptly following such determination.
In addition to the right of recovery from the Escrow and the right of set-off
set forth in this Section 7.4, Parent shall have the right to any and all
remedies available under law. The agreement governing the Escrow will provide
for compliance by the Escrow Agent with the provisions of this Section 7.4(a).

(b) In the event that there shall exist a Pending Claim at the time
that the funds and securities in the Escrow would be distributed to the Members
in the ordinary course, the distribution of such funds and securities with a
market value equal to the highest reasonable estimate of the indemnifying
party's obligations to the indemnified party with respect to the Pending
Claim(s) will be deferred until such time as the indemnifying party's
obligations under the Pending Claim shall have been finally determined and any
amounts due to be distributed from the Escrow to the indemnified party in
satisfaction of indemnification obligations shall have been distributed.

7.5 Members' Representative.
-----------------------

(a) Upon the closing of the Merger, one of the Members shall be
constituted and appointed as agent and attorney-in-fact (the "Members'
Representative") for and on behalf of each of the Members to give and receive
notices and communications, to object to such deliveries, to agree to,
negotiate, enter into settlements and compromises of, and demand arbitration and
comply with orders of courts and awards of arbitrators with respect to Claims,
and to take all actions necessary or appropriate in the judgment of the Members'
Representative for the accomplishment of the foregoing. Such agency may be
changed (whether pursuant to vacancy, removal or resignation) by the vote of a
majority of the Members from time to time upon not less than thirty (30) days
prior written notice to Parent. No bond shall be required of the Members'
Representative, and the Members' Representative shall receive no compensation
for its services, except for payment by the Members of expenses, including fees
of counsel, reasonably incurred by the Members' Representative in connection
with the performance of its duties hereunder.

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<PAGE>

(b) The Members' Representative shall not be liable for any act done
or omitted hereunder as Members' Representative while acting in good faith, and
any act done or omitted pursuant to the advice of counsel shall be conclusive
evidence of such good faith. The Members shall severally indemnify the Members'
Representative and hold such agent harmless against any loss, liability or
expense incurred without bad faith on the part of the Members' Representative
and arising out of or in connection with the acceptance or administration of the
Members' Representative's duties hereunder.

(c) A decision, act, consent or instruction of the Members'
Representative shall constitute a decision of all Members and shall be final,
binding and conclusive upon each Member, and Parent may rely upon any decision,
act, consent or instruction of the Members' Representative taken in such manner
as being the decision, act, consent or instruction of each and every Member.
The Parent is hereby relieved from any liability to any person for any acts done
by them in accordance with such decision, act, consent or instruction of the
Members' Representative.

7.6 Survival of Representations, Warranties and Covenants. All
-----------------------------------------------------
representations, warranties and covenants made by the Company and, the Members
in or pursuant to this Agreement or in any document delivered pursuant hereto
will survive the Closing and will remain in effect until, and will expire upon
the Indemnification Deadline Date, provided, however, that the indemnification
obligations with respect to any Pending Claim (and the related representations,
warranties and covenants) will survive until the final resolution of such
Pending Claim. All representations, warranties and covenants made by the Parent
in or pursuant to this Agreement or in any document delivered pursuant hereto
will survive the Closing and will remain in effect until, and will expire upon,
the first anniversary of the Closing; provided, however that the representations
and warranties made in Section 4.6 (Information Supplied) shall survive until
the expiration of the applicable statute of limitations and the conclusion of
all claims pending on such date.

SECTION 8

TERMINATION, AMENDMENT AND WAIVER

8.1 Termination. This Agreement may be terminated and the Merger
-----------
abandoned at any time prior to the Effective Time, whether before or after
approval of the Merger by the Members of the Company:

(a) by mutual written consent of the Company and Parent;

(b) by Parent or the Company if the Closing has not occurred by
September 30, 1999 if the Form S-4 has not been declared effective by the SEC as
of such date or October 31, 1999 for any other reason; provided, however, that
the right to terminate this Agreement under this Section 8.1(b) shall not be
available to any party whose action or failure to act has been the principal
cause of the failure of the Form S-4 to become effective or the Merger to occur
on or before such dates;

A-45
<PAGE>

(c) by Parent or the Company if there shall be a final nonappealable
order of a federal or state court in effect preventing consummation of the
Merger; or there shall be any action taken, or any statute, rule, regulation or
order enacted, promulgated or issued or deemed applicable to the Merger by any
Governmental Entity which would make the consummation of the Merger illegal;

(d) by Parent if there shall be any action taken, or any statute,
rule, regulation or order enacted, promulgated or issued or deemed applicable to
the Merger by any Governmental Entity, which would: (i) prohibit Parent's or the
Company's ownership or operation of all or a portion of the business of the
Company or (ii) compel Parent or the Company to dispose of or hold separate all
or a portion of the business or assets of the Company or Parent as a result of
the Merger;

(e) by Parent or Company if the Form S-4 shall not have been filed
with the SEC on or prior to 45 days after the date of execution of this
Agreement; provided, however, that a party shall not have a right to terminate
this Agreement pursuant to this Section 8.1(e) if it is the primary cause of the
failure to file the Form S-4 within such period;

(f) by Parent if it is not in breach of its obligations under this
Agreement and there has been a material breach of any representation, warranty,
covenant or agreement contained in this Agreement on the part of the Company or
the Members and such breach has not been cured within five (5) business days
after written notice to the Company and the Members (provided that no cure
period shall be required for a breach which by its nature cannot be cured);

(g) by the Company if it is not in breach of its obligations under
this Agreement and there has been a material breach of any representation,
warranty, covenant or agreement contained in this Agreement on the part of
Parent or Sub and such breach has not been cured within five (5) business days
after written notice to Parent (provided that no cure period shall be required
for a breach which by its nature cannot be cured); or

(h) by the Parent or the Company if the Parent's Board of Directors
does not approve the Merger and the other transactions contemplated herein by
the close of business on June 23, 1999.

(i) by any Party if the Value of the Parent Common Stock on the
Closing Date is less than $20.80 (the "Minimum Price"); provided, however, that
in the event of termination by the Members or the Company on the one hand, the
Parent and the Sub on the other hand shall have the option to supercede such
termination by establishing the actual average closing price per share of Parent
Common Stock on the Nasdaq National Market over the five consecutive trading
days ending on the trading day two days preceding the Closing instead of the
Minimum Price for purposes of determining the number of shares to be issued upon
Closing; provided, further, however, that in the event of termination by the
Parent and the Sub on the one hand, the Members and the Company shall have the
option to supercede such termination by establishing the Minimum Price as the
price to be used in determining the number of shares to be issued upon Closing.

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<PAGE>

Where action is taken to terminate this Agreement pursuant to this Section
8.1, it shall be sufficient for such action to be authorized by the Board of
Directors or Board of Members (as applicable) of the party taking such action.

8.2 Effect of Termination. In the event of termination of this Agreement
---------------------
as provided in Section 8.1, this Agreement shall forthwith become void and there
shall be no liability or obligation on the part of Parent, Sub, the Company or
the Members, or their respective officers or directors, provided that each party
shall remain liable for any breaches of this Agreement prior to its termination;
and provided further that, the provisions of Sections 5.2(b), 5.6, 5.7, and 5.8
of this Agreement shall remain in full force and effect and survive any
termination of this Agreement.

8.3 Amendment. This Agreement may be amended by the parties hereto at any
---------
time prior to the Closing by execution of an instrument in writing signed on
behalf of each of the parties hereto, provided, however that no amendment shall
be made which by law requires the further approval of the Members of the Company
without obtaining such approval.

8.4 Extension; Waiver. At any time prior to the Effective Time, Parent
-----------------
and Sub, on the one hand, and the Company, on the other, may, to the extent
legally allowed, (i) extend the time for the performance of any of the
obligations of the other party hereto, (ii) waive any inaccuracies in the
representations and warranties made to such party contained herein or in any
document delivered pursuant hereto, and (iii) waive compliance with any of the
agreements or conditions for the benefit of such party contained herein. Any
agreement on the part of a party hereto to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
party.

8.5 Notice of Termination. Subject to the provisions of Section 8.1(i),
---------------------
any termination of this Agreement under Section 8.1 above will be effective
immediately upon the delivery of written notice of the terminating party to the
other parties hereto.

SECTION 9

MISCELLANEOUS

9.1 Notices. All notices and other communications hereunder shall be in
-------
writing and shall be deemed given if delivered personally or by commercial
delivery service, or mailed by registered or certified mail (return receipt
requested) or sent via facsimile (with acknowledgment of complete transmission)
to the parties at the following addresses (or at such other address for a party
as shall be specified by like notice):

A-47
<PAGE>

(a) if to Parent or Sub, to:
Ticketmaster Online - CitySearch, Inc.
790 E. Colorado Boulevard, Suite 200,
Pasadena, CA 91101
Attention: Chief Executive Officer
Telephone No.: (626) 405-0050
Facsimile No.: (626) 405-9929

with a copy at the same address to the attention of Bradley K.
Serwin, General Counsel

with a copy to:

Wilson Sonsini Goodrich & Rosati, P.C.
650 Page Mill Road
Palo Alto, CA 94304-1050
Attention: Larry W. Sonsini, Esq.
John T. Sheridan, Esq.
Telephone No.: (650) 493-9300
Facsimile No.: (650) 496-4088

(b) if to the Company, to:

with a copy to:

WebMedia Ventures, LLC
5307 East Mockingbird Lane
Suite 102
Dallas, Texas 75206
Attention: David Kennedy
William Bunker
Glenn Wiggins
Telephone No.: (214) 827-2262
Facsimile No.: (214) 827-2937

with a copy to:

Jenkens & Gilchrist, P.C.
1445 Ross Avenue
Suite 3200
Dallas, Texas 75202
Attention: John R. Holzgraefe, Esq.
Telephone No.: (214) 855-4500
Facsimile No.: (214) 855-4300

A-48
<PAGE>

c/o Wiggins & Company
5307 E. Mockingbird, Suite 610
Dallas, Texas 75206
Attention: David Kennedy

Telephone No.: (214) 827-7830
Facsimile No.: (214) 827-1534

with a copy to:
Jenkens & Gilchrist, P.C.
1445 Ross Avenue
Suite 3200
Dallas, Texas 75202
Attention: John R. Holzgraefe, Esq.
Telephone No.: (214) 855-4500
Facsimile No.: (214) 855-4300

9.2 Interpretation.
--------------

(a) When a reference is made in this Agreement to Exhibits, such
reference shall be to an Exhibit to this Agreement unless otherwise indicated.
When a reference is made in this Agreement to Sections, such reference shall be
to a Section of this Agreement unless otherwise indicated. The words "include,"
"includes" and "including" when used herein shall be deemed in each case to be
followed by the words "without limitation." 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. When reference is
made herein to "the business of" an entity, such reference shall be deemed to
include the business of all direct and indirect subsidiaries of such entity.

(b) For purposes of this Agreement the term "knowledge" means with
respect to a party hereto, with respect to any matter in question, any actual
knowledge that any of the chief executive officer, chief operating officer,
president, chief financial officer, general counsel or controller of such party,
or knowledge that could be reasonably expected to be had by any such person by
virtue of his position with respect to such matter.

(c) For purposes of this Agreement, the term "Material Adverse
Effect" when used in connection with an entity means any change, event,
violation, inaccuracy, circumstance or other matter, if such change, event,
violation, inaccuracy, circumstance or other matter would have a material
adverse effect on the business, assets (including intangible assets),
capitalization or financial condition of (i) such entity and its subsidiaries
taken as a whole, or (ii) the Surviving Corporation, except for those changes,
events and effects that (x) are primarily caused by conditions

A-49
<PAGE>

affecting the United States or world economy as a whole or affecting the
industry in which such entity competes as a whole, or (y) result from
announcement or pendency of the Merger.

(d) For purposes of this Agreement, the term "subsidiary" of any
entity means any other entity of which securities or other ownership interests
having ordinary voting power to elect a majority of the board of directors or
other persons performing similar functions are directly or indirectly owned or
controlled by such entity.

9.3 Counterparts. This Agreement may be executed in one or more
------------
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party, it being understood that all
parties need not sign the same counterpart.

9.4 Entire Agreement; Assignment. This Agreement, the schedules and
----------------------------
Exhibits hereto, the Confidentiality Agreement and the documents and instruments
and other agreements among the parties hereto referenced herein: (a) constitute
the entire agreement among the parties with respect to the subject matter hereof
and supersede all prior agreements and understandings, both written and oral,
among the parties with respect to the subject matter hereof; (b) are not
intended to confer upon any other person any rights or remedies hereunder; and
(c) shall not be assigned by operation of law or otherwise except as otherwise
specifically provided, except that Parent and Sub may assign their respective
rights and delegate their respective obligations hereunder to their respective
affiliates. This Agreement is binding upon and will inure to the benefit of the
parties hereto and their respective successors and permitted assigns.

9.5 Severability. In the event that any provision of this Agreement or
------------
the application thereof, becomes or is declared by a court of competent
jurisdiction to be illegal, void or unenforceable, the remainder of this
Agreement will continue in full force and effect and the application of such
provision to other persons or circumstances will be interpreted so as reasonably
to effect the intent of the parties hereto. The parties further agree to replace
such void or unenforceable provision of this Agreement with a valid and
enforceable provision that will achieve, to the extent possible, the economic,
business and other purposes of such void or unenforceable provision.

9.6 Other Remedies. Except as otherwise provided herein, any and all
--------------
remedies herein expressly conferred upon a party will be deemed cumulative with
and not exclusive of any other remedy conferred hereby, or by law or equity upon
such party, and the exercise by a party of any one remedy will not preclude the
exercise of any other remedy.

9.7 Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the State of Delaware, regardless of the laws that
might otherwise govern under applicable principles of conflicts of laws thereof.

9.8 Further Assurances. Each party agrees to cooperate fully with the
------------------
other parties and to execute such further instruments, documents and agreements
and to give such further written

A-50
<PAGE>

assurances as may be reasonably requested by any other party to evidence and
reflect the transactions described herein and contemplated hereby and to carry
into effect the intents and purposes of this Agreement.

9.9 Absence of Third Party Beneficiary Rights. No provision of this
-----------------------------------------
Agreement is intended, nor will be interpreted, to provide to create any third
party beneficiary rights or any other rights of any kind in any client,
customer, affiliate, Member, employee, partner of any party hereto or any other
person or entity.

9.10 Mutual Drafting. This Agreement is the joint product of the parties
---------------
hereto, and each provision hereof has been subject to the mutual consultation,
negotiation and agreement of each of the parties, and shall not be construed for
or against any party hereto.

9.11 Further Representations. Each party to this Agreement acknowledges
-----------------------
and represents that it has been represented by its own legal counsel in
connection with the transactions contemplated by this Agreement, with the
opportunity to seek advice as to its legal rights from such counsel. Each party
further represents that it is being independently advised as to the tax
consequences of the transactions contemplated by this Agreement and is not
relying on any representation or statements made by the other party as to such
tax consequences. The Company also represents that it has communicated the above
to its Members.

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<PAGE>

IN WITNESS WHEREOF, Parent, Sub, the Company and the Members have entered
into this Agreement as of the date first written above.

WEB MEDIA, LLC TICKETMASTER ONLINE - CITYSEARCH, INC.

By: /s/ Dave Kennedy By: /s/ Thomas McInerney
----------------------------- -----------------------------

Name: Dave Kennedy Name: Thomas McInerney
--------------------------- ---------------------------

Title: President Title: Chief Financial Officer,
-------------------------- Executive Vice President,
Finance & Administration
--------------------------
MEMBERS

/s/ William Bunker
_________________________________
William Bunker

/s/ Dave Kennedy
_________________________________
Dave Kennedy

/s/ Glenn Wiggins
_________________________________
Glenn Wiggins

[Signature page to Reorganization Agreement]

A-52
<PAGE>

AMENDMENT NO.1 TO AGREEMENT AND PLAN OF REORGANIZATION

This Amendment No.1 to Agreement and Plan of Reorganization (the
"Agreement") is made and entered into as of July 21, 1999 among Ticketmaster
Online-CitySearch, Inc., a Delaware Corporation (the "Parent"), Web Media
Ventures, LLC, a Texas limited liability company dba One & Only Network (the
"Company") and William Bunker, David Kennedy and Glenn Wiggins, Members of the
Company (collectively the "Members").

BACKGROUND

A. The parties to this Agreement entered into a certain Agreement and Plan of
Reorganization dated June 10, 1999 (the "Reorganization Agreement"), providing
for the merger of the Company into a subsidiary of Parent such that the Company
would become a wholly-owned subsidiary of Parent.

B. The parties wish to amend the Agreement as set forth herein.

NOW THEREFOR, the parties agree as follows:

AGREEMENT

1. Revision. Section 5.13 of the Reorganization Agreement is hereby amended
--------
and restated in its entirety as follows:

"5.13 Noncompetition Agreement; Voting and Employment Arrangements. Upon
------------------------------------------------------------
execution of this Agreement, Parent and each of the Members shall execute and
deliver the noncompetition agreements in the form attached as Exhibit B (the
---------
"Noncompetition Agreement"). William Bunker and Glenn Wiggins hereby agree to
vote all of their Units in favor of the Merger and the other transactions
contemplated herein at the Members Meeting and at any adjournments and
postponements thereof, or pursuant to a Unanimous Written Consent. Each such
Member further agrees to take any action and execute any document deemed
necessary or advisable by Parent to effect such vote, including without
limitation the execution of an irrevocable proxy in compliance with applicable
laws. David Kennedy hereby agrees that he will attend any such Members Meeting,
including any adjournments and postponements thereof, for purposes of
establishing a quorum. Each Member agrees not to transfer, sell, exchange,
pledge or otherwise dispose of or encumber any of his Units, or to make any
offer or agreement relating thereto, at any time prior to the termination of
this Agreement (other than consummation of the Merger). The Noncompetition
Agreements shall become effective as of the Effective Time. The Parent and
Messrs. Kennedy and Bunker agree to negotiate in good faith the terms of
employment agreements or offer letters which will be mutually acceptable to the
parties prior to the Closing. Such agreements will include, among other matters,
agreements about Messrs. Kennedy and Bunker's salaries and benefits (which will
be commensurate with those of similarly situate Parent executives) and grants of
options to purchase Parent Common Stock."

A-53
<PAGE>

2. No Additional Changes. The terms of the Reorganization Agreement shall
---------------------
remain in full force and effect except with respect to the amendment explicitly
set forth in paragraph 1 above.

3. Counterparts. This Agreement maybe executed in one or more counterparts,
------------
all of which shall be considered one and the same agreement and shall become
effective when one or more counterparts have been signed by each of the parties
and delivered to the other party, it being understood that all parties need not
sign the same counterpart.

4. Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the State of Delaware, regardless of the laws that
might govern replicable principles of conflicts of laws thereof.

IN WITNESS THEREOF, the parties hereto have entered into this Agreement as of
the date first written above.

WEB MEDIA VENTURES, LLC TICKETMASTER ONLINE-
CITYSEARCH, INC.

By: /s/ Dave Kennedy By: /s/ Thomas McInerney
------------------------------ ------------------------------

Name: Dave Kennedy Name: Thomas McInerney
---------------------------- ----------------------------

Title: President Title: Chief Financial Officer,
--------------------------- Executive Vice President,
Finance & Administration
--------------------------

MEMBERS

/s/ William Bunker
_________________________________
William Bunker

/s/ David Kennedy
_________________________________
David Kennedy

/s/ Glenn Wiggins
_________________________________
Glenn Wiggins

A-54
<PAGE>

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information in this prospectus is not complete and may be changed. We may +
+not sell these securities until the registration statement filed with the +
+Securities and Exchange Commission is effective. This prospectus is not an +
+offer to sell these securities and we are not soliciting offers to buy these +
+securities in any state where the offer or sale is not permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

[ALTERNATE PAGE FOR SELLING STOCKHOLDERS PROSPECTUS]

SUBJECT TO COMPLETION, DATED SEPTEMBER 8, 1999

2,574,233 shares

LOGO

CLASS B COMMON STOCK

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

The selling stockholders identified in this prospectus are offering up to
2,574,233 shares of Ticketmaster Online-City Search, Inc.'s Class B Common
Stock. Ticketmaster Online-CitySearch's stock is traded on the Nasdaq National
Market under the symbol "TMCS." The last reported sale price for the Class B
Common Stock on the Nasdaq National Market on August 25, 1999 was $28.56 per
share. Ticketmaster Online CitySearch, Inc. will not receive any of the proceeds
from the sale of shares by the selling stockholders and we are not offering any
shares for sale under this prospectus. See "Plan of Distribution" for a
description of sales of the shares by the selling stockholders.

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

Investing in the Class B Common Stock involves risks.

See "Risk Factors" beginning on page 16.

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

The Securities and Exchange Commission and state securities regulators have
not approved or disapproved these securities, or determined if this prospectus
is truthful or complete. Any representation to the contrary is a criminal
offense.

The date of this prospectus is September 8, 1999
<PAGE>

[ALTERNATIVE PAGE FOR SELLING STOCKHOLDERS PROSPECTUS]

PLAN OF DISTRIBUTION

On June 10, 1999, TMCS, Web Media and the selling stockholders entered into
an agreement whereby TMCS agreed to issue up to 2,574,233 shares of its Class B
Common Stock to the selling stockholders in connection with TMCS's acquisition
of Web Media. TMCS will issue up to this number of shares to the selling
stockholders in installments beginning on the closing date of the merger and
continuing on three payment dates 90, 180 and 270 days after the closing. See
"The Merger - Purchase Price and Exchange of Units." Pursuant to this
Agreement, TMCS agreed to register the shares under the Securities Act of 1933
for resale to the public. Under the registration rights agreements between
Ticketmaster Online-CitySearch and the selling stockholders, we must use
reasonable commercial efforts to cause this registration statement to be
declared effective by the Securities and Exchange Commission as soon as
practicable and to keep this registration statement, or a replacement,
continuously effective under the Securities Act until the earlier of (1) such
time as the selling stockholders have sold all shares offered by this
prospectus, or a replacement prospectus, (2) the date on which the shares, in
the opinion of counsel to the selling stockholders, may be immediately sold
without restriction, including without limitation as to volume, without
registration under the Securities Act and (3) 360 days following the date of
effectiveness of the registration statement.

The sale of all or a portion of the shares of Class B Common Stock offered
hereby by the selling stockholders may be effected from time to time at
prevailing market prices at the time of such sales, at prices related to such
prevailing prices, at fixed prices that may be changed or at negotiated prices.
The selling stockholders may effect such transactions by selling directly to
purchasers in negotiated transactions, to dealers acting as principals or
through one or more brokers, or any combination of these methods of sale. In
addition, shares may be transferred in connection with the settlement of call
options, short sales, through the issuance of exchangeable or convertible
securities or similar transactions that may be effected by the selling
stockholders. Dealers or brokers may receive compensation in the form of
discounts, concessions or commissions from the selling stockholders and/or
purchasers of shares for whom they may act as agent (which compensation may be
in excess of customary commissions). The selling stockholders and any brokers or
dealers that participate in the distribution may under certain circumstances be
deemed to be "underwriters" within the meaning of the Securities Act, and any
commissions received by such brokers or dealers and any profits realized on the
resale of shares by them may be deemed to be underwriting discounts and
commissions under the Securities Act. Ticketmaster Online-CitySearch and the
selling stockholders may agree to indemnify such brokers or dealers against
certain liabilities, including liabilities under the Securities Act.

To the extent required under the Securities Act or the rules of the
Securities and Exchange Commission, a supplemental prospectus will be filed,
disclosing (1) the name of any such brokers or dealers, (2) the number of shares
involved, (3) the price at which such shares are to be sold, (4) the commissions
paid or discounts or concessions allowed to such brokers or dealers, where
applicable, (5) that such brokers or dealers did not conduct any investigation
to verify the information set out in this prospectus, as supplemented, and (6)
other facts material to the transaction.

There is no assurance that the selling stockholders will sell any or all of
the shares of Class B Common Stock offered hereby.

Ticketmaster Online-CitySearch has agreed to pay the expenses incurred in
connection with the registration of the shares of Class B Common Stock offered
hereby. The selling stockholders will be responsible for all selling
commissions, transfer taxes and related charges in connection with the offer and
sale of such shares.
<PAGE>

[ALTERNATE PAGE FOR SELLING STOCKHOLDERS PROSPECTUS]

SHARE OWNERSHIP OF SELLING STOCKHOLDERS
TMCS Class B Common Stock

The following table sets forth certain information regarding the beneficial
ownership of the selling stockholders.

<TABLE>
<CAPTION>
Shares Beneficially Shares Beneficially
Owned Prior to Offering Number Owned After Offering
----------------------- of Shares --------------------
Number Percent Offered Number Percent
---------- ----------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C>
David Kennedy(1)................. 858,077 858,077 -- --
William Bunker(1)................ 858,077 858,077 -- --
Glenn Wiggins(1)................. 858,077 858,077 -- --
</TABLE>

- --------------
(1) The address for each person is: c/o Web Media Ventures, LLC dba One & Only
Network, 5307 East Mockingbird Lane, Suite 102, Dallas, Texas 75206.

The selling stockholders are neither officers nor directors of TMCS. They
acquired the TMCS Class B Common Stock pursuant to the acquisition by TMCS of
Web Media. The shares of Class B Common Common Stock set forth in the table
above represent the maximum number of shares each selling stockholder may
receive in the acquisition.

Pursuant to TMCS's Restated Certificate of Incorporation, shares of its
Class A Common Stock are convertible at any time into an equal number of shares
of Class B Common Stock. The percentage of shares beneficially owned as set
forth in the table above does not assume the conversion of Class A Common Stock.
Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting and investment
power with respect to securities. The persons named in the above table have
sole voting and investment power with respect to all shares of Class B Common
Stock shown as beneficially owned by them.
<PAGE>

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Section 145 of the DGCL permits a corporation to include in its charter
documents, and in agreements between the corporation and its directors and
officers, provisions expanding the scope of indemnification beyond that
specifically provided by the current law.

The Registrant's Restated Certificate of Incorporation provides for the
indemnification of directors to the fullest extent permissible under Delaware
law.

The Registrant's Bylaws provide for the indemnification of officers,
directors and third parties acting on behalf of the Registrant if such person
acted in good faith and in a manner reasonably believed to be in and not opposed
to the best interest of the Registrant, and, with respect to any criminal action
or proceeding, the indemnified party had no reason to believe his conduct was
unlawful.

ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) Exhibits

2.7 Agreement and Plan of Merger by and among Sidewalk.com, Inc., Microsoft (I)
Corporation and the Registrant, dated as of July 19, 1999.

</TABLE>

II-1
<PAGE>

<TABLE>
<CAPTION>
Notes
---------------
<S> <C>
3.1 Form of Amended and Restated Certificate of Incorporation. (C)
3.2 Amended and Restated Bylaws. (C)
4.1 Specimen Class B Common Stock Certificate. (C)
4.2 Form of Class B Common Stock Purchase Warrant of the Registrant to be delivered
upon closing of the Sidewalk acquisition (3,000,000 shares). (I)
4.3 Form of Class B Common Stock Purchase Warrant of the Registrant to be delivered
upon closing of the Sidewalk acquisition (1,500,000 shares). (I)
5.1 Opinion of Wilson Sonsini Goodrich & Rosati, Professional Corporation, as to +
the legality of the securities being registered.
10.1 1996 Stock Option Plan and form of agreement thereunder. (C)
10.2 1998 Stock Option Plan and form of agreement thereunder. (C)
10.3 1998 Employee Stock Purchase Plan. (D)
10.4 License Agreement between CitySearch, Inc. and Perly, Inc., dated March 9, (A)*
1996.
10.5 Marketing Agreement between CitySearch, Inc. and American Express Travel (A)*
Related Services Company, Inc., dated May 26, 1998.
10.6 Employment Agreement between CitySearch, Inc. and Charles Conn, dated May 9, (A)
1996.
10.7 Unanimous Shareholder Agreement between Tele-Direct (Services), Inc., (A)*
Metroland Printing, Publishing & Distributing Ltd., CitySearch Canada, Inc.
and 1310818 Ontario, Inc., dated August 31, 1998.
10.8 Limited Partnership Agreement between Metroland Printing, Publishing & (A)*
Distributing Ltd., 1310818 Ontario Inc., CitySearch Canada, Inc., Tele-
Direct (Services), Inc., Tele-Direct (Publications), Inc., CitySearch, Inc.
and Torstar Corporation, dated August 31, 1998.
10.9 Amended and Restated License and Services Agreement between CitySearch, Inc. (A)*
and CitySearch Canada, Inc., dated August 31, 1998.
10.11 Non-competition Agreement between Toronto Star Newspapers Ltd., Tele-Direct (A)*
(Services), Inc., CitySearch Canada, Inc. and Metroland Printing, Publishing
& Distributing Ltd., dated August 31, 1998.
10.12 Lease Agreement by and between CitySearch, Inc. and West End Land (A)
Development Co., L.P., dated November 7, 1996.
10.13 Standard Form of Lease, Aeriel Center Executive Park, between Pizzagalli (A)
Investment Company and CitySearch, Inc., dated May 8, 1996.
10.14 Standard Office Lease between CitySearch, Inc. and Sage Realty Corporation, (A)
dated May 6, 1997.
</TABLE>

II-2
<PAGE>

<TABLE>
<CAPTION>
Notes
---------------
<S> <C>
10.15 Standard Office Lease between CitySearch, Inc. and H. Naito Corporation, (A)
dated March 6, 1997.
10.16 Standard Office Lease between CitySearch, Inc. and Brazos Austin Centre, (A)
Ltd., dated August 15, 1996.
10.17 Standard Office Lease between CitySearch, Inc. and Judge Building Group, (A)
dated September 10, 1996.
10.18 Standard Office Lease between CitySearch, Inc. and Sobel Building (A)
Development, dated May 31, 1996.
10.19 Standard Office Lease between CitySearch, Inc. and BPG Pasadena, L.L.C. (A)
(later assigned to Spieker Properties), dated September 30, 1996.
10.20 Lease Agreement between CitySearch, Inc. And Secured Properties Investors (A)
II, L.P., dated May 13, 1998.
10.21 License and Services Agreement between CitySearch, Inc. and Classified (A)*
Ventures, L.L.C.
10.22 Convertible Promissory Note issued to CitySearch, Inc. by USA Networks, (A)
Inc., dated August 12, 1998.
10.23 Non-Competition Agreement between CitySearch, Inc., Ticketmaster (A)
Corporation, Ticketmaster Multimedia Holdings, Inc., and Charles Conn, dated
August 12, 1998.
10.24 Letter Agreement between N2K Inc. and Ticketmaster (B)*
Ticketing Co., Inc., dated April 3, 1998, as amended by a Letter Agreement
by and between the parties, dated June 16, 1998.
10.25 Development and Services Agreement between Ticketmaster Multimedia Holdings, (A)
Inc. and Starwave Corporation, dated June 28, 1996.
10.26 License and Services Agreement between Ticketmaster Corporation, (A)*
Ticketmaster Multimedia Holdings, Inc. and USA Networks, Inc., dated August
12, 1998.
10.27 Contribution Agreement dated as of February 8, 1999, by and among USA (E)
Networks, Inc., USANi LLC and USA Interactive Inc.
10.28 Stock Option Agreement dated February 8, 1999 between Lycos, Inc. and USA (E)
Networks, Inc.
10.29 Stock Option Agreement dated February 8, 1999 between Lycos, Inc. and (E)
Ticketmaster Online--CitySearch.
</TABLE>

II-3
<PAGE>

<TABLE>
<CAPTION>
Notes
---------------
<S> <C>
10.30 Registration Rights Agreement dated March 29, 1999 by and among Ticketmaster (G)
Online CitySearch, Inc., Charter Venture Capital, GCA Investments, John
Montgomery, Monica Lee and Andrew Rebele.
10.31 Non-competition Agreement dated March 29, 1999 by and among Ticketmaster (G)
Online--CitySearch, Inc., CityAuction, Inc. and Andrew Rebele.
10.32 Non-competition Agreement dated March 29, 1999 by and among Ticketmaster (G)
Online--CitySearch, Inc., CityAuction, Inc. and Monica Lee.
10.33 Employment Agreement dated March 29, 1999 by and between Ticketmaster (G)
Online--CitySearch, Inc. and Andrew Rebele.
10.34 Employment Agreement dated March 29, 1999 by and between Ticketmaster (G)
Online--CitySearch, Inc. and Monica Lee.
10.35 Registration Rights Agreement dated May 14, 1999 among Cendant Intermediate (H)
Holdings, Inc. and Ticketmaster Online--CitySearch.
10.36 Employment Agreement between Ticketmaster Online--CitySearch and Robert (F)
Perkins dated November 25, 1998.
10.37 Employment Agreement between Ticketmaster Online--CitySearch, Inc. and David (F)
Hagan dated November 27, 1998.
10.38 Form of Registration Rights Agreement to be entered into between the Registrant and (I)
Microsoft Corporation upon closing of the Sidewalk acquisition.
21.1 Subsidiaries of the Registrant. (A)
23.1 Consent of Independent Auditors. ++
23.2 Consent of Independent Auditors. ++
23.3 Consent of Counsel (included in Exhibit 5.1). +
24.1 Power of Attorney (See signature page). +
27.1 Financial Data Schedule. ++
99.1 Form of Proxy for Web Media Ventures, L.L.C. d/b/a One & Only Network +
</TABLE>

________________________

+ Previously filed with the registration statement.

++ Filed herewith.
* Confidential treatment has been granted with respect to portions of this
exhibit.

(A) Incorporated by reference to exhibits filed in response to Item 16,
"Exhibits," of the Company's Registration Statement on Form S-1 (File No.
333-64855) filed with the Commission on September 30, 1998.

(B) Incorporated by reference to exhibits filed in response to Item 16,
"Exhibits," of the Company's Registration Statement on Form S-1 (File No.
333-64855) filed with the Commission on October 19, 1998.

(C) Incorporated by reference to exhibits filed in response to Item 16,
"Exhibits," of the Company's Registration Statement on Form S-1 (File No.
333-64855) filed with the Commission on November 6, 1998.

II-4
<PAGE>

(D) Incorporated by reference to exhibits filed in response to Item 16,
"Exhibits," of the Company's Registration Statement on Form S-1 (File No.
333-64855) filed with the Commission on November 20, 1998.

(E) Incorporated by reference to exhibits filed in response to Item 7,
"Exhibits," of the Report on form 8-K filed by USA Networks, Inc. (File No.
000-20570) with the Commission on February 26, 1998.

(F) Incorporated by reference to the Company's Report on Form 10-K filed with
the Commission on March 31, 1999.

(G) Incorporated by reference to exhibits filed in response to Item 7,
"Exhibits," of the Report on Form 8-K (File No. 000-25041) with the
Commission on April 29, 1999.

(H) Incorporated by reference to exhibits filed in response to Item 16,
"Exhibits," of the Company's Registration Statement on Form S-1 (File No.
333-81761) filed with the Commission on June 29, 1999.

(I) Incorporated by reference to exhibits filed in response to Item 6,
"Exhibits," of the Report on Form 10-Q filed with the Commission on August
16, 1999.

(b) Schedules

Schedule II--Valuation and Qualifying Accounts

ITEM 22. UNDERTAKINGS

The undersigned Registrant hereby undertakes:

(a) (1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:

(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;

(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in
the registration statement; and

(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement.

(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.

(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.

(4) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of any
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new

II-5
<PAGE>

registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.

(5) The undersigned registrant hereby undertakes as follows: that prior
to any public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain the information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other Items of the applicable form.

(6) The registrant undertakes that every prospectus (i) that is filed
pursuant to the paragraph immediately preceding, or (ii) that purports to meet
the requirements of section 10(a)(3) of the Act and is used in connection with
an offering of securities subject to Rule 415, will be filed as a part of an
amendment to the registration statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities At of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.

(7) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.

(b) The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.

(c) That, for purposes of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.

(d) To remove from registration by means of a post-effective amendment any
of the securities being registered which remaining unsold at the termination of
the offering.

II-6
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Pasadena, State of California, on this 8th day of September 1999.

TICKETMASTER ONLINE-CITYSEARCH, INC.

By: /s/ Charles Conn
------------------
Charles Conn
Chief Executive Officer

Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement has been signed by the following persons in
the capacities and on the dates indicated:

<TABLE>
<CAPTION>
Signature Title Date
- -------------------------------- -------------------------------- ---------------
<S> <C> <C>
/s/ Charles Conn Chief Executive Officer (Principal September 8, 1999
- --------------------------------
Charles Conn Executive Officer) and Director

/s/ Thomas McInerney Chief Financial Officer, Executive Vice September 8, 1999
- --------------------------------
Thomas McInerney President, Finance and Administration
and Treasurer (Principal Financial and
Accounting Officer)

* Director September 8, 1999
- --------------------------------
Barry Baker

* Director September 8, 1999
- --------------------------------
Terry Barnes

* Director September 8, 1999
- --------------------------------
Alan Citron

* Director September 8, 1999
- --------------------------------
Eugene L. Cobuzzi

* Director September 8, 1999
- --------------------------------
</TABLE>

II-7
<PAGE>

<TABLE>
<CAPTION>
Signature Title Date
- -------------------------------- -------------------------------- ---------------
<S> <C> <C>
Barry Diller

* Director September 8, 1999
- --------------------------------
Joseph Gleberman

* Director September 8, 1999
- --------------------------------
William Gross

* Director September 8, 1999
- --------------------------------
Victor A. Kaufman

* Director September 8, 1999
- --------------------------------
Robert Kavner

* Director September 8, 1999
- --------------------------------
William D. Savoy

* Director September 8, 1999
- --------------------------------
Alan Spoon

* Director September 8, 1999
- --------------------------------
Thomas Unterman
</TABLE>

By: /s/ Thomas McInerney
---------------------
Thomas McInerney
Attorney-in-fact

II-8
<PAGE>

SCHEDULE II

VALUATION AND QUALIFYING ACCOUNTS

TICKETMASTER ONLINE-CITYSEARCH, INC.

<TABLE>
<CAPTION>
Balance
Description Balance at Transferred Charged to Charged Balance
Beginning at the Costs and to Other at End
of Period Merger Expenses Accounts Deductions of Period
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Eleven months ended
December 31, 1998 $ -- $ 68,400 $ 125,200 $ 65,900 $ 221,700(a) $ 57,800
</TABLE>

CITYSEARCH, INC

<TABLE>
<CAPTION>
Balance at Charged to Charged Balance
Beginning Costs and to Other at End
of Period Expenses Accounts Deductions of Period
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Period from September 20 (date of formation) $ - $ - $ - $ - $ -
through December 31, 1995 - - - - -
Year ended December 31, 1996 - - - - -
Year ended December 31, 1997 - $ 114,000 - $ 89,000\(1)\ $ 25,000
</TABLE>

_________________________

/(a)/ Represents amounts written-off against the allowance for doubtful
accounts, net of recoveries and reversals.

II-9
<PAGE>

EXHIBIT INDEX

(a) Exhibits

<TABLE>
<CAPTION>
Notes
---------------
<S> <C>
2.1 Agreement and Plan of Reorganization, among CitySearch, Inc., MB Acquisition (A)*
Corporation, MetroBeat, Inc., Mark Davies and Joshua White, dated May 31,
1996.
2.2 Amended and Restated Agreement and Plan of Reorganization, among CitySearch, (A)
Inc., Tiberius, Inc., USA Networks, Inc., Ticketmaster Group, Inc.,
Ticketmaster Corporation and Ticketmaster Multimedia Holdings, Inc., dated
August 12, 1998.
2.3 Agreement and Plan of Reorganization, dated January 8, 1999, by and among (F)
Ticketmaster Online--CitySearch, Inc., Nero Acquisition Corp., Inc.,
CityAuction, Inc., Andrew Rebele and Monica Lee as amended.
2.4 Agreement and Plan of Reorganization, dated as of February 8, 1999, by and (E)
among USA Networks, Inc., Ticketmaster Online- CitySearch, Inc., Lycos,
Inc., USA Interactive Inc., Lemma, Inc. and Tycho, Inc. (the "Merger
Agreement"), including Form of Certificate of Designations, Preferences and
Rights of Series A Convertible Redeemable Preferred Stock of USA/Lycos
Interactive Networks, Inc. (Exhibit B to the Merger Agreement)
2.5 Exchange Agreement by and among Cendant Corporation, Cendant Intermediate (H)
Holdings, Inc. and Ticketmaster Online-- CitySearch, Inc. dated as of May
14, 1999.
2.6 Agreement and Plan of Reorganization dated June 10, 1999 among Ticketmaster +
Online--CitySearch, Web Media Ventures, L.L.C. (dba One & Only Network) and
William Bunker, David Kennedy and Glenn Wiggins.
2.7 Agreement and Plan of Merger by and among Sidewalk.com, Inc., Microsoft
Corporation and the Registrant, dated as of July 19, 1999. (I)
3.1 Form of Amended and Restated Certificate of Incorporation. (C)
3.2 Amended and Restated Bylaws. (C)
4.1 Specimen Class B Common Stock Certificate. (C)
4.2 Form of Class B Common Stock Purchase Warrant of the Registrant to be delivered
upon closing of the Sidewalk acquisition (3,000,000 shares) (I)
4.3 Form of Class B Common Stock Purchase Warrant of the Registrant to be delivered
upon closing of Sidewalk acquisition (1,500,000 shares). (I)
5.1 Opinion of Wilson Sonsini Goodrich & Rosati, Professional Corporation, as to +
the legality of the securities being registered.
10.1 1996 Stock Option Plan and form of agreement thereunder. (C)
10.2 1998 Stock Option Plan and form of agreement thereunder. (C)
10.3 1998 Employee Stock Purchase Plan. (D)
10.4 License Agreement between CitySearch, Inc. and Perly, Inc., dated March 9, (A)*
1996.
</TABLE>
<PAGE>

<TABLE>
<CAPTION>
Notes
---------------
<S> <C>
10.5 Marketing Agreement between CitySearch, Inc. and American Express Travel (A)*
Related Services Company, Inc., dated May 26, 1998.
10.6 Employment Agreement between CitySearch, Inc. and Charles Conn, dated May 9, (A)
1996.
10.7 Unanimous Shareholder Agreement between Tele-Direct (Services), Inc., (A)*
Metroland Printing, Publishing & Distributing Ltd., CitySearch Canada, Inc.
and 1310818 Ontario, Inc., dated August 31, 1998.
10.8 Limited Partnership Agreement between Metroland Printing, Publishing & (A)*
Distributing Ltd., 1310818 Ontario Inc., CitySearch Canada, Inc., Tele-
Direct (Services), Inc., Tele-Direct (Publications), Inc., CitySearch, Inc.
and Torstar Corporation, dated August 31, 1998.
10.9 Amended and Restated License and Services Agreement between CitySearch, Inc. (A)*
and CitySearch Canada, Inc., dated August 31, 1998.
10.11 Non-competition Agreement between Toronto Star Newspapers Ltd., Tele-Direct (A)*
(Services), Inc., CitySearch Canada, Inc. and Metroland Printing, Publishing
& Distributing Ltd., dated August 31, 1998.
10.12 Lease Agreement by and between CitySearch, Inc. and West End Land (A)
Development Co., L.P., dated November 7, 1996.
10.13 Standard Form of Lease, Aeriel Center Executive Park, between Pizzagalli (A)
Investment Company and CitySearch, Inc., dated May 8, 1996.
10.14 Standard Office Lease between CitySearch, Inc. and Sage Realty Corporation, (A)
dated May 6, 1997.
10.15 Standard Office Lease between CitySearch, Inc. and H. Naito Corporation, (A)
dated March 6, 1997.
10.16 Standard Office Lease between CitySearch, Inc. and Brazos Austin Centre, (A)
Ltd., dated August 15, 1996.
10.17 Standard Office Lease between CitySearch, Inc. and Judge Building Group, (A)
dated September 10, 1996.
10.18 Standard Office Lease between CitySearch, Inc. and Sobel Building (A)
Development, dated May 31, 1996.
10.19 Standard Office Lease between CitySearch, Inc. and BPG Pasadena, L.L.C. (A)
(later assigned to Spieker Properties), dated September 30, 1996.
10.20 Lease Agreement between CitySearch, Inc. And Secured Properties Investors (A)
II, L.P., dated May 13, 1998.
</TABLE>
<PAGE>

<TABLE>
<CAPTION>
Notes
---------------
<S> <C>
10.21 License and Services Agreement between CitySearch, Inc. and Classified (A)*
Ventures, L.L.C.
10.22 Convertible Promissory Note issued to CitySearch, Inc. by USA Networks, (A)
Inc., dated August 12, 1998.
10.23 Non-Competition Agreement between CitySearch, Inc., Ticketmaster (A)
Corporation, Ticketmaster Multimedia Holdings, Inc., and Charles Conn, dated
August 12, 1998.
10.24 Letter Agreement between N2K Inc. and Ticketmaster (B)*
Ticketing Co., Inc., dated April 3, 1998, as amended by a Letter Agreement
by and between the parties, dated June 16, 1998.
10.25 Development and Services Agreement between Ticketmaster Multimedia Holdings, (A)
Inc. and Starwave Corporation, dated June 28, 1996.
10.26 License and Services Agreement between Ticketmaster Corporation, (A)*
Ticketmaster Multimedia Holdings, Inc. and USA Networks, Inc., dated August
12, 1998.
10.27 Contribution Agreement dated as of February 8, 1999, by and among USA (E)
Networks, Inc., USANi LLC and USA Interactive Inc.
10.28 Stock Option Agreement dated February 8, 1999 between Lycos, Inc. and USA (E)
Networks, Inc.
10.29 Stock Option Agreement dated February 8, 1999 between Lycos, Inc. and (E)
Ticketmaster Online--CitySearch.
10.30 Registration Rights Agreement dated March 29, 1999 by and among Ticketmaster (G)
Online CitySearch, Inc., Charter Venture Capital, GCA Investments, John
Montgomery, Monica Lee and Andrew Rebele.
10.31 Non-competition Agreement dated March 29, 1999 by and among Ticketmaster (G)
Online--CitySearch, Inc., CityAuction, Inc. and Andrew Rebele.
10.32 Non-competition Agreement dated March 29, 1999 by and among Ticketmaster (G)
Online--CitySearch, Inc., CityAuction, Inc. and Monica Lee.
10.33 Employment Agreement dated March 29, 1999 by and between Ticketmaster (G)
Online--CitySearch, Inc. and Andrew Rebele.
10.34 Employment Agreement dated March 29, 1999 by and between Ticketmaster (G)
Online--CitySearch, Inc. and Monica Lee.
10.35 Registration Rights Agreement dated May 14, 1999 among Cendant Intermediate (H)
Holdings, Inc. and Ticketmaster Online--CitySearch.
</TABLE>
<PAGE>

Notes
---------------
<S> <C>
10.36 Employment Agreement between Ticketmaster Online--CitySearch and Robert (F)
Perkins dated November 25, 1998.
10.37 Employment Agreement between Ticketmaster Online--CitySearch, Inc. and David (F)
Hagan dated November 27, 1998.
10.38 Form of Registration Rights Agreement to be entered into between the Registrant (I)
and Microsoft Corporation upon closing of the Sidewalk acquisition.
21.1 Subsidiaries of the Registrant. (A)
23.1 Consent of Independent Auditors. ++
23.2 Consent of Independent Auditors. ++
23.3 Consent of Counsel (included in Exhibit 5.1). +
24.1 Power of Attorney (See signature page). +
27.1 Financial Data Schedule. ++
99.1 Form of Proxy for Web Media Ventures, L.L.C. d/b/a One & Only Network +
</TABLE>

____________________

+ Previously filed with the registration statement.

++ Filed herewith.

* Confidential treatment has been granted with respect to portions of this
exhibit.

(E) Incorporated by reference to exhibits filed in response to Item 7,
"Exhibits," of the Report on Form 8-K filed by USA Networks, Inc. (File No.
000-20570) with the Commission on February 26, 1998.

(F) Incorporated by reference to the Company's Report on Form 10-K filed with
the Commission on March 31, 1999.

(G) Incorporated by reference to exhibits filed in response to Item 7,
"Exhibits," of the Report on Form 8-K (File No. 000-25041) with the
Commission on April 29, 1999.

(I) Incorporated by reference to exhibits filed in response to Item 6,
"Exhibits" of the Report on Form 10-Q filed with the Commission on August
16, 1999.

<PAGE>

EXHIBIT 23.1

CONSENT OF INDEPENDENT AUDITORS

We consent to the reference to our firm under the caption "Experts" and to the
use of our report dated March 11, 1998, except for Note 10, as to which the date
is September 28, 1998, with respect to the consolidated financial statements of
CitySearch, Inc. for the period from September 20, 1995 (date of formation) to
December 31, 1995 for each of the two years ended December 31, 1997 included in
the Proxy Statement of Ticketmaster Online-CitySearch, Inc. that is made a part
of the Registration Statement (Form S-4 No. 333-83753) and Prospectus of
Ticketmaster Online-CitySearch, Inc. for the registration of 2,574,233 shares of
its common stock.

We also consent to the use of our report dated January 29, 1999 with respect to
the consolidated financial statements of Ticketmaster Online-CitySearch, Inc.
for each of the two years ended January 31, 1998 and the eleven month period
ended December 31, 1998 included in the Proxy Statement of Ticketmaster Online-
CitySearch, Inc. that is made a part of the Registration Statement (Form S-4
No. 333-83753) and Prospectus of Ticketmaster Online-CitySearch, Inc. for
the registration of 2,574,233 shares of its common stock.

Our audits also included the financial statement schedule of CitySearch, Inc.
for the periods from September 20, 1995 (date of formation) through December 31,
1995 and for each of the two years ended December 31, 1997 and the financial
statement schedule of Ticketmaster Online-CitySearch, Inc. for the eleven months
ended December 31, 1998 listed in Item 16(b). The schedules are the
responsibility of the Company's management. Our responsibility is to express an
opinion on the schedules based on our audits. In our opinion, the financial
statement schedules referred to above, when considered in relation to the basic
financial statements taken as a whole, present fairly in all material respects
the information set forth therein.

/s/ ERNST & YOUNG LLP

Woodland Hills, California
September 7, 1999

<PAGE>

EXHIBIT 23.2

CONSENT OF INDEPENDENT AUDITORS

We consent to the reference to our firm under the caption "Experts" and to the
use of our report dated February 26, 1999, with respect to the financial
statements of Web Media Ventures, L.L.C. as of December 31, 1998 and for the
year then ended included in the Proxy Statement of Ticketmaster Online-
CitySearch, Inc. that is made a part of the Registration Statement (Amendment
No. 1 to Form S-4 dated September 8, 1999) and Prospectus of Ticketmaster
Online-CitySearch, Inc. for the registration of 2,574,233 shares of its common
stock.
/s/ ERNST & YOUNG LLP

Dallas, Texas

September 1, 1999

<PAGE>

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