VIACOM INC, DEF 14A, 1999-04-16

VIACOM INC
DEF 14A, 1999-04-16
CABLE & OTHER PAY TELEVISION SERVICES

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<PAGE>
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 Section240.14a-11(c) or
Section240.14a-12

VIACOM 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)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
-----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-----------------------------------------------------------------------
(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:
-----------------------------------------------------------------------
(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 paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-----------------------------------------------------------------------
(3) Filing Party:
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(4) Date Filed:
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<PAGE>

[LOGO]

April 16, 1999

Dear Stockholder:

You are cordially invited to attend the 1999 Annual Meeting of Stockholders
of Viacom Inc., which will be held at the UCI Cinemas Empire Theater, Leicester
Square, London, WC2 H7NA, United Kingdom at 2:30 p.m. (local time) on Wednesday,
May 19, 1999. Holders of Class A Common Stock are being asked to vote on the
matters listed on the enclosed Notice of 1999 Annual Meeting of Stockholders.

National Amusements, Inc., which owns approximately 67% of the Class A
Common Stock, has advised the Company that it intends to vote its shares of
Class A Common Stock for these matters. Therefore, approval of such matters by
the stockholders of the Company is assured.

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

If you plan to attend the Annual Meeting in person and hold registered
shares of Class A Common Stock, you should mark the appropriate box on the
enclosed proxy card and an admission ticket will be sent to you. If you hold
registered shares of Class B Common Stock or you beneficially hold shares of
Class A or Class B Common Stock and you plan to attend the Annual Meeting in
person, you should obtain an admission ticket in advance by sending a written
request, along with proof of ownership, such as a bank or brokerage firm account
statement, for beneficially owned shares, to the Director--Investor Relations,
Viacom Inc., 1515 Broadway, 53rd Floor, New York, New York 10036.

Thank you.

Sincerely,

/s/ SUMNER M. REDSTONE

SUMNER M. REDSTONE
CHAIRMAN OF THE BOARD AND
CHIEF EXECUTIVE OFFICER
<PAGE>
[LOGO]

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

VIACOM INC.

NOTICE OF 1999 ANNUAL MEETING

AND PROXY STATEMENT

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

To Viacom Inc. Stockholders:

The Annual Meeting of Stockholders of Viacom Inc. will be held at the UCI
Cinemas Empire Theater, Leicester Square, London, WC2 H7NA, United Kingdom at
2:30 p.m. (local time) on Wednesday, May 19, 1999. The principal business of the
meeting will be consideration of the following matters:

1. The election of 10 directors;

2. The approval of the adoption of amendments to the Viacom Inc. Restated
Certificate of Incorporation to increase (i) the number of shares of
Class A Common Stock authorized to be issued from 200 million to 500
million, and (ii) the number of shares of Class B Common Stock authorized
to be issued from 1 billion to 3 billion;

3. The approval of the adoption of an amendment to the Viacom Inc. Restated
Certificate of Incorporation to provide that each record holder of shares
of Common Stock may convert any or all of such shares into an equal
number of shares of Class B Common Stock;

4. The approval of an amendment to the Viacom Inc. Restated Certificate of
Incorporation to modify the indemnification rights of directors, officers
and others, as permitted by Delaware General Corporation Law;

5. The approval of the Viacom Inc. Senior Executive Short-Term Incentive
Plan;

6. The approval of the appointment of PricewaterhouseCoopers to serve as
independent accountants until the 2000 Annual Meeting of Stockholders;
and

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

By order of the Board of Directors,

/s/ Michael D. Fricklas

MICHAEL D. FRICKLAS
SECRETARY

April 16, 1999
<PAGE>
------------------------

PROXY STATEMENT

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

The enclosed Proxy is being solicited by the Board of Directors of Viacom
Inc. (the "Company" or "Viacom") for use at the Annual Meeting of Stockholders
(the "Annual Meeting") to be held on May 19, 1999. Holders of shares of the
Company's Class A Common Stock, $0.01 par value ("Class A Common Stock"), on the
books of the Company at the close of business on April 8, 1999 are entitled to
notice of and to vote at the Annual Meeting. The Company then had outstanding
140,251,240 shares of Class A Common Stock, each of such shares being entitled
to one vote, and 555,846,693 shares of non-voting Class B Common Stock, $0.01
par value ("Class B Common Stock" and, together with the Class A Common Stock,
"Common Stock").

The enclosed Proxy may be revoked at any time prior to being voted upon by
written notice to the Secretary of the Company, by submission of a Proxy bearing
a later date or by voting in person at the meeting. Each valid and timely Proxy
not revoked will be voted at the meeting in accordance with the instructions
thereon or if no instructions are specified thereon, then the Proxy will be
voted as recommended by the Board of Directors. The affirmative vote of the
holders of a majority of the shares of Class A Common Stock present in person or
represented by proxy and entitled to vote on each other proposal is required for
the election of directors, the approval of the Viacom Inc. Senior Executive
Short-Term Incentive Plan (the "Senior Executive STIP") and the appointment of
the independent accountants. The affirmative vote of the holders of a majority
of the outstanding shares of Class A Common Stock is required for the adoption
of the proposed amendments to the Viacom Inc. Restated Certificate of
Incorporation. A broker non-vote with respect to the election of directors, the
approval of the Senior Executive STIP or the appointment of the accountants will
have no effect on such matters. A broker non-vote with respect to the proposed
amendments to the Viacom Inc. Restated Certificate of Incorporation will have
the effect of a vote against the amendments. An abstention with respect to any
matter brought before the meeting will have the effect of a vote against such
matter.

As of April 8, 1999, National Amusements, Inc. ("NAI") owned approximately
67% of the Class A Common Stock and approximately 28% of the outstanding Class A
Common Stock and Class B Common Stock on a combined basis. Sumner M. Redstone,
the controlling stockholder of NAI, is Chairman of the Board and Chief Executive
Officer of the Company.

NAI has advised the Company that it intends to vote all of its shares of
Class A Common Stock in favor of the election of the 10 nominated directors and
each of the proposals described in this Proxy Statement. Such action by NAI will
be sufficient to elect such directors and adopt each of such proposals without
any action on the part of any other holder of Class A Common Stock.

The complete mailing address of the principal executive offices of the
Company is 1515 Broadway, New York, New York 10036-5794. The Company intends to
commence its distribution of the Proxy Statement and the Proxy on or about April
16, 1999.

1
<PAGE>
ELECTION OF DIRECTORS

The election of 10 directors of the Company is proposed, each to hold office
for one year and until his or her successor is elected and qualified. The
persons named in the enclosed Proxy will vote the shares of Class A Common Stock
covered by such Proxy for the election of the nominees set forth below, unless
instructed to the contrary. Each nominee is now a member of the Board of
Directors of the Company. If, for any reason, any of said nominees becomes
unavailable for election, the holders of the Proxies may exercise discretion to
vote for substitutes proposed by the Board. Management has no reason to believe
that the persons named will be unable to serve if elected or will decline to do
so.

INFORMATION CONCERNING DIRECTORS AND NOMINEES

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

<TABLE>
<CAPTION>
NOMINEE FOR COMPANY OFFICES AND
DIRECTOR* PRINCIPAL OCCUPATION**
------------ ---------------------------------------------------------------------------
<S> <C>
George S. Abrams.................... Attorney associated with the law firm of Winer and Abrams in Boston,
Age 67 Massachusetts since 1969. Mr. Abrams served as the General Counsel and
Director since 1987 Staff Director of the United States Senate Judiciary Subcommittee on
Refugees from 1965 through 1968. He is currently a member of the Boards of
Trustees and Visiting Committees of a number of art museums, arts-related
organizations and educational institutions, including The European Fine
Arts Foundation, the Museum of Fine Arts in Boston, and the Harvard
University Art Museums. Mr. Abrams is a director of NAI and Sonesta
International Hotels Corporation.

Philippe P. Dauman.................. Deputy Chairman of the Company since January 1996 and Executive Vice
Age 45 President since March 1994. From February 1993 to October 1998, Mr. Dauman
Director since 1987 also served as General Counsel and Secretary of the Company. Prior to that,
he was a partner in the law firm of Shearman & Sterling in New York, which
he joined in 1978. Mr. Dauman is a director of NAI, Spelling Entertainment
Group Inc. ("Spelling") and Lafarge Corporation.

Thomas E. Dooley.................... Deputy Chairman of the Company since January 1996 and Executive Vice
Age 42 President since March 1994. From July 1992 to March 1994, Mr. Dooley served
Director since 1996 as Senior Vice President, Corporate Development of the Company. From August
1993 to March 1994, he also served as President, Interactive Television.
Prior to that, he held various positions in the Company's corporate and
divisional finance areas. Mr. Dooley is a director of Spelling.

Ken Miller.......................... Vice Chairman of Credit Suisse First Boston Corporation since June 1994.
Age 56 Mr. Miller served as President, Chief Executive Officer of The Lodestar
Director since 1987 Group, an investment firm, from 1988 to June 1994. Prior to that, he was
Vice Chairman of Merrill Lynch Capital Markets.
</TABLE>

2
<PAGE>

<TABLE>
<CAPTION>
NOMINEE FOR COMPANY OFFICES AND
DIRECTOR* PRINCIPAL OCCUPATION**
------------ ---------------------------------------------------------------------------
<S> <C>
Brent D. Redstone................... Special Counsel to the law firm of Davis, Graham and Stubbs, L.L.P. in
Age 48 Denver, Colorado since July 1998. Mr. Redstone has a corporate and
Director since 1991 securities law practice. He previously served as a member of the Board of
Directors of the American Prosecutors Research Institute, located in
Alexandria, Virginia. He served as Assistant District Attorney for Suffolk
County, Massachusetts from 1977 to 1991. Mr. Redstone is a director of NAI.

Shari Redstone...................... Executive Vice President of NAI since 1994. Prior to that, she served as
Age 45 Vice President, Corporate Planning and Development of NAI. Ms. Redstone
Director since 1994 practiced law from 1978 to 1993; her practice included corporate law,
estate planning and criminal law. Ms. Redstone participated on the
Executive Committee at the Boston University School of Law in the early
1980s. She is currently a member of the Board of Directors at Combined
Jewish Philanthropies, a member of the Board of Directors and Executive
Committee for the National Association of Theatre Owners, and a member of
the Board of Trustees at Dana Farber Cancer Institute. She also is a member
of the Board of Trustees at Tufts University and a member of the Advisory
Committee for Tufts Hillel. Ms. Redstone is a director of NAI.

Sumner M. Redstone.................. Chairman of the Board of the Company since 1987 and Chief Executive Officer
Age 75 since January 1996. Mr. Redstone has served as Chairman of the Board of NAI
Director since 1986 since 1986 and President, Chief Executive Officer of NAI since 1967. He is
a member of the Advisory Council for the Academy of Television Arts and
Sciences Foundation and is on the Board of Trustees for The Museum of
Television and Radio. Mr. Redstone served as the first Chairman of the
Board of the National Association of Theatre Owners and is currently a
member of its Executive Committee. Since 1982, Mr. Redstone has been a
member of the faculty of Boston University Law School, where he has
lectured on entertainment law, and since 1994, he has been a Visiting
Professor at Brandeis University. Mr. Redstone graduated from Harvard
University in 1944 and received an LL.B. from Harvard University School of
Law in 1947. Upon graduation, Mr. Redstone served as Law Secretary with the
United States Court of Appeals, and then as a Special Assistant to the
United States Attorney General. Mr. Redstone is Chairman of the Board of
Spelling.

Frederic V. Salerno................. Senior Executive Vice President and Chief Financial Officer/Strategy and
Age 55 Business Development of Bell Atlantic Corporation ("Bell Atlantic") since
Director since 1994 August 1997. Prior to the merger of Bell Atlantic and NYNEX Corporation
("NYNEX"), Mr. Salerno served as Vice Chairman--Finance and Business
Development of NYNEX from 1994 to 1997. Mr. Salerno was Vice Chairman of
the Board of NYNEX and President of the Worldwide Services Group from 1991
to 1994. Mr. Salerno is a director of Avnet Inc., The Bear Stearns
Companies, Inc., Bell Atlantic, KeySpan Energy Corporation and The Hartford
Financial Services Group, Inc.
</TABLE>

<PAGE>
<TABLE>
<CAPTION>
NOMINEE FOR COMPANY OFFICES AND
DIRECTOR* PRINCIPAL OCCUPATION**
------------ ---------------------------------------------------------------------------
<S> <C>
William Schwartz.................... Counsel to Cadwalader, Wickersham & Taft since 1988. Mr. Schwartz also
Age 65 served as Vice President for Academic Affairs (the chief academic officer)
Director since 1987 of Yeshiva University from 1993 to July 1998 and has been University
Professor of Law at Yeshiva University and the Cardozo School of Law since
1991. He was Dean of the Boston University School of Law from 1980 to 1988
and a professor of law at Boston University from 1955 to 1991. Mr. Schwartz
is Chairman of the Board of UST Corporation and a member of the Advisory
Board of WCI Steel, Inc. He is an honorary member of the National College
of Probate Judges. He served as Chairman of the Boston Mayor's Special
Commission on Police Procedures and was formerly a member of the Legal
Advisory Board of the New York Stock Exchange.

Ivan Seidenberg..................... Chairman of the Board of Bell Atlantic since January 1999 and Chief
Age 52 Executive Officer since June 1998. Mr. Seidenberg served as Vice Chairman
Director since 1995 and President of Bell Atlantic from August 1997 to December 1998 and Chief
Operating Officer from August 1997 to June 1998. Prior to the merger of
Bell Atlantic and NYNEX, he served as Chairman and Chief Executive Officer
of NYNEX since April 1995 and before that as President and Chief Executive
Officer of NYNEX since January 1995. Previously, he served as President and
Chief Operating Officer of NYNEX from March 1994 to December 1994 and as
Vice Chairman of NYNEX from April 1991 to January 1995. Mr. Seidenberg
became a director of NYNEX in 1991. He is also a director of AlliedSignal
Inc., American Home Products Corporation, Boston Properties, Inc. and CVS
Corporation.
</TABLE>

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

* Brent Redstone is the son of Sumner Redstone and Shari Redstone is Sumner
Redstone's daughter. None of the other nominees for director is related to
any other director or executive officer of the Company by blood, marriage or
adoption.

** NAI and Spelling are affiliates of the Company. None of the other
corporations or organizations indicated herein is a parent, subsidiary or
other affiliate of the Company.

<PAGE>
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS

During 1998, the Board of Directors held eight (8) regular meetings and one
(1) special meeting.

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

<TABLE>
<CAPTION>
NUMBER OF
MEETINGS
COMMITTEE MEMBERS OF COMMITTEE DURING 1998
- - ------------------------------------ -------------------------------------------------------------- -----------------
<S> <C> <C>
Audit Committee..................... Messrs. Abrams, Miller, Salerno*, Schwartz and Seidenberg 3

Compensation Committee.............. Messrs. Abrams, Miller, Brent Redstone, Salerno, Schwartz* and 9
Seidenberg and Ms. Shari Redstone

Senior Executive Compensation Messrs. Salerno, Schwartz* and Seidenberg 8
Committee.........................

Governance and Nominations Messrs. Abrams*, Dauman, Miller, Seidenberg and Sumner 1
Committee......................... Redstone
</TABLE>

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

* Chairman

The functions of the Audit Committee include reviewing with the independent
accountants the plans and results of the annual audit, approving the audit and
non-audit services by such independent accountants, reviewing the scope and
results of the Company's internal auditing procedures, reviewing the adequacy of
the Company's system of internal accounting controls and reviewing the annual
financial statements prepared for release to stockholders and the public.

The functions of the Compensation Committee include reviewing the Company's
general compensation strategy (except with respect to matters entrusted to the
Senior Executive Compensation Committee as described below), reviewing the terms
of employment agreements for executives earning over a specified amount and
administering the Company's annual bonus compensation plan and long-term
compensation plans (other than the stock option program), as well as its benefit
plans.

The functions of the Senior Executive Compensation Committee include
reviewing and approving executive compensation for executive officers if their
compensation is, or may become, subject to Section 162(m) of the Internal
Revenue Code of 1986, as amended (the "Code"), including the terms of employment
agreements for such executives. The Senior Executive Compensation Committee also
administers the Senior Executive STIP, determining the executive officers who
will participate in the plan, establishing performance targets and determining
specific bonuses for the participants. In addition, this Committee administers
the Company's stock option plans and approves individual stock option grants.

The functions of the Governance and Nominations Committee include addressing
nominations to the Board and corporate governance issues. The Governance and
Nominations Committee will consider nominees recommended by the stockholders of
the Company; recommendations should be submitted to the Company, to the
attention of Michael D. Fricklas, Secretary.

<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Set forth below, as of April 8, 1999, is certain information concerning
beneficial ownership of each equity security of the Company and Spelling* by (i)
each director of the Company, (ii) each of the executive officers whose
individual compensation is disclosed in the tables that appear on subsequent
pages, and (iii) current directors and executive officers of the Company as a
group. Also set forth below, as of April 8, 1999, is certain information
concerning beneficial ownership of each equity security of the Company by
holders of 5% or more of the Class A Common Stock. All Viacom share numbers set
forth below reflect a 2 for 1 stock split effectuated by way of a dividend on
March 31, 1999.

<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP OF EQUITY SECURITIES
---------------------------------------------------------------
TITLE OF EQUITY NUMBER OF OPTION PERCENT OF
NAME SECURITY EQUITY SHARES SHARES(1) CLASS
- - -------------------------------------------- -------------------- ---------------- ---------- -----------
<S> <C> <C> <C> <C>
George S. Abrams Class A Common 14,010(2) -- (9)
Class B Common 14,740(2) 42,000 (9)

Capital Research and Management Company Class A Common 8,251,800(3) -- 5.9%
333 South Hope Street
Los Angeles, CA 90071

Philippe P. Dauman Class A Common 2,380(4) -- (9)
Class B Common 29,778(4) 973,332 (9)

Thomas E. Dooley Class A Common 4,866(4) 0 (9)
Class B Common 17,286(4) 947,332 (9)

Michael D. Fricklas Class A Common 72(4) -- (9)
Class B Common 3,316(4) 55,666 (9)

Mario J. Gabelli Class A Common 13,447,864(5) -- 9.6%
Gabelli Funds, Inc.
One Corporate Center
Rye, NY 10580-1434

Ken Miller Class A Common 12,654(2) -- (9)
Class B Common 12,936(2) 42,000 (9)

National Amusements, Inc. Class A Common 93,658,828(6) -- 66.8%
200 Elm Street Class B Common 104,334,828(6) -- 18.8%
Dedham, MA 02026

Brent D. Redstone Class A Common --(7) -- --
Class B Common --(7) -- --

Shari Redstone Class A Common --(7) -- --
Class B Common --(7) -- --

Sumner M. Redstone Class A Common 93,658,988(6) -- 66.8%
Class B Common 104,334,988(6) 1,499,998 18.8%

Frederic V. Salerno Class B Common -- 22,000(8) (9)

William Schwartz Class A Common 13,312(2) -- (9)
Class B Common 13,584(2) 42,000 (9)

Ivan Seidenberg Class B Common -- 19,000(8) (9)
</TABLE>

6
<PAGE>

<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP OF EQUITY SECURITIES
---------------------------------------------------------------
TITLE OF EQUITY NUMBER OF OPTION PERCENT OF
NAME SECURITY EQUITY SHARES SHARES(1) CLASS
- - -------------------------------------------- -------------------- ---------------- ---------- -----------
<S> <C> <C> <C> <C>
George S. Smith, Jr. Class A Common 10,642(4) -- (9)
Class B Common 14,904(4) 341,332 (9)

Current directors and executive officers as Class A Common 60,284(2)(4) 0 (9)
a group other than Mr. Sumner Redstone (18 Class B Common 141,674(2)(4) 2,775,226 (9)
persons) 5 Year Warrant -- -- --
Spelling Common -- -- --
</TABLE>

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

* Other than shares of Spelling Common Stock owned by the Company and
attributed to NAI and Sumner Redstone.

NOTES:
(1) Reflects shares subject to options to purchase such shares which on April 8,
1999 were unexercised but were exercisable within a period of 60 days from
that date. These shares are excluded from the column headed "Number of
Equity Shares".

(2) Includes Class A Common Stock units and Class B Common Stock units credited
as of January 1, 1999 to Messrs. Abrams, Miller and Schwartz pursuant to the
Deferred Compensation Plan described below under which their directors' fees
are converted into stock units.

(3) Capital Research and Management Company, an investment advisor, filed with
the Securities and Exchange Commission (the "Commission") a Statement on
Schedule 13G (the "Capital Statement"), dated February 8, 1999, reporting
beneficial ownership as of December 31, 1998 of 8,251,800 shares of Class A
Common Stock, representing approximately 5.9% of the outstanding shares of
such class. The Capital Statement reported that the shares are generally
held for investment and that Capital Research and Management Company has
sole investment power but does not have voting power over such shares.

(4) Includes shares and rights equal in value to shares held through the
Company's 401(k) and Excess 401(k) Plans as of December 31, 1998.

(5) Mario J. Gabelli and various entities, including investment companies, which
he directly or indirectly controls or for which he acts as chief investment
officer, filed with the Commission Amendment No. 4 to their Statement on
Schedule 13D (the "Gabelli Statement"), dated December 22, 1997, reporting
an aggregate beneficial ownership of 13,447,864 shares of Class A Common
Stock, representing approximately 9.6% of the outstanding shares of such
class. The Gabelli Statement reported that the shares are generally held for
investment and that the entities reporting beneficial ownership generally
have sole investment and voting power over such shares.

(6) Except for 160 shares of each class of Common Stock owned directly by Mr.
Redstone, all shares are owned of record by NAI. Mr. Redstone is the
Chairman and the beneficial owner of the controlling interest in NAI and,
accordingly, beneficially owns all such shares.

(7) Brent Redstone and Shari Redstone are stockholders of NAI and, accordingly,
each has a significant indirect beneficial interest in the Company shares
owned by NAI.

(8) Held for the benefit of Bell Atlantic.

(9) Less than 1%.

DIRECTORS' COMPENSATION*

Directors of the Company who are not officers or employees of the Company or
NAI or members of their immediate family ("Outside Directors") are entitled to
receive the directors' fees and are eligible to participate in the Company's
retirement and stock option plans described below. Messrs. Abrams, Miller,
Salerno, Schwartz and Seidenberg were Outside Directors for the entire 1998
calendar year. In 1998, only Outside Directors received any compensation for
services as a director.

DIRECTORS' FEES. Effective October 1, 1998, certain fees paid to the
Outside Directors were increased. Accordingly, Outside Directors received the
following fees for 1998: (i) a quarterly retainer of $10,000 for the first three
quarters of 1998 and a quarterly retainer of $12,500 for the fourth quarter of
1998; (ii) a per meeting attendance fee of $1,500 for each Board meeting; (iii)
a per meeting attendance fee of $500 for each meeting of the Audit Committee,
Compensation Committee and Governance and Nominations

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

* The number of Common Stock units and the number of shares subject to options
and the exercise price set forth in the discussion of the Deferred
Compensation Plan and the Outside Directors' Stock Option Plans have been
adjusted for the Company's 2 for 1 common stock split, effective March 31,
1999, by doubling the number of units and shares and dividing the exercise
price in half.

7
<PAGE>
Committee held during the first three quarters of 1998 and a per meeting
attendance fee of $1,500 for each meeting of such Committees held during the
fourth quarter of 1998; and (iv) a $7,500 annual retainer fee for the Chairman
of the Audit Committee (currently Mr. Salerno), for the Chairman of the
Compensation Committee (currently Mr. Schwartz) and for the Chairman of the
Governance and Nominations Committee (currently Mr. Abrams). No additional fees
or retainers are paid for attendance at meetings of the Senior Executive
Compensation Committee held on the same day on which a meeting of the
Compensation Committee is held or for the Chairman of the Senior Executive
Compensation Committee. Compensation for Messrs. Salerno's and Seidenberg's
services as Outside Directors for 1998 was paid to Bell Atlantic.

DEFERRED COMPENSATION PLAN. Since 1989, Messrs. Abrams, Miller and Schwartz
have deferred payment of their retainer and attendance fees pursuant to the
Company's unfunded Deferred Compensation Plan; these amounts are deemed invested
in the number of stock units equal to the number of shares of Common Stock such
amounts would have purchased when deferred. Payment will be made in a lump sum
or in three or five annual installments starting seven months after their
retirement, with the value of the stock units determined by reference to the
fair market values of the Class A Common Stock and Class B Common Stock at that
time and, in the case of installment payments, credited with interest. For 1998,
the stock unit accounts of Messrs. Abrams, Miller and Schwartz were credited
with 1,286, 1,064 and 1,196 Class A Common Stock units and 1,274, 1,056 and
1,188 Class B Common Stock units, respectively.

RETIREMENT INCOME PLAN. In 1989, the Company established an unfunded,
non-qualified Retirement Income Plan pursuant to which each Outside Director
will receive annual payments commencing on such director's retirement equal to
100% of the amount of the annual Board retainer at the time of such retirement
(not including meeting attendance fees or the annual retainer for serving as
Chairman of the Audit, Compensation or Governance and Nominations Committee),
provided he has served on the Board for at least three years. The Plan provides
that the director or his estate will receive such annual payments for the number
of years of such director's service on the Board.

1993 AND 1994 OUTSIDE DIRECTORS' STOCK OPTION PLANS. Each Outside Director
received a grant of non-qualified stock options to purchase 10,000 shares of
Class B Common Stock when the Company's Outside Directors' Stock Option Plan
(the "1993 Plan") was adopted in May 1993 or, for Outside Directors who joined
the Board after the Plan was adopted, when such person was elected or appointed
to the Board. In addition, each Outside Director has received an annual grant of
stock options to purchase 3,000 shares of Class B Common Stock since November
1994 when the Company's 1994 Outside Directors' Stock Option Plan (the "1994
Plan") was adopted. Each Outside Director who had served as an Outside Director
since 1989 also received a one-time grant under the 1994 Plan in November 1994
of stock options to purchase 20,000 shares of Class B Common Stock. The per
share exercise price of each grant under the 1993 and 1994 Plans has been the
closing price of a share of Class B Common Stock on the American Stock Exchange
("AMEX") on the date of grant. On August 1, 1998, Messrs. Abrams, Miller,
Salerno, Schwartz and Seidenberg each received an annual grant under the 1994
Plan to purchase 3,000 shares of Class B Common Stock, with a per share exercise
price of $34.25 (the closing price of a share of Class B Common Stock on the
AMEX on the date of grant).

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

Messrs. Abrams, Miller, Brent Redstone, Salerno, Schwartz and Seidenberg and
Ms. Shari Redstone were members of the Compensation Committee for the entire
1998 calendar year.

Shari Redstone is an executive officer of NAI. Mr. Dauman, a director and
executive officer of the Company, is a director of NAI.

George S. Abrams, a director of the Company and NAI, entered into an
agreement with the Company in 1994 to provide legal and governmental consulting
services for the Company. During the fiscal year

8
<PAGE>
ended December 31, 1998, the Company made payments to Mr. Abrams for such
services in the aggregate amount of $120,000.

Ken Miller, a director of the Company, is Vice Chairman of Credit Suisse
First Boston Corporation. Credit Suisse First Boston Corporation has performed,
and, in the future, is expected to perform from time to time, investment banking
services for the Company.

Brent Redstone, a director of the Company and NAI, is associated with the
law firm of Davis, Graham and Stubbs, L.L.P. which has performed, both prior to
and after Mr. Redstone became associated with the firm, and, in the future, is
expected to perform from time to time, legal services for the Company.

NAI, the Company's major stockholder, licenses films in the ordinary course
of its business for its motion picture theaters from all major studios including
Paramount Pictures, a division of the Company. During the fiscal year ended
December 31, 1998, NAI made payments to Paramount Pictures in the aggregate
amount of approximately $24,985,000 to license Paramount Pictures films. NAI
licenses films from a number of unaffiliated companies and the Company believes
that the terms of the licenses between NAI and Paramount Pictures were no less
favorable to Paramount Pictures than licenses between unaffiliated companies and
NAI were to such unaffiliated companies. The Company expects to continue to
license Paramount Pictures films to NAI upon similar terms in the future.

Mr. Redstone and NAI own an aggregate of approximately 25.5% of the common
stock of Midway Games Inc. ("Midway"). During the fiscal year ended December 31,
1998, Blockbuster purchased approximately $19,111,000 of home video games from
Midway. The Company believes that the terms of these purchases were no less
favorable to the Company than it would have obtained from parties in which there
was no such ownership interest. The Company expects to purchase video games from
Midway in the future.

EXECUTIVE COMPENSATION

REPORT OF THE COMPENSATION COMMITTEE AND THE SENIOR EXECUTIVE COMPENSATION
COMMITTEE
ON EXECUTIVE COMPENSATION

The Compensation Committee and the Senior Executive Compensation Committee
(collectively, the "Committee") of the Board of Directors has furnished the
following report on executive compensation for fiscal 1998.

All members of the Compensation Committee and the Senior Executive
Compensation Committee are non-employee directors. The Compensation Committee
reviews and approves the Company's executive compensation. The Senior Executive
Compensation Committee reviews and approves compensation for executive officers,
if their compensation is, or may become, subject to Section 162(m) of the
Internal Revenue Code of 1986, as amended (the "Code"). Independent compensation
consultants have advised the Committee from time to time with respect to the
Company's long-term incentive compensation plans since 1987.

The objectives of the executive compensation package for the Company's
executive officers (other than the Chief Executive Officer) are to:

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

- Provide annual bonus compensation for executive officers that varies with
the Company's financial performance and reflects the executive officer's
individual contribution to that performance;

- Provide long-term compensation that is tied to the Company's stock price
so as to focus the attention of the executive officers on managing the
Company from the perspective of an owner with an equity stake; and

9
<PAGE>
- Emphasize performance-based compensation, through annual bonus
compensation and long-term compensation, over fixed compensation.

The Committee evaluates the competitiveness of its executive compensation
packages based on information from a variety of sources, including information
supplied by consultants and information obtained from the media or from the
Company's own experience. The Committee also focuses on executive compensation
offered by the members of the peer groups included in the Performance Graphs set
forth on a subsequent page. At times, the Committee also evaluates compensation
relative to a broader range of companies, whether or not included in such peer
groups, that have particular lines of business comparable to those of the
Company.

COMPLIANCE WITH INTERNAL REVENUE CODE SECTION 162(M)

Section 162(m) of the Code generally limits to $1,000,000 the federal tax
deductibility of compensation (including stock options) paid to the Company's
Chief Executive Officer and the other four executive officers whose compensation
is individually disclosed in the tables that appear on subsequent pages (the
"named executive officers"). The tax law includes an exception to the deduction
limitation for deferred compensation paid to an executive officer when he is no
longer subject to Section 162(m). Performance based compensation (including
stock options) is also subject to an exception, provided such compensation meets
certain requirements, including stockholder approval.

Compensation for the Company's executive officers (other than the Chief
Executive Officer) is comprised of base salary, annual bonus compensation,
long-term compensation in the form of stock options and deferred compensation
for any executive officer whose annual base salary exceeds $1,000,000. The
annual bonus plan for most of the Company's executives officers (the "Senior
Executive STIP") and the Company's stock option plans (the "LTMIP") were
designed to comply with the exception for performance-based compensation. The
Senior Executive STIP provides objective performance-based annual bonuses,
subject to, prior to March 18, 1999, a maximum limit of eight (8) times the
executive's base salary in effect on March 27, 1996. As described below under
"Approval of the Viacom Inc. Senior Executive Short-Term Incentive Plan", the
Senior Executive STIP was amended on March 18, 1999 to provide that the maximum
limit is eight (8) times the executive's annual salary compensation, consisting
of base salary plus any deferred compensation. To comply with Section 162(m) of
the Code, the Senior Executive STIP is being submitted for stockholder approval
at the 1999 Annual Meeting of Stockholders. Long-term compensation for the
Company's executive officers has been provided through grants of LTMIP stock
options. It is expected that long-term compensation for future years will
continue to be provided through grants of LTMIP stock options. The stockholders
of the Company have approved the LTMIP.

ANNUAL SALARY COMPENSATION

Annual salary compensation levels for executive officers are designed to be
consistent with competitive practice and level of responsibility. Annual salary
compensation consists of base salary and, for the Deputy Chairmen, deferred
compensation. During 1998, an increase was made in the deferred compensation
payable to Messrs. Dauman and Dooley for 1998 and subsequent years, in
connection with their entering into new five (5) year employment agreements. The
employment agreements for the named executive officers are described below under
"Employment Agreements".

ANNUAL BONUS COMPENSATION

Annual bonus compensation for 1998 for the named executive officers was
provided under the Senior Executive STIP. In accordance with the Senior
Executive STIP and as permitted by Section 162(m) of the Code, the Senior
Executive Compensation Committee established performance criteria and target
awards for these executive officers. The performance criteria related to the
attainment of a specified level of

10
<PAGE>
operating income for the Company as a whole. For this purpose, the Senior
Executive STIP uses the EBITDA definition of revenues less operating expenses
(other than depreciation, amortization and non-recurring charges) to define
"operating income".

The level of the Senior Executive STIP annual bonuses for 1998 for most of
the Company's executive officers, including the named executive officers (other
than the Chief Executive Officer), was based on the determination of the Senior
Executive Compensation Committee that the performance criteria established for
1998 had been achieved. The Senior Executive Compensation Committee considered a
number of factors, including the exceptionally effective role played by the
Deputy Chairmen and the executive officers in helping the Company achieve record
operating results, a significantly improved capital structure, the sale on very
attractive terms of several non-core assets, including the Company's
non-consumer publishing assets for approximately $4.7 billion, Blockbuster's
music operations and Spelling's Virgin Interactive video game businesses, in
addition to helping to achieve the repositioning of Blockbuster Entertainment,
and awarded the annual bonuses set forth below in the Summary Executive
Compensation Table.

Annual bonus compensation for the Company's executive officers not
participating in the Senior Executive STIP was provided under the Company's
Short-Term Incentive Plan based on individual performance and the Company's
financial performance.

LONG-TERM COMPENSATION

The Committee believes that the use of equity-based long-term compensation
plans appropriately links executive interests to enhancing stockholder value.

Annual grants of LTMIP stock options for Class B Common Stock are generally
awarded to the Company's executive officers in August of each year. The grants
of LTMIP stock options for Class B Common Stock awarded to the Company's
executive officers in August 1997 represented such executives' grants for 1997
and 1998; these stock options have an extended vesting period of five years. The
$15.25 exercise price, adjusted for the March 1999 stock split, of the 1997/1998
stock options grants was set at the fair market value of the Class B Common
Stock on the date of grant. The stock options have a ten-year term from the date
of grant.

The size of the grant to each executive was within the range assigned to the
executive's relative level of responsibility. In determining the amounts
awarded, the Senior Executive Compensation Committee considered the amounts
awarded in prior years, as adjusted for changes in responsibility and the
provisions of executives' employment agreements.

Messrs. Dauman and Dooley, the Deputy Chairmen and Executive Vice Presidents
of the Company, were awarded special stock option grants in August 1998 to
purchase, adjusted for the March 1999 stock split, 2,000,000 shares* of Class B
Common Stock each in connection with their entering into new five (5) year
employment agreements. These special grants represented such executives' entire
stock option grant for the 1999 - 2003 calendar years and were made in lieu of
annual grants for such years. The $30.536 exercise price*, adjusted for the
March 1999 stock split, of such special stock option grants was set at the fair
market value of the Class B Common Stock on the date of grant. These options
will vest in two equal installments during the last two years of their
employment term and have a ten-year term from the date of grant. The terms of
these executives' new employment agreements are described below under
"Employment Agreements".

11
<PAGE>
CHIEF EXECUTIVE OFFICER'S COMPENSATION

Mr. Redstone, the Chairman of the Board, Chief Executive Officer and
controlling stockholder of the Company, has waived payment of any salary or
bonus compensation for his services as Chief Executive Officer of the Company.

In August 1998, Mr. Redstone was awarded a grant of stock options to
purchase, adjusted for the March 1999 stock split, 4,000,000* shares of Class B
Common Stock, representing his grant for the 1999 - 2003 calendar years. This
was awarded on the same terms as the August 1998 grants to the Company's Deputy
Chairmen.

<TABLE>
<S> <C>
Members of the Members of the Senior Executive
Compensation Committee: Compensation Committee:

George S. Abrams Frederic V. Salerno
Ken Miller William Schwartz, Chairman
Brent D. Redstone Ivan Seidenberg
Shari Redstone
Frederic V. Salerno
William Schwartz, Chairman
Ivan Seidenberg
</TABLE>

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

* The special stock option grants that Messrs. Dauman and Dooley each received
in August 1998 were for 1,000,000 shares of Class B Common Stock with an
exercise price of $61.125 per share. The grants were adjusted for the
Company's 2 for 1 common stock split, effective March 31, 1999, by doubling
the number of shares and dividing the exercise price in half. Similarly, Mr.
Redstone originally received a grant for 2,000,000 shares of Class B Common
Stock. The exercise price for the 1997/1998 stock option grants reflects
adjustment for the split.

12
<PAGE>
SUMMARY EXECUTIVE COMPENSATION TABLE

The following table sets forth information concerning total compensation for
the Chief Executive Officer and the four most highly compensated executive
officers of the Company who served in such capacities during 1998 for services
rendered to the Company during each of the last three fiscal years.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION (1) LONG-TERM COMPENSATION
------------------------------------------------------- --------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
OPTION NUMBERS ADJUSTED
FOR MARCH 31, 1999
STOCK SPLIT
--------------------------

<CAPTION>
AWARDS PAYOUTS
------------- -----------
NAME AND PRINCIPAL SECURITIES
POSITION DEFERRED UNDERLYING LTIP ALL OTHER
AT END OF FISCAL 1998 YEAR SALARY BONUS COMPENSATION(2) OPTIONS(3)(4) PAYOUTS(5) COMPENSATION(6)
- - ------------------------- --------- ------------ ------------ ---------------- ------------- ----------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
Sumner M. Redstone 1998 $ 0 $ 0 $ 0 4,000,000 $ 0 $ 0
CHAIRMAN, CHIEF 1997 0 0 0 1,500,000 0 0
EXECUTIVE OFFICER 1996 0 0 0 2,000,000 0 0

Philippe P. Dauman 1998 1,000,000 6,000,000 710,000 2,000,000 0 103,288
DEPUTY CHAIRMAN, 1997 1,000,000 2,750,000 100,000 600,000 0 73,530
EXECUTIVE VICE 1996 1,000,000 2,250,000 0 800,000 0 81,332
PRESIDENT

Thomas E. Dooley 1998 1,000,000 6,000,000 710,000 2,000,000 0 103,288
DEPUTY CHAIRMAN, 1997 1,000,000 2,750,000 100,000 600,000 0 73,530
EXECUTIVE VICE 1996 1,000,000 2,250,000 0 800,000 33,380 80,993
PRESIDENT

Michael D. Fricklas 1998 529,711 550,000 0 0 0 18,750
SENIOR VICE PRESIDENT, 1997 471,250 300,000 0 120,000 0 17,976
GENERAL COUNSEL AND 1996 425,000 250,000 0 50,000 0 18,750
SECRETARY

George S. Smith, Jr. 1998 612,500 475,000 0 0 0 22,000
SENIOR VICE PRESIDENT, 1997 562,500 300,000 0 160,000 0 21,558
CHIEF 1996 516,538 300,000 0 70,000 61,549 21,562
FINANCIAL OFFICER
</TABLE>

- - ------------------------
NOTES:

(1) Mr. Redstone has waived payment of salary and bonus compensation for his
services as Chief Executive Officer during 1998, 1997 and 1996. Salary for
the other named executives includes the following amounts of compensation
deferred under the Company's 401(k) and Excess 401(k) Plans: for Mr. Dauman
for 1998 in the amount of $187,500, for 1997 in the amount of $119,500 and
for 1996 in the amount of $160,454; for Mr. Dooley for 1998 in the amount of
$641,071, for 1997 in the amount of $349,270 and for 1996 in the amount of
$472,512; for Mr. Fricklas for 1998 in the amount of $82,365, for 1997 in
the amount of $66,085 and for 1996 in the amount of $87,173; and for Mr.
Smith for 1998 in the amount of $45,606, for 1997 in the amount of $43,115
and for 1996 in the amount of $43,125.

(2) Represents amounts deferred in accordance with the executive's employment
agreement until the year after the executive ceases to serve as an executive
officer of the Company.

(3) The number of shares subject to options set forth in this table have been
adjusted for the Company's 2 for 1 common stock split, effective March 31,
1999, by doubling the number of shares and dividing the exercise price in
half.

(4) The 1998 special grants for Messrs. Redstone, Dauman and Dooley were awarded
in lieu of annual grants for the next five (5) years (I.E., 1999 - 2003) in
connection, in the case of Messrs. Dauman and Dooley, with their entering
into new five (5) year employment agreements. The 1997 grants for Messrs.
Redstone, Dauman, Dooley, Fricklas and Smith represented their entire annual
grant for calendar years 1997 and 1998. Mr. Redstone received a grant in
January 1997 which represented his annual

13
<PAGE>
grant for 1996. Mr. Redstone received a special one-time grant of, as
adjusted for the March 1999 stock split, 2,000,000 options for Class B
Common Stock on January 29, 1996, when he became Chief Executive Officer of
the Company. Messrs. Dauman and Dooley each received two stock option grants
in 1996: a special one-time grant of, as adjusted for the March 1999 stock
split, 500,000 options for Class B Common Stock on January 29, 1996, when
they were appointed Deputy Chairmen, and an annual grant of, as adjusted for
the March 1999 stock split, 300,000 options for Class B Common Stock in
August 1996.

(5) The 1996 payout represents the amount paid in cash for the phantom units
granted to the named executives in 1989 under the Company's 1989 LTMIP with
a December 1996 valuation date.

(6) The Company maintains a program of life and disability insurance which is
generally available to all salaried employees on the same basis. In
addition, during 1998, the Company maintained for Messrs. Dauman and Dooley
certain supplemental life insurance benefits. All Other Compensation
includes premiums paid by the Company for this supplemental coverage for
1998 for each of Messrs. Dauman and Dooley of $25,788; the Company's
matching contributions under its 401(k) Plan for each of Messrs. Dauman,
Fricklas and Smith of $4,000 and for Mr. Dooley of approximately $3,571;
credits for the Company's matching contributions under its Excess 401(k)
Plan for 1998 for Mr. Dauman of $55,750, for Mr. Dooley of $56,179, for Mr.
Fricklas of $14,750 and for Mr. Smith of $18,000; and credits for the
Company's matching contributions for compensation deferred pursuant to their
employment agreements for 1998 for each of Messrs. Dauman and Dooley of
$17,750.

14
<PAGE>
OPTION GRANTS IN FISCAL 1998

The following table sets forth certain information with respect to special
stock options to purchase shares of Class B Common Stock awarded in August 1998
in lieu of annual grants for the next five (5) years (I.E., 1999 - 2003) to Mr.
Redstone, the Chief Executive Officer of the Company, and to Messrs. Dauman and
Dooley, the Deputy Chairmen and Executive Vice Presidents of the Company, in
connection with their entering into new five (5) year employment agreements. The
grants will vest in two equal installments in August 2002 and August 2003, the
last two (2) years of the term of Messrs. Dauman and Dooley's new employment
agreements. No grants were made to Messrs. Fricklas and Smith during 1998
because their 1997 grant represented their grant for 1997 and 1998. The table
includes a column designated "Grant Date Present Value". The calculation in that
column is based on the Black-Scholes option pricing model adapted for use in
valuing executive stock options. There is no way to anticipate what the actual
growth rate of the Class B Common Stock will be.

<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
ADJUSTED FOR MARCH 31, 1999 STOCK SPLIT
------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
% OF TOTAL
NUMBER OF SHARES OF OPTIONS GRANTED EXERCISE GRANT DATE
CLASS B COMMON STOCK TO EMPLOYEES IN PRICE EXPIRATION PRESENT
NAME UNDERLYING OPTIONS(1) FISCAL 1998 ($/SHARE) DATE VALUE(2)
- - ----------------------------- --------------------- --------------- ------------- ----------- -------------
Sumner M. Redstone........... 4,000,000 29.55% $ 30.563 8/20/2008 $ 51,955,200

Philippe P. Dauman........... 2,000,000 14.77% 30.563 8/20/2008 25,977,600

Thomas E. Dooley............. 2,000,000 14.77% 30.563 8/20/2008 25,977,600

Michael D. Fricklas.......... 0 0 -- --

George S. Smith, Jr.......... 0 0 -- --
</TABLE>

- - ------------------------
NOTES:

(1) In August 1998, Mr. Redstone received a stock option grant for 2,000,000
shares of Class B Common Stock and Messrs. Dauman and Dooley each received
grants for 1,000,000 shares. The number of shares subject to these options
have been adjusted for the Company's 2 for 1 common stock split, effective
March 31, 1999, by doubling the number of shares and dividing the exercise
price in half.

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

<TABLE>
<S> <C>
Expected volatility...................................................................... 32.73%
Risk-free rate of return................................................................. 5.45%
Dividend yield........................................................................... 0.00%
Time of exercise......................................................................... 6 years
</TABLE>

The approach used in developing the assumptions upon which the Black-Scholes
valuation was done is consistent with the requirements of the Statement of
Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation".

15
<PAGE>
AGGREGATED OPTION EXERCISES IN FISCAL 1998
AND VALUE OF OPTIONS AT END OF FISCAL 1998

The following table sets forth as to the Chief Executive Officer and the
named executive officers information with respect to option exercises during
1998 and the status of their options on December 31, 1998.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES(1)(2)
UNDERLYING UNEXERCISED
OPTIONS AS OF
DECEMBER 31, 1998 VALUE OF
--------------------------- UNEXERCISED
IN-THE-MONEY
OPTION NUMBERS OPTIONS AS
NUMBER OF ADJUSTED FOR OF DECEMBER 31,
SECURITIES(1) MARCH 31, 1999 STOCK SPLIT 1998
ACQUIRED VALUE --------------------------- ---------------
NAME ON EXERCISE REALIZED EXERCISABLE NONEXERCISABLE EXERCISABLE
- - ------------------------------------ --------------------- ------------- ----------- -------------- ---------------
<S> <C> <C> <C> <C> <C>
Sumner M. Redstone.................. 0 0 833,332 6,666,668 $ 14,583,309

Philippe P. Dauman.................. 0 0 806,666 3,233,334 13,640,822

Thomas E. Dooley.................... 0 0 788,666 3,233,334 14,995,822

Michael D. Fricklas................. 0 0 75,666 166,334 1,277,862

George S. Smith, Jr.(3)............. 15,000 A Shares $ 518,094 341,332 236,668 6,690,099
15,000 B Shares

<CAPTION>
NAME NONEXERCISABLE
- - ------------------------------------ ---------------
<S> <C>
Sumner M. Redstone.................. $ 76,666,691
Philippe P. Dauman.................. 37,454,178
Thomas E. Dooley.................... 37,454,178
Michael D. Fricklas................. 3,515,138
George S. Smith, Jr.(3)............. 4,978,776
</TABLE>

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

NOTES:

(1) The number of shares subject to options set forth in this table have been
adjusted for the Company's 2 for 1 common stock split, effective March 31,
1999, by doubling the number of shares and dividing the exercise price in
half.

(2) The options are for shares of Class B Common Stock except that exercisable
options include for Mr. Dooley 8,000 options each for a share of Class A
Common Stock and a share of Class B Common Stock; the aggregate number of
exercisable options includes two underlying securities for each of these
options.

(3) Mr. Smith exercised options during 1998 that were due to expire on August 1,
1999.

16
<PAGE>
PENSION PLAN TABLE

<TABLE>
<CAPTION>
YEARS OF SERVICE
------------------------------------------
<S> <C> <C> <C> <C>
REMUNERATION 15 20 25 30
- - ---------------------------------------------------------------------- --------- --------- --------- ---------
$150,000.............................................................. $ 37,041 $ 49,387 $ 61,734 $ 74,081
300,000.............................................................. 76,416 101,887 127,359 152,831
450,000.............................................................. 115,791 154,387 192,984 231,581
600,000.............................................................. 155,166 206,887 258,609 310,331
750,000.............................................................. 194,541 259,387 324,234 389,081
900,000.............................................................. 233,916 311,887 389,859 467,831
</TABLE>

Under the terms of the Company's Pension Plan and the Company's Excess
Pension Plan (collectively, the "Pension Plans") for certain higher compensated
employees, an eligible employee will receive a benefit at retirement that is
based upon the employee's number of years of benefit service and average annual
compensation (salary and bonus) for the highest 60 consecutive months out of the
final 120 months. Such compensation is limited to the greater of base salary as
of December 31, 1995 and $750,000. The benefits under the Company's Excess
Pension Plan are not subject to the Internal Revenue Code provisions that limit
the compensation used to determine benefits and the amount of annual benefits
payable under the Company's Pension Plan. The foregoing table illustrates, for
representative average annual pensionable compensation and years of benefit
service classifications, the annual retirement benefit payable to employees
under the Pension Plans upon retirement in 1998 at age 65, based on the
straight-life annuity form of benefit payment and not subject to deduction or
offset.

The number of years of benefit service that have been credited for Messrs.
Dooley, Fricklas and Smith are 19, 4.5 and 22, respectively. Mr. Dauman has been
credited with five years of service under the Company's Pension Plan; however,
the benefits payable under the Company's Excess Pension Plan will be calculated
as though he had 14 years of credited service.

17
<PAGE>
PERFORMANCE GRAPHS

The following graphs compare the cumulative total stockholder return on the
Class A Common Stock and the Class B Common Stock with the cumulative total
return on the companies listed in the Standard & Poor's 500 Stock Index and a
peer group of companies identified below. The composition of the peer group
included in the graphs set forth below as Exhibits I and II have been revised to
more closely resemble the Company's continuing lines of businesses. For
comparison purposes, Exhibit III shows the Company's performance with respect to
the peer group used for graphs contained in the Company's 1998 and 1997 proxy
statements. The total return data was obtained from Standard & Poor's Compustat
Services, Inc.

NAI acquired control of the Company in June 1987. The performance graph in
Exhibit I assumes $100 invested on December 31, 1987 in each of the Class A
Common Stock, the S&P 500 Index and the Peer Group (identified in such graph),
including reinvestment of dividends, through the fiscal year ended December 31,
1998. The cumulative total stockholder return on the Class B Common Stock
assumes the investment in Class B Common Stock as of June 18, 1990 (the first
date on which the Class B Common Stock was publicly traded) of an amount equal
to the cumulative total stockholder return on the Class A Common Stock as of
that date ($302.78).

The performance graphs in Exhibits II and III assume $100 invested on
December 31, 1993 in each of the Class A Common Stock, the Class B Common Stock,
the S&P 500 Index and the Peer Group (identified in such graphs), including
reinvestment of dividends, through the fiscal year ended December 31, 1998.

NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN ANY OF 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 FOLLOWING PERFORMANCE
GRAPHS AND THE REPORT OF THE COMPENSATION COMMITTEE AND THE SENIOR EXECUTIVE
COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION SET FORTH ABOVE SHALL NOT BE
INCORPORATED BY REFERENCE INTO ANY SUCH FILINGS.

18
<PAGE>
EXHIBIT I
TOTAL CUMULATIVE STOCKHOLDER RETURN FOR
ELEVEN-YEAR PERIOD ENDING DECEMBER 31, 1998

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
CLASS A COMMON CLASS B COMMON S&P 500 PEER GROUP
<S> <C> <C> <C> <C>
1987 100.00 100.00 100.00
1988 171.72 116.50 113.68
1989 317.24 153.30 163.56
6/18/90 302.78 302.78 151.06 173.82
1990 286.41 273.61 148.52 137.03
1991 373.70 379.17 193.58 169.14
1992 480.08 465.28 208.31 203.10
1993 533.27 498.61 229.21 240.69
1994 454.17 452.78 232.32 228.56
1995 504.63 526.39 319.31 280.74
1996 376.32 387.37 394.41 311.18
1997 445.86 460.27 526.15 431.05
1998 802.41 821.96 676.52 545.51
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, 1987 1988 1989 6/18/90 1990 1991 1992 1993 1994
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CLASS A COMMON 100.00 171.72 317.24 286.41 373.70 480.08 533.27 454.17
CLASS B COMMON 302.78 273.61 379.17 465.28 498.61 452.78
S&P 500 100.00 116.50 153.30 148.52 193.58 208.31 229.21 232.32
PEER GROUP(*) 100.00 113.68 163.56 137.03 169.14 203.10 240.69 228.56

<CAPTION>
DECEMBER 31, 1995 1996 1997 1998
<S> <C> <C> <C> <C>
CLASS A COMMON 504.63 376.32 445.86 802.41
CLASS B COMMON 526.39 387.37 460.27 821.96
S&P 500 319.31 394.41 526.15 676.52
PEER GROUP(*) 280.74 311.18 431.05 545.51
</TABLE>

* The Peer Group consists of the following companies: BHC Communications,
Inc.; The Walt Disney Company; Gaylord Entertainment Co.; King World
Productions Inc.; The News Corp. Ltd. (ADRs); The Seagram Company, Ltd.;
Time Warner Inc. and Tribune Company.

19
<PAGE>
EXHIBIT II
TOTAL CUMULATIVE STOCKHOLDER RETURN FOR
FIVE-YEAR PERIOD ENDING DECEMBER 31, 1998

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
CLASS A COMMON CLASS B COMMON S&P 500 PEER GROUP*

<TABLE>
<CAPTION>
DECEMBER 31, 1993 1994 1995 1996 1997 1998
<S> <C> <C> <C> <C> <C> <C>
CLASS A COMMON 100.00 85.17 94.63 70.59 83.63 150.51
CLASS B COMMON 100.00 90.81 105.57 77.72 92.34 164.90
S&P 500 100.00 101.36 139.31 171.21 228.57 293.89
PEER GROUP(*) 100.00 94.96 116.64 129.29 177.79 224.76
</TABLE>

20
<PAGE>
EXHIBIT III
TOTAL CUMULATIVE STOCKHOLDER RETURN FOR
FIVE-YEAR PERIOD ENDING DECEMBER 31, 1998

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
CLASS A COMMON CLASS B COMMON S&P 500 PEER GROUP*
<S> <C> <C> <C> <C>
12/31/93 100.00 100.00 100.00 100.00
12/31/94 85.17 90.81 101.36 90.05
12/31/95 94.63 105.57 139.31 103.06
12/31/96 70.59 77.72 171.21 110.57
12/31/97 83.63 92.34 228.57 172.96
12/31/98 150.51 164.90 293.89 278.29
</TABLE>

* The Peer Group consists of the following companies: BHC Communications,
Inc.; The Walt Disney Company; Gaylord Entertainment Co.; King World
Productions Inc.; McGraw Hill Companies Inc.; The Limited Inc.; The News
Corp. Ltd. (ADRs); Time Warner Inc.; Tribune Company and Wal-Mart Stores
Inc.

21
<PAGE>
EMPLOYMENT AGREEMENTS

Mr. Redstone, the Chairman of the Board, Chief Executive Officer and
controlling stockholder of the Company, has waived salary and bonus compensation
for his services as Chief Executive Officer and does not have an employment
agreement with the Company.

Messrs. Dauman and Dooley entered into new employment agreements during 1998
which provide that they will each be employed as Deputy Chairman, Executive Vice
President of the Company until December 31, 2003, at a salary of $1,000,000 per
annum. Each executive also receives deferred compensation, payable the year
after he ceases to be an executive officer of the Company, in an amount equal to
$710,000 for 1998, $881,000 for 1999, $1,069,100 for 2000 and no less than
$1,069,100 per year for 2001-2003. The target bonus for each executive for each
calendar year during the employment term is set at 250% of his salary and
deferred compensation for such year. Each executive will be provided with
$5,000,000 of life insurance during the employment term. In the event of the
termination of his employment without "cause" or voluntary termination for "good
reason" during the employment term, each executive will be entitled to receive
salary, deferred compensation and target bonus for the balance of the employment
term, subject to mitigation after the first two years, and his stock options
(including options that would have vested during the employment term) will
remain exercisable for six (6) months following the date of termination (but not
beyond the expiration date of such stock options).

Mr. Fricklas' employment agreement was amended in October 1998 in connection
with his promotion to the position of Senior Vice President, General Counsel and
Secretary of the Company. His agreement provides that he will be employed until
December 31, 2001, at a salary of $550,000 for the balance of 1998, with $50,000
annual increases. Mr. Fricklas' target bonus is set at 50% of his base salary.
In the event of the termination of Mr. Fricklas' employment without "cause" or
voluntary termination for "good reason" during the employment term, he will be
entitled to receive salary and target bonus for the balance of the employment
term, subject to mitigation after the first twelve (12) months, and his stock
options (including options that would have vested during the employment term)
shall remain exercisable for six (6) months following the date of termination
(but not beyond the expiration of such stock options).

Mr. Smith's employment agreement provides that he will be employed as Senior
Vice President, Chief Financial Officer of the Company until March 31, 2001 at a
salary of $575,000 for the twelve (12) month period ended March 31, 1998, and
$625,000 for the succeeding twelve (12) month period, subject to annual
increases to be determined by mutual agreement. Mr. Smith's target bonus is set
at 50% of his base salary. In the event of the termination of Mr. Smith's
employment without "cause" or voluntary termination for "good reason" during the
employment term, he will be entitled to receive salary and target bonus for the
balance of the employment term, subject to mitigation after the first twelve
(12) months, and his stock options (including options that would have vested
during the employment term) shall remain exercisable for six (6) months
following the date of termination (but not beyond the expiration of such stock
options).

RELATED TRANSACTION

In November 1995, the Company entered into an agreement with Gabelli Asset
Management Company ("GAMCO") providing that GAMCO would manage certain assets in
the Company's pension plan. For the fiscal year ended December 31, 1998, the
Company paid GAMCO approximately $311,000 for such investment management
services. GAMCO is expected to continue to provide such investment management
services in the future. The Company entered into the arrangement with GAMCO
prior to GAMCO's disclosure of its interest in the Company. The Company believes
that the terms of the agreement with GAMCO are no less favorable to the Company
than it could have obtained from an unaffiliated party.

22
<PAGE>
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's executive officers and directors, and
persons who own more than 10% of a registered class of the Company's equity
securities, to file reports of ownership and changes in ownership with the
Securities and Exchange Commission (the "Commission") and the AMEX and, after
April 8, 1999, the New York Stock Exchange. Executive officers, directors and
greater than 10% stockholders are required by the Exchange Act to furnish the
Company with copies of all Section 16(a) forms they file. Based upon the
Company's compliance program, as well as a review of the copies of such forms
furnished to the Company, or written representations that no Form 5s were
required, the Company believes that during 1998, its executive officers,
directors and greater than 10% beneficial owners complied with all applicable
Section 16(a) filing requirements.

23
<PAGE>
APPROVAL OF THE ADOPTION OF AMENDMENTS TO
VIACOM INC.'S RESTATED CERTIFICATE OF INCORPORATION
INCREASING THE AUTHORIZED SHARES OF
CLASS A COMMON STOCK AND CLASS B COMMON STOCK

The Board of Directors of the Company has approved and is submitting for
stockholder approval amendments to the Company's Restated Certificate of
Incorporation (the "Certificate of Incorporation") to increase (i) the number of
shares of Class A Common Stock authorized to be issued from 200 million to 500
million, and (ii) the number of shares of Class B Common Stock authorized to be
issued from 1 billion to 3 billion. The text of the amendments is attached as
Exhibit A-1. The foregoing summary of the amendments should be read in
conjunction with, and is qualified in its entirety by reference to, the full
text of such changes set forth in Exhibit A-1.

PURPOSE OF THE AMENDMENTS

The purpose of the amendments described above is to make available
additional shares of Class A Common Stock and Class B Common Stock for possible
future stock dividends and splits, financing and acquisition transactions, or
other corporate purposes. On February 25, 1999, the Board of Directors of the
Company declared a two for one stock split in the form of a dividend distributed
on March 31, 1999 to stockholders of record on March 15, 1999. As a result of
the stock split, there are only 59,740,106 shares of authorized Class A Common
Stock and 444,838,236 shares of authorized Class B Common Stock available for
future issuance. The amendments are necessary in order to have sufficient shares
available for the purposes stated above.

The Board of Directors of the Company recommends a vote "FOR" the adoption
of the foregoing amendments.

24
<PAGE>
APPROVAL OF THE ADOPTION OF AN AMENDMENT TO
VIACOM INC.'S RESTATED CERTIFICATE OF INCORPORATION
TO PROVIDE A CONVERSION RIGHT TO
THE HOLDERS OF COMMON STOCK

The Board of Directors of the Company has approved and is submitting for
stockholder approval an amendment to the Certificate of Incorporation to provide
that each record holder of shares of Common Stock may, at the holder's option,
convert any or all of such shares into an equal number of shares of Class B
Common Stock. The text of the amendment is attached as Exhibit A-2. The
foregoing summary of the proposed amendment should be read in conjunction with,
and is qualified in its entirety by reference to, the full text of such changes
set forth in Exhibit A-2.

PURPOSE OF THE AMENDMENT

The purpose of the amendment described above is to improve the liquidity of
the Company's Common Stock. The Class A Common Stock is identical to the Class B
Common Stock, except that the Class A Common Stock has one vote per share and
the Class B Common Stock generally has no voting rights. In 1994, in connection
with the Paramount and Blockbuster mergers, the Company issued significantly
more shares of Class B Common Stock than Class A Common Stock. This resulted in
a disproportionate increase in the market liquidity for the Class B Common
Stock. Since the mergers, the Class B Common Stock has traded at a premium to
the Class A Common Stock, reflecting the greater liquidity. The Board of
Directors of the Company has determined that the conversion right should
increase the liquidity of all of the shares of Common Stock without adversely
affecting either class.

The Board of Directors of the Company recommends a vote "FOR" the adoption
of the foregoing amendment.

25
<PAGE>
APPROVAL OF THE ADOPTION OF AN AMENDMENT TO
VIACOM INC.'S RESTATED CERTIFICATE OF INCORPORATION
MODIFYING THE INDEMNIFICATION RIGHTS OF
DIRECTORS, OFFICERS AND OTHERS

The Board of Directors of the Company has approved and is submitting for
stockholder approval an amendment to the Certificate of Incorporation to modify
the indemnification rights of directors, officers and others, as permitted by
Delaware General Corporation Law. The text of the amendment is attached as
Exhibit A-3. For ease of reference, the text of the amendment described above
has been marked against the current Certificate of Incorporation. Deletions are
indicated and new text is presented in bold. The foregoing summary of the
amendment should be read in conjunction with, and is qualified in its entirety
by reference to, the full text of such changes set forth in Exhibit A-3.

PURPOSE OF THE AMENDMENT

The purpose of the amendment described above is to revise the Certificate of
Incorporation's indemnification provisions to provide adequate assurance to the
Company's directors and officers that they will be appropriately indemnified and
entitled to advancement of expenses in accordance with current Delaware General
Corporation Law. The Company's indemnification provisions have not been modified
since the certificate of incorporation was filed in 1987. The Company believes
that providing the proposed improvements regarding indemnification will permit
the Company to continue to attract and retain qualified directors and officers
who may otherwise be subject to large expenses whether or not a matter subject
to indemnification is ultimately resolved in favor of the director or officer.
More specifically, this amendment makes two principal changes to the Certificate
of Incorporation. First, the amendment specifies that the persons appropriate to
make the determination of whether a proposed indemnitee has met the standard of
conduct required by the Certificate of Incorporation include (i) the Board of
Directors of the Company acting by majority vote of directors not party to the
proceeding, whether or not constituting a quorum, (ii) by a committee of such
directors designated by a majority vote of such directors, even though less than
a quorum, (iii) if there are no such directors or if such directors so direct,
by independent legal counsel in a written opinion, or (iv) the stockholders of
the Company entitled to vote on such determination. Second, the amendment
provides for mandatory advancement of expenses to directors and officers upon
receipt of an undertaking to repay such advance if it is ultimately determined
that such indemnitee is not entitled to indemnification.

The Board of Directors of the Company recommends a vote "FOR" the adoption
of the foregoing amendment.

FEDERAL INCOME TAX CONSEQUENCES

The Company's stockholders will not recognize gain or loss upon the
effectiveness of any of the amendments to the Certificate of Incorporation for
Federal income tax purposes. Stockholders should consult their own tax advisors
concerning any state, local or foreign tax consequences of the amendments.

26
<PAGE>
APPROVAL OF THE VIACOM INC.
SENIOR EXECUTIVE SHORT-TERM INCENTIVE PLAN

The Viacom Inc. Senior Executive Short-Term Incentive Plan (the "Senior
Executive STIP") was approved by the Board of Directors of the Company on March
31, 1994 and by the stockholders of the Company at the 1994 Annual Meeting of
Stockholders. An amendment to the Senior Executive STIP was approved by the
Board of Directors of the Company on March 27, 1996 and the stockholders of the
Company at the 1996 Annual Meeting of Stockholders. The Board of Directors of
the Company further amended the Senior Executive STIP on March 18, 1999, as more
fully described below, to change the maximum limit on annual awards to any
executive participating in the Senior Executive STIP to eight (8) times such
executive's annual salary and deferred compensation and to change the Company's
financial performance criteria from operating income and/or cash flow levels to
operating income and/or net earnings. To comply with Section 162(m) of the Code,
the Senior Executive STIP, as so amended, is being submitted for approval at the
Annual Meeting by the affirmative vote of the holders of a majority of the
shares of Class A Common Stock represented in person or by proxy and entitled to
vote at the Annual Meeting.

SENIOR EXECUTIVE STIP GENERALLY

The following description of the material features of the Senior Executive
STIP is qualified in its entirety by the full text of the Senior Executive STIP,
as set forth in Exhibit B to this Proxy Statement. The Senior Executive STIP has
provided objective performance-based annual bonuses for selected senior
executives of the Company, subject to a maximum limit, starting with the 1994
calendar year, as described in more detail below. Amounts paid under the Senior
Executive STIP qualify as "performance-based compensation" which is excluded
from the $1,000,000 limit on deductible compensation set forth in Section 162(m)
of the Code. Awards under the Senior Executive STIP are determined by the Senior
Executive Compensation Committee. For this reason, it is not possible to
determine the amounts that will be received by senior executives participating
in the Senior Executive STIP in the future.

ADMINISTRATION

The Senior Executive STIP is administered by the Senior Executive
Compensation Committee (the "Committee"), which is authorized to approve awards
to selected executive officers (the "Participants") at the level of Senior Vice
President of the Company or above. Approximately ten officers have participated
in the Senior Executive STIP annually. The committee that administers the Senior
Executive STIP must be comprised of at least two directors, each of whom must be
an "outside director" within the meaning of Section 162(m) of the Code.

AWARDS

The Committee establishes performance criteria and target awards for each
Participant for each calendar year by the end of the first quarter of such
calendar year. The performance criteria relate to the achievement of annual
financial goals. Prior to March 18, 1999, such criteria related to operating
income and/or cash flow levels for the Company as a whole. On March 18, 1999,
the Senior Executive STIP was amended to provide that such criteria would relate
to operating income and/or net earnings for the Company as a whole. For this
purpose, the Senior Executive STIP uses an EBITDA definition of revenues less
operating expenses (other than depreciation, amortization and non-recurring
charges) to define "operating income"; "net earnings" is defined as earnings
from continuing operations.

Shortly after the end of each performance year, the Committee certifies
whether the performance criteria have been achieved; if so, the awards have been
earned, subject to the Committee's right, in its sole discretion, to reduce the
amount of the award to any Participant to reflect the Committee's assessment of
the Participant's individual performance or for any other reason. These awards
are payable in cash as soon as practicable thereafter.

To receive payment of an award, the Participant must have remained in the
continuous employ of the Company or its subsidiaries through the end of the
applicable performance period. If the Company or any

27
<PAGE>
subsidiary terminates a Participant's employment other than for "cause" or a
Participant becomes "permanently disabled" or dies during a performance period,
such Participant or his estate shall be awarded, unless his employment agreement
provides otherwise, a pro rata portion of the award for such performance period,
subject to the Committee's right, in its sole discretion, to reduce the amount
of such award to reflect the Committee's assessment of such Participant's
individual performance prior to the termination of such Participant's
employment, such Participant's becoming permanently disabled or such
Participant's death, as the case may be, or for any other reason.

MAXIMUM ANNUAL AWARD

Prior to March 18, 1999, the Senior Executive STIP provided that the total
of all awards to any Participant for any calendar year shall not exceed the
amount determined by multiplying such Participant's base salary in effect on
March 27, 1996 by a factor of eight (8). In the case of a Participant hired
after March 27, 1996, the Plan provided that the Participant's salary for this
purpose would be the Participant's base salary on the date of hire.

The Senior Executive STIP was amended on March 18, 1999 to increase the
maximum annual award to any Participant for any calendar year to the amount
determined by multiplying such Participant's "salary" in effect on March 18,
1999 by a factor of eight (8). Salary is defined as the sum of (i) the
Participant's base salary on March 18, 1999, and (ii) the minimum stated amount
of any annual compensation for such year deferred pursuant to the Participant's
employment agreement in effect on March 18, 1999 until no earlier than the year
after the Participant ceases to be a executive officer of the Company. The
Senior Executive STIP was also amended to provide that, in the case of any
Participant hired after March 18, 1999, the Participant's "salary" for this
purpose would be the sum of (i) the Participant's base salary on the date of
hire, and (ii) an amount equal to the annual rate of any compensation for the
year of hire deferred pursuant to his employment agreement in effect on the date
of hire until no earlier than the year after the Participant ceases to be an
executive officer of the Company; provided, that the "salary" for any
Participant hired after March 19, 1999 shall not exceed 1.5 times the highest
"salary" on March 18, 1999 of any current Participant in the Senior Executive
STIP. This would adjust the maximum bonus payable under the Senior Executive
STIP to reflect the increased salaries of certain Participants who entered into
new employment agreements or were promoted after March 27, 1996. The current
salaries of the named executive officers are disclosed under "Employment
Agreements" above.

ADJUSTMENTS

In the event that, during a performance period, any recapitalization,
reorganization, merger, acquisition, divestiture, consolidation, spin-off,
combination, liquidation, dissolution, sale of assets or other similar corporate
transaction or event, or any extraordinary event, or any other event which
distorts the applicable performance criteria occurs involving the Company or a
subsidiary or division thereof, the Committee shall adjust or modify, as
determined by the Committee in its sole and absolute discretion, the calculation
of operating income and/or net earnings, or the applicable performance goals, to
the extent necessary to prevent reduction or enlargement of Participants' awards
for such performance period attributable to such transaction or event.

TRANSFER RESTRICTIONS, ETC.

The rights of a Participant with respect to awards under the Senior
Executive STIP are not transferable by the Participant other than by will or the
laws of descent and distribution. No award under the Senior Executive STIP will
be construed as giving any employee a right to continued employment with the
Company.

AMENDMENT

The Board of Directors of the Company may at any time alter, amend, suspend
or terminate the Senior Executive STIP in whole or in part.

28
<PAGE>
APPROVAL OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS

The Board of Directors recommends that the stockholders approve the
appointment of PricewaterhouseCoopers as independent accountants to serve until
the Annual Meeting of Stockholders in 2000.

In connection with the audit function for 1998, PricewaterhouseCoopers also
reviewed the Company's annual report on Form 10-K and its filings with the
Commission and provided certain other accounting, tax and consulting services.

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

29
<PAGE>
OTHER MATTERS

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

In order for proposals by stockholders to be considered for inclusion in the
Proxy and Proxy Statement relating to the 2000 Annual Meeting of Stockholders,
such proposals must be received at the principal executive offices of the
Company on or before December 17, 1999 and should be submitted to the attention
of Michael D. Fricklas, Secretary.

By Order of the Board of Directors,

/s/ Michael D. Fricklas

MICHAEL D. FRICKLAS
SECRETARY

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

THE COMPANY HAS SENT A COPY OF ITS ANNUAL REPORT ON FORM 10-K FOR THE YEAR
ENDED DECEMBER 31, 1998, INCLUDING FINANCIAL STATEMENTS AND SCHEDULES THERETO,
TO EACH OF ITS STOCKHOLDERS OF RECORD ON APRIL 8, 1999 AND EACH BENEFICIAL
STOCKHOLDER ON THAT DATE. IF YOU HAVE NOT RECEIVED YOUR COPY, THE COMPANY WILL
PROVIDE A COPY WITHOUT CHARGE (A REASONABLE FEE WILL BE CHARGED FOR EXHIBITS),
UPON RECEIPT OF WRITTEN REQUEST THEREFOR MAILED TO THE COMPANY'S OFFICES,
ATTENTION SECRETARY.

30
<PAGE>
EXHIBIT A-1

TEXT OF AMENDMENTS TO VIACOM INC.'S
RESTATED CERTIFICATE OF INCORPORATION
INCREASING THE AUTHORIZED SHARES OF
CLASS A COMMON STOCK AND CLASS B COMMON STOCK

That Section (1)(a) of Article IV of the Restated Certificate of
Incorporation be, and the same hereby is, amended in full to read:

"(a) The total number of shares of all classes of capital stock which the
Corporation shall have authority to issue is 3,700,000,000 shares. The classes
and the aggregate number of shares of stock of each class which the Corporation
shall have authority to issue are as follows:

(i) 500,000,000 shares of Class A Common Stock, $0.01 par value ("Class
A Common Stock").

(ii) 3,000,000,000 shares of Class B Common Stock, $0.01 par value
("Class B Common Stock").

(iii) 200,000,000 shares of Preferred Stock, $0.01 par value ("Preferred
Stock")."

A-1
<PAGE>
EXHIBIT A-2

TEXT OF AN AMENDMENT TO VIACOM INC.'S
RESTATED CERTIFICATE OF INCORPORATION
TO PROVIDE A CONVERSION RIGHT TO
THE HOLDERS OF COMMON STOCK

That Section (2) of Article IV of the Restated Certificate of Incorporation
be, and the same hereby is, amended by adding a new subsection E. to read as
follows:

"E. CONVERSION. So long as there are 10,000 shares of Class A Common Stock
outstanding, each record holder of shares of Class A Common Stock or Class B
Common Stock may convert any or all of such shares into an equal number of
shares of Class B Common Stock by surrendering the certificates for such shares,
accompanied by payment of documentary, stamp or similar issue or transfer taxes,
if any, along with a written notice by such record holder to the Corporation
stating that such record holder desires to convert such shares into the same
number of shares of Class B Common Stock and requesting that the Corporation
issue all of such Class B Common Stock to the persons named therein, setting
forth the number of shares of Class B Common Stock to be issued to each such
person and the denominations in which the certificates therefor are to be
issued."

A-2
<PAGE>
EXHIBIT A-3

TEXT OF AN AMENDMENT TO VIACOM INC.'S
RESTATED CERTIFICATE OF INCORPORATION
MODIFYING THE INDEMNIFICATION RIGHTS OF
DIRECTORS, OFFICERS AND OTHERS

That Article VI of the Restated Certificate of Incorporation be, and the
same hereby is, amended in full to read as follows:

"ARTICLE VI
INDEMNIFICATION OF DIRECTORS,
OFFICERS AND OTHERS

(1) ACTION NOT BY OR ON BEHALF OF CORPORATION. The Corporation shall
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (other than an action by or in
the right of the Corporation) by reason of the fact that he is or was a
Director, officer, employee or agent of the Corporation, or is or was serving at
the request of the Corporation as a director, officer, employee or agent
(including trustee) of another corporation, partnership, joint venture, trust or
other enterprise, against judgments, fines, amounts paid in settlement and
expenses (including attorneys' fees), actually and reasonably incurred by him in
connection with such action, suit or proceedings if he acted in good faith and
in a manner reasonably believed to be in or not opposed to the best interests of
the Corporation, and with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction, or upon a
plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful.

(2) ACTION BY OR ON BEHALF OF CORPORATION. The Corporation shall indemnify
any person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the
Corporation to procure a judgment in its favor by reason of the fact that he is
or was a Director, officer, employee or agent of the Corporation, or is or was
serving at the request of the Corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust, or other
enterprise against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection with the defense or settlement of such action or
suit if he acted in good faith and in a manner he reasonably believed to be in
or not opposed to the best interests of the Corporation, except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the Corporation
unless and only to the extent that the court in which such action or suit was
brought shall determine upon application that, despite the adjudication of
liability and in view of all of the circumstances of the case, such person is
fairly and reasonably entitled to indemnify for such expenses which the court
shall deem proper.

(3) SUCCESSFUL DEFENSE. To the extent that a present or former Director,
officer, employee or agent of the Corporation has been successful on the merits
or otherwise in defense of any action, suit or proceeding referred to in Section
1 or 2 of this Article VI, or in defense of any claim, issue or matter therein,
he shall be indemnified against expenses (including attorneys' fees) actually
and reasonably incurred by him in connection therewith.

(4) DETERMINATION OF RIGHTS TO INDEMNIFICATION IN CERTAIN
CIRCUMSTANCES. Any indemnification under Section 1 or 2 of this Article VI
(unless ordered by a court) shall be made by the Corporation only as authorized
in the specific case upon a determination that indemnification of the present or
former

A-3
<PAGE>
Director, officer, employee or agent is proper in the circumstances because he
has met the applicable standard of conduct set forth in Section 1 or 2 of this
Article IV. Such determination shall be made, with respect to a person who is a
Director or officer at the time of such determination, (1) by a majority vote of
the Directors who are not parties to such action, suit or proceedings, even
though less than a quorum, or (2) by a committee of such Directors designated by
a majority vote of such Directors, even though less than a quorum, or (3) if
there are no such Directors, or if such Directors so direct, by independent
legal counsel in a written opinion, or (4) by the stockholders of the
Corporation entitled to vote thereon.

(5) ADVANCE PAYMENT OF EXPENSES. (a) Expenses (including attorneys' fees)
incurred by a Director or officer in defending any civil, criminal,
administrative or investigative action, suit or proceeding shall be paid by the
Corporation in advance of the final disposition of such action, suit or
proceeding upon receipt of an undertaking by or on behalf of such Director or
officer, to repay such amount if it shall ultimately be determined that he is
not entitled to be indemnified by the Corporation as authorized in this Article.

(b) Expenses (including attorneys' fees) incurred by any other employee or
agent in defending any civil, criminal, administrative or investigative action,
suit or proceeding may be paid by the Corporation in advance of the final
disposition of such action, suit or proceeding upon such terms and conditions,
if any, as the Corporation deems appropriate.

(6) NOT EXCLUSIVE. The indemnification and advancement of expenses
provided by, or granted pursuant to, the other sections of this Article VI shall
not be deemed exclusive of any other rights to which a person seeking
indemnification or advancement of expenses may be entitled under any statute,
by-law, agreement, vote of stockholders or disinterested Directors or otherwise,
both as to action in his official capacity and as to action in another capacity
while holding such office. Without limiting the foregoing, the Corporation is
authorized to enter into an agreement with any Director, officer, employee or
agent of the Corporation providing indemnification for such person against
expenses, including attorneys' fees, judgments, fines and amounts paid in
settlement that result from any threatened pending or completed actions, suit,
or proceeding, whether civil, criminal, administrative or investigative,
including any action by or in the right of the Corporation, that arises by
reason of the fact that such person is or was a Director, officer, employee or
agent of the Corporation, or is or was serving at the request of the Corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, to the full extent allowed by law,
except that no such agreement shall provide for indemnification for any actions
that constitute fraud, actual dishonesty or willful misconduct.

(7) INSURANCE. The Corporation may purchase and maintain insurance on
behalf of any person who is or was a Director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against him
and incurred by him in any such capacity, or arising out of his status as such,
whether or not the Corporation would have the power to indemnify him against
such liability under the provisions of this Article VI.

(8) CERTAIN DEFINITIONS. For the purposes of this Article VI, (A) any
Director, officer, employee or agent of the Corporation who shall serve as a
director, officer, employee or agent of any other corporation, joint venture,
trust or other enterprise of which the Corporation, directly or indirectly, is
or was a stockholder or creditor, or in which the Corporation is or was in any
way interested, or (B) any director, officer, employee or agent of any
subsidiary corporation, joint venture, trust or other enterprise wholly owned by
the Corporation, shall be deemed to be serving as such director, officer,
employee or agent at the request of the Corporation, unless the Board of
Directors of the Corporation shall determine otherwise. In all other instances
where any person shall serve as a director, officer, employee or agent of
another corporation, joint venture, trust or other enterprise of which the
Corporation is or was a stockholder or creditor, or in which it is or was
otherwise interested, if it is not otherwise established that such person is or
was serving as such director, officer, employee or agent at the request of the
Corporation, the Board of Directors of the Corporation may determine whether
such service is or was at the request of the

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Corporation, and it shall not be necessary to show any actual or prior request
for such service. For purposes of this Article VI, references to a corporation
include all constituent corporations absorbed in a consolidation or merger as
well as the resulting or surviving corporation so that any person who is or was
a director, officer, employee or agent of such a constituent corporation or is
or was serving at the request of such constituent corporation as a director,
officer, employee or agent of another corporation, joint venture, trust or other
enterprise shall stand in the same position under the provisions of this Article
VI with respect to the resulting or surviving corporation as he would if he had
served the resulting or surviving corporation in the same capacity. For purposes
of this Article VI, references to "other enterprises" shall include employee
benefit plans; references to "fines" shall include any excise taxes assessed on
a person with respect to any employee benefit plan; and references to "serving
at the request of the Corporation" shall include any service as a director,
officer, employee or agent of the corporation which imposes duties on, or
involves services by, such director, officer, employee, or agent with respect to
an employee benefit plan, its participants, or beneficiaries; and a person who
acted in good faith and in a manner he reasonably believed to be in the interest
of the participants and beneficiaries of an employee benefit plan shall be
deemed to have acted in a manner "not opposed to the best beneficiaries of an
employee benefit plan shall be deemed to have acted in a manner "not opposed to
the best interests of the Corporation" as referred to this Article VI.

(9) The indemnification and advancement of expenses provided by, or granted
pursuant to, this Article VI shall, unless otherwise provided when authorized or
ratified, continue as to a person who has ceased to be a director, officer,
employee or agent and shall inure to the benefit of the heirs, executors and
administrators of such a person."

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EXHIBIT B

VIACOM INC.
SENIOR EXECUTIVE
SHORT-TERM INCENTIVE PLAN
(as amended and restated through March 27, 1996 and as further amended and
restated through March 18, 1999)

ARTICLE I

GENERAL

SECTION 1.1 PURPOSE. The purpose of the Viacom Inc. Senior Executive
Short-Term Incentive Plan (the "Plan") is to benefit and advance the interests
of Viacom Inc., a Delaware corporation (the "Company"), by rewarding selected
senior executive officers of the Company and its subsidiaries for their
contributions to the Company's financial success and thereby motivate them to
continue to make such contributions in the future by granting annual
performance-based awards ("Awards").

SECTION 1.2 ADMINISTRATION OF THE PLAN. The Plan shall be administered by a
committee ("Committee") which shall adopt such rules as it may deem appropriate
in order to carry out the purpose of the Plan. The Committee shall be the Senior
Executive Compensation Committee of the Company's Board of Directors ("Board")
(or such other Committee as may be appointed by the Board) except that (i) the
number of directors on the Committee shall not be less than two (2) and (ii)
each member of the Committee shall be an "outside director" within the meaning
of Section 162(m)(4) of the Internal Revenue Code of 1986, as amended (the
"Code"). All questions of interpretation, administration and application of the
Plan shall be determined by a majority of the members of the Committee then in
office, except that the Committee may authorize any one or more of its members,
or any officer of the Company, to execute and deliver documents on behalf of the
Committee. The determination of such majority shall be final and binding in all
matters relating to the Plan. The Committee shall have authority to determine
the terms and conditions of the Awards granted to eligible persons specified in
Section 1.3 below ("Participants").

SECTION 1.3 ELIGIBLE PERSONS. Awards may be granted only to employees of the
Company or one of its subsidiaries who are at the level of Senior Vice President
of the Company or at a more senior level. An individual shall not be deemed an
employee for purposes of the Plan unless such individual receives compensation
from either the Company or one of its subsidiaries for services performed as an
employee of the Company or any of its subsidiaries.

ARTICLE II

AWARDS

SECTION 2.1 AWARDS. The Committee may grant Awards to eligible employees
with respect to each fiscal year of the Company, subject to the terms and
conditions set forth in the Plan.

SECTION 2.2 TERMS OF AWARDS. Prior to the end of the first quarter of each
fiscal year of the Company, the Committee shall establish (i) performance goals
and objectives ("Performance Targets") for the Company and the subsidiaries and
divisions thereof for such fiscal year ("Performance Period") and (ii) target
awards ("Target Awards") for each Participant which shall be a percentage of the
Participant's salary (as defined in Section 2.3 below). Such Performance Targets
shall relate to the achievement of annual financial goals based on the
attainment of specified levels of Operating Income and/or Net Earnings (as such
terms are defined below) for the Company and the subsidiaries and divisions
thereof. For purposes of the Plan, "Operating Income" shall mean revenues less
operating expenses (other than

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depreciation, amortization and non-recurring charges) and Net Earnings shall
mean earnings from continuing operations.

SECTION 2.3 LIMITATION ON AWARDS. The aggregate amount of all Awards to any
Participant for any Performance Period shall not exceed the amount determined by
multiplying such Participant's Salary by a factor of eight (8). For purposes of
the Plan, "Salary" shall mean (a) for any Participant hired on or before March
18, 1999, the sum of (i) the base salary of the Participant on March 18, 1999,
and (ii) the minimum stated amount of any annual compensation for such year
deferred pursuant to the Participant's employment agreement as in effect on
March 18, 1999 until no earlier than the year after the Participant ceases to be
an executive officer of the Company; and (b) for any Participant hired after
March 18, 1999, the sum of (x) such Participant's base salary on the date of
hire, and (y) an amount equal to the annual rate of any compensation for the
year of hire deferred pursuant to such Participant's employment agreement as in
effect on his date of hire until no earlier than the year after the Participant
ceases to be an executive officer of the Company; PROVIDED, that the Salary for
this purpose of a Participant hired after March 18, 1999 shall not exceed 1.5
times the highest Salary on March 18, 1999 for any Participant determined
pursuant to clause (a) of this Section 2.3.

SECTION 2.4 DETERMINATION OF AWARD. The Committee shall, promptly after the
date on which the necessary financial or other information for a particular
Performance Period becomes available, certify whether the Performance Targets
have been achieved in the manner required by Section 162(m) of the Code. If the
Performance Targets have been achieved, the Awards for such Performance Period
shall have been earned except that the Committee may, in its sole discretion,
reduce the amount of any Award to reflect the Committee's assessment of the
Participant's individual performance or for any other reason. Subject to Section
2.5, such Awards shall become payable in cash as promptly as practicable
thereafter.

SECTION 2.5 EMPLOYMENT REQUIREMENT. To be eligible to receive payment of an
Award, the Participant must have remained in the continuous employ of the
Company or its subsidiaries through the end of the applicable Performance
Period. If the Company or any subsidiary terminates a Participant's employment
other than for "cause" or a Participant becomes "permanently disabled" (in each
case, as determined by the Committee in its sole discretion) or a Participant
dies during a Performance Period, such Participant or his estate shall be
awarded, unless his employment contract provides otherwise, a pro rata portion
of the amount of the Award for such Performance Period except that the Committee
may, in its sole discretion, reduce the amount of such Award to reflect the
Committee's assessment of such Participant's individual performance prior to the
termination of such Participant's employment, such Participant's becoming
permanently disabled or such Participant's death, as the case may be, or for any
other reason.

ARTICLE III

ADJUSTMENT OF AWARDS

In the event that, during a Performance Period, any recapitalization,
reorganization, merger, acquisition, divestiture, consolidation, spin-off,
combination, liquidation, dissolution, sale of assets, or other similar
corporate transaction or event, or any extraordinary event, or any other event
which distorts the applicable performance criteria occurs involving the Company
or a subsidiary or division thereof, the Committee shall adjust or modify, as
determined by the Committee in its sole and absolute discretion, the calculation
of Operating Income and/or Cash Flow, or the applicable Performance Targets, to
the extent necessary to prevent reduction or enlargement of Participants' Awards
under the Plan for such Performance Period attributable to such transaction or
event. Such adjustments shall be conclusive and binding for all purposes.

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ARTICLE IV

MISCELLANEOUS

SECTION 4.1 NO RIGHTS TO AWARDS OR CONTINUED EMPLOYMENT. No employee shall
have any claim or right to receive Awards under the Plan. Neither the Plan nor
any action taken hereunder shall be construed as giving any employee any right
to be retained by the Company or any of its subsidiaries.

SECTION 4.2 RESTRICTION ON TRANSFER. The rights of a Participant with
respect to Awards under the Plan shall not be transferable by the Participant to
whom such Award is granted, otherwise than by will or the laws of descent and
distribution.

SECTION 4.3 TAX WITHHOLDING. The Company or a subsidiary thereof, as
appropriate, shall have the right to deduct from all payments made under the
Plan to a Participant or to a Participant's beneficiary or beneficiaries any
Federal, state or local taxes required by law to be withheld with respect to
such payments.

SECTION 4.4 NO RESTRICTION ON RIGHT OF COMPANY TO EFFECT CHANGES. The Plan
shall not affect in any way the right or power of the Company or its
stockholders to make or authorize any recapitalization, reorganization, merger,
acquisition, divestiture, consolidation, spin-off, combination, liquidation,
dissolution, sale of assets, or other similar corporate transaction or event
involving the Company or a subsidiary thereof or any other event or series of
events, whether of a similar character or otherwise.

SECTION 4.5 SOURCE OF PAYMENTS. The Company shall not have any obligation to
establish any separate fund or trust or other segregation of assets to provide
for payments under the Plan. To the extent any person acquires any rights to
receive payments hereunder from the Company, such rights shall be no greater
than those of an unsecured creditor.

SECTION 4.6 AMENDMENT AND TERMINATION. The Board may at any time and from
time to time alter, amend, suspend or terminate the Plan in whole or in part. No
termination or amendment of the Plan may, without the consent of the Participant
to whom an Award has been made, adversely affect the rights of such Participant
in such Award.

SECTION 4.7 GOVERNMENTAL REGULATIONS. The Plan, and all Awards hereunder,
shall be subject to all applicable rules and regulations of governmental or
other authorities.

SECTION 4.8 HEADINGS. The headings of sections and subsections herein are
included solely for convenience of reference and shall not affect the meaning of
any of the provisions of the Plan.

SECTION 4.9 GOVERNING LAW. The Plan and all rights and Awards hereunder
shall be construed in accordance with and governed by the laws of the State of
Delaware.

SECTION 4.10 EFFECTIVE DATE. The Plan became effective as of January 1,
1994. The first amendment and restatement thereof became effective as of March
27, 1996. The second amendment and restatement thereof shall be effective as of
March 18, 1999; provided, however, that it shall be a condition to the
effectiveness of the Plan, and any Awards made after March 18, 1999, that the
stockholders of the Company approve the Plan at the 1999 Annual Meeting of
Stockholders. Such approval shall meet the requirements of Section 162(m) of the
Code and the regulations thereunder. If such approval is not obtained, then the
Plan shall not be effective and any Award made after March 18, 1999 shall be
void AB INITIO.

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<TABLE>

<S> <C> <C> <C>
1. Election of Directors FOR all nominees WITHHOLD authority to vote "EXCEPTIONS" / /
listed below / / for all nominees listed below / /

</TABLE>

Nominees: George S. Abrams, Philippe P. Dauman, Thomas E. Dooley, Ken Miller,
Brent D. Redstone, Shari Redstone, Sumner M. Redstone, Frederic V. Salerno,
William Schwartz, Ivan Seidenberg

INSTRUCTIONS: To withhold authority to vote for any individual nominee, mark the
"Exceptions" box and write that nominee's name in the space provided below.)

"Exceptions"
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2. Approval of the adoption of an amendment to the Restated Certificate of
Incorporation to increase the authorized number of shares of Class A Common
Stock.