VHS Revenue Sharing License Agreement - Warner Home Video and Blockbuster Inc.


                                       [LOGO]
                                 WARNER HOME VIDEO


January 20, 1999

Mr. Dean Wilson
Executive Vice President
General Merchandising Manager
Blockbuster Inc.
1201 Elm Street
Dallas, TX  75270

RE:  VHS REVENUE SHARING LICENSE AGREEMENT

Dear Dean:

The following (the 'Letter Agreement') sets forth the terms of the license 
agreement (the 'License') between Warner Home Video, a division of Time 
Warner Entertainment Company, L.P. ('WHV') and Blockbuster Inc. 
('Blockbuster') for revenue sharing on WHV's Rental Picture output.

1.    TERM:  Three (3) year period commencing upon the 'Street Date' of the 
      first 'Rental Picture' (as such terms are defined below) released by 
      WHV on or after March 1, 1999.

2.    TERRITORY: United States only; provided, however, Blockbuster shall 
      have the option to enter into an agreement with WHV (Canada) on 
      substantially the same terms and conditions, and for a term coextensive 
      with the Term hereof, upon one hundred and eighty (180) days prior 
      written notice to WHV.

3.    DEFINITIONS AND CALCULATIONS:

      a.    'Base Units':

            (i)   Calculation Based on Revenue Sharing Measurement Titles: 
                  The following calculation shall be used for determining *

----------------------
*     Pages where confidential treatment has been requested are stamped
      'Confidential material omitted and separately filed with the Commission
      under an application for confidential treatment', and the confidential
      section has been marked with a star (*).



                  (A)   *

                  (B)   *

                  (C)   *

                  (D)   *

                  (E)   *

                  (F)   *

            (ii)  *

      b.    'Bonus Units' *

      c.    'Box Office Receipts' shall mean North American (United States  
            and Canada) gross box office receipts, as reported or estimated 
            in VARIETY or the HOLLYWOOD REPORTER *                          

      d.    'Guarantee Program' shall mean the program under which Blockbuster
            nationally advertises a money-back guarantee or free rental to
            consumers if videocassettes of certain titles are not available for
            rental from the Stores or another comparable program.

      e.    'Licensed Units' shall mean the sum of the Base Units and the 
            Bonus Units for each Rental Picture.

      f.    'Month' shall be defined as set forth on Exhibit 3(e) attached
            hereto and by this reference made a part hereof.

      g.    'Picture Term' means for each Rental Picture the first 26 weeks of
            rental release beginning with Street Date.

      h.    'Rental Picture' means each and every new release on videocassette
            of a feature motion picture for which WHV owns or controls home 
            video distribution rights in the Territory (subject to any and 
            all approvals required by any third party) of not

----------------------
*     Confidential material omitted and separately filed with the Commission
      under an application for confidential treatment.


                                       2


            fewer than seventy (70) minutes in length, priced for rental in the
            retail market; provided, however, the following shall be
            specifically excluded from Rental Pictures: (i) New Line, MGM and 
            HBO distributed lines (unless and until the terms of this Letter 
            Agreement are accepted and agreed by any such distributed line), 
            (ii) product controlled by third parties who do not approve of 
            the terms hereof and (iii) videocassettes of sports events, 
            concert footage, stage plays, documentaries, video or theatrical 
            re-releases, foreign language titles or product rated NC-17 or 
            more restrictive by the MPAA, or library titles.

      i.    'Revenue' means *

            (i)   'Bad Debt' shall mean *

            (ii)  'Credits' *

            (iii) 'Taxes' shall mean any and all sales, excise, value added or
                  other taxes which meet the following qualifications: (A) the
                  taxes are separately stated, (B) the taxes are required by law
                  to be collected from Blockbuster's customers, and (C) the
                  taxes are actually paid by Blockbuster to taxing authorities.

      j.    'Stores' shall mean (i) all Blockbuster-owned rental retail stores,
            (ii) any and all Blockbuster franchises that elect to participate
            in, and comply with, the obligations set forth under this Letter
            Agreement and any other obligations that Blockbuster may impose to
            administer the terms hereof with respect to any such franchisees,
            and (iii) Blockbuster-owned alternative direct-to-consumer VHS
            rental distribution systems by which Blockbuster rents VHS
            videocassettes to consumers for home use and/or sells PVTs to
            consumers via internet, vending machines and/or kiosks
            (collectively, 'Alternative Distribution Systems'). * All
            franchisees that participate shall be treated as Blockbuster Stores
            for the purposes of this Letter Agreement, and the actual rental
            transactions of such franchisees on Measurement Titles shall be
            included in Blockbuster's total rental transactions. In the event
            that there is insufficient historical data, the parties shall use
            good faith efforts to agree on estimated rental transactions for
            such franchisees. 'Stores' shall specifically exclude any new store
            or stores owned or controlled by Blockbuster operating under any
            name other than Blockbuster. The parties agree

----------------------
*     Confidential material omitted and separately filed with the Commission
      under an application for confidential treatment.


                                       3


            that with respect to stores and/or chains of stores acquired by
            Blockbuster during the Term, such stores shall be eligible to assume
            the rights and obligations set forth hereunder provided Blockbuster
            shall report for such new stores through its existing established
            reporting mechanism, and, any existing revenue sharing agreement of
            any such store with WHV shall terminate. Upon the addition or
            acquisition of stores, Blockbuster shall notify WHV immediately in
            writing, and the parties shall begin good faith discussions to
            immediately increase the number of Base Units to reflect such store
            acquisitions and/or additions.

      k.    'Street Date' means the first day retailers are permitted by WHV to
            make a title available for rental to consumers.

4.    LICENSED RIGHTS:

      a.    Homevideo Distribution License: WHV licenses to Blockbuster on a
            limited and non-exclusive basis homevideo distribution rights to all
            Rental Pictures in the VHS format for rental (i) only to consumers
            for home use and (ii) only from Stores in the Territory during the
            Term, subject to the terms hereunder.

      b.    Reservation of Title: Legal title to, and risk of loss of, the
            Licensed Units hereunder shall remain vested in WHV, subject to
            disposition of PVTs pursuant to Paragraph 8 below. Blockbuster shall
            not permit any encumbrance to attach to any Licensed Units delivered
            pursuant to this Letter Agreement.

5.    INITIAL PAYMENT TO WHV: 

      a.    Calculation:

            (i)  For each Rental Picture licensed hereunder with Box Office 
                 Receipts of *

            (ii)  *

      b.    Payment Terms: For each Rental Picture, if applicable, the * 
            shall be due and payable by Blockbuster within *

      c.    Recoupment: Blockbuster shall recoup *

----------------------
*     Confidential material omitted and separately filed with the Commission
      under an application for confidential treatment.


                                       4


6.    REVENUE SHARING: For each Rental Picture, subject to Paragraph 5(c) 
      above, WHV's share of the Revenue shall be calculated as follows:

      a.    For weeks* 

      b.    For weeks *

      c.    *

7.    STATEMENTS AND PAYMENTS:

      a.    Statements: On a Monthly basis, * Blockbuster shall provide to 
            WHV, in the formats reasonably requested and as periodically 
            amended by WHV, a statement (the 'Statement') which reflects the 
            rental and related activities for such Month, *.

      b.    Payments: For each Rental Picture, to the extent any amounts are due
            pursuant to the Statements, Blockbuster shall wire transfer such
            amounts to an account designated by WHV no later than *.

8.    DISPOSITION OF PREVIOUSLY VIEWED TAPES:

      a.    Sale: For each Rental Picture, WHV may direct Blockbuster, as its
            licensee, to sell previously viewed tapes ('PVTs') to consumers
            pursuant to the following conditions:

            (i)   For Rental Pictures with *

            (ii)  For Rental Pictures with *

            (iii) Restriction on Sale of PVT's: In addition to and without 
                  limiting in any way the foregoing, the following 
                  restrictions shall apply on a title-by-title basis for all 
                  Rental Pictures:

                  (A)   *

                  (B)   *

----------------------
*     Confidential material omitted and separately filed with the Commission
      under an application for confidential treatment.


                                       5


            (iv)  No Revenue Share: There shall be no revenue sharing between 
                  Blockbuster and WHV with respect to the proceeds from sales 
                  of PVTs by Blockbuster except *.

            (v)   *

            (vi)  In the event WHV changes its current practice with respect to 
                  directing Blockbuster to sell PVTs consistent with 
                  Subparagraphs (i)-(v) of 8.a. above ('Redirection'), the 
                  parties shall in good faith review and reduce WHV's Revenue 
                  Share effective with any Redirection, if necessary, to 
                  provide for the sharing on a pre-established * basis of 
                  revenues generated by Blockbuster under this Letter 
                  Agreement in excess of the revenues Blockbuster would have 
                  earned prior to the parties' revenue sharing relationship. 
                  The calculation of WHV's Revenue Share shall be based on 
                  historical data relating to revenues generated from the 
                  Rental Pictures during the prior year and shall be subject 
                  to audit. The Minimum Share shall be adjusted on a pro rata 
                  basis to reflect any new WHV Revenue Share percentage.

      b.    Other Disposition:

            (i)   Box Office Receipts of *: Subject to the foregoing, with 
                  respect to Rental Pictures with Box Office Receipts of * at 
                  the end of the applicable Picture Term, the Licensed Units 
                  shall be treated as follows:

                  (A)   Base Units: * of Base Units * except as otherwise 
                        specified herein.

                  (B)   Bonus Units: Blockbuster and WHV shall * of Bonus 
                        Units by the end of the Picture Term for each Rental 
                        Picture, with *. To the extent any Bonus Unit is * 
                        WHV * within * after the end of the applicable 
                        Picture Term, which * shall not be recoupable.*

                  (C)   * of Licensed Units: In the event that * the Bonus 
                        Units, then, * thereafter for each such Rental 
                        Picture. The parties agree that, *.

            (ii)  Box Office Receipts of *: Subject to the foregoing, with 
                  respect to Rental Pictures with Box Office Receipts of *, 
                  Blockbuster shall at the end of the applicable Picture 
                  Term, * of the Licnesed Units for each Rental Picture.

      c.    Payment Terms: For each Rental Picture licensed hereunder, within 
            * days after the end of the Picture Term, *.

9.    PLACEMENT OF LICENSED UNITS: Blockbuster shall place all licensed Units of
      each Rental Picture licensed hereunder (except those units out for rental
      by consumers) on prominent 'new release' display walls or another agreed
      equivalent in-store location

----------------------
*     Confidential material omitted and separately filed with the Commission
      under an application for confidential treatment.


                                       6


      for not fewer than ninety (90) days after Street Date, subject to prior 
      sale pursuant to the terms of Paragraph 8.a. above.

10.   ADVERTISING SUPPORT: WHV shall provide advertising support to 
      Blockbuster for Base Units only, consistent with current practices, 
      provided, however, in the event that any two (2) other major motion 
      picture studios (e.g., Disney, Fox, Sony, Paramount, or Universal) 
      (each, a 'Major Studio') offer substantially different advertising 
      support that results in a material change in the video industry, WHV 
      shall have the option to modify its advertising support accordingly 
      with respect to the Rental Pictures hereunder. In such event, 
      Blockbuster shall have the option to modify the Base Units calculation, 
      provided that, in the event that Blockbuster modifies the calculation 
      to decrease the Base Units by * or more, WHV shall have the option 
      immediately to terminate this Letter Agreement.

11.   DELIVERY: WHV, at its cost, shall use its reasonable good faith efforts 
      to deliver product to Blockbuster's distribution center in McKinney, 
      Texas four (4) weeks prior to Street Date for each Rental Picture. The 
      parties agree that for each Rental Picture, Blockbuster may retain up 
      to * of the Base Units at its distribution center for replenishment of 
      defectives (the 'Replenishment Units'), new stores, and unexpected 
      spikes in product performance. To the extent the Replenishment Units 
      are still in the distribution center at the end of the applicable 
      Picture Term for each Rental Picture, such Replenishment Units shall be 
      subject to disposition pursuant to the terms of Paragraph 8.b. above.

12.   INFORMATION TO BE PROVIDED BY BLOCKBUSTER:  To the extent reasonably 
      available to Blockbuster and with respect to WHV product only, 
      Blockbuster agrees to provide the following information to WHV at 
      Blockbuster's expense:

      a.    Revenue Share Reporting: On a bi-weekly basis, Blockbuster shall 
            deliver to WHV * reports detailing the number of rental 
            transactions and gross revenues per Rental Picture for all 
            WHV-distributed labels subject to this Letter Agreement.

      b.    Other Information: Blockbuster and WHV shall mutually agree on 
            other information to be provided to WHV for all WHV-distributed 
            labels subject to this Letter Agreement.

13.   SHARING OF COSTS: WHV shall reimburse Blockbuster for a portion of its
      reasonable, out-of-pocket, third party costs for the following: (i) making
      the Bonus Units rental-

----------------------
*     Confidential material omitted and separately filed with the Commission
      under an application for confidential treatment.


                                       7


      ready; (ii) shipping the Bonus Units to the Stores; and (iii) purchasing
      Amaray boxes for the Bonus Units. Such reimbursement amount shall be * for
      each Bonus Unit.

14.   AUDIT RIGHTS: Upon not less than fourteen (14) days advance written
      notice to Blockbuster, WHV, or its representatives or designees, shall 
      have the right during normal business hours, but not more than two (2) 
      times during each calendar year of the Term and one (1) time after the 
      expiration or earlier termination of the Term, to inspect, audit and 
      make extracts of the books and records of Blockbuster insofar as said 
      books and records relate to the calculation or determination by 
      Blockbuster of (a) Revenue, (b) WHV's Revenue Share, (c) Credit, (d) 
      Bad Debt, and (e) the rights licensed hereunder as they relate to WHV; 
      provided, however, WHV shall have the right to conduct store audits as 
      reasonably required throughout the Term. Such rights of audit shall 
      continue for a period of two (2) years following the expiration of all 
      Picture Terms as provided for under this Letter Agreement. The parties 
      agree that Blockbuster shall have the right reasonably to approve 
      independent auditors hired by WHV to conduct an audit, provided that 
      the internal auditors of WHV and/or Time Warner and the accounting firm 
      of Ernst & Young or WHV's then existing auditors shall be deemed 
      pre-approved for any and all audits conducted pursuant hereto. 
      Notwithstanding the foregoing, the parties agree that no WHV or Time 
      Warner employees shall have direct or indirect access to Blockbuster's 
      information relating to WHV's competitors or Blockbuster's aggregate 
      market data; provided, however, WHV's auditors shall have the right to 
      review Blockbuster's aggregate market data subject to executing a 
      confidentiality agreement.

15.   CONFIDENTIALITY: Each of WHV and Blockbuster acknowledges that all
      information and data (including, without limitation, rental and revenue 
      forecasts, projections and estimates and actual results, in whatever 
      form or medium) (collectively, the 'Confidential Information') provided 
      by each party to the other under this Letter Agreement is highly 
      proprietary and confidential. Each of WHV and Blockbuster agrees that 
      it shall not use (other than in (a) connection with the performance of 
      its obligations under this Letter Agreement, or (b) the exercise of its 
      rights, under this Letter Agreement, or (c) as required by law, but 
      only to the extent the law so requires, or (d) unless compelled by 
      subpoena or court order) or disclose to any person (other than its 
      officers, employees, agents, representatives, licensors and 
      participants on a need-to-know basis only and who agree to be bound by 
      the confidentiality obligations hereunder) any such Confidential 
      Information. Blockbuster further agrees that (i) it shall not disclose 
      under any circumstances any Confidential Information to Paramount 
      without WHV's prior written approval and (ii) it shall only disclose 
      Confidential Information to Viacom on a need-to-know basis, provided 
      that no Paramount employee shall have or be given direct or indirect 
      access to any WHV information. This Paragraph 15 shall survive 
      expiration or earlier termination of this Letter Agreement.

----------------------
*     'Confidential material omitted and separately filed with the Commission
      under an application for confidential treatment'.


                                       8


16.   INDEMNIFICATION:

      a.    Indemnification by Blockbuster: Except as otherwise provided in
            Paragraph 16.b. below, Blockbuster shall defend, indemnify and 
            hold WHV, its parent company, their affiliates and subsidiaries, 
            and the officers, directors, agents and employees of each, free 
            and harmless from all suits, claims, demands and other 
            liabilities and expenses (including reasonable attorneys' fees) 
            (each, a 'Claim') which may arise directly or indirectly out of 
            or by reason of (i) the unauthorized use by Blockbuster of any 
            patented invention, or of any copyrighted material provided by 
            WHV, (ii) a Claim from a customer arising out of Blockbuster's 
            rental or retail practices or course of dealing with respect to 
            such customer, and/or (iii) a breach or violation of this Letter 
            Agreement by Blockbuster.

      b.    Indemnification by WHV: Except as otherwise provided in Paragraph
            16.a. above, WHV shall defend, indemnify and hold Blockbuster, 
            its parent company, their affiliates, subsidiaries, and 
            franchisees, and the officers, directors, agents, and employees 
            of each, free and harmless from all Claims (including reasonable 
            attorneys' fees) which may arise directly or indirectly out of or 
            by reason of (i) copyright infringement by, or other third party 
            Claim against, WHV with respect to the content of any Rental 
            Picture, provided such Claim or infringement is not the result of 
            the negligence of Blockbuster or any employee or agent of 
            Blockbuster, (ii) a physical defect in any Licensed Unit provided 
            to Blockbuster hereunder by WHV, provided such defect was not 
            caused by the negligence of Blockbuster or any employee or agent 
            of Blockbuster, and/or (iii) a breach or violation of this Letter 
            Agreement by WHV.

17.   REMEDIES: Each of WHV and Blockbuster acknowledge and agree that a 
      material breach by either party of any of its obligations under this 
      Letter Agreement, gives the other party the right to terminate this 
      Letter Agreement upon * prior written notice. Blockbuster waives any 
      rights to seek injunctive relief with respect to the sale, license 
      and/or other distribution of any Rental Picture, provided that 
      Blockbuster does not waive any right it may have to seek specific 
      performance under this Letter Agreement with respect to any Rental 
      Picture being distributed by WHV. The termination of this Letter 
      Agreement shall not relieve the parties of any obligations incurred 
      prior to such termination.

----------------------
*     Confidential material omitted and separately filed with the Commission
      under an application for confidential treatment.


                                       9


18.   DEFECTIVES: The parties agree that there shall be no replacements of, or
      credits or set-offs against the Initial Payment, overages, or any other
      amounts owed to WHV by Blockbuster for, defective Licensed Units. For each
      Rental Picture, to the extent defectives exceed * of the total number of
      Licensed Units delivered to Blockbuster during the first thirty (30) days
      after Street Date, Blockbuster may exchange defectives for new videos from
      WHV to be delivered within a reasonable time thereafter, which reasonable
      time shall be within seventy-two (72) hours, provided that Blockbuster
      utilizes WHV's eight hundred (800) number defective replacement system.

19.   MISCELLANEOUS:

      a.    Amendment and Waiver: Except as otherwise provided herein, no
            modification, amendment or waiver of any provision of this Letter
            Agreement shall be effective against any party unless such
            modification, amendment or waiver is approved in writing by
            Blockbuster and WHV. The failure of any party to enforce any of the
            provisions of this Letter Agreement shall in no way be construed as
            a waiver of such provisions and shall not affect the right of such
            party thereafter to enforce each and every provision of this Letter
            Agreement in accordance with its terms.

      b.    Severability: Whenever possible, each provision of this Letter
            Agreement shall be interpreted in such manner as to be effective and
            valid under applicable law, but if any provision of this Letter
            Agreement is held to be invalid, illegal or unenforceable in any
            respect under any applicable law or rule in any jurisdiction, such
            invalidity, illegality or unenforceability shall not affect any
            other provision or any other jurisdiction, but this Letter Agreement
            shall be reformed, construed and enforced in such jurisdiction as if
            such invalid, illegal or unenforceable provision had never been
            contained herein.

      c.    Entire Agreement: Except as otherwise expressly set forth herein,
            this document embodies the complete agreement and understanding
            between the parties hereto with respect to the subject matter hereof
            and supersedes and preempts any prior understandings, agreements or
            representations by or between the parties, written or oral, which
            may have related to the subject matter hereof in any way.

      d.    Assignment:

----------------------
*     Confidential material omitted and separately filed with the Commission
      under an application for confidential treatment.


                                       10


            (i)   Blockbuster Assignment: This Letter Agreement shall not be
                  assigned by Blockbuster without the prior written consent of
                  WHV, except (a) to any corporation or entity with which
                  Blockbuster is merged or consolidated, or (b) to any
                  corporation or entity which succeeds to all or substantially
                  all of Blockbuster's assets, or (c) to any corporation or
                  entity which controls, is controlled by, or under common
                  control with Blockbuster. All the foregoing exceptions shall
                  be subject to (1) written notice to WHV on or before 
                  assignment, (2) Paragraph 3.i. above with respect to 
                  non-Blockbuster stores, (3) *.

            (ii)  WHV Assignment: This Letter Agreement shall not be assigned 
                  by WHV without the prior written consent of Blockbuster, 
                  except (a) to any corporation or entity with which WHV is 
                  merged or consolidated, or (b) to any corporation or entity 
                  which succeeds to all or substantially all of WHV's assets, 
                  or (c) to any corporation or entity which controls, is 
                  controlled by, or under common control with WHV (in each 
                  instance, an 'Excluded Assignment'); provided, however, the 
                  assignee continues to distribute the Rental Pictures under 
                  the 'Warner Home Video' or similar name and logo. To the 
                  extent a non-Excluded Assignment by WHV results in a 
                  material change in the mix of Rental Pictures or a material 
                  decrease in the number of Rental Pictures, Blockbuster 
                  shall have the option to terminate this Letter Agreement 
                  upon written notice to WHV.

            (iii) Purchase of Blockbuster by a Major Studio or Retailer:

                  (A)   Purchase By Major Studio: In the event a Major Studio
                        enters into an agreement to acquire Blockbuster, WHV 
                        shall be given prompt notice of such agreement and 
                        shall have the option to terminate this Letter 
                        Agreement immediately upon written notice to 
                        Blockbuster. Promptly following such notice of 
                        acquisition agreement, Blockbuster, in consultation 
                        with WHV, shall undertake to provide adequate 
                        assurance in writing to WHV that proprietary and 
                        confidential information of WHV shall not be 
                        disclosed to, or otherwise made accessible to, the 
                        management or other employees of such Major Studio 
                        following such acquisition. As used in this Paragraph 
                        19.d.(iii) (A), the term 'Major Studio' shall (i) 
                        also include, without limitation, (x) MGM and (y) the 
                        respective affiliated

----------------------
*     Confidential material omitted and separately filed with the Commission
      under an application for confidential treatment.


                                       11


                        corporations which control, are controlled by, or are
                        under common control with, each Major Studio and (ii)
                        exclude Viacom and the affiliated corporations which
                        control, are controlled by, or are under common control
                        with Viacom. The term 'control' shall refer to the
                        ownership of at least fifty percent (50%) of the
                        outstanding voting power of the corporation or entity
                        which is subject to such 'control'.

                  (B)   Purchase By/of Retailer: In the event a retailer enters
                        into an agreement to acquire Blockbuster or Blockbuster
                        enters into an agreement to acquire a retailer, WHV and
                        Blockbuster agree that in such event, the terms of this
                        Letter Agreement shall apply only (i) to already
                        existing Blockbuster stores and (ii) to any new stores
                        which operate under the Blockbuster name at the retail
                        level, and/or to the extent such new stores are capable
                        of reporting through Blockbuster's established reporting
                        mechanism.

                  (C)   Definition of 'Purchase': For purposes of this
                        Subparagraph 19.d.(iii) the term 'Purchase' shall
                        include acquisition, merger and/or other consolidation.

      e.    Counterparts. This Letter Agreement may be executed in separate
            counterparts each of which shall be an original and all of which
            taken together shall constitute one and the same agreement.

      f.    Due Authorization. Each of WHV and Blockbuster represents and 
            warrants that the officer executing this Letter Agreement has been 
            duly authorized and that this Letter Agreement when executed and
            delivered shall be valid and binding and enforceable in accordance
            with its terms.

      g.    Notices. All notices provided for in this Letter Agreement shall be
            in writing and shall be either personally delivered, or mailed first
            class mail (postage prepaid) or sent by reputable overnight courier
            service (charges prepaid) to the parties at the following address:

            If to Blockbuster:



                                       12


            Blockbuster Inc.
            1201 Elm Street
            Dallas, TX  75270
            Attention: Dean Wilson, Executive Vice President
                       General Merchandising Manager
                       Ed Stead, Executive Vice President and General Counsel

            If to WHV:

            Warner Home Video
            4000 Warner Boulevard
            Burbank, CA 91522
            Attention: Jim Cardwell, Executive Vice President,
                       North American Operations
                       Beth Baier, Senior Vice President, Business Affairs and
                       General Counsel

      h.    Governing Law. This Letter Agreement and all matters or issues
            material thereto shall be governed by the laws of the State of 
            New York, applicable to contracts performed entirely therein. WHV 
            and Blockbuster hereby agree that all actions, proceedings or 
            litigation relating to this Letter Agreement shall be instituted 
            and prosecuted solely within the county of New York, State of New 
            York and each party hereby consents to the jurisdiction of the 
            state courts of New York and the federal courts located within 
            the State of New York with respect to any matter arising out of 
            or relating to this Letter Agreement.

      i.    Descriptive Headings. The descriptive headings of this Letter
            Agreement are inserted for convenience only and do not constitute a
            part of this Letter Agreement.

      j.    Relationship of Parties. Nothing contained herein shall constitute a
            partnership, joint venture, association or principal and agent
            relationship or be construed to evidence the intention of the
            parties to constitute such. Blockbuster and WHV are independent
            contractors and neither has any authority to act on the other's
            behalf or to bind the other in any way.

      k.    Force Majeure. Whenever performance by any party of its obligations
            under this Letter Agreement, other than any of Blockbuster's payment
            obligations hereunder, is substantially prevented by reason of any
            act of God, strike, lock-out, or other industrial or
            transportational disturbance, fire, lack of materials, law,
            regulation or ordinance, war or war conditions, or by reason of any
            other matter beyond such party's reasonable control, then such
            performance shall be excused and this Letter Agreement shall be
            deemed suspended during the continuation of such



                                       13


            prevention, and the term shall be extended for a period equal to the
            time of such suspension.

      l.    Third Parties. None of the provisions of this Letter Agreement is
            intended for the benefit of or shall be enforceable by any third
            party including creditors of Blockbuster or WHV.

In WITNESS WHEREOF, this Letter Agreement was executed by the parties on the
date first written above.

BLOCKBUSTER INC. ('Blockbuster')            WARNER HOME VIDEO, 
                                            a division of Time Warner 
                                            Entertainment Company, L.P. ('WHV')


By:       /s/ Edward B. Stead               By: /s/ Jim Cardwell
     -----------------------------              -------------------------------

Its:             EVP                        Its:  
     -----------------------------              -------------------------------



                                       14


                                 Exhibit 3(a)(i)

                   BLOCKBUSTER REVENUE SHARE AGREEMENT EXHIBIT

                                        *

----------------------
*     Confidential material omitted and separately filed with the Commission
      under an application for confidential treatment.



                               Exhibit 3(a)(i)(B)

                   BLOCKBUSTER REVENUE SHARE AGREEMENT EXHIBIT

                                        *

----------------------
*     Confidential material omitted and separately filed with the Commission
      under an application for confidential treatment.



                               Exhibit 3(a)(i)(F)

                                        *

----------------------
*     Confidential material omitted and separately filed with the Commission
      under an application for confidential treatment.



                                  Exhibit 3(b)

                                        *


----------------------
*     Confidential material omitted and separately filed with the Commission
      under an application for confidential treatment.




                              [LOGO]
                         WARNER HOME VIDEO




January 20, 1999




Mr. Dean Wilson
Senior Vice President
General Merchandising Manager
Blockbuster, Inc.
1201 Elm Street
Dallas, TX 75270

RE:  VHS REVENUE SHARING LICENSE AGREEMENT - HBO

Dear Mr. Wilson:

Reference is hereby made to that certain Revenue Sharing License Agreement 
(the 'Agreement') dated January 20, 1999, by and between Warner Home Video, a 
division of Time Warner Entertainment Company, L.P. ('WHV') and Blockbuster 
Inc. ('Blockbuster') for VHS revenue sharing on WHV's Rental Picture output. 
Capitalized terms used herein and not otherwise defined shall have the same 
meanings as in the Agreement.

Pursuant to Paragraph 3 of the Agreement, the parties agree that the term 
'Rental Pictures' shall include all HBO titles distributed by WHV, subject to 
the exclusions set forth in Paragraph 3.h. of the Agreement.

Except as otherwise modified herein, all other terms and conditions of the 
agreement are hereby ratified and shall remain in full force and effect.

IN WITNESS WHEREOF, this letter agreement was executed by the parties on the 
date first written above.

WARNER HOME VIDEO, a division of Time
Warner Entertainment Company, L.P. ('WHV')

By:/s/ Jim Cardwell
   -----------------------

Its: 
    ----------------------

BLOCKBUSTER, INC. ('Blockbuster')


By:/s/ Edward B. Stead
   -----------------------

Its: EVP
    ----------------------