EXHIBIT D
Discovery Zone Closes Management Agreement with Blockbuster
Board Members, Key Management Positions Named
CHICAGO, IL, May 25, 1995 -- Discovery Zone Inc. (NASDAQ: ZONE) today said
it has closed the previously announced five-year Management Services Agreement
with Blockbuster Entertainment Group, a unit of Viacom Inc. (AMEX: VIA, VIA.B).
Also, in conjunction with this agreement, Viacom completed its purchase of an
additional 3,823,647 shares of Discovery Zone common stock from the family of
Donald F. Flynn, the company's chairman of the board of directors.
Under the terms of the Management Services Agreement, Discovery Zone
granted Viacom warrants to acquire an aggregate of up to 473,463 shares of a new
class of non-cumulative, convertible, participating preferred stock. Each share
of preferred stock is convertible into 24 shares of Discovery Zone common stock
by any holder who is not affiliated with Viacom. Viacom now owns approximately
49.9 percent of Discovery Zone's outstanding common stock.
On May 11, 1995, Flynn and certain members of his family contributed to
Discovery Zone warrants to purchase Discovery Zone common stock, together with
cash in an amount equal to the $26.7 million warrant exercise price, in exchange
for approximately 7.2 million shares of the company's common stock. The
proceeds from this transaction will be used to reduce Discovery Zone's debt.
Discovery Zone today also announced the appointment of several new members
to the board of directors. Under the Management Services Agreement, Discovery
Zone board members who were not affiliated with Viacom (with the exception of
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Donald Flynn and Steven Berrard, Blockbuster Entertainment president and chief
executive officer) resigned effective at closing.
Named to the Discovery Zone board were:
-- Sumner Redstone, chairman of the board of Viacom Inc.; and president,
chief executive officer and chairman of National Amusements, Inc..
-- Frank Biondi, Jr., president and chief executive officer of Viacom Inc.
-- Philippe Dauman, executive vice president, general counsel and chief
administrative officer of Viacom Inc.
-- J. Brian McGrath, commissioner of the Thoroughbred Racing Associations,
president of TRA Enterprises, which is the managing general partner of Equibase
Holding Partners; and a member of the board of directors of Spelling
Entertainment Group, a unit of Blockbuster Entertainment.
-- John Muething, of counsel to the Cincinnati, Ohio law firm of Keating,
Muething & Kleakamp, and also a member of the board of directors of Spelling.
In a related announcement, Berrard, who continues as interim chief
executive officer of Discovery Zone, named a number of executives to the
following positions at the company:
Debra D. Joester becomes senior vice president, marketing of Discovery
Zone. She will oversee the company's efforts to develop and expand Discovery
Zone's marketing and merchandising efforts, as well as explore new ways to
capitalize on Discovery Zone's popular brands.
Joester has been with Hamilton Projects, Inc., a New York-based
international licensing agency, for 11 years, most recently as president. She
has had broad
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responsibilities for the development of entertainment licensing, strategic brand
extension programs and special-events marketing.
Joester has designed licensing programs for widely recognized entertainment
brand names including "Beverly Hills, 90210," and "Melrose Place," and for
consumer-products from manufacturers such as Miller Brewing and Chrysler
Corporation.
Hamilton Projects is a division of Spelling Entertainment.
James O. George becomes Discovery Zone's senior vice president, operations.
He will be responsible for the overall operations of Discovery Zone's 330-plus
locations.
George has held management positions in operations for Blockbuster Video as
well as other multiple-location retail chains. Formerly a vice president of
Blockbuster Video's Central Zone, he successfully oversaw the operations of more
than 500 retail stores.
He had been with Blockbuster Video since 1987.
Albert J. Detz becomes senior vice president and chief financial officer of
Discovery Zone. Detz will oversee the company's accounting and finance
functions, including investor-relations.
In addition to his Discovery Zone role, Detz will also continue in his
present capacity as senior vice president and chief financial officer of the
Blockbuster Entertainment Group. At Blockbuster, he is responsible for
overseeing financial, accounting and other administrative aspects of a $5
billion business organization. He joined Blockbuster in 1991.
John E. Vollmer has been named vice president, finance and administration
of Discovery Zone. Vollmer most recently was vice president of finance for
Blockbuster
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Entertainment. He joined the company in 1992 when Blockbuster acquired Sound
Warehouse, Inc., where he was chief financial officer of a 146-store music
retail chain.
David A. Barclay becomes vice president and general counsel of Discovery
Zone. Barclay most recently served as Blockbuster Entertainment's senior
corporate counsel. He joined Blockbuster in 1991.
Robert W. Levis becomes vice president, corporate development and finance
of Discovery Zone. He will be responsible for strategic planning and management
of the company's zone financial structure.
Levis most recently was Blockbuster Entertainment's director, corporate
development. He joined the company in 1993.
John Chapman becomes vice president and controller, Discovery Zone.
Chapman was formerly assistant controller for Blockbuster Entertainment. He had
been with the company since 1991.
In commenting on these appointments, Berrard said, "All of these
individuals have been instrumental in growing Blockbuster Entertainment from a
small video retailer to a broad-based entertainment company. Their professional
backgrounds will help us focus on enhancing the quality of Discovery Zone's
operations, and strategic marketing and merchandising initiatives, as well as
enable us to further develop its intellectual properties.
"As we proceed with repositioning Discovery Zone for the future, we plan to
develop and utilize a proprietary database and increase our efforts to cross-
promote Discovery Zone FunCenters with other Blockbuster group businesses.
Berrard also stated that, "We continue to actively search for a president
and
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other senior positions within the company. It is our intention to name the most
qualified and capable individuals to those areas as soon as possible."
In addition to the above announcements, Discovery Zone today said it will
be relocating its corporate offices to Ft. Lauderdale.
Discovery Zone is the nation's leading operator of children's indoor
entertainment and fitness facilities.
Blockbuster Entertainment Group is a worldwide leader in entertainment
retailing, television and film production, live entertainment and premium
television. The Group's operations include Blockbuster Video, Blockbuster
Music, Showtime Networks Inc., Discovery Zone FunCenters, Spelling Entertainment
Group Inc., and Paramount Parks.
Viacom is one of the world's largest entertainment and publishing companies
and a leading force in nearly every segment of the international media
marketplace. The operations of Viacom Inc. also include MTV Networks, Paramount
Pictures, Paramount Television, Simon & Schuster and Viacom Interactive Media,
as well as radio and television stations, cable systems and movie screens in 11
countries.
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