ALL AMERICAN COMMUNICATIONS INC, DEF 14A, 1997-07-09

ALL AMERICAN COMMUNICATIONS INC
DEF 14A, 1997-07-09
MOTION PICTURE & VIDEO TAPE PRODUCTION

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<PAGE> 1

SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )

Filed by the Registrant [x]

Filed by a Party other than the Registrant [ ]

Check the appropriate box:

[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12

ALL AMERICAN COMMUNICATIONS, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)

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

Payment of Filing Fee (Check the appropriate box):

[x] No fee required.

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

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

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

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

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

(4) Proposed maximum aggregate value of transaction:

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(5) Total fee paid:

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

[ ] Fee paid previously with preliminary materials.

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

(1) Amount Previously Paid:

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

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(3) Filing Party:

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(4) Date Filed:

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<PAGE> 2

ALL AMERICAN COMMUNICATIONS, INC.
808 WILSHIRE BOULEVARD
SANTA MONICA, CALIFORNIA 90401-1810

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

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JULY 30, 1997

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

To the Stockholders of All American Communications, Inc.:

Notice is hereby given that the Annual Meeting of Stockholders of All
American Communications, Inc., a Delaware corporation (the "Company"), will be
held at the Miramar Sheraton Hotel, 101 Wilshire Boulevard, Santa Monica,
California on July 30, 1997, at 10:00 a.m., local time, to consider and vote
upon the following matters:

1. The election of Class I Directors;

2. The ratification of the selection of Price Waterhouse LLP as the
Company's independent accountants for the fiscal year ending December 31,
1997; and

3. Such other business as may properly come before the meeting or any
adjournment(s) thereof.

Information concerning these matters, including the names of the nominees
for the Company's Board of Directors, is set forth in the attached Proxy
Statement which is a part of this Notice.

The Board of Directors has fixed June 17, 1997 as the record date for
determination of stockholders entitled to notice of and to vote at the Annual
Meeting. Accordingly, only those stockholders of record with voting rights at
the close of business on that date are entitled to vote at the Annual Meeting or
any adjournment(s) thereof.

The Company's Board of Directors urges that all stockholders of record
entitled to vote exercise their right to vote at the Annual Meeting personally
or by proxy.

Your proxy will continue in full force and effect unless and until you
revoke such proxy prior to the vote to which such proxy pertains. You may revoke
your proxy by a writing delivered to the Company stating that the proxy is
revoked, by a subsequent proxy executed by you, or by attending the Annual
Meeting and voting in person. The dates contained on the forms of proxy
presumptively determine the date of execution, regardless of the postmark dates
on the envelopes in which they are mailed.

By Order of the Board of Directors

/s/ ANTHONY J. SCOTTI
Anthony J. Scotti
Chairman and Chief Executive Officer

July 8, 1997

TO ENSURE YOUR REPRESENTATION AT THE ANNUAL MEETING, PLEASE COMPLETE, SIGN
(DO NOT PRINT) YOUR NAME AND DATE THE ENCLOSED PROXY CARD(S) AS PROMPTLY AS
POSSIBLE AND RETURN IT (THEM) IN THE ENCLOSED PRE-ADDRESSED ENVELOPE. IF YOU
RECEIVE MORE THAN ONE PROXY CARD BECAUSE YOU OWN SHARES REGISTERED IN DIFFERENT
NAMES OR AT DIFFERENT ADDRESSES, EACH PROXY CARD SHOULD BE COMPLETED AND
RETURNED.
<PAGE> 3

ALL AMERICAN COMMUNICATIONS, INC.
808 WILSHIRE BOULEVARD
SANTA MONICA, CALIFORNIA 90401-1810

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

PROXY STATEMENT

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

This Proxy Statement is furnished to stockholders in connection with the
solicitation by the Board of Directors (individually, a "Director" and
collectively, the "Board") of All American Communications, Inc., a Delaware
corporation (the "Company"), of proxies for use at the Annual Meeting of
Stockholders of the Company to be held at the Miramar Sheraton Hotel, 101
Wilshire Boulevard, Santa Monica, California on July 30, 1997, at 10:00 A.M.,
local time, and any postponement(s) and adjournment(s) of such meeting (the
"Annual Meeting").

The Company's principal executive offices are located at 808 Wilshire
Boulevard, Santa Monica, California 90401-1810, and its telephone number is
(310) 656-1100.

This Proxy Statement, Notice of Annual Meeting and the accompanying proxy
card(s) and the Annual Report to Stockholders are being first mailed on or about
July 8, 1997 to those stockholders entitled to vote at the Annual Meeting. The
Company will bear the costs of soliciting proxies. The Company may use the
services of its Directors, officers and other regular employees to solicit
proxies personally or telephonically. Such Directors, officers and employees
will not receive additional compensation for such solicitation but may be
reimbursed for reasonable out-of-pocket expenses incurred in connection with
such solicitation.

The proxy will be voted in accordance with its instructions. In the absence
of such instructions, the persons designated as proxies in the accompanying
proxy card(s) will vote: for the election of the Director nominees listed in the
Proxy Statement (the "Nominees") and for the ratification of the selection of
Price Waterhouse LLP as the Company's independent accountants for the fiscal
year ending December 31, 1997 and in their discretion as to any other business
that may properly come before the Annual Meeting. The Board does not know of any
other business to be brought before the Annual Meeting.

The proxy will continue in full force and effect unless and until revoked
by the person executing it prior to the stockholder vote at the Annual Meeting.
Such revocation may be effected by a writing delivered to the Company to the
attention of the Corporate Secretary, at the address indicated above, stating
that the proxy is revoked, by a subsequent proxy executed by the person
executing the prior proxy and presented at the Annual Meeting, or by attendance
at the Annual Meeting and voting in person. The dates contained on the forms of
proxy presumptively determine the order of execution, regardless of the postmark
dates on the envelopes in which they are mailed.

GENERAL INFORMATION

The Board has fixed June 17, 1997 as the record date (the "Record Date")
for the determination of stockholders entitled to notice of and to vote at the
Annual Meeting. At the end of business on the Record Date, 6,913,305 shares of
the Company's common stock, $.0001 par value per share (the "Common Stock"),
were outstanding and entitled to vote at the Annual Meeting. The Common Stock is
the only class of stock of the Company entitled to vote at the Annual Meeting.
The holders of the Company's Common Stock, Class B, $.0001 par value per share
(the "Class B Common Stock"), are not entitled to vote at the Annual Meeting.

Stockholders who own shares registered in different names or at different
addresses will receive more than one proxy card. A stockholder must sign and
return each of the proxy cards received to ensure that all of the shares owned
by such stockholder are represented at the Annual Meeting.

The presence at the Annual Meeting, in person or by proxy, of the holders
of a majority of the shares of Common Stock entitled to vote at the Annual
Meeting will constitute a quorum. With respect to the election of the Class I
Directors, the three Nominees receiving the highest number of affirmative votes
will be elected.
<PAGE> 4

Abstentions and broker non-votes (which occur if a broker or other nominee does
not have discretionary authority and has not received voting instructions from
the beneficial owner with respect to the particular item) are counted for
purposes of determining the presence or absence of a quorum for the transaction
of business. Abstentions are counted in tabulations of the votes cast on
proposals presented to the stockholders and have the same legal effect as a vote
against a particular proposal. Broker non-votes are not taken into account for
purposes of determining whether a proposal has been approved by the requisite
stockholder vote,

Stockholders do not have dissenters' rights of appraisal with respect to
any of the matters to be acted upon at the Annual Meeting.

Each share of Common Stock entitles its holder to one vote on each matter
to be voted on at the Annual Meeting.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth information as of June 30, 1997 concerning
the beneficial ownership of certain securities of the Company by (i) each person
who is known to the Company to be a beneficial owner of more than five percent
of the outstanding Common Stock or Class B Common Stock of the Company, (ii)
each of the current Directors of the Company, and (iii) all current Directors,
the Chief Executive Officer and the four most highly compensated officers of the
Company who served in such capacities during the 1996 fiscal year, as a group.
Unless otherwise specified, the address of each beneficial owner listed below is
808 Wilshire Boulevard, Santa Monica, California 90401-1810.

<TABLE>
<CAPTION>
PERCENT OF
PERCENT OF CLASS B CLASS B
COMMON STOCK COMMON STOCK COMMON STOCK COMMON STOCK
BENEFICIALLY BENEFICIALLY BENEFICIALLY BENEFICIALLY
OWNED(1) OWNED OWNED(1) OWNED
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Anthony J. Scotti(2)..................... 3,430,965 42.36% 450,000 7.97%
Benjamin J. Scotti(3).................... 1,445,995 20.80% 30,000 *
Myron I. Roth(4)......................... 440,850 6.26% 50,000 *
Thomas Bradshaw(5)....................... 385,850 5.50% 145,000 2.71%
Sydney D. Vinnedge(6).................... 153,875 2.21% 9,000 *
Lawrence E. Lamattina(7)................. 155,000 2.19% 37,500 *
Gordon C. Luce(8)........................ 5,000 * 9,000 *
David A. Mount(8)........................ 3,000 * 9,000 *
R. Timothy O'Donnell(9).................. 98,600 1.42% 9,000 *
Jefferson Capital Group, Ltd.
One James Center
901 East Cary Street, Suite 1400
Richmond, Virginia 23219
Eugene P. Beard(10)...................... -- -- -- --
The Interpublic Group of Companies,
Inc.
1271 Avenue of the Americas
New York, New York 10020
The Interpublic Group of Companies,
Inc.(11),(12).......................... 630,000 9.07% 2,520,000 48.47%
1271 Avenue of the Americas
New York, New York 10020
The Capital Group Companies, Inc.(13).... -- -- 540,000 10.39%
333 South Hope Street, 52nd Floor
Los Angeles, California 90071
</TABLE>

2
<PAGE> 5

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

* less than 1%

(1) Amounts include options and other securities exercisable into shares of
Common Stock or Class B Common Stock, as the case may be, held by such
beneficial owner, unless such securities are not convertible or exercisable
within 60 days.

(2) Common Stock includes 1,426,275 shares beneficially owned by Messrs. Roth,
Bradshaw, Vinnedge, Lamattina and certain other employees which Anthony J.
Scotti has a proxy to vote. See "Certain Relationships and Related
Transactions -- Management Stockholders Agreement." Includes vested options
to purchase 500,000 shares of Common Stock and 450,000 shares of Class B
Common Stock. Does not include 750,000 shares of Class B Common Stock
issuable to Mr. Scotti upon exercise of options which have not vested and
are not subject to vesting within the next 60 days.

(3) Includes 10,000 time vesting Common Stock options which have vested and
vested performance options to purchase 30,000 shares of Class B Common
Stock. Does not include options to purchase 10,000 shares of Common Stock
which have not vested and are not subject to vesting within the next 60
days. Further, does not include 70,000 shares of Class B Common Stock
issuable to Benjamin J. Scotti upon exercise of options which have not
vested and are not subject to vesting within the next 60 days.

(4) 415,850 of such Common Stock shares are subject to a voting proxy granted
to Anthony J. Scotti. Includes vested performance options to purchase
100,000 shares of Common Stock and 50,000 shares of Class B Common Stock.

(5) 385,850 of such Common Stock shares are subject to a voting proxy granted
to Anthony J. Scotti. Includes vested performance options to purchase
70,000 shares of Common Stock and 145,000 shares of Class B Common Stock.
Does not include 105,000 shares of Class B Common Stock issuable to Mr.
Bradshaw upon exercise of options which have not vested and are not subject
to vesting within the next 60 days.

(6) 120,225 of such Common Stock shares are subject to a voting proxy granted
to Anthony J. Scotti. Includes vested performance options to purchase
12,000 shares of Common Stock and 9,000 shares of Class B Common Stock.
Does not include 3,000 shares of Class B Common Stock issuable to Mr.
Vinnedge upon exercise of options which have not vested and are not subject
to vesting within the next 60 days.

(7) Mr. Lamattina owns 30,000 shares of restricted Common Stock which vest in
July 1998, is vested in time vesting options to purchase 75,000 shares of
Common Stock and is vested in performance options to purchase 50,000 shares
of Common Stock and 37,500 shares of Class B Common Stock. All such Common
Stock shares are subject to a voting proxy granted to Anthony J. Scotti.
Excludes 50,000 time vesting Common Stock options which have not vested and
are not subject to vesting within the next 60 days. Further, does not
include 12,500 shares of Class B Common Stock issuable upon exercise of
options which have not vested and are not subject to vesting within the
next 60 days.

3
<PAGE> 6

(8) Includes 3,000 time vesting Common Stock options which have vested and
vested options to purchase 9,000 shares of Class B Common Stock. Excludes
3,000 time vesting Common Stock options which have not vested and are not
subject to vesting within the next 60 days.

(9) Mr. O'Donnell owns 33,100 shares of Common Stock, and his affiliate,
Jefferson Capital Group, Ltd., owns 62,500 shares of Common Stock. Includes
3,000 time vesting Common Stock options which have vested and vested
options to purchase 9,000 shares of Class B Common Stock. Excludes 3,000
time vesting Common Stock options which have not vested and are not subject
to vesting within the next 60 days.

(10) Mr. Beard was appointed to the Board of Directors on October 12, 1994 to
fill a vacancy. Mr. Beard does not own any shares of Common Stock or Class
B Common Stock directly and disclaims beneficial ownership of the 630,000
shares of Common Stock and the 2,520,000 shares of Class B Common Stock
owned by The Interpublic Group of Companies, Inc.

(11) As disclosed on a Schedule 13D, dated August 12, 1994.

(12) Represents approximately 26% (approximately 20% on a fully-diluted basis)
of common stock when Common Stock and Class B Common Stock are aggregated
as one class.

(13) As disclosed on a Schedule 13G, dated February 12, 1997.

(14) As disclosed on a Schedule 13G, dated February 10, 1997.

(15) As disclosed on a Schedule 13G, dated February 13, 1996.

ELECTION OF DIRECTORS

In accordance with the Restated Certificate of Incorporation and Bylaws of
the Company, the Board is divided into three classes. Benjamin J. Scotti, David
A. Mount and Eugene P. Beard were elected by the Company's stockholders as Class
I Directors, with their current terms expiring at the Annual Meeting for 1997;
Anthony J. Scotti, Thomas Bradshaw, Myron I. Roth and R. Timothy O'Donnell were
elected by the Company's stockholders as Class II Directors, with their current
terms expiring at the Annual Meeting for 1998; and Sydney D. Vinnedge, Gordon C.
Luce and Lawrence E. Lamattina were elected by the Company's stockholders as
Class III Directors, with their current terms expiring at the Annual Meeting for
1999. All Nominees have consented to being named in this Proxy Statement and
have indicated their intention to serve as Directors of the Company, if elected.

The Board proposes the election of the following Nominees as Class I
members of the Board:

Benjamin J. Scotti
David A. Mount
Eugene P. Beard

If elected, the Nominees for Class I Directors are expected to serve until
the Annual Meeting for 2000 or until their successors are duly elected and
qualified.

Unless otherwise marked, proxies received will be voted FOR the election of
each of the Nominees named above. If such person is unable or unwilling to serve
as a Nominee for the office of Class I Director at the date of the Annual
Meeting, the proxies may be voted by a substitute nominee, designated by the
proxy holders or by the present Board to fill such vacancy. The Board has no
reason to believe that such Nominee will be unwilling or unable to serve if
elected a Director.

4
<PAGE> 7

INFORMATION WITH RESPECT TO DIRECTORS AND NOMINEES

The following sets forth certain information with respect to the continuing
Directors and Nominees of the Company as of the Record Date.

<TABLE>
<CAPTION>
NAME POSITION AGE
- ------------------------- ------------------------------------------------------------- ---
<S> <C> <C>
Anthony J. Scotti** Chairman and Chief Executive Officer......................... 57
Myron I. Roth** President, Chief Operating Officer and Director.............. 64
Thomas Bradshaw** Chief Financial Officer, Senior Executive Vice President and
Director..................................................... 54
Sydney D. Vinnedge Senior Executive Vice President and Director................. 53
Benjamin J. Scotti Senior Executive Vice President; Executive Vice
President -- All American Music Group; and Director.......... 60
Lawrence E. Lamattina Chief Executive Officer and President -- All
American/Fremantle Television Group; and Director............ 51
Gordon C. Luce*+ Director..................................................... 71
R. Timothy O'Donnell*+++ Director..................................................... 41
David A. Mount*+++ Director..................................................... 54
Eugene P. Beard Director..................................................... 62
</TABLE>

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

* Member of Stock Option Committee

** Member of Executive Committee

+ Member of Compensation Committee

++ Member of Audit Committee

Each of the persons listed above (other than Messrs. Lamattina, O'Donnell,
Mount and Beard) assumed the positions listed above on February 25, 1991, the
date on which Scotti Brothers Entertainment Industries, Inc. ("SBEI") merged
(the "Merger") into All American Television, Inc. ("AATV"), which was the legal
predecessor to the Company. Prior to such date, Anthony J. Scotti and Mr.
Vinnedge were already directors of AATV.

ANTHONY J. SCOTTI was a co-founder of the Company and has been a Director
of the Company since its inception in 1982. He became Chairman and Chief
Executive Officer of the Board on February 25, 1991. Mr. Scotti served as a
consultant to Carolco Pictures Inc. (motion picture production) and was a
director of LIVE Entertainment, Inc. (entertainment software) from November 1988
until his resignation in May 1996. Mr. Scotti was the non-executive Chairman of
the Board of LIVE Entertainment from November 1992 until his resignation from
such position in March 1996. He is the brother of Benjamin J. Scotti.

MYRON I. ROTH joined SBEI in December 1990 as President and Chief Operating
Officer, and he assumed the same titles and became a Director of the Company on
February 25, 1991. Mr. Roth is a member of the Board of Directors of the Record
Industry Association of America.

THOMAS BRADSHAW was a director, Senior Executive Vice President and Chief
Financial Officer of SBEI from 1985 and, on February 25, 1991, he assumed the
same positions at the Company. In addition, Mr. Bradshaw was a director of LIVE
Entertainment, Inc. from December 1988 to November 1993.

SYDNEY D. VINNEDGE was a co-founder of the Company and has been a Director
of the Company since its inception in 1982. Since February 25, 1991, Mr.
Vinnedge has served as a Senior Executive Vice President of the Company.

BENJAMIN J. SCOTTI co-founded the predecessor to SBEI in 1974 and served as
Co-Chairman of SBEI until February 25, 1991. Since February 25, 1991, Mr. Scotti
has been Senior Executive Vice President of the Company, Senior Executive Vice
President of All American Music Group (a subsidiary of the Company) and a
Director of the Company. He is the brother of Anthony J. Scotti.

LAWRENCE E. LAMATTINA became Chief Executive Officer and President of All
American/Fremantle Television Group, an operating division of the Company, on
August 3, 1994 and a Director of the Company on

5
<PAGE> 8

October 12, 1994. Since May 1989, he has been Chairman of the Board of Fremantle
International, Inc. and Chairman and Chief Executive Officer of EC TV, a
division of The Interpublic Group of Companies, Inc. ("IPG"). Mr. Lamattina also
continues to act as a consultant to IPG with respect to areas that are not
competitive with the Company.

GORDON C. LUCE is a senior advisor to Eastman & Benirschke Financial Group
(financial planning and insurance brokerage), a position he has held from July
1990 to the present. Mr. Luce is a member of the Board of Directors of PS Group
(a diversified investment company) and Molecular Biosystems, Inc. (a medical
research enterprise) and is currently a member of the Board of Trustees of the
University of Southern California and the Chairman of Scripps Health. He became
a Director of the Company on February 25, 1991. Mr. Luce was an independent
director of Carolco Pictures, Inc. until his resignation in November 1995.

R. TIMOTHY O'DONNELL was elected a Director of the Company effective
January 2, 1992. He is President of Jefferson Capital Group, Ltd., a
privately-held investment banking group co-founded by Mr. O'Donnell in September
1989. In February 1996, Mr. O'Donnell resigned from his directorship of LIVE
Entertainment, Inc. which he had held since 1988. Mr. O'Donnell has been a
director of Shorewood Packaging Corporation (packager for records, videos and
cassettes) since October 1991 and a director of Cinergi Pictures Entertainment,
Inc. (motion picture production) since March 1994.

DAVID A. MOUNT was appointed a Director of the Company on May 5, 1994. In
March 1995, Mr. Mount was named Chairman and Chief Executive Officer of WEA,
Inc. Prior thereto, Mr. Mount had been President and Chief Executive Officer of
Warner/Elektra/Atlantic Corporation, a division of Time Warner, Inc., since
October 1993. Mr. Mount was President and Chief Executive Officer of LIVE
Entertainment Inc. from August 1988 through September 1993. In addition, Mr.
Mount served as a director of LIVE Entertainment in 1989 and from January 1992
to the present. On February 2, 1993, LIVE Entertainment filed a voluntary
petition under Chapter 11 of the U.S. Bankruptcy Code and emerged pursuant to a
plan of reorganization on March 17, 1993. From August 1989 to June 1993, Mr.
Mount was President of LIVE Home Video, Inc., a subsidiary of LIVE
Entertainment. He was Chief Executive Officer of LIVE Home Video from August
1989 to October 1993.

EUGENE P. BEARD became a member of the Board on October 12, 1994. Mr. Beard
has been the Vice Chairman -- Finance and Operations of IPG since October 1995,
was Executive Vice President -- Finance and Operations of IPG prior to that time
and has served as a director of IPG since 1982. Mr. Beard is also a director of
Brown Brothers Harriman, 59 Wall Street Fund, Inc. (diversified investment fund)
and Micrografx, Inc. (computer software).

IPG has entered into a voting agreement with certain management
stockholders of the Company (including Anthony J. Scotti) to vote for the
election of one member of the Board nominated by IPG.

DIRECTORS' REMUNERATION

The Company does not pay any compensation to any person serving as a
Director of the Company if such person is also an employee of the Company. All
outside Directors are paid an annual fee of $25,000 for serving as a Director,
except that Mr. Beard serves as a Director without compensation for such
services. Non-employee Directors receive automatic stock option grants of 6,000
shares of Class B Common Stock per year, with the exception of Mr. Beard who has
waived his right to stock options.

COMMITTEES OF THE BOARD OF DIRECTORS; ATTENDANCE

During the year ended December 31, 1996, there were three meetings of the
Board. All members participated in one meeting, Messrs. O'Donnell and Vinnedge
each were absent from one meeting and Mr. Mount was absent from two meetings.
Additionally, the Board acted by unanimous written consent on two occasions. To
assist in carrying out its duties and responsibilities, the Board has appointed
a Stock Option Committee to administer the Company's 1991 Incentive Stock Option
Plan, as amended (the "1991 Plan").

6
<PAGE> 9

The members of the Stock Option Committee are R. Timothy O'Donnell, Gordon C.
Luce and David A. Mount. During the year ended December 31, 1996, the Stock
Option Committee had no formal meetings but acted by unanimous written consent
on one occasion. The Board has appointed an Executive Committee to assist the
Board in the overall management of the business and affairs of the Company. The
members of the Executive Committee are Anthony J. Scotti, Myron Roth and Thomas
Bradshaw. During the year ended December 31, 1996, the Executive Committee had
no formal meetings but acted by unanimous written consent on one occasion. The
Company has an Audit Committee, whose members are R. Timothy O'Donnell and David
A. Mount. For the year ended December 31, 1996, the Audit Committee held one
meeting, and both members participated. The Board has appointed a Compensation
Committee to assist in the establishing of executive compensation of its senior
management and the performance goals of the Company and to administer the
Company's 1994 Stock Incentive Plan, as amended (the "1994 Plan"). The members
of the Compensation Committee are Gordon C. Luce, R. Timothy O'Donnell and David
A. Mount. During the year ended December 31, 1996, there were no formal meetings
of the Compensation Committee, but it acted by unanimous written consent on one
occasion.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE "FOR"
THE ELECTION OF ALL OF THE CLASS I DIRECTORS NOMINATED HEREIN.

7
<PAGE> 10

EXECUTIVE COMPENSATION

SUMMARY OF EXECUTIVE COMPENSATION

The following table sets forth the total compensation paid or accrued by
the Company to the Chief Executive Officer and the four most highly compensated
executive officers of the Company who served in such capacities during the 1996
fiscal year (the "Named Executive Officers") for services rendered during each
of the last three fiscal years.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG TERM COMPENSATION AWARDS
------------------------------------------
SECURITIES
ANNUAL COMPENSATION RESTRICTED UNDERLYING ALL OTHER
--------------------------- STOCK OPTIONS/ COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS AWARDS SAR'S (#) (1)
- ------------------------------ ----- -------- -------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Anthony J. Scotti 1996 $895,000 $ -- $ -- 1,500,000(2) $ --
Chairman and 1995 813,000 -- -- 100,000(3) --
Chief Executive Officer 1994 719,000 -- -- 100,000(3) --
Myron I. Roth 1996 425,000 -- -- 50,000(4) --
President and Chief 1995 425,000 79,000 -- 50,000(3) --
Operating Officer 1994 408,000 79,000 -- 50,000(3) --
Thomas Bradshaw 1996 467,000 -- -- 250,000(4) --
Chief Financial Officer 1995 419,000 43,000 -- 35,000(3) --
and Senior Executive 1994 399,000 43,000 -- 35,000(3) --
Vice President
Sydney D. Vinnedge 1996 273,000 -- -- 6,000(4) --
Senior Executive Vice 1995 396,000 13,000 -- 6,000(3) --
President 1994 371,000 13,000 -- 6,000(3) --
Lawrence E. Lamattina (5) 1996 590,000 550,000 -- 25,000(4) --
Chief Executive Officer and 1995 561,000 550,000 -- 25,000(3) --
President, All American/ 1994 229,000 229,000 218,000(6) 150,000(3) --
Fremantle Television
Group
</TABLE>

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

(1) The Named Executive Officers received compensation in the form of personal
benefits, including automobile allowances, premiums for health insurance,
disability insurance and life insurance, which did not exceed the lesser of
$50,000 or 10% of the total annual salary and bonus reported for each year.

(2) Mr. Scotti was granted options to purchase 300,000 shares of Common Stock
and options to purchase 1,200,000 shares of Class B Common Stock during
1996. These grants were approved by the Company's stockholders at its 1996
Annual Meeting.

(3) Options granted to purchase shares of Common Stock.

(4) Options granted to purchase shares of Class B Common Stock.

(5) Mr. Lamattina's employment with the Company commenced on August 3, 1994. For
a discussion of Mr. Lamattina's employment agreement, including his right to
bonus payments, see "Report on Executive Compensation -- Employment
Agreements."

(6) In accordance with his employment agreement dated August 3, 1994, Mr.
Lamattina was granted restricted stock awards ("RSAs") under the 1994 Plan,
as of July 6, 1994, for 30,000 shares of Common Stock, with a vesting date
of July 5, 1998. The shares have been valued using the closing bid price on
July 6, 1994 of $7.25.

8
<PAGE> 11

OPTION GRANTS IN 1996

<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-------------------------------------------------------------------------------------
NUMBER OF
SHARES OF PERCENT OF
CAPITAL STOCK TOTAL OPTIONS EXERCISE GRANT
UNDERLYING GRANTED TO OR BASE DATE
OPTIONS EMPLOYEES IN PRICE PRESENT
NAME GRANTED (#) 1996 ($/SH) (1) EXPIRATION DATE VALUE (2)
- -------------------- -------------- -------------- ---------- ------------------ ----------
<S> <C> <C> <C> <C> <C>
Anthony J. Scotti 50,000(3) 2.20% $ 10.863 February 26, 2001 $ 149,000
250,000(4) 11.01% 9.875 February 26, 2006 833,000
1,200,000(5) 52.84% 7.875 February 26, 2006 3,180,000
Myron I. Roth 50,000(6) 2.20% 7.875 February 26, 2006 133,000
Thomas Bradshaw 250,000(7) 11.01% 7.875 February 26, 2006 663,000
Sydney D. Vinnedge 6,000(6) 0.26% 7.875 February 26, 2006 16,000
Lawrence E. 25,000(6) 1.10% 7.875 February 26, 2006 66,000
Lamattina
</TABLE>

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

(1) Unless otherwise noted, the exercise price is the closing sales price of the
Common Stock or Class B Common Stock, as the case may be, on the date of
grant.

(2) Grant date present value is determined using the Black-Scholes option
valuation model with the following weighted average assumptions for 1996:
risk-free interest rate of 6.0%; dividend yield of 0%; volatility factors of
the expected market price of the Company's Common Stock and Class B Common
Stock of 0.40 and 0.40, respectively; and a weighted average expected life
of the options of three years.

(3) Options to purchase shares of Common Stock which vested immediately with an
exercise price equal to 110% of the closing sales price of the Common Stock
on the date of grant.

(4) Options to purchase shares of Common Stock which vested immediately.

(5) Options to purchase 450,000 shares of Class B Common Stock vested subsequent
to December 31, 1996 upon the Company's achievement of the specified
performance targets. The remaining options to purchase 750,000 shares of
Class B Common Stock are subject to vesting in tranches of 300,000 shares
over each of the next three years upon the Company's achievement of
specified performance targets or nine years and nine months from the date of
grant, to the extent not previously vested, if such specified performance
targets are not achieved. The foregoing grant was approved by the Company's
stockholders at the 1996 Annual Meeting.

(6) These options to purchase shares of Class B Common Stock vest in varying
percentages based upon the satisfaction of certain performance targets. None
of these options had vested as of December 31, 1996. All of these options
became fully vested subsequent to December 31, 1996 upon the Company's
achievement of the specified performance targets. The foregoing grants to
Messrs. Vinnedge and Lamattina were approved by the Company's stockholders
at the 1996 Annual Meeting.

(7) Options to purchase 100,000 shares of Class B Common Stock vested on the
date of grant. Options to purchase 45,000 shares of Class B Common Stock
vested subsequent to December 31, 1996 upon the Company's achievement of the
specified performance targets. The remaining options to purchase 105,000
shares of Class B Common Stock are subject to vesting in tranches of 30,000
shares over each of the next four years upon the Company's achievement of
specified performance targets or nine years and nine months from the date of
grant, to the extent not previously vested, if such specified performance
targets are not achieved. See "Report on Executive
Compensation -- Employment Agreements." The foregoing grant was approved by
the Company's stockholders at the 1996 Annual Meeting.

9
<PAGE> 12

OPTION EXERCISES IN 1996 AND YEAR END OPTION VALUES

The following table provides certain information concerning the exercise of
stock options and shows the number of shares covered by both exercisable and
non-exercisable stock options held as of the end of 1996. Also shown are values
for "in-the-money" options, which represent the positive difference between the
exercise price of such options and the price of the Common Stock and Class B
Common Stock at year end.

AGGREGATED OPTION EXERCISES DURING 1996 AND
OPTION VALUES ON DECEMBER 31, 1996

<TABLE>
<CAPTION>
NUMBER OF SHARES
OF CAPITAL STOCK
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS AT IN-THE-MONEY OPTIONS AT
ACQUIRED ON VALUE DECEMBER 31, 1996 DECEMBER 31, 1996
NAME EXERCISE REALIZED EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- -------------------------- ------------ -------- ------------------------- ---------------------------
<S> <C> <C> <C> <C>
Anthony J. Scotti -- -- 500,000/1,200,000 $1,850,625/$2,550,000
Myron I. Roth -- -- 100,000/ 50,000 443,750/ 106,250
Thomas Bradshaw -- -- 170,000/ 150,000 523,125/ 318,750
Sydney D. Vinnedge -- -- 12,000/ 6,000 53,250/ 12,750
Lawrence E. Lamattina -- -- 100,000/ 100,000 525,000/ 475,000
</TABLE>

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

During the 1994 fiscal year, the Company established a Compensation
Committee whose members are Gordon C. Luce, R. Timothy O'Donnell and David A.
Mount. For information concerning certain transactions between the Company and
certain Directors, see "Certain Relationships and Related Transactions."

REPORT ON EXECUTIVE COMPENSATION

The Compensation Committee has furnished the following report on executive
compensation:

COMPENSATION OVERVIEW

The Company uses a combination of salary and incentive compensation,
including cash bonus and periodic grants of stock options under the Company's
1991 Plan or its 1994 Plan (collectively, the "Plans") or pursuant to other
option plans or arrangements adopted by the Board of Directors, to compensate
its executive officers. Additional benefits, including insurance benefits, are
provided to executives and other key employees that the Company believes are
similar to those provided by other companies in the entertainment industry. The
Company draws most of its executives and other key employees from the
entertainment industry where creative talent is crucial and commands a
significant premium and where decisions made by a relatively small number of
employees with an in-depth knowledge of creative businesses can have a major
impact on the performance of the Company. Persons with such unique
qualifications are rare and are being pursued by other companies both in and out
of the entertainment industry, many of whom have greater available resources
than the Company. Except as otherwise described below, each of the Company's
executive officers is currently employed pursuant to a multi-year employment
agreement, the purpose of which is to retain the services of such executive
officer for an extended period. The Company believes that its compensation
program for executive officers benefits the Company through the continuation of
expansion and new opportunities designed to enhance stockholder value.

In May 1994, the Company amended certain of its employment agreements with
its executives following the recommendation of Towers Perrin, Inc. ("Towers"),
an executive compensation consultant retained by the Company. Towers assessed
the Company's current compensation levels for its executive officers and
reviewed the annual incentive and the long-term incentive compensation plans.
Towers compared such compensation and plans to 13 entertainment or entertainment
related companies for which data were publicly

10
<PAGE> 13

available (the "Proxy Group"). This review was undertaken by the Company to
establish consistent yet competitive compensation arrangements that also reflect
the financial performance of the Company. Such review compared financial
performance of the Company and each of the members of the Proxy Group and cash
compensation and long-term incentives of comparable positions between such
companies. The Company had the highest return on equity and the second highest
average three-year rate of growth in the Proxy Group. Towers recommended that
the Company should target executive compensation at levels above the Proxy
Group's averages as an incentive to continue such level of performance. Overall,
Towers determined that the Company's cash compensation was below the Proxy
Group's median for the Chief Operating Officer and Chief Executive Officer and
above the Proxy Group's median for the Senior Executive Vice Presidents and
Chief Financial Officer. Towers noted, however, that the Chief Financial
Officer's extensive involvement in Company operations warranted the higher base
level pay. Towers also determined that the Company fell below the competitive
norms for long-term incentive compensation. Towers recommended maintaining base
salaries (except for an increase in the Chief Executive Officer's salary) and,
for the short term, annual incentives at current levels while adopting a
long-term incentive plan, such as the 1994 Plan, that emphasizes both standard
stock options and performance-based stock options.

Towers was also retained by the Company in 1996 to review certain stock
option awards to the Chief Executive Officer. See "-- Employment Agreements."
Towers concluded that the vesting schedule of such option awards was not
unreasonable in the context of entertainment or entertainment related companies.

SALARY

The base salary to which each of the Company's executive officers is
entitled is specified in such person's employment agreement (see "-- Employment
Agreements" below) and was established pursuant to arm's length negotiations
with each executive officer, in part based on the subjective assessment of the
Company which included a number of factors, including experience, tenure and
responsibility, and external factors, including similarly situated executives,
geographic and economic conditions, based on information drawn from a variety of
sources, including published survey data, information obtained from the media,
and the Company's own experience in recruiting and retaining executives,
although complete information is not easily obtainable. Most of the employment
agreements were entered into at the time of the Merger and were subject to the
review and approval of the financial advisors to the parties in the Merger and
ECD Corporation, an outside investor in the Company in the Merger. Subsequent
modifications to such employment agreements have been made following
negotiations with the underwriter of the Company's Common Stock or following the
report of Towers.

CASH BONUS

Arrangements for bonus compensation for the Company's executive officers
are also negotiated individually with each executive officer and are generally
fixed by contract. Bonus arrangements take various forms and may be determined
based on factors such as the Company's or a specific segment of the Company's
operations, financial performance or project developments. In 1994, each of
Anthony J. Scotti, Myron I. Roth, Thomas Bradshaw, Sidney D. Vinnedge and
Benjamin J. Scotti agreed to an amendment to their employment agreements to
eliminate bonus provisions tied to the achievement of certain financial
objectives by the Company in connection with the March 1992 public offering of
the Company's Common Stock at the request of the underwriter. The Company's
executive officers, however, are eligible to receive discretionary bonuses as
may be determined by the Board. Except for Messrs. Bradshaw, Lamattina, Roth and
Vinnedge, who are discussed below, the Chief Executive Officer develops
individual bonus recommendations following the end of each fiscal year based on
the subjective assessment of the Company's overall performance and each
executive officer's contribution to such performance. No specific formula is
used; however, factors may include improved competitive position, project
development, long-term objectives and such executive officer's leadership role
in any of the foregoing factors. Such factors are not necessarily linked to any
specific performance related targets or given any particular weight. Messrs.
Bradshaw, Roth and Vinnedge are eligible for a bonus in the discretion of the
Board. Mr. Lamattina's employment agreement provides for an annual incentive
compensation payment of up to $550,000 per year (prorated in the case of 1994)
based on the operating income of the All

11
<PAGE> 14

American/Fremantle Television Group as compared to the operating income targets
established by the Compensation Committee. No discretionary bonuses were paid to
the executive officers for 1994, 1995 or 1996.

OPTION GRANTS

The Company uses incentive and non-qualified stock options and other
available forms of compensation under the Plans which are intended to provide
additional long-term incentives to key employees, including the Company's
executive officers. The Board believes that stock ownership, through options or
otherwise, aligns the executive officers' interests with the stockholders'
interest. The Plans have been approved by the Company's stockholders. Grants
under the Plans generally require the executive to be employed by the Company on
the exercise date and vest over a period of years (time vesting options) or the
Company's achievement of certain performance criteria (performance options)
following the date of grant. The exercise price of such grants is generally
equal to the market price of the Company's Common Stock or Class B Common Stock
on the grant date; therefore, option grants will only benefit an executive if
the market price of the Company's Common Stock or Class B Common Stock is
greater than on the date of the option grant. No specific formula is used to
determine grants made to any particular employee, including executive officers,
but grants are generally based on factors such as employment agreements and
competitive norms and subjective factors, such as promotion, contribution to
performance and individual performance related criteria. The Chief Executive
Officer makes recommendations regarding option grants and vesting to the Stock
Option Committee with respect to grants under the 1991 Plan and to the
Compensation Committee with respect to grants under the 1994 Plan. While time
vesting options typically vest equally over a five-year period, options granted
to certain executive officers may have shorter or longer vesting periods.
Performance options typically vest upon the achievement of certain performance
criteria of the operations of the Company, its subsidiaries or divisions over a
certain period of time established by the Compensation Committee or the Stock
Option Committee, as applicable.

CHIEF EXECUTIVE OFFICER COMPENSATION

Anthony J. Scotti, Chairman and Chief Executive Officer of the Company, is
compensated pursuant to an employment agreement described under "-- Employment
Agreements" below. His original employment agreement had an initial term of five
years and was negotiated in connection with the Merger and amended at the
request of the underwriters in connection with the Company's 1992 offering of
Common Stock. Mr. Scotti's employment agreement established an annual base
salary of $500,000, increasing by five percent on each anniversary date of such
agreement. The employment agreement also permits an annual bonus in the
discretion of the Board. The term of Mr. Scotti's employment agreement was then
extended in May 1994 to February 1999. In connection with such extension and as
recommended by the Towers report, Mr. Scotti's annual base salary was increased
to $750,000, increasing by 10% on each anniversary date (subject to a maximum
base salary of $1,000,000). Mr. Scotti's employment agreement was also amended,
upon the recommendation of Towers, to provide for the annual grant of options to
acquire 100,000 shares of Common Stock, commencing in 1994, in an effort to
bring Mr. Scotti's long-term incentive compensation within the competitive norms
of the Proxy Group. These options have now vested upon the satisfaction of
certain performance criteria of the Company as established by the Compensation
Committee. These recommendations were based on the strategic importance of Mr.
Scotti to the Company, the dilutive effect of the 1994 Plan on Mr. Scotti's
ownership in the Company and the review by Towers of competitive norms for
companies in the Proxy Group. The term of Mr. Scotti's employment agreement was
subsequently further extended in February 1996 to February 2001. Towers also
reviewed the award of stock options granted to Mr. Scotti in 1996 as a portion
of the inducement for him to extend his employment Agreement. See "-- Employment
Agreements."

COMPLIANCE WITH INTERNAL REVENUE CODE SECTION 162(m)

Section 162(m) of the Internal Revenue Code (the "Code"), enacted in 1993,
generally limits tax deductions to public companies for compensation over
$1,000,000 paid to the corporation's chief executive

12
<PAGE> 15

officer and four other most highly compensated executive officers. Qualifying
performance based compensation will not be subject to the deduction limit if
certain requirements are met. The Company intends to consider the provisions of
Section 162(m) in connection with the performance based portion of the
compensation of its executives (which currently consists of stock option grants
and annual bonuses described above). However, the Board of Directors does not
necessarily intend to structure compensation to its executives to avoid
disallowance of any tax deductions in the future in light of available tax
deductions to the Company and the requirements imposed by Section 162(m) and the
proposed regulations thereunder for compensation to be fully deductible for
income tax purposes.

EMPLOYMENT AGREEMENTS

The Company has entered into employment agreements with the following Named
Executive Officers: Anthony J. Scotti, Thomas Bradshaw, Sydney D. Vinnedge and
Lawrence Lamattina. The employment agreement with Mr. Scotti, originally entered
into in February 1991 and amended most recently in February 1996, provides that
Mr. Scotti shall serve as Chief Executive Officer of the Company through
February 25, 2001 (unless earlier terminated in accordance with the terms of
such agreement), commencing at a base salary of $907,500 in 1996 and increasing
by 10% per year (subject to a maximum base salary of $1,000,000 per year). Mr.
Scotti's current salary is $998,250. Mr. Scotti is required to render his
services on a full-time basis to the Company, except that he may devote such
reasonable amount of time, as he determines, to other business activities which
may be conducted in the entertainment industry. The term of his agreement may be
terminated by the Company for good cause, (as defined) or by Mr. Scotti in the
event of the "Company's Material Breach" (as defined) or a "Change in Control"
or other "Event", as defined in the 1994 Plan.

The employment agreement with Mr. Bradshaw, originally entered into in
February 1991 and amended most recently in February 1996, provides that Mr.
Bradshaw shall serve as Senior Executive Vice President, Finance and Chief
Financial Officer of the Company through February 25, 2001 (unless earlier
terminated), commencing at a base salary of $476,650 in 1996 and increasing by a
minimum of 6% per year. Mr. Bradshaw's current salary is $505,249. The five-year
term employment agreement with Mr. Vinnedge, originally entered into in February
1991, which provides that he will serve as a Senior Executive Vice President of
the Company, has been extended through August 25, 1997, commencing at a base
compensation of $250,000 per year, plus contingent compensation of up to
$250,000 per year at the Company's discretion. The employment agreement with Mr.
Lamattina, entered into in August 1994, provides that Mr. Lamattina shall serve
as the Chief Executive Officer and President of the All American/Fremantle
Television Group through August 3, 1999 (unless earlier terminated), commencing
at a base salary of $550,000 and increasing by 5% per year. His current salary
is $606,375. Mr. Lamattina is also entitled to receive annual incentive
compensation up to $550,000 per year if certain operating income targets are
achieved by the All American/Fremantle Television Group. Under Mr. Lamattina's
employment agreement, he is entitled to annual grants of options to purchase
25,000 shares of the Company's stock. See "Security Ownership of Certain
Beneficial Owners and Management" for a description of the vesting of Mr.
Lamattina's stock options. The employment agreement for Mr. Roth, originally
entered into in February 1991, has expired, but he continues his employment with
the Company as President and Chief Operating Officer without an employment
agreement under substantially the same terms as those in effect in the last year
of his expired employment agreement. Mr. Roth's current salary is $425,000 per
year. Each of the Named Executive Officers is provided with an automobile
expense reimbursement allowance and an annual allowance to cover premiums for
life, health and disability insurance.

Under his employment agreement, prior to its amendment in February 1996,
Mr. Scotti was entitled to receive, as long-term incentive compensation, 100,000
stock options annually (from 1994 to 1999). In February 1996, subject to Mr.
Scotti relinquishing his remaining contractual right to future grants under his
employment agreement, the Compensation Committee granted to Mr. Scotti options
(under the 1994 Plan) to purchase 250,000 shares of Common Stock at the market
price ($9.875 per share) on the date of grant, and the Stock Option Committee
granted to Mr. Scotti options (under the 1991 Plan) to purchase 50,000 shares

13
<PAGE> 16

of Common Stock at 110% of the fair market value ($10.8625 per share) on the
date of grant. All such stock options vested on the date of grant in February
1996.

In addition, in connection with the extension of Mr. Scotti's employment
agreement, the Compensation Committee granted to Mr. Scotti options (under the
1994 Plan) to purchase 1,200,000 shares of Class B Common Stock at an exercise
price equal to the market price ($7.875 per share) on the date of grant. These
options vest subject to Mr. Scotti's staying in the continuous employment of the
Company for a period of nine years and nine months from the original date of his
employment agreement and are entitled to accelerated vesting in four equal
annual tranches upon the achievement of certain operating income targets set
annually by the Compensation Committee or the Board or earlier upon the
occurrence, with certain exceptions, of a "Change in Control" or other "Event"
(as defined in the 1994 Plan). The Company has also agreed to reimburse Mr.
Scotti for any federal, state or local excise tax ("Excise Tax"), and any
additional taxes to which he may be subject, on any payments to Mr. Scotti from
the Company as a result of accelerated vesting of this option grant upon a
"Change in Control" or otherwise, up to a maximum reimbursement equal to two
times the amount of such Excise Tax.

As part of the amendment of Mr. Bradshaw's employment agreement, the
Compensation Committee granted to Mr. Bradshaw options (under the 1994 Plan) to
purchase 250,000 shares of Class B Common Stock at the market price ($7.875 per
share) on the date of grant. One hundred thousand of such options vested on the
date of grant in February 1996. The remainder vests in a manner substantially
similar to the vesting provisions described above with respect to Mr. Scotti's
options to purchase Class B Common Stock.

THE COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS:
Gordon C. Luce
David A. Mount
R. Timothy O'Donnell

14
<PAGE> 17

CORPORATE PERFORMANCE

The following graph compares the stock price of the Company's Common Stock
with the performance of the Standard and Poor's ("S&P") 500 Composite Index and
the S&P Entertainment Index as of the last trading date for each of 1991, 1992,
1993, 1994, 1995 and 1996. The graph assumes that $100 was invested on December
31, 1991 in the Company's Common Stock, and that all dividends were reinvested.
No dividends have been declared or paid on the Company's Common Stock other than
to holders of record of such Common Stock at February 25, 1991, who were paid an
extraordinary dividend in the amount of $10.00 per share in connection with the
Merger. The historical price performance data shown on the graph are not
necessarily indicative of future price performance.

TOTAL SHAREHOLDER RETURNS -- DIVIDENDS REINVESTED

<TABLE>
<CAPTION>
ALL AMERICAN
MEASUREMENT PERIOD COMMUNICATIONS S&P 500 COMPOSITE S&P ENTERTAINMENT
(FISCAL YEAR COVERED) INC. INDEX INDEX
<S> <C> <C> <C>
DEC 91 100 100 100
DEC 92 95.31 107.62 143.00
DEC 93 115.83 118.46 165.28
DEC 94 78.13 120.03 157.84
DEC 95 125.00 165.13 189.40
DEC 96 168.75 203.05 192.30
</TABLE>

Notwithstanding anything to the contrary set forth in the Company's
previous filings under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, that might incorporate future filings,
including this Proxy Statement, in whole or in part, the Report on Executive
Compensation beginning on page 10 and the graph on page 15 shall not be
incorporated by reference into any filings.

15
<PAGE> 18

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

In October 1994, the Company provided a loan of $250,000 to Thomas
Bradshaw. Such loan is secured by a pledge of shares of Common Stock owned by
Mr. Bradshaw, bears interest at a rate equal to a market rate determined by
reference to the Company's working capital line (8%) and has been extended to
mature upon the expiration of Mr. Bradshaw's current employment agreement
(February 2001).

In December 1995, the Company entered into a domestic distribution
agreement for recorded music with Warner/Elektra/Atlantic Corporation, a
division of Time Warner, Inc. ("WEA Corp."). David A. Mount, a member of the
Board, is currently Chairman and Chief Executive Officer of WEA, Inc., the
parent company of WEA Corp. During the 1996 fiscal year, WEA accounted for 9% of
the Company's consolidated gross revenues and is expected to account for
approximately the same amount of such revenues in the 1997 fiscal year.

In January 1996, the Company acquired from IPG the remaining 50% interest
of Mark Goodson Productions, LLC (the "LLC"). As a result, the Company is
responsible for the full share of the LLC's contingent purchase price, to the
extent earned. Such contingent purchase price, which may total $48.5 million by
the fifth anniversary of the initial acquisition of the LLC in October 1995,
will be treated as an increase in goodwill and will be amortized coterminously
with the original 25 year period. Through December 31, 1996, accrued contingent
purchase price totaled $10.1 million (including IPG's share through December 31,
1995 of $0.9 million). As of December 31, 1996, goodwill, including the total
initial purchase price of $53.8 million (including deal costs of $0.9 million)
and contingent purchase price, totals $60.0 million (before accumulated
amortization of $2.7 million).

The Company currently leases, on a month to month basis, a building from
Anthony J. Scotti and Benjamin J. Scotti at a cost to the Company of
approximately $4,500 per month, which the Company believes is a market rate.
This building is used for office and warehouse space for the Company's
television production operations.

The Company believes that the terms of the transactions described above are
substantially comparable to those that would have been obtainable in similar or
analogous transactions by the Company with unaffiliated parties.

MANAGEMENT STOCKHOLDERS AGREEMENT

The Company has entered into a stockholders' agreement with Anthony J.
Scotti, Benjamin J. Scotti, Thomas Bradshaw, and Sydney D. Vinnedge (the
"Management Stockholders Agreement"), pursuant to which (i) each of Messrs.
Bradshaw and Vinnedge granted (a) to Anthony J. Scotti and Benjamin J. Scotti a
right of first refusal until August 25, 2001 on all shares of the Common Stock
owned by Mr. Bradshaw and 108,225 shares of Common Stock held by Mr. Vinnedge
and a right to purchase all such shares upon termination of their employment for
a reason other than "cause" (as defined in their respective employment
agreements), and (b) to Anthony J. Scotti an irrevocable proxy to vote
substantially all such shares until February 25, 2002; and (ii) each of the
individuals was granted certain registration rights for such shares owned by him
(such shares were subsequently registered on a registration statement which was
declared effective on January 29, 1997). Additionally, Myron Roth, effective
August 26, 1996, has granted to Anthony J. Scotti an irrevocable proxy to vote
315,850 shares of Common Stock for the lesser of five years (August 25, 2001) or
the period of Mr. Roth's employment by the Company. The proxies granted to
Anthony J. Scotti give him the ability to control the voting of 2,244,615 shares
of the 6,913,305 shares (or approximately 32%) of the Common Stock outstanding.
Additionally, Messrs. Roth, Bradshaw and Vinnedge have granted to Anthony J.
Scotti an irrevocable proxy to vote all shares of Common Stock acquired upon
exercise of their options to purchase an aggregate of 182,000 shares of Common
Stock.

Lawrence E. Lamattina and all other employees have granted to Anthony J.
Scotti an irrevocable proxy to vote all shares of Common Stock acquired upon
exercise of their options to purchase an aggregate of 474,350 shares of Common
Stock and, in Mr. Lamattina's case, 30,000 shares of restricted Common Stock
granted pursuant to the 1994 Plan.

16
<PAGE> 19

In the aggregate, Anthony J. Scotti owns 1,504,690 shares of Common Stock,
has vested options to purchase 500,000 shares of Common Stock, has an
irrevocable proxy to vote 739,925 shares of Common Stock (excluding 30,000
shares of restricted Common Stock) and has irrevocable proxies to vote 656,350
shares of Common Stock when acquired upon exercise of vested options.

RATIFICATION OF THE SELECTION OF INDEPENDENT ACCOUNTANTS

Price Waterhouse LLP audited the Company's financial statements for the
year ended December 31, 1996 and has been the Company's auditors since July
1996.

The Board selected the firm of Price Waterhouse LLP as independent
accountants for the Company for the fiscal year ending December 31, 1997,
subject to ratification by the stockholders at the Annual Meeting. The proxy
holders named in the accompanying proxy card will vote the shares represented by
the proxy for ratification of the selection of Price Waterhouse LLP, unless a
contrary choice has been specified on the proxy. If stockholders do not ratify
the selection of Price Waterhouse LLP, the selection of independent accountants
will be considered by the Board, although the Board would not be required to
select different independent accountants for the Company. The Board retains the
power to select another firm as independent accountants for the Company to
replace the firm whose selection was ratified by its stockholders in the event
the Board determines that the best interests of the Company warrant a change of
its independent accountants. A representative of Price Waterhouse LLP is
expected to be present at the Annual Meeting with an opportunity to make a
statement if he desires to do so, and such representative is expected to be
available to respond to appropriate questions.

Upon unanimous recommendation of the Board, the Company appointed Ernst &
Young LLP as the Company's independent accountants for the fiscal year ended
December 31, 1995. Services provided to the Company by Ernst & Young LLP during
the 1995 fiscal year included the examination of the Company's consolidated
financial statements and consultations on various tax matters.

On June 7, 1996, the Audit Committee of the Company approved the engagement
of Price Waterhouse LLP as its independent accountants as a replacement of the
Company's prior independent accountants, Ernst & Young LLP.

The audit reports of Ernst & Young LLP on the consolidated financial
statements of the Company for the fiscal year ended December 31, 1995 did not
contain any adverse opinion or disclaimer of opinion, nor were they qualified or
modified as to uncertainty, audit scope, or accounting principles.

Ernst & Young LLP audited the Company's 1995 and 1994 financial statements
in addition to auditing financial statements for certain prior fiscal years. In
connection with the Company's two most recent fiscal years ended December 31,
1995 and any subsequent interim period, the Company believes that there were no
disagreements with Ernst & Young LLP on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or procedure,
which, if not resolved to their satisfaction, would have caused them to make
reference to the subject matter of the disagreement in connection with their
report. However, following discussions with Ernst & Young LLP subsequent to
their termination, the Company notes two accounting matters which Ernst & Young
LLP believes constitute disagreements within the meaning of Item 304 of
Regulation S-K but which were both resolved to Ernst & Young LLP's satisfaction
prior to the issuance of their reports on the aforementioned financial
statements. The Company has authorized Ernst & Young LLP to respond fully to the
inquiries of Price Waterhouse LLP or other successor accountants regarding the
subject matter of the perceived disagreements.

The first matter involved certain communications between the Company and
Ernst & Young LLP involving the Company's accounting during certain periods
prior to the 1994 reporting period for the capitalization and deferral of
advance royalties paid to recording artists. As recently as March 1996, the
Company contended, subject to the receipt of additional information, that Ernst
& Young LLP had recently interpreted such standards differently (and less
restrictively) in dealings with another publicly traded music client. Ernst &
Young LLP has advised the Company that such standards have been interpreted on a
consistent basis in relation to all of its clients in accordance with generally
accepted accounting principles.

17
<PAGE> 20

The second matter, in connection with the audit of the financial statements
for the year ended December 31, 1995, involved a proposed reduction of $700,000
by the Company in the reserve accounts in the Recorded Music segment and an
equal increase in the reserve accounts in the Television segment. After Ernst &
Young LLP informed the Company's management that the full amount of the
adjustment could not be supported, the Company did not make such adjustment.

In connection with the Company's audit for the 1996 fiscal year, the
Company solicited bids from independent accountants, including Ernst & Young
LLP, for accounting services to be provided to the Company. Ernst & Young LLP
submitted a bid but was not selected, and thus its services were terminated. The
winning bidder was Price Waterhouse LLP.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE
"FOR" THE RATIFICATION OF THE SELECTION OF PRICE WATERHOUSE LLP AS THE COMPANY'S
INDEPENDENT ACCOUNTANTS FOR THE 1997 FISCAL YEAR.

PROPOSALS OF STOCKHOLDERS

A proper proposal submitted by a stockholder for presentation at the
Company's next Annual Meeting of Stockholders and received at the Company's
principal executive offices on or prior to March 5, 1998 will be included in the
Company's proxy statement and form of proxy relating to such Annual Meeting.

OTHER MATTERS

The Board is not aware of any matter to be acted upon at the Annual Meeting
other than described in this Proxy Statement. Unless otherwise directed, all
shares represented by the persons named in the accompanying proxy will be voted
in favor of the proposals described in this Proxy Statement. If any other matter
properly comes before the Annual Meeting, however, the proxy holders will vote
thereon in accordance with their best judgment.

MISCELLANEOUS

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

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
executive officers, Directors and persons who beneficially own more than 10% of
the Company's stock to file initial reports of ownership and reports of changes
in ownership with the Securities and Exchange Commission ("SEC"). Executive
officers, Directors and greater than 10% beneficial owners are required by SEC
regulations to furnish the Company with copies of all Section 16(a) forms filed
by them.

Based solely on a review of the copies of such forms furnished to the
Company, the Company believes that all Section 16(a) filing requirements
applicable to its executive officers, Directors and greater than 10% beneficial
owners were complied with, except that (i) Jefferson Capital Group, Ltd., an
affiliate of Director R. Timothy O'Donnell, failed to file a Form 4 in November
1996 relating to its exercise of a warrant for 62,500 shares of Common Stock in
October 1996, and (ii) R. Timothy O'Donnell, a Director, failed to timely file a
Form 5 in February 1997 relating to the grant of 3,000 stock options in February
1996.

DOCUMENTS INCORPORATED BY REFERENCE

The Company's Form 10-K, as amended, for the year ended December 31, 1996
and Form 10-Q for the quarter ended March 31, 1997 are hereby incorporated by
this reference. A copy of the Company's Annual Report to Stockholders, which
includes the Form 10-K, as amended, and Form 10-Q accompanies this Proxy
Statement but shall not constitute proxy soliciting material. COPIES OF THE FORM
10-K AND FORM 10-Q WILL BE PROVIDED, WITHOUT CHARGE, TO ANY STOCKHOLDER OF THE
COMPANY. WRITTEN REQUESTS FOR A COPY OF THE FORM 10-K AND FORM 10-Q SHOULD BE
DIRECTED TO PAUL A. PAVLIS, CORPORATE SECRETARY, AT ALL AMERICAN COMMUNICATIONS,
INC., 808 WILSHIRE BOULEVARD, SANTA MONICA, CALIFORNIA 90401-1810.

18
<PAGE> 21

PROXY SOLICITED BY THE BOARD OF DIRECTORS OF
ALL AMERICAN COMMUNICATIONS, INC.
FOR JULY 30, 1997 ANNUAL MEETING OF STOCKHOLDERS

The undersigned, revoking any previous proxies for such stock, hereby
appoints each of ANTHONY J. SCOTTI, BENJAMIN J. SCOTTI and MYRON I. ROTH, as
attorney and agent, acting individually or by a majority of those present, with
full power of substitution, to vote as proxy in the name, place and stead of the
undersigned at the annual meeting of stockholders of ALL AMERICAN
COMMUNICATIONS, INC. to be held on July 30, 1997 and at any adjournment(s) or
postponement(s) thereof, according to the number of votes that the undersigned
would be entitled to vote if personally present. Without limiting the generality
hereof, each of such persons is authorized to vote (1) as hereinafter specified
upon the proposals listed below and on the reverse side and described in the
Proxy Statement for the meeting, and (2) in his discretion upon any other matter
that may properly come before this meeting.

The shares represented by this proxy shall be voted as specified. If no
specification is made, the shares shall be voted on the specified matters as
recommended by the Board of Directors.

The Board of Directors unanimously recommends a vote FOR the items below.

1. Approval of the following Class I nominees to the Board of Directors:

Benjamin J. Scotti FOR [ ] WITHHOLD [ ]

David A. Mount FOR [ ] WITHHOLD [ ]

Eugene P. Beard FOR [ ] WITHHOLD [ ]

2. Ratification of the selection of Price Waterhouse LLP as the Company's
independent accountants for the fiscal year ending December 31, 1997.

FOR [ ] AGAINST [ ] ABSTAIN [ ]

(SIGN AND DATE ON REVERSE SIDE)
<PAGE> 22

-------------------------
Signature

Date: _____________, 1997

IMPORTANT: PLEASE SIGN
YOUR NAME OR NAMES
EXACTLY AS STENCILED ON
THIS PROXY. WHEN SIGNING
AS AN ATTORNEY, EXECUTOR
OR ADMINISTRATOR, TRUSTEE
OR GUARDIAN, PLEASE GIVE
YOUR FULL TITLE AS SUCH.

PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY.
A STAMPED AND ADDRESSED ENVELOPE HAS BEEN PROVIDED FOR YOUR USE.