Mig, Inc. – ‘DEF 14A’ for 7/10/97

As of:  Wednesday, 6/18/97   ·   For:  7/10/97   ·   Accession #:  912057-97-20675   ·   File #:  1-05706

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Definitive Proxy Solicitation Material   —   Schedule 14A
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: DEF 14A     Definitive 14A                                       142    767K 
 2: EX-1        Form 10K/A (6/18/97)                                 117    630K 
 3: EX-2        Form 10-Q (3/31/97)                                   38    191K 
 4: EX-3        Form 8-K (2/11/97)                                     5     11K 
 5: EX-4        Form 8-K (5/2/97)                                      4     18K 
 6: EX-5        Form 10-K/A (7/13/95)                                 35    192K 
 7: EX-6        Form 10-K (3/31/96)                                   19    104K 
 8: EX-7        Form 8-A (10/30/95)                                    9     19K 

DEF 14A   —   Definitive 14A
Document Table of Contents

DEF 14A
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As filed with the Securities and Exchange Commission on June 18, 1997 
--------------------------------------------------------------------------------
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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) 
OF THE SECURITIES EXCHANGE ACT OF 1934

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

/X/ Filed by the Registrant                                                     

/ / Filed by a Party other than the Registrant                                  

Check the appropriate box:                                                      

/ / Preliminary Proxy Statement                                                 

/X/ Definitive Proxy Statement                                                  

/ / Definitive Additional Materials                                             

/ / Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12                 

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

METROMEDIA INTERNATIONAL GROUP, INC.

    (Name of Registrant as Specified in its Charter)

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

Payment of Filing Fee (Check the appropriate box):                              

/ / 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: n/a 

2)  Aggregate number of securities to which transaction applies: n/a    

3)  Per unit price or other underlying value of transaction computed    
pursuant to Exchange Act Rule 0-11: $573,000,000                  

4)  Proposed maximum aggregate value of transaction: $573,000,000       

5)  Total fee paid: $114,600                                            

/X/ 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 No.:                                          

3) Filing Party:                                                                

4) Date Filed:                                                                  
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[LOGO]                                                          

One Meadowlands Plaza       
          East Rutherford, New Jersey 07073-2137

                       June 18, 1997

Dear Stockholder:                                                               

On behalf of the Board of Directors, I wish to extend to you a cordial  
invitation to attend the Annual Meeting of Stockholders of Metromedia           
International Group, Inc. ("MMG"), which will be held in the Orion Pictures     
Corporation Screening Room at 1888 Century Park East, Los Angeles, California   
90067 at 9:00 a.m., Los Angeles time, on July 10, 1997 (the "Annual Meeting"). I
look forward to greeting as many stockholders as possible at the Annual Meeting.

At the Annual Meeting, you will be asked to consider and approve, among 
other things, the Stock Purchase Agreement, dated as of May 2, 1997 (the "Stock 
Purchase Agreement"), by and among MMG, Orion Pictures Corporation, a Delaware  
corporation and a wholly-owned subsidiary of MMG ("Orion"), and P&F Acquisition 
Corp., a Delaware corporation ("P&F"), and the parent company of Metro-         
Goldwyn-Mayer Inc., pursuant to which MMG will sell, and P&F will purchase,     
certain of MMG's entertainment assets (the "Proposed Transaction"), including   
all of the outstanding shares of capital stock of Orion and its direct and      
indirect subsidiaries (other than Landmark Theatre Group and its subsidiaries). 
In connection with the Proposed Transaction, MMG will receive $573 million in   
cash, less amounts used to repay the existing Orion credit facility and other   
outstanding debt of Orion and its subsidiaries. Details regarding the terms and 
conditions of the Proposed Transaction are included in the enclosed Proxy       
Statement.                                                                      

AT THE DIRECTORS' MEETING HELD TO CONSIDER THE PROPOSED TRANSACTION, THE
DIRECTORS OF MMG CAREFULLY CONSIDERED AND UNANIMOUSLY APPROVED THE TERMS OF THE 
PROPOSED TRANSACTION AS BEING IN THE BEST INTERESTS OF MMG AND ITS STOCKHOLDERS.
THE MMG BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE    
"FOR" PROPOSAL NO. 1 TO APPROVE THE PROPOSED TRANSACTION.                       

    In addition, at the Annual Meeting, you will be asked to vote on three other
proposals: (i) to elect two Class II Directors for three year terms ending in   
the year 2000; (ii) to ratify the selection of KPMG Peat Marwick LLP as MMG's   
independent accountants for the year ending December 31, 1997; and (iii) to     
consider and vote upon a proposal submitted by a stockholder of MMG to amend the
Company's certificate of incorporation to allow stockholders of MMG to take     
action by written consent and to call special meetings, and any other matters   
that may properly come before the Annual Meeting.                               

It is important that your shares be represented at the Annual Meeting,  
whether or not you are able to attend. Accordingly, you are urged to sign, date 
and mail the enclosed proxy promptly. If you later decide to attend the Annual  
Meeting, you may revoke your proxy and vote in person. As indicated in the      
notice previously mailed to you, this Proxy Statement supersedes in all respects
the proxy statement previously mailed to you on or about April 14, 1997, and the
meeting previously scheduled for May 14, 1997 has been canceled. Any proxy cards
received in connection therewith will be destroyed by MMG and you are asked to  
submit the proxy cards enclosed herewith.                                       

Thank you for your time and consideration.                              

              Sincerely,

                    Stuart Subotnick
                 PRESIDENT AND
                           CHIEF EXECUTIVE OFFICER

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METROMEDIA INTERNATIONAL GROUP, INC.

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

ONE MEADOWLANDS PLAZA 
EAST RUTHERFORD, NEW JERSEY 07073-2137

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

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JULY 10, 1997 

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

TO THE STOCKHOLDERS OF
METROMEDIA INTERNATIONAL GROUP, INC.: 

  NOTICE IS HEREBY GIVEN that an Annual Meeting of Stockholders (the "Annual
Meeting") of Metromedia International Group, Inc., a Delaware corporation       
("MMG"), will be held on July 10, 1997, at 9:00 a.m., local time, in the Orion  
Pictures Corporation Screening Room, 1888 Century Park East, Los Angeles,       
California 90067, for the purpose of considering and acting upon the following: 

      1.  The proposal to consider and approve the Stock Purchase Agreement,
   dated as of May 2, 1997 (the "Stock Purchase Agreement"), by and among MMG,
Orion Pictures Corporation, a Delaware corporation ("Orion"), and P & F 
  Acquisition Corp., a Delaware corporation ("P&F"), and the consummation of
the transactions contemplated thereby, including the sale of all of the 
  outstanding capital stock of Orion and all of its subsidiaries (other than
Landmark Theatre Group and its subsidiaries) to P&F (the "Proposed      
Transaction");                                                          

    2.  The election of two members to MMG's Board of Directors to serve
three-year terms as Class II Directors;                                 

       3.  The ratification of the selection of KPMG Peat Marwick LLP as MMG's
independent accountants for the year ending December 31, 1997;          

       4.  The proposal submitted by a stockholder of the Company to amend the
   Company's certificate of incorporation to allow stockholders of MMG to take
action by written consent and to call special meetings; and             

      5.  The transaction of such other business as may properly come before
    the Annual Meeting or any adjournment thereof. The Board of Directors is not
   aware of any other business that will be presented for consideration at the
Annual Meeting.                                                         

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE
"FOR" PROPOSALS NO. 1, NO. 2 AND NO. 3 AND "AGAINST" PROPOSAL NO. 4 TO BE       
PRESENTED TO MMG STOCKHOLDERS AT THE MMG ANNUAL MEETING.                        

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  Only stockholders of record at the close of business on June 13, 1997 will
be entitled to notice of and to vote at the Annual Meeting or any adjournment   
thereof. The Annual Meeting may be adjourned from time to time without notice   
other than by announcement at the Annual Meeting. A list of stockholders        
entitled to vote at the Annual Meeting will be available for inspection by any  
stockholder, for any reason germane to the Annual Meeting, during ordinary      
business hours during the ten days prior to the Annual Meeting at One           
Meadowlands Plaza, East Rutherford, New Jersey 07073-2137.                      

                                       By Order of the Board of Directors.

                    Arnold L. Wadler
             SECRETARY

East Rutherford, New Jersey                                                     

June 18, 1997                                                                   

    IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING REGARDLESS OF
THE NUMBER OF SHARES YOU HOLD IN ORDER THAT A QUORUM MAY BE ASSURED, WHETHER OR 
NOT YOU PLAN TO BE PRESENT AT THE MEETING IN PERSON. PLEASE COMPLETE, SIGN, DATE
AND MAIL THE ENCLOSED PROXY IN THE ACCOMPANYING RETURN ENVELOPE (TO WHICH NO    
POSTAGE NEED BE AFFIXED BY THE SENDER IF MAILED WITHIN THE UNITED STATES). IF   
YOU RECEIVE MORE THAN ONE PROXY BECAUSE YOUR SHARES ARE REGISTERED IN DIFFERENT 
NAMES OR ADDRESSES, EACH SUCH PROXY SHOULD BE SIGNED AND RETURNED TO ASSURE THAT
ALL OF YOUR SHARES WILL BE VOTED. THE PROXY SHOULD BE SIGNED BY ALL REGISTERED  
HOLDERS EXACTLY AS THE STOCK IS REGISTERED.                                     

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METROMEDIA INTERNATIONAL GROUP, INC.

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

PROXY STATEMENT 
FOR AN ANNUAL MEETING OF STOCKHOLDERS 
TO BE HELD ON JULY 10, 1997 

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

This Proxy Statement (the "Proxy Statement") is being furnished to the  
holders of shares of common stock, par value $1.00 per share (the "Common       
Stock"), of Metromedia International Group, Inc., a Delaware corporation ("MMG" 
or the "Company"), in connection with the solicitation of proxies by the Board  
of Directors of MMG for use at the Annual Meeting of the Stockholders of MMG to 
be held at 9:00 a.m., Los Angeles time, on July 10, 1997 in the Orion Pictures  
Corporation Screening Room at 1888 Century Park East, Los Angeles, California   
90067 (the "Annual Meeting"), and any adjournments thereof. As indicated in the 
notice previously mailed to you, this Proxy Statement supersedes in all respects
the proxy statement previously mailed to you on or about April 14, 1997 and the 
meeting previously scheduled for May 14, 1997 has been canceled. Any proxy cards
received in connection therewith have been destroyed by the Company and you are 
asked to submit the proxy cards enclosed herewith.                              

At the Annual Meeting, the holders of MMG's Common Stock ("MMG          
Stockholders") will be asked to (i) consider and approve the Stock Purchase     
Agreement, a copy of which is attached hereto as Appendix A, dated as of May 2, 
1997 (the "Stock Purchase Agreement"), by and among MMG, Orion Pictures         
Corporation, a Delaware corporation and a wholly-owned subsidiary of MMG        
("Orion"), and P & F Acquisition Corp., a Delaware corporation ("P&F") and the  
parent company of Metro-Goldwyn-Mayer Inc. ("MGM"), and the consummation of the 
transactions contemplated thereby, including the sale of all the outstanding    
capital stock of Orion and its direct and indirect subsidiaries (other than     
Landmark Theatre Group and its subsidiaries ("Landmark")), to P&F (the "Proposed
Transaction") (Orion, together with such subsidiaries, excluding Landmark, are  
collectively referred to herein as the "Entertainment Companies"); (ii) elect   
two members to MMG's Board of Directors to serve a three-year term as Class II  
Directors; (iii) ratify the selection of KPMG Peat Marwick LLP as MMG's         
independent accountants for the year ending December 31, 1997; (iv) vote upon a 
proposal submitted by a stockholder of the Company to amend the Company's       
certificate of incorporation to allow stockholders of MMG to take action by     
written consent and to call special meetings; and (v) vote upon the transaction 
of such other matters as may properly come before the Meeting.                  

Included among the matters described in this Proxy Statement are matters
that relate to approval by the MMG Stockholders of the Proposed Transaction.    
Upon the terms and subject to the conditions of the Stock Purchase Agreement, on
the closing date under the Stock Purchase Agreement (the "Closing Date"), P&F   
will purchase from MMG all of the outstanding shares of capital stock of Orion  
(the "Shares"), for cash in an amount equal to $573 million, less indebtedness  
outstanding (approximately $271.8 million at May 31, 1997) under the existing   
credit facility (the "Orion Credit Facility") between Orion and Chase Manhattan 
Bank ("Chase") and less all outstanding debt of Orion other than the Orion      
Credit Facility (approximately $13.5 million at May 31, 1997). See "INFORMATION 
REGARDING MMG--Certain Relationships and Related Transactions." The consummation
of the Proposed Transaction is subject to the satisfaction or waiver of certain 
conditions and may be terminated by either MMG or P&F upon the occurrence or    
nonoccurrence of certain events. See "PROPOSAL NO. 1--THE PROPOSED              
TRANSACTION--Terms and Conditions of the Stock Purchase Agreement." Pursuant to 
the terms of a Stockholders Agreement (as attached hereto as Appendix B), dated 
as of April 27, 1997 (the "Stockholders Agreement"), among John W. Kluge, Stuart
Subotnick, Metromedia Company, a Delaware general partnership ("Metromedia"),   
Met Telcell, Inc., a Delaware corporation owned and controlled by Messrs. Kluge 
and Subotnick ("Met Telcell" and, together with Messrs. Kluge and Subotnick and 
Metromedia, the "Metromedia Holders"), and P&F, Messrs. Kluge and Subotnick, the
general partners of Metromedia, have agreed (i) to vote their shares of Common  
Stock in favor of the Stock Purchase Agreement, (ii) to vote their shares       
against another proposal (except if such vote would violate their fiduciary     
duties) to sell all or substantially all of the Shares or any or all of the     
assets of the Entertainment                                                     

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Companies and (iii) not to transfer their shares of Common Stock until the later
of September 30, 1997 or 90 days after an MMG Stockholders meeting held to      
approve and adopt the Stock Purchase Agreement (as long as such meeting is held 
by September 30, 1997). As of the Record Date (as defined below), the Metromedia
Holders owned approximately 26% of the outstanding Common Stock. In addition,   
simultaneously with the consummation of the Proposed Transaction, (i) Mr. Kluge 
and Metromedia will be released from their guarantees made in favor of Chase    
under the $100 million revolving credit portion of the Orion Credit Facility    
(approximately $94.3 million of which was outstanding at May 31, 1997) and (ii) 
Metromedia will be released from its guarantee made in favor of Chase of payment
of a certain third party account receivable owed to Orion (approximately $11.4  
million at May 31, 1997) so that the entire face amount of such account         
receivable could be included in the borrowing base for the Orion Credit         
Facility. See "PROPOSAL NO. 1--PROPOSED TRANSACTION--Interests of Certain       
Persons."                                                                       

This Proxy Statement is being furnished to holders of Common Stock in   
connection with the solicitation of proxies by the Board of Directors of MMG for
use at the Annual Meeting, and any adjournments thereof. Each copy of this Proxy
Statement being mailed or delivered to MMG Stockholders is accompanied by a MMG 
proxy card, the Notice of Annual Meeting of Stockholders of MMG and the         
Exhibits.                                                                       

 All properly executed proxy cards delivered pursuant to this solicitation
and not revoked will be voted at the Annual Meeting in accordance with the      
directions given. In voting by proxy with regard to the election of directors,  
MMG Stockholders may vote in favor of all nominees, withhold their votes as to  
all nominees or withhold their votes as to specific nominees. With regard to    
other proposals, MMG Stockholders may vote in favor of each proposal or against 
each proposal, or in favor of some proposals and against others, or may abstain 
from voting on any or all proposals. Stockholders should specify their          
respective choices on the accompanying proxy card. If no specific instructions  
are given with regard to the matters to be voted upon, the shares of Common     
Stock represented by a signed proxy card will be voted "FOR" Proposal Nos. 1, 2 
and 3 and "AGAINST" Proposal No. 4 listed on the proxy card. If any other       
matters properly come before the Annual Meeting, the persons named as proxies   
will vote upon such matters according to their judgment.                        

    The presence, in person or by proxy, of a majority of the outstanding shares
of Common Stock is necessary to constitute a quorum at the Annual Meeting. Each 
of the proposals set forth in this Proxy Statement will be voted upon separately
at the Annual Meeting. Because the Proposed Transaction may constitute a sale of
"substantially all" of the assets of the Company under Delaware law, which would
require the approval of a majority of the outstanding shares of the Common Stock
before such a sale may be consummated, the Board of Directors of the Company is 
seeking approval of the MMG Stockholders to complete the Proposed Transaction.  
As noted above, the Metromedia Holders, who together own approximately 26% of   
the outstanding shares of Common Stock as of the Record Date, have agreed to    
vote their shares of Common Stock in favor of Proposal No. 1. The affirmative   
vote of the holders of a majority of all of the issued and outstanding shares of
Common Stock (whether or not represented in person or by proxy at the Annual    
Meeting) is also required to approve Proposal No. 4. The affirmative vote of the
holders of a plurality of shares of Common Stock present in person or           
represented by proxy at the Annual Meeting will be required to elect each of the
Class II Directors to MMG's Board of Directors pursuant to Proposal No. 2. The  
affirmative vote of the holders of a majority of shares of Common Stock present 
in person or represented by proxy at the Annual Meeting will be required to     
approve and adopt Proposal No. 3. For these reasons, it is important that all   
shares are represented at the Annual Meeting, either in person or by proxy.     

    All proxy cards delivered pursuant to this solicitation are revocable at any
time prior to the Annual Meeting at the option of the persons executing them by 
giving written notice to the Secretary of MMG, by delivering a later-dated proxy
card or by voting in person at the Annual Meeting. All written notices of       
revocation and other communications with respect to revocations of proxies      
should be addressed to:                                                         

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Metromedia International Group, Inc., One Meadowlands Plaza, East Rutherford, NJ
07073-2137, Attention: Arnold L. Wadler, Secretary.                             

   Proxies will initially be solicited by MMG by mail, but directors, officers
and selected employees may solicit proxies from Stockholders personally or by   
telephone, facsimile or other forms of communication. Such directors, officers  
and employees will not receive any additional compensation for such             
solicitation. In addition, the Company has retained MacKenzie Partners to       
solicit proxies on its behalf for a fee of $7,500 plus reimbursement for all    
out-of-pocket costs. MMG also will request brokerage houses, nominees,          
fiduciaries and other custodians to forward soliciting materials to beneficial  
owners, and MMG will reimburse such persons for their reasonable expenses       
incurred in doing so. All expenses incurred in connection with the solicitation 
of proxies will be borne by MMG.                                                

AT THE DIRECTORS' MEETING HELD TO CONSIDER THE PROPOSED TRANSACTION, THE
DIRECTORS OF MMG CAREFULLY CONSIDERED AND UNANIMOUSLY APPROVED THE TERMS OF THE 
PROPOSED TRANSACTION AS BEING IN THE BEST INTERESTS OF MMG AND ITS STOCKHOLDERS.
THE MMG BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE    
"FOR" PROPOSAL NO. 1 TO APPROVE THE PROPOSED TRANSACTION.                       

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE
"FOR" PROPOSALS NO. 2 AND NO. 3 AND "AGAINST" PROPOSAL NO. 4 TO BE PRESENTED TO 
MMG STOCKHOLDERS AT THE MMG ANNUAL MEETING.                                     

  Stockholders of MMG are not entitled to dissenters' rights of appraisal or
other dissenters' rights under Delaware law with respect to the Proposed        
Transaction or any other transactions contemplated by the Stock Purchase        
Agreement.                                                                      

MMG STOCKHOLDERS SHOULD 
CONSIDER CAREFULLY THE FACTORS DESCRIBED UNDER THE
HEADING "CERTAIN CONSIDERATIONS" ON PAGE 14 IN THIS PROXY STATEMENT.

    The Common Stock is listed on the American Stock Exchange ("AMEX") under the
symbol "MMG." On June 16, 1997, the closing sale price for the Common Stock as  
reported by the AMEX was $11 3/4 per share.                                     

    This Proxy Statement and the accompanying proxy card are being mailed to the
stockholders of the Company on or about June 18, 1997.                          

The date of this Proxy Statement is June 18, 1997.                      

  The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance        
therewith files reports, proxy statements and other information with the        
Securities and Exchange Commission (the "Commission"). Such reports, proxy      
statements and other information may be inspected without charge at, and copies 
thereof may be obtained at prescribed rates from, the public reference          
facilities of the Commission's principal office at 450 Fifth Street, N.W.,      
Washington, D.C. 20549 and at the Commission's regional offices at 500 West     
Madison Street, Suite 1400, Chicago, Illinois 60661 and 7 World Trade Center,   
Suite 1300, New York, New York 10048. The Commission maintains a Web site that  
contains reports, proxy and information statements and other information        
regarding registrants (such as the Company) that file electronically with the   
Commission. The address of such site is: http://www.sec.gov. In addition, the   
Common Stock is traded on the AMEX, and copies of reports, proxy statements and 
other information can be inspected at the offices of the AMEX, 86 Trinity Place,
New York, New York 10006.                                                       

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SPECIAL NOTE REGARDING FORWARD--LOOKING STATEMENTS

Certain statements in the Summary and elsewhere in this Proxy Statement 
constitute "forward-looking statements" within the meaning of the Private       
Securities Litigation Reform Act of 1995, as amended (the "Reform Act"). Such   
forward-looking statements involve known and unknown risks, uncertainties and   
other factors which may cause the actual results, performance or achievements of
the Company, or industry results, to be materially different from any future    
results, performance or achievements expressed or implied by such               
forward-looking statements. Such factors included, among others, general        
economic and business conditions, which will, among other things, impact demand 
for the Company's products and services; industry capacity, which tends to      
increase during strong years of the business cycle; changes in public taste,    
industry trends and demographic changes; competition from other entertainment   
and communications companies, which may affect the Company's ability to generate
revenues; political, social and economic conditions and laws, rules and         
regulations, particularly in Eastern Europe, the republics of the former Soviet 
Union, the People's Republic of China (the "PRC") and other selected emerging   
markets, which may affect the Company's results of operations; timely completion
of construction projects for new systems for the joint ventures in which the    
Company has invested; developing legal structures in Eastern Europe, the former 
Soviet Republics, the PRC and other selected emerging markets, which may affect 
the Company's results of operations; cooperation of local partners for the      
Company's communications investments in Eastern Europe, the republics of the    
former Soviet Union and the PRC; exchange rate fluctuations; license renewals   
for the Company's communications investments in Eastern Europe, the republics of
the former Soviet Union and the PRC; the loss of any significant customers      
(especially clients of the Communications Group); changes in business strategy  
or development plans; the significant indebtedness of the Company; quality of   
management; availability of qualified personnel; changes in, or the failure to  
comply with, government regulations; and other factors referenced in this Proxy 
Statement, including the factors described in "CERTAIN CONSIDERATIONS."         

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TABLE OF CONTENTS 

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SUMMARY INFORMATION........................................................................................         8
  Business of MMG..........................................................................................         8
  Business of P&F..........................................................................................         8
  The Proposed Transaction.................................................................................         9
  Reasons for the Proposed Transaction; Recommendation of MMG's Board of Directors.........................         9
  Conditions to the Stock Purchase Agreement...............................................................        11
  Accounting Treatment for the Proposed Transaction........................................................        11
  Dissenters' Rights.......................................................................................        11
  Regulatory Filings and Approvals.........................................................................        11
  Certain Federal Income Tax Consequences..................................................................        11
  Proxies; Change of Vote..................................................................................        11
  Equivalent Per Share Data................................................................................        12
  Summary Financial Data...................................................................................        12

SUMMARY CONSOLIDATED FINANCIAL DATA........................................................................        13

CERTAIN CONSIDERATIONS.....................................................................................        14
    CHANGE IN BUSINESS OF MMG..............................................................................        14
    FAILURE OF TRANSACTIONS TO CLOSE.......................................................................        14
    CLASSIFICATION AS AN INVESTMENT COMPANY................................................................        14
    THE COMPANY'S 1996 STOCK PLAN..........................................................................        15
  MMG--Related and General Considerations..................................................................        15
    OPERATING LOSSES; NO ASSURANCE OF PROFITABILITY........................................................        15
    FUTURE FINANCING NEEDS.................................................................................        15
  Communications Group Considerations......................................................................        16
    POLITICAL, SOCIAL AND ECONOMIC RISKS...................................................................        16
    COMPETITIVE INDUSTRIES.................................................................................        16
    GENERAL OPERATING RISKS................................................................................        17
    RISKS INHERENT IN FOREIGN INVESTMENT...................................................................        17
    DEVELOPING LEGAL STRUCTURES IN TARGET MARKETS..........................................................        18
    RISK INHERENT IN GROWTH STRATEGY.......................................................................        19
    APPROVALS AND UNCERTAINTY OF LICENSE RENEWALS..........................................................        19
    EXCHANGE RATE FLUCTUATIONS AND INFLATION RISKS IN TARGET MARKETS.......................................        20
    POSSIBLE INABILITY TO CONTROL CERTAIN JOINT VENTURES...................................................        20
    TECHNICAL APPROVAL OF TELEPHONY EQUIPMENT..............................................................        21
    TECHNOLOGICAL OBSOLESCENCE.............................................................................        21

INFORMATION REGARDING THE MEETING..........................................................................        22
  The Annual Meeting.......................................................................................        22

PROPOSAL NO. 1--THE PROPOSED TRANSACTION...................................................................        23
  General..................................................................................................        23
  Use of Proceeds..........................................................................................        24
  Background of the Proposed Transaction...................................................................        24
  Reasons for the Proposed Transaction.....................................................................        26
  Recommendation of MMG's Board of Directors...............................................................        28
  Opinion of Financial Advisor.............................................................................        28

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    ANALYSIS OF SELECTED PUBLIC COMPANIES..................................................................        29
    ANALYSIS OF SELECTED MERGERS AND ACQUISITIONS..........................................................        30
    LIBRARY TRANSFER ANALYSIS..............................................................................        31
    DISCOUNTED CASH FLOW ANALYSIS..........................................................................        32
  Interests of Certain Persons.............................................................................        33
  Terms and Conditions of the Stock Purchase Agreement.....................................................        34
    P&F CLOSING CONDITIONS.................................................................................        34
    MMG CLOSING CONDITIONS.................................................................................        35
    TERMINATION............................................................................................        35
    EXPENSES...............................................................................................        36
    BREAK-UP FEE...........................................................................................        36
    CONDUCT OF BUSINESS OF THE ENTERTAINMENT COMPANIES PRIOR TO THE CLOSING OF THE                                   
      PROPOSED TRANSACTION.................................................................................        37
    AGREEMENT NOT TO SOLICIT OTHER OFFERS..................................................................        38
    RIGHT OF FIRST NEGOTIATION.............................................................................        38
    INDEMNIFICATION; LIMITATION ON DAMAGES.................................................................        38
  Accounting Treatment for the Proposed Transaction........................................................        38
  Dissenters' Rights.......................................................................................        38
  Regulatory Filings and Approvals.........................................................................        38

SELECTED CONSOLIDATED FINANCIAL DATA.......................................................................        45

CERTAIN FEDERAL INCOME TAX CONSEQUENCES....................................................................        46
  Election to Treat Sale of the Shares as Sale of Assets...................................................        46
  Limitations on Loss Carryforwards........................................................................        46

INFORMATION REGARDING MMG..................................................................................        48
  Business of MMG..........................................................................................        48
    THE COMMUNICATIONS GROUP...............................................................................        48
    THE ENTERTAINMENT GROUP................................................................................        48
  Security Ownership of Certain Beneficial Owners..........................................................        50
  Securities Beneficially Owned by Directors and Executive Officers........................................        50
  Directors of MMG.........................................................................................        52
  Meetings and Certain Committees of the Board.............................................................        52
  Compensation of Directors................................................................................        53
  Executive Compensation...................................................................................        54
  Pension Plans............................................................................................        55
  Option/SAR Grants During the Year Ended December 31, 1996................................................        57
  Aggregated Option and SAR Exercises in 1996 and Fiscal Year-End Option and SAR Values....................        58
  Certain Relationships and Related Transactions...........................................................        59
    MMG'S RELATIONSHIP WITH METROMEDIA COMPANY.............................................................        59
    CERTAIN AGREEMENTS REGARDING EMPLOYMENT................................................................        61
    INDEMNIFICATION AGREEMENTS.............................................................................        62
  Compliance with Section 16(a) of the Exchange Act........................................................        62
  Compensation Committee Interlocks and Insider Participation..............................................        63
  Compensation Committee Report on Compensation............................................................        63
  Performance Graph........................................................................................        65
    METROMEDIA INTERNATIONAL GROUP CUMULATIVE TOTAL SHAREHOLDER RETURN.....................................        65

INFORMATION REGARDING P&F..................................................................................        66

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                                                                                                             ---------
                                                                                                                      
  Business of P&F..........................................................................................         66
  P&F Shareholders.........................................................................................         66

PROPOSAL NO. 2--ELECTION OF DIRECTORS......................................................................         67

PROPOSAL NO. 3--RATIFICATION OF THE APPOINTMENT OF INDEPENDENT AUDITORS....................................         69

PROPOSAL NO. 4--STOCKHOLDER PROPOSAL.......................................................................         70

ANNUAL REPORT; INCORPORATION BY REFERENCE..................................................................         72

STOCKHOLDER PROPOSALS FOR 1998 ANNUAL MEETING..............................................................         72

OTHER BUSINESS.............................................................................................         72


APPENDICES                                                                                                            
-----------------------------------------------------------------------------------------------------------           
                                                                                                                      

Appendix A    Stock Purchase Agreement.....................................................................        A-1
Appendix B    Stockholders Agreement.......................................................................        B-1
Appendix C    DLJ Fairness Opinion.........................................................................        C-1

                                                        [Enlarge/Download Table]

EXHIBITS                                                                                                    
------------                                                                                                

                                                                                                            
Exhibit 1     MMG's Annual Report on Form 10-K, as amended, for the year ended December 31, 1996........... 
Exhibit 2     MMG's Quarterly Report on Form 10-Q for the quarter ended March 31, 1997..................... 
Exhibit 3     MMG's Current Report on Form 8-K dated February 11, 1997..................................... 
Exhibit 4     MMG's Current Report on Form 8-K dated May 2, 1997........................................... 
Exhibit 5     Consolidated Financial Statements and related schedules of The Actava Group Inc. included in  
              the Annual Report on Form 10-K, as amended, for the fiscal year ended December 31, 1994...... 
Exhibit 6     Consolidated Financial Statements and related schedules of The Samuel Goldwyn Company         
              included in the Annual Report on Form 10-K for the year ended March 31, 1996................. 
Exhibit 7     MMG's Form 8-A dated November 1, 1995........................................................ 

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SUMMARY INFORMATION 

THE FOLLOWING SUMMARY IS QUALIFIED BY THE DETAILED INFORMATION AND/OR   
FINANCIAL STATEMENTS INCLUDED ELSEWHERE IN THIS PROXY STATEMENT, APPENDICES A, B
AND C AND THE EXHIBITS HERETO. SPECIAL NOTE: CERTAIN STATEMENTS SET FORTH BELOW 
UNDER THIS CAPTION CONSTITUTE "FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF
THE REFORM ACT. SEE "SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS" ON PAGE 
4 FOR ADDITIONAL FACTORS RELATING TO SUCH STATEMENTS. CERTAIN CAPITALIZED TERMS 
USED IN THIS SUMMARY ARE DEFINED ELSEWHERE IN THIS PROXY STATEMENT. ALL         
STOCKHOLDERS ARE URGED TO READ THIS PROXY STATEMENT, THE APPENDICES AND THE     
EXHIBITS HERETO IN THEIR ENTIRETY.                                              

BUSINESS OF MMG                                                                 

 MMG is a global communications, entertainment and media company currently
engaged in two strategic businesses: (i) the development and operation of       
communications businesses, including wireless cable television, AM/FM radio,    
paging, cellular telecommunications, international toll calling and trunked     
mobile radio, in Eastern Europe, the republics of the former Soviet Union, the  
PRC and other selected emerging markets, through its Communications Group (the  
"Communications Group") and (ii) the production and worldwide distribution in   
all media of motion pictures, television programming and other filmed           
entertainment and the exploitation of its library of over 2,200 feature film and
television titles, through its Entertainment Group (the "Entertainment Group"). 
If the Proposed Transaction is approved and consummated, substantially all of   
the Entertainment Group's assets will be sold and as a result, the Company will 
narrow its strategic focus to operating the Communications Group. Following     
consummation of the Proposed Transaction, the Company will continue to own and  
operate Landmark in order to maximize the value of these assets. The Company    
believes that Landmark, which operated 50 theaters with 138 screens at December 
31, 1996, is the largest exhibitor of specialized motion pictures and art films 
in the United States. The Company also owns two non-core assets, Snapper, Inc.  
("Snapper"), a premium lawn and garden equipment manufacturer and supplier, and 
approximately 39% of RDM Sports Group, Inc. ("RDM"), a leading sporting goods   
manufacturer listed on the New York Stock Exchange. The Company intends to      
actively manage Snapper in order to maximize Snapper's long-term value. The     
Company is continuing to pursue opportunities to sell its investment in RDM.    

   The Company was organized in 1929 under Pennsylvania law and reincorporated
in 1968 under Delaware Law. On November 1, 1995, as a result of the mergers of  
Orion and Metromedia International Telecommunications, Inc. ("MITI") with and   
into wholly-owned subsidiaries of the Company and the merger of MCEG Sterling   
Incorporated ("Sterling") with and into the Company (collectively, the "November
1 Merger"), the Company changed its name from "The Actava Group Inc." to        
"Metromedia International Group, Inc." The Company is a holding company that    
currently owns two strategic operating companies, Orion and MITI. Goldwyn and   
MPCA are subsidiaries of Orion. The Company also owns Snapper and its interest  
in RDM. Metromedia provides certain management services to the Company pursuant 
to the Management Agreement described below and the Metromedia Holders are      
currently the Company's largest stockholders, collectively owning approximately 
26% of the outstanding shares of Common Stock. See "INFORMATION REGARDING       
MMG--Certain Relationships and Related Transactions--MANAGEMENT AGREEMENT."     

BUSINESS OF P&F                                                                 

  P&F is a holding company that owns all of the outstanding capital stock of
MGM. P&F is controlled (directly or indirectly) by two principal shareholders   
(the "P&F Stockholders"), Seven Network Limited, a publicly traded Australian   
corporation ("Seven"), and Tracinda Corporation, a Nevada corporation owned and 
controlled by Mr. Kirk Kerkorian ("Tracinda"). MGM is actively engaged in the   
worldwide production and distribution of entertainment products, including      
motion pictures, television programming, home video, interactive media, music,  
licensed merchandise, a current 1,600-title film library, a 4,500-title home    
video library, and a significant television library. The company's operating    
units include Metro-Goldwyn-Mayer Pictures, United Artists Pictures, MGM        
Worldwide Television, MGM Telecommunications Group, MGM Distribution Co., MGM   
Home Entertainment/Consumer Products, Metro-Goldwyn-Mayer Music and MGM         
Interactive, among others.                                                      

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THE PROPOSED TRANSACTION                                                        

   THE SALE OF THE ENTERTAINMENT COMPANIES. Pursuant to the terms of the Stock
Purchase Agreement, MMG proposes to sell substantially all of the Entertainment 
Group's assets and liabilities (except Landmark and certain specified           
liabilities) to P&F by selling the Shares for an aggregate purchase price of    
$573 million, less amounts required to repay the Orion Credit Facility and other
Orion indebtedness (which amounts aggregated approximately $285.3 million at May
31, 1997) (the "Purchase Price"). The assets to be sold to P&F include MMG's    
entire film and television library, consisting of approximately 2,200 titles,   
the production and distribution activities of the Entertainment Group, which    
include the operations of Orion, Goldwyn Entertainment Company ("Goldwyn") and  
Motion Picture Corporation of America ("MPCA"), as well as 12 substantially     
completed films and 5 direct-to-video features and substantially all of the     
liabilities of these entities. MMG will retain and actively manage Landmark.    

As a result of the sale of the Entertainment Companies, MMG's strategic 
focus will be significantly altered. The Company will continue to operate the   
businesses conducted by the Communications Group, and it will actively manage   
Landmark and Snapper in order to maximize their value. See "CERTAIN             
CONSIDERATIONS--Change in Business of MMG." On a pro forma basis, assuming the  
Proposed Transaction had been consummated at December 31, 1996, the             
Entertainment Companies constituted approximately 45.5% of the Company's total  
assets as of December 31, 1996. The Company believes that the sale of the       
Entertainment Companies will allow MMG to focus on expanding the business       
currently conducted by the Communications Group, which will continue to seek to 
capitalize upon the potential in the global telecommunications market.          

  FINANCING.  Consummation of the Proposed Transaction is not subject to P&F
obtaining financing. Prior to the execution of the Stock Purchase Agreement, P&F
caused the delivery of (i) the Commitment Letter of Morgan Guaranty Trust       
Company ("Morgan"), which provides that Morgan is committed, subject to         
customary closing conditions and the consummation of the Proposed Transaction,  
to provide a $250 million credit facility to MGM (the "Morgan Facility"),       
secured by all of the assets of the Entertainment Companies and (ii) an         
Investment Agreement, which provides that the P&F Stockholders are committed to 
purchase an additional $360 million of the common stock of P&F to finance the   
remainder of the Purchase Price.                                                

   REPAYMENT OF MMG DEBT.  Because the Company has been advised by its regular
outside legal counsel, Paul, Weiss, Rifkind, Wharton & Garrison ("Paul Weiss")  
that the Proposed Transaction constitutes a sale of MMG's assets "substantially 
as an entirety," MMG will use approximately $140 million of the net cash        
proceeds after repayment of the indebtedness of the Entertainment Companies to  
repay the Company's outstanding subordinated debentures in accordance with the  
indentures for such debentures.                                                 

 USE OF PROCEEDS.  Following the consummation of the Proposed Transaction,
and after repaying substantially all of the Company's outstanding indebtedness, 
the Company intends to use the remaining net proceeds (approximately $147.7     
million before taxes) to finance the Communication Group's activities, including
the continued build-out of the Communications Group's existing systems and the  
completion of pre-operational systems, and to acquire interests in joint        
ventures in new markets.                                                        

REASONS FOR THE PROPOSED TRANSACTION; RECOMMENDATION OF MMG'S BOARD OF DIRECTORS

In reaching their decision to approve the Stock Purchase Agreement, the 
Board of Directors of MMG consulted with its management team and advisors, and  
independently considered the material factors described elsewhere in this Proxy 
Statement. See "PROPOSAL NO. 1--THE PROPOSED TRANSACTION--Reasons for the       
Proposed Transaction." Based upon its independent review of such factors and the
other factors set forth herein, the Board of Directors of MMG approved the Stock
Purchase Agreement.                                                             

THE MMG BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE STOCK PURCHASE  
AGREEMENT AND THE PROPOSED TRANSACTION AND RECOMMENDS THAT MMG STOCKHOLDERS VOTE
"FOR" APPROVAL AND ADOPTION OF THE STOCK PURCHASE AGREEMENT. For a discussion of
the factors considered by the Board of Directors of MMG in                      

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reaching their decision, see "PROPOSAL NO. 1--THE PROPOSED                      
TRANSACTION--Background of the Proposed Transaction" and "--Reasons for the     
Proposed Transaction."                                                          

OPINION OF FINANCIAL ADVISOR                                                    

    On May 2, 1997, Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ"),
financial advisor to MMG in connection with the Proposed Transaction, delivered 
its oral opinion (which it subsequently confirmed in writing) to the Board of   
Directors of MMG to the effect that on and as of the date of such opinion, and  
based upon the procedures and subject to the assumptions described in such      
opinion, the consideration to be received by MMG in the Proposed Transaction is 
fair to MMG from a financial point of view (the "DLJ Fairness Opinion"). The DLJ
Fairness Opinion is attached as Appendix C to this Proxy Statement and MMG      
Stockholders are urged to read this opinion in its entirety. See "PROPOSAL NO.  
1--THE PROPOSED TRANSACTION--Opinion of Financial Advisor."                     

INTERESTS OF CERTAIN PERSONS                                                    

In order to induce Chase to provide the $100 million revolving credit   
portion of the Orion Credit Facility, Metromedia and Mr. Kluge, for no          
additional consideration, agreed to guarantee to Chase the entire amount of such
revolving credit facility (approximately $94.3 million of which was outstanding 
at May 31, 1997) and to guarantee the payment of a third party account          
receivable owed to Orion (approximately $11.4 million at May 31, 1997). In      
connection with the consummation of the Proposed Transaction, both of these     
guarantees will be terminated and released. In considering the approval of the  
Proposed Transaction, MMG Stockholders should be aware of these releases, and   
that they may give rise to certain officers and directors of the Company having 
interests in the Proposed Transaction that are in addition to the interests of  
MMG or the MMG Stockholders generally. See "PROPOSAL NO. 1--THE PROPOSED        
TRANSACTION--Interests of Certain Persons." In addition, on April 27, 1997, the 
Metromedia Holders entered into the Stockholders Agreement pursuant to which the
Metromedia Holders have agreed (i) to vote their shares of Common Stock         
(representing approximately 26% of the outstanding Common Stock as of the Record
Date) in favor of the Stock Purchase Agreement, (ii) to vote their shares of    
Common Stock against any other proposal (except if such vote would violate their
fiduciary duties) to sell all or substantially all of the Shares or any or all  
of the assets of the Entertainment Companies and (iii) not to sell any of their 
shares of Common Stock until the later of September 30, 1997 and 90 days after  
the date of the MMG Stockholders meeting to be held for the purpose of approving
the Proposed Transaction (as long as such meeting is held by September 30,      
1997).                                                                          

The Company believes that the Proposed Transaction will not trigger any 
"change of control" provisions in any agreements or other contracts to which the
Company is a party except for (i) the Metromedia License Agreement (as defined  
below), which provides Metromedia with a termination right upon a sale of       
substantially all of the assets of the Company, which right Metromedia has      
agreed to waive, and (ii) the Company's 1996 Incentive Stock Plan (the "1996    
Stock Plan"), which provides that upon a sale of "substantially all" of the     
Company's assets, all unvested outstanding options to acquire Common Stock under
such plan would vest and become immediately exercisable. The Company's          
Compensation Committee is empowered under the 1996 Stock Plan to interpret the  
provisions of such plan and the Compensation Committee has determined that,     
although the issue is not free from doubt, the Proposed Transaction constitutes 
a sale of "substantially all" of the Company's assets for purposes of the 1996  
Stock Plan, thereby accelerating all options outstanding under such plan. As of 
May 31, 1997, 4,304,656 options had been issued to the directors, officers and  
certain employees of the Company, the Entertainment Companies, and the          
Communications Group, and remain outstanding under the 1996 Stock Plan and      
2,929,641 of such options had not vested. All such options are exercisable at a 
price equal to $9.31 per share. In connection with the consummation of the      
Proposed Transaction, all directors, officers and employees (other than officers
and employees of the Entertainment Companies) will be asked to waive the        
acceleration of their unvested options (aggregating approximately 1,686,816     
options). While all of the directors of the Company have agreed to waive the    
accelerated vesting of their options, no assurance can be given that any officer
or employee will similarly agree. Based on a price equal to $11 3/4 per share of
Common Stock (the closing price per share of Common Stock reported by the AMEX  
on June 16, 1997), the aggregate value of all accelerated options (assuming NO  
optionee agrees to waive acceleration) is equal to $7,148,324.                  

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CONDITIONS TO THE STOCK PURCHASE AGREEMENT                                      

Pursuant to the Stock Purchase Agreement, the obligation of each of MMG,
Orion and P&F to consummate the Proposed Transaction is subject to various      
conditions, including, but not limited to (i) approval by a majority of the MMG 
Stockholders; (ii) the release of MMG and its affiliates (including certain of  
the Metromedia Holders) of all obligations under the Orion Credit Facility; and 
(iii) the release of MMG of all obligations as guarantor under Orion's existing 
lease (the "Orion Lease"), and certain other specified conditions. For a more   
detailed description of the conditions to the consummation of the Proposed      
Transaction, see "PROPOSAL NO. 1--THE PROPOSED TRANSACTION--Terms and Conditions
of the Stock Purchase Agreement."                                               

ACCOUNTING TREATMENT FOR THE PROPOSED TRANSACTION                               

The Proposed Transaction will be accounted for as a sale of the         
Entertainment Companies.                                                        

DISSENTERS' RIGHTS                                                              

   The MMG Stockholders are not entitled to dissenters' rights of appraisal or
other dissenters' rights under Delaware law with respect to the Proposed        
Transaction or any transactions contemplated by the Stock Purchase Agreement.   

REGULATORY FILINGS AND APPROVALS                                                

  In accordance with the Stock Purchase Agreement, the parties have made the
appropriate filings required under the Hart-Scott-Rodino Antitrust Improvements 
Act of 1976, as amended (the "Hart-Scott Act"), in connection with the          
transactions contemplated by the Stock Purchase Agreement, and the consummation 
of the Proposed Transaction is subject to the expiration or early termination of
the waiting period prescribed under such Act. The applicable waiting period     
under the Hart-Scott-Rodino Act expired on June 12, 1997. See "PROPOSAL NO.     
1--THE PROPOSED TRANSACTION--Regulatory Filings and Approvals."                 

CERTAIN FEDERAL INCOME TAX CONSEQUENCES                                         

  The Company and P&F will elect to treat the sale of all of the Shares as a
sale of the assets of Orion and the other Entertainment Companies for Federal,  
state, local and foreign income tax purposes. Orion and the other Entertainment 
Companies will recognize gain or loss equal to the difference between (i) the   
portion of the cash received by the Company and the liabilities of Orion        
satisfied or assumed in connection with the sale of the Shares allocated to     
particular assets of the Entertainment Companies and (ii) the tax basis with    
respect to such assets. The Company intends, subject to the limitations         
discussed herein, to use net operating loss carryforwards to offset any gain so 
recognized by MMG as a result of the sale of the Entertainment Companies. MMG   
has not completed its calculations of the gain which will be recognized as a    
result of the sale of the Entertainment Companies. While MMG estimates that its 
net operating loss carryforwards will be sufficient to offset most of any gain  
so recognized for Federal income tax purposes, MMG currently believes that it   
will be required to pay Federal, state, local and foreign taxes. At the present 
time, however, it is not practicable to accurately quantify the amount of taxes 
that will be payable upon consummation of the Proposed Transaction. The Company 
does not believe that the taxes payable as a result of the consummation of the  
Proposed Transaction will have a material adverse effect on the Company's       
results of operations and financial condition. See "CERTAIN FEDERAL INCOME TAX  
CONSEQUENCES."                                                                  

PROXIES; CHANGE OF VOTE                                                         

  MMG Stockholders who have delivered a proxy to MMG may revoke the proxy at
any time prior to its exercise at the MMG Annual Meeting by giving written      
notice to the Secretary of MMG, by signing and                                  

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returning a later dated proxy card or by voting in person at the MMG Annual     
Meeting. All written notices of revocation and other communications with respect
to revocations of proxies should be addressed by MMG Stockholders to Metromedia 
International Group, Inc., One Meadowlands Plaza, East Rutherford, New Jersey   
07073-2173, Attention: Arnold L. Wadler, Secretary.                             

EQUIVALENT PER SHARE DATA                                                       

 The following tables set forth certain data concerning the historical net
income (loss), dividends and book value per share for MMG and for MMG on a pro  
forma basis after giving effect to the Proposed Transaction and the repayment of
the Orion Credit Facility, the Entertainment Companies' other long-term         
indebtedness and MMG's 6 1/2% Convertible Debentures due 2002 (the "6 1/2%      
Convertible Debentures"), 9 1/2% Debentures due 1998 (the "9 1/2% Debentures")  
and 10% Debentures due 1999 (the "10% Debentures"), as if such repayments had   
occurred at the beginning of the period presented. The information below should 
be read in conjunction with the unaudited Pro Forma Financial Statements of MMG 
and the historical financial statements of MMG contained elsewhere in this Proxy
Statement. The unaudited pro forma equivalent per share data shows, for each    
share of Common Stock, the relevant information as if the Proposed Transaction  
was consummated.                                                                

                                                        [Enlarge/Download Table]

                                                                                      THREE MONTHS     YEAR ENDED  
                                                                                          ENDED       DECEMBER 31, 
MMG -- HISTORICAL                                                                    MARCH 31, 1997       1996     
-----------------------------------------------------------------------------------  ---------------  -------------
                                                                                                                   
Net income (loss) from continuing operations before discontinued operations and                                    
  extraordinary item per common share..............................................     $   (0.34)      $   (1.74) 
Cash dividends declared per share..................................................        --              --      
Book value per common share at end of period.......................................     $    3.46       $    4.05  

                                                        [Enlarge/Download Table]

                                                                                      THREE MONTHS     YEAR ENDED  
                                                                                          ENDED       DECEMBER 31, 
MMG -- PRO FORMA                                                                     MARCH 31, 1997       1996     
-----------------------------------------------------------------------------------  ---------------  -------------
                                                                                                                   
Net income (loss) from continuing operations before discontinued operations and                                    
  extraordinary item per common stock..............................................     $   (0.17)      $   (1.49) 
Cash dividends declared per share..................................................        --              --      
Book Value per common share at end of period.......................................     $    7.56       $    8.86  

SUMMARY FINANCIAL DATA                                                          

    The following tables present selected historical financial data of MMG which
are derived from the audited and unaudited financial statements of MMG and      
selected unaudited pro forma financial data after giving effect to the Proposed 
Transaction and the repayment of the Orion Credit Facility, Orion's other long  
term indebtedness and MMG's 6 1/2% Convertible Debentures, 9 1/2% Debentures and
10% Debentures, as if they had occurred at the beginning of the periods         
presented.                                                                      

The pro forma data is not necessarily indicative of the results of      
operations or the financial condition that would have been reported if the      
aforementioned transactions had occurred during those periods, or as of those   
dates, or that may be reported in the future.                                   

This data should be read in conjunction with the consolidated financial 
statements of MMG (and the related notes thereto) and the unaudited pro forma   
financial information contained elsewhere in this Proxy Statement. See "PRO     
FORMA CONSOLIDATED CONDENSED FINANCIAL INFORMATION OF THE COMPANY" and "ANNUAL  
REPORT; INCORPORATION BY REFERENCE."                                            

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SUMMARY CONSOLIDATED FINANCIAL DATA 

MMG--HISTORICAL                                                                 

The following table presents selected historical financial data of the  
Company, which are derived from the consolidated financial statements of the    
Company. The data is qualified by reference to and should be read in conjunction
with the consolidated financial statements of the Company and the related notes 
thereto and "Management's Discussion and Analysis of Financial Condition" in the
Company's Annual Report on Form 10-K, as amended, for the year ended December   
31, 1996, and in the Company's Quarterly Report on Form 10-Q for the quarter    
ended March 31, 1997, each of which is contained elsewhere in this Proxy        
Statement.                                                                      

                                                        [Enlarge/Download Table]

                                                THREE MONTHS ENDED                                                         
                                                                         YEARS ENDED                                       
                                                    MARCH 31,            DECEMBER 31,         YEARS ENDED FEBRUARY 28,     
                                               --------------------  --------------------  ------------------------------- 
                                                                                                                           
                                                   (UNAUDITED)                                                             


                                                 1997       1996      1996(1)    1995(2)     1995       1994       1993    
                                               ---------  ---------  ---------  ---------  ---------  ---------  --------- 
                                                                  (IN THOUSANDS, EXCEPT PER SHARE DATA)                    
                                                                                                                           
Revenues...................................... $ 103,418  $  30,805  $ 201,755  $ 138,970  $ 194,789  $ 175,713  $ 222,318 
Equity in losses of joint ventures............    (1,598)    (1,783)   (11,079)    (7,981)    (2,257)      (777)    --     
Loss from continuing operations before                                                                                     
  discontinued operations and extraordinary                                                                                
  item........................................   (22,258)   (19,141)   (94,433)   (87,024)   (69,411)  (132,530)   (72,973)
Loss per common share from continuing                                                                                      
  operations before discontinued operations                                                                                
  and extraordinary item......................     (0.34)     (0.45)     (1.74)     (3.54)     (3.43)     (7.71)    (19.75)

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

(1) The consolidated financial statements for the twelve months ended December  
  31, 1996 include two months (November and December 1996) of the results of
operations of Snapper and the results of operations for Goldwyn and MPCA
since July 2, 1996.                                                     

(2) The consolidated financial statements for the twelve months ended December  
  31, 1995 include operations for The Actava Group Inc. (an acquired company
  for accounting purposes) and MCEG from November 1, 1995 and two months for
Orion (January and February 1995) that were included in the February 28,
 1995 consolidated financial statements. The revenues and net loss for the
two month duplicate period are $22.5 million and $11.4 million,         
respectively.                                                           

MMG--PRO FORMA                                                                  

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                                                                                THREE MONTHS                     
                                                                                   ENDED           YEAR ENDED    
                                                                               MARCH 31, 1997   DECEMBER 31, 1996
                                                                              ----------------  -----------------
                                                                                                                 
Revenues.....................................................................    $   75,998           $223,715   
Loss from continuing operations..............................................       (11,070)          (84,517)   
  Per share of Common Stock: Primary.........................................         (0.17)            (1.49)   
Dividends per share of Common Stock..........................................        --                --        
Total assets.................................................................       728,358            --        
Total liabilities............................................................       186,792            --        

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CERTAIN CONSIDERATIONS

   IN ADDITION TO THE OTHER INFORMATION CONTAINED IN THIS PROXY STATEMENT, THE
FOLLOWING FACTORS SHOULD BE CONSIDERED CAREFULLY IN EVALUATING WHETHER TO       
APPROVE THE PROPOSED TRANSACTION AND THE STOCK PURCHASE AGREEMENT. CERTAIN      
STATEMENTS SET FORTH BELOW UNDER THIS CAPTION CONSTITUTE "FORWARD-LOOKING       
STATEMENTS" WITHIN THE MEANING OF THE REFORM ACT. SEE "SPECIAL NOTE REGARDING   
FORWARD-LOOKING STATEMENTS" ON PAGE 4 FOR ADDITIONAL FACTORS RELATING TO SUCH   
STATEMENTS.                                                                     

TRANSACTION - RELATED CONSIDERATIONS                                            

CHANGE IN BUSINESS OF MMG                                                   

    The sale of the Entertainment Companies will result in a major change in the
strategic focus of MMG's business. For the fiscal year ended December 31, 1996  
and the quarter ended March 31, 1997, the Entertainment Group reported $165.2   
million and $44.4 million, respectively, in revenues or approximately 81.9% or  
43.0% respectively of MMG's consolidated revenues. After consummation of the    
Proposed                                                                        
Transaction, the Company's sole remaining strategic asset will be the           
Communications Group, which reported approximately $14 million and $5.2 million 
of revenues in the year ended December 31, 1996 and the quarter ended March 31, 
1997, respectively. The Company's remaining reported consolidated revenues were 
generated by Snapper. MMG believes that the sale of the Shares and the resulting
divestiture of the Entertainment Companies will enable MMG to focus its cash    
resources on the Communications Group. However, as a result of the consummation 
of the Proposed Transaction, MMG will lose the revenues generated by the        
Entertainment Companies. There can be no assurance that the Communications Group
will generate sufficient revenues in the future.                                

FAILURE OF TRANSACTIONS TO CLOSE                                            

There can be no assurance that all of the conditions to the Proposed    
Transaction will be satisfied or that the Proposed Transaction will be          
consummated. In addition, the parties have the right to terminate the Stock     
Purchase Agreement upon the occurrence or nonoccurrence of certain events.      
Failure to consummate the Proposed Transaction will result in material expenses 
to MMG which will not be reimbursed, including, under certain circumstances, the
payment by MMG of a break-up fee of $30 million (inclusive of actual            
out-of-pocket expenses incurred by P&F of up to $10 million in connection with  
or arising out of the Stock Purchase Agreement). In such event, there may be    
other operational changes required to address the impact on the Company of the  
recent adverse results reported by the Entertainment Group, including reducing  
the Entertainment Group's production and distribution activities or directing   
the Company's cash resources to the Entertainment Group. See "PROPOSAL NO.      
1--THE PROPOSED TRANSACTION-- Terms and Conditions of Stock Purchase Agreement."

CLASSIFICATION AS AN INVESTMENT COMPANY                                     

  If MMG uses the cash available to it from the consummation of the Proposed
Transaction to acquire "investment securities" having a value exceeding 40% of  
the value of its total assets on an unconsolidated basis, MMG could be deemed to
be an investment company subject to regulation under the Investment Company Act 
of 1940, as amended. However, "government securities" or "cash" items are not   
considered "investment securities." Accordingly, to the extent that MMG         
purchases securities, it may have to invest its cash in government securities to
avoid the application of the Investment Company Act of 1940. "Government        
securities" include any securities issued or guaranteed as to principal or      
interest by the United States, or by a person controlled or supervised by and   
acting as an instrumentality of the Government of the United States pursuant to 
authority granted by the Congress of the United States, or any certificate of   
deposit for any of the foregoing. Because of the limited risk of government     
securities, the yields of Government securities are lower than yields obtainable
from investments with only somewhat more risk, such as investment grade         
corporate securities.                                                           

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THE COMPANY'S 1996 STOCK PLAN                                               

   The 1996 Stock Plan provides that upon a sale of "substantially all" of the
Company's assets, all unvested outstanding options to acquire Common Stock under
such plan would vest and become immediately exercisable. The Company's          
Compensation Committee is empowered under the 1996 Stock Plan to interpret the  
provisions of such plan and the Compensation Committee has determined that,     
although the issue is not free from doubt, the Proposed Transaction constitutes 
a sale of "substantially all" of the Company's assets for purposes of the 1996  
Stock Plan, thereby accelerating all options outstanding under such plan. As of 
May 31, 1997, 4,304,656 options had been issued to the directors, officers and  
certain employees of the Company, the Entertainment Companies, and the          
Communications Group, and remain outstanding under the 1996 Stock Plan and      
2,929,641 of such options had not vested. All such options are exercisable at a 
price equal to $9.31 per share. In connection with the consummation of the      
Proposed Transaction, directors, such officers and employees (other than        
officers and employees of the Entertainment Companies) will be asked to waive   
the acceleration of their unvested options (aggregating approximately 1,686,816 
options). While all of the directors of the Company have agreed to waive the    
accelerated vesting of their options, no assurance can be given that any officer
or employee will similarly agree. Based on a price equal to $11 3/4 per share of
Common Stock (the closing price per share of Common Stock reported by the AMEX  
on June 16, 1997), the aggregate value of all accelerated options (assuming NO  
optionee agrees to waive acceleration) is equal to $7,148,324.                  

MMG-RELATED AND GENERAL CONSIDERATIONS                                          

OPERATING LOSSES; NO ASSURANCE OF PROFITABILITY                             

For the years ended December 31, 1996 and 1995, MMG reported a loss from
continuing operations of approximately $94.4 million and $87.0 million,         
respectively, and a net loss of $115.2 million and $413 million, respectively.  
For the quarters ended March 31, 1997 and 1996, respectively, MMG reported a    
loss of $22.3 million and $19.1 million, respectively. On a pro forma basis,    
assuming consummation of the Proposed Transaction had occurred at December 31,  
1996, MMG's loss from continuing operations would have been $84.5 million. MMG  
expects that it will report significant operating losses for the fiscal year    
ended December 31, 1997 including losses attributable to Snapper, whose results 
of operations were consolidated and reported with MMG's consolidated results of 
operations as of November 1, 1996. In addition, because the Communications Group
is in its early stages of development, MMG expects this group to continue to    
generate significant losses as it continues to build out and market its         
services. Without the revenues previously reported by the Entertainment         
Companies, MMG's losses will likely continue. Accordingly, MMG expects to       
generate consolidated losses for the foreseeable future.                        

FUTURE FINANCING NEEDS                                                      

Assuming that the Proposed Transaction is consummated, the Company's    
remaining strategic business will be the business conducted by the              
Communications Group. The Communications Group is engaged in businesses that    
require the investment of significant amounts of capital in order to construct  
and develop operational systems and market services. See "INFORMATION REGARDING 
MMG--Business of MMG". In connection with the consummation of the Proposed      
Transaction, the Company anticipates that it will receive approximately $287.7  
million of net cash proceeds (assuming the Entertainment Companies had          
approximately $285.3 million of outstanding debt outstanding at May 31, 1997).  
Because the Company has been advised by Paul Weiss that the Proposed Transaction
constitutes a sale of MMG's assets "substantially as an entirety", MMG will use 
approximately $140 million of such net proceeds to repay all of its outstanding 
subordinated debentures, leaving MMG with approximately $147.7 million of net   
cash proceeds (before taxes). As a result, although MMG will have no significant
long-term debt, MMG may require additional financing in order to satisfy the    
Communication Group's on-going capital requirements and to achieve the          
Communication Group's long-term business strategies. Such additional capital may
be                                                                              

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provided through the public or private sale of debt or equity securities. On    
April 4, 1997, MMG filed a Registration Statement with the Commission to        
register $125 million of convertible preferred stock. No determination has been 
made by MMG as to whether it will proceed with this offering. If MMG elects to  
proceed, no assurance can be given that the Company will be able to consummate  
this offering or that any additional financing will be available to MMG on      
acceptable terms, if at all. If adequate additional funds are not available, MMG
may be required to curtail significantly its long term business objectives and  
the Company's results from operations may be materially and adversely affected. 

COMMUNICATIONS GROUP CONSIDERATIONS                                             

    Upon consummation of the Proposed Transaction, the Communications Group will
be MMG's sole remaining strategic operating business and, accordingly, the      
following factors should be seriously considered by MMG Stockholders in deciding
whether to approve the Proposed Transaction.                                    

POLITICAL, SOCIAL AND ECONOMIC RISKS                                        

The Communications Group's operations may be materially and adversely   
affected by significant political, social and economic uncertainties in Eastern 
Europe, the republics of the former Soviet Union, the PRC and in other selected 
emerging markets where it presently conducts or may in the future conduct       
business. Political stability in many of the Communications Group's markets has 
been affected by political tensions between different branches of government. In
addition, internal military conflicts have occurred in certain regions of some  
of the countries in which the Communications Group has made investments. There  
are also concerns about potential civil unrest fueled by, among other things,   
economic and social crises in certain of the Communications Group's markets.    
Moreover, political tensions between national and local governments in certain  
of the Communications Group's markets could have a material adverse effect on   
the Communications Group's operations in such areas. The Communications Group's 
operations may also be materially and adversely affected by bureaucratic        
infighting between government agencies with unclear and overlapping             
jurisdictions.                                                                  

  The governments in the Communications Group's markets exercise substantial
influence over many aspects of the private sector. The governments in these     
areas have been attempting to varying degrees to implement economic reform      
policies and encourage private economic activity. However, these reforms have   
been only partially successful to date. The economies in many of the            
Communications Group's markets are still characterized by high unemployment,    
high inflation, high foreign debt, weak currencies and the possibility of       
widespread bankruptcies. Moreover, in some of the Communications Group's        
markets, the governments have continued to reserve large sectors of the economy 
for state ownership and have not dismantled all portions of the command economy 
system. Important infrastructure and utility sectors, such as certain sectors of
the telecommunications industry, of some of the economies in which the          
Communications Group presently conducts or plans to conduct business are still  
primarily state-owned and operated and are subject to pervasive regulatory      
control. Despite some success in implementing reform policies and developing the
private sector, there can be no assurance that the pursuit of economic reforms  
by any of these governments will continue or prove to be ultimately effective,  
especially in the event of a change in leadership, social or political          
disruption or other circumstances affecting economic, political or social       
conditions.                                                                     

COMPETITIVE INDUSTRIES                                                      

   The Communications Group operates in industries that are highly competitive
worldwide. MMG recognizes that in the future the Communications Group is likely 
to encounter significant competition from other entities which may be led by    
successful and experienced members of the communications industry and which may 
have established operating infrastructure and superior access to financial      
resources. The Communications Group also faces potential competition from       
competing technologies which could emerge over time in Eastern Europe, the      
republics of the former Soviet Union, the PRC and                               

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other selected emerging markets and compete directly with the Communications    
Group's operations. In addition, MMG does not expect to maintain or to be       
granted exclusive licenses to operate its communications businesses in any of   
the markets where it currently provides or plans to provide its services.       

GENERAL OPERATING RISKS                                                     

   The Communications Group's operating results are dependent upon the ability
to attract subscribers to its cable, paging and telephony systems, the sale of  
commercial advertising time on its radio stations and its ability to control    
overall operating expenses. The ability to attract subscribers is dependent on  
the general economic conditions in the market where each cable, paging and      
telephony system is located, the relative popularity of such systems, the       
demographic characteristics of the potential subscribers to such systems, the   
technical attractiveness to customers of the equipment and service of such      
systems, the activities of competitors and other factors which may be outside of
the Communications Group's control. In addition, the sale of commercial         
advertising time on the Communications Group's AM/FM radio stations is similarly
dependent on economic conditions in the market in which such stations are       
located, the relative popularity of such stations, the demographic              
characteristics of the audience of such stations, the activities of competitors 
and other factors beyond the control of the Communications Group.               

    The Communications Group relies heavily in many of the countries in which it
operates upon the availability and accessibility of government-owned broadcast  
and transmission facilities for distribution of its signal throughout its       
license areas. Most of the joint ventures in which the Communications Group     
makes investments require substantial construction of new systems and additions 
to the physical plant of existing systems. Construction projects are adversely  
affected by cost overruns and delays not within the control of the              
Communications Group or its subcontractors, such as those caused by governmental
action or inaction. In addition, delays also can occur as a result of design    
changes and material or equipment shortages or delays in delivery of material or
equipment. The failure to complete construction of a communications system on a 
timely basis could jeopardize the franchise or license for such system or       
provide opportunities to the Communications Group's competitors.                

RISKS INHERENT IN FOREIGN INVESTMENT                                        

   The Communications Group has invested substantially all of its resources in
operations outside of the United States and, in the ordinary course of its      
business, plans to make additional international investments in the near future.
Risks inherent in foreign operations include loss of revenue, property and      
equipment from expropriation, nationalization, war, insurrection, terrorism and 
other political risks, risks of increases in taxes and governmental royalties   
and involuntary modifications of contracts with or licenses issued by foreign   
governments or their affiliated commercial enterprises.                         

The Communications Group is also vulnerable to the risk of changes in   
foreign and domestic laws and policies that govern operations of overseas-based 
companies. Exchange control regulations currently in place or which could be    
enacted in many of the Communication Group's markets could create substantial   
barriers to the conversion or repatriation of funds, and such restrictions could
adversely affect the Communications Group's and the Company's ability to pay    
overhead expenses, meet any of their respective debt obligations and to continue
and expand its communications businesses. Tax laws and regulations may also be  
amended or differently interpreted and implemented, thereby adversely affecting 
the profitability after tax of the Communications Group's ventures. In addition,
criminal organizations in certain of the countries in which the Communications  
Group operates may threaten and intimidate businesses. While the Communications 
Group has thus far not experienced widespread difficulties with criminal        
organizations in these countries, there can be no assurance that such pressures 
from criminal organizations will not increase in the future and have a material 
adverse effect on MMG and its operations.                                       

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    There is significant uncertainty as to the extent to which local parties and
entities, particularly government authorities, in the Communications Group's    
markets will respect the contractual and other rights of foreign parties, such  
as the Communications Group, and also the extent to which the "rule of law" has 
taken hold and will be upheld in each of these countries. Although the general  
legal framework and the governments' strategy in some of the Communications     
Group's markets currently encourage foreign trade and investments, relevant laws
of the countries in which the Communications Group has invested may not be      
enforced in accordance with their terms or implemented in countries in which    
they do not now exist. Laws in the Communications Group's markets affecting     
foreign investment, trade and communications activities often change and create 
uncertainty and confusion. Additionally, foreign investment and sales may be    
materially and adversely affected by conflicting and restrictive administrative 
regulations in many of the Communications Group's markets.                      

 The Communications Group may also be materially and adversely affected by
laws restricting foreign investment in the field of communications. Certain     
countries have extensive restrictions on foreign investment in the              
communications field and the Communications Group is attempting to structure its
prospective projects in order to comply with such laws. However, there can be no
assurance that such legal and regulatory restrictions will not increase in the  
future or, as currently promulgated, will not be interpreted in a manner giving 
rise to tighter restrictions, and thus may have a material adverse effect on the
Company's prospective projects in that country. The Russian Federation has      
periodically proposed legislation that would limit the ownership percentage that
foreign companies can have in communications businesses. While such proposed    
legislation has not been made into law, it is possible that such legislation    
could be enacted in Russia and/or that other countries in Eastern Europe and the
republics of the former Soviet Union may enact similar legislation which could  
have a material adverse effect on the business, operations, financial condition 
or prospects of the Communications Group. Such legislation could be similar to  
United States Federal law which limits the foreign ownership in entities owning 
broadcasting licenses. Similarly, PRC law and regulation restrict and prohibit  
foreign companies or joint ventures in which they participate from providing    
telephony service to customers in the PRC and generally limit the role that     
foreign companies or their joint ventures may play in the telecommunications    
industry. Unlike the Communications Group's joint ventures in Eastern Europe and
in the republics of the former Soviet Union, MMG's affiliated joint ventures in 
China must structure transactions as a provider of telephony equipment and      
technical and support services as opposed to a direct provider of such services.
These legal restrictions in the PRC may limit the ability of such joint ventures
to control the management and direction of the telecommunications systems in    
which it invests in the PRC. In addition, there is no way of predicting whether 
other foreign ownership limitations will be enacted in any of the Communications
Group's markets, or whether any such law, if enacted, will force the            
Communications Group to reduce or restructure its ownership interest in any of  
the ventures in which the Communications Group currently has an ownership       
interest. If foreign ownership limitations are enacted in any of the            
Communications Group's markets and the Communications Group is required to      
reduce or restructure its ownership interests in any ventures, it is unclear how
such reduction or restructuring would be implemented, or what impact such       
reduction or restructuring would have on the Communications Group.              

DEVELOPING LEGAL STRUCTURES IN TARGET MARKETS                               

    As a result of political, economic and social changes in Eastern Europe, the
republics of the former Soviet Union, the PRC and in other selected emerging    
markets, the bodies of commercial and corporate laws in the Communications      
Group's markets are, in most cases, in their formative stages. Despite the fact 
that many of these areas have undergone radical changes in recent years,        
commercial and corporate laws in these markets are still significantly less     
developed or clear than comparable laws in the United States and countries of   
Western Europe and are subject to frequent changes, preemption and              
reinterpretation by local or administrative regulations, by administrative      
officials and, in the case of Eastern Europe and republics of the former Soviet 
Union, by new governments. Such lack of development or clarity makes it         
difficult for the Communications Group's businesses to plan operations and      
maintain compliance with administrative                                         

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interpretations of the law. No assurance can be given that the uncertainties    
associated with the existing and future laws and regulations in the             
Communications Group's markets will not have a material adverse effect on the   
Company's ability to conduct its business and to generate profits.              

    Laws relating to telecommunications are also in their developmental stage in
most of the markets in which the Communications Group operates and are often    
modified. The Hungarian government has begun to charge license fees for use of  
newly and previously issued licenses. At this time, the Communications Group    
does not yet know the amount its joint venture will be charged for the use of   
its license in this market.                                                     

   In addition, the courts in many of the Communications Group's markets often
do not have the experience, resources or authority to resolve significant       
economic disputes and enforce their decisions. In some cases courts are not     
insulated from political considerations and other outside pressures and         
sometimes do not function in an independent manner. Enforcement of legal rights 
in these areas is also affected in some cases by political discretion and       
lobbying. This creates particular concerns for the Communications Group because 
the licenses held by the Communications Group's businesses or the contracts     
providing such businesses access to the airwaves or other rights essential for  
operations may be significantly modified, revoked or canceled without           
justification, and legal redress may be substantially delayed or even           
unavailable in such cases.                                                      

RISK INHERENT IN GROWTH STRATEGY                                            

   The Communications Group has grown rapidly since its inception. Many of the
Communications Group's ventures are either in developmental stages or have only 
recently commenced operations. The Communications Group has incurred significant
operating losses to date. The Communications Group is pursuing additional       
investments in a variety of communications businesses in both its existing      
markets and additional markets. This growth strategy entails the risks inherent 
in assessing the strength and weaknesses of development opportunities, in       
evaluating the costs and uncertain returns of developing and constructing the   
facilities for operating systems and in integrating and managing the operations 
of existing and additional systems. The Company's growth strategy requires it to
expend significant capital in order to enable it to continue to develop its     
existing operations and to invest in additional ventures. There can be no       
assurance that MMG will have the funds necessary to support the capital needs of
the Communications Group's current investments or any of the Communications     
Group's additional investment opportunities or that the Communications Group    
will be able to obtain financing from third parties. If such financing is       
unavailable, the Communications Group may not be able to further develop its    
existing ventures and the number of additional ventures in which it invests may 
be significantly curtailed.                                                     

APPROVALS AND UNCERTAINTY OF LICENSE RENEWALS                               

The Communications Group's joint ventures' operations are subject to    
governmental regulation in their respective markets and their operations require
certain governmental approvals. The licenses pursuant to which the              
Communications Group's joint ventures operate are issued for limited periods,   
including certain licenses which are renewable annually. Certain of these       
licenses expire over the next several years. In addition, licenses held by two  
of the Communications Group's joint ventures have recently expired, although    
these joint ventures have been permitted to continue operations while the       
reissuance is pending. These joint ventures applied for renewals and expect new 
licenses to be issued. Four other licenses held or used by Communications       
Group's joint ventures will expire during 1997. While there can be no assurance 
on the matter, based on past experience, the Communications Group expects that  
all of these licenses will be renewed. For most of the licenses held or used by 
the Communications Group's joint ventures, no statutory or regulatory           
presumption exists for renewal by the current license holder, and there can be  
no assurance that such licenses will be renewed upon the expiration of their    
current terms. The Communications Group's partners in these ventures have not   
advised the Communications Group of any reason such licenses would not be       
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adverse effect on MMG. There can also be no assurance that the Communications   
Group's joint ventures will obtain necessary approvals to operate additional    
wireless cable television, wireless telephony or paging systems or radio        
broadcast stations in any of the markets in which it is seeking to establish its
businesses.                                                                     

  Additionally, certain of the licenses pursuant to which the Communications
Group's businesses operate contain network build-out milestones. The failure to 
satisfy such milestones could result in the loss of such licenses which may have
a material adverse effect on MMG.                                               

EXCHANGE RATE FLUCTUATIONS AND INFLATION RISKS IN TARGET MARKETS            

The Communications Group's strategy is to minimize its foreign currency 
exposure risk. To the extent possible, in countries that have experienced high  
rates of inflation, the Communications Group bills and collects all revenues in 
U.S. dollars or an equivalent local currency amount adjusted on a monthly basis 
for exchange rate fluctuations. The Communications Group's joint ventures are   
generally permitted to maintain U.S. dollar accounts to service their U.S.      
dollar-denominated credit lines, thereby reducing foreign currency risk. As the 
Communications Group and its joint venture investees expand their operations and
become more dependent on local currency-based transactions, the Communications  
Group expects that its foreign currency exposure will increase. The             
Communications Group does not hedge against foreign exchange rate risks at the  
current time and therefore could be subject in the future to any declines in    
exchange rates between the time a joint venture receives its funds in local     
currencies and the time it distributes such funds in U.S. dollars to MMG. In    
addition, the economies of certain of the Communications Group's target markets,
including but not limited to Russia, Romania, Hungary, Lithuania, Belarus,      
Georgia, China and Kazakstan, have experienced significant and, in some periods,
extremely high rates of inflation over the past few years. Inflation and rapid  
fluctuation in exchange rates have had and may continue to have a negative      
effect on these economies and may have a negative impact on the Company's       
business, financial condition and results of operations.                        

POSSIBLE INABILITY TO CONTROL CERTAIN JOINT VENTURES                        

    The Communications Group has invested in virtually all of its joint ventures
with local partners. Although the Communications Group exercises significant    
influence in the management and operations of the joint ventures in which it has
an ownership interest and intends to invest in the future only in joint ventures
in which it can exercise significant influence in management, the degree of its 
voting power and the voting power and veto rights of its joint venture partners 
may limit the Communications Group from effectively controlling the operations, 
strategies and financial decisions of the joint ventures in which it has an     
ownership interest. In certain markets where the Communications Group conducts  
or may in the future conduct business, increases in the capitalization of a     
joint venture require not only the consent of all joint venture partners, but   
also government approval, thereby creating a risk that a venture may not be able
to obtain additional capital without cooperation of the joint venture partner   
and government approval. The Communications Group is dependent on the continuing
cooperation of its partners in the joint ventures and any significant           
disagreements among the participants could have a material adverse effect on any
such venture. In addition, in many instances, the Communications Group's        
partners in a joint venture include a governmental entity or an affiliate of a  
governmental entity. The presence of a governmental entity or affiliate thereof 
as a partner poses a number of risks, including the possibility of decreased    
governmental support or enthusiasm for the venture as a result of a change of   
government or government officials, a change of policy by the government and    
perhaps most significantly the ability of the governmental entities to exert    
undue control or influence over the project in the event of a dispute or        
otherwise. In addition, to the extent joint ventures become profitable and      
generate sufficient cash flows in the future, there can be no assurance that the
joint ventures will pay dividends or return capital at any time. Moreover, the  
equity interests of the Communications Group in these investments generally are 
not freely transferable. Therefore, there can be no assurance of the Company's  
ability to realize economic benefits through the sale of the Communications     
Group's interests in its joint ventures.                                        

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TECHNICAL APPROVAL OF TELEPHONY EQUIPMENT                                   

 Many of the Communications Group's proposed wireless local loop telephony
operations are dependent upon type approval of the Communications Group's       
proposed wireless local loop telephony equipment by the communications          
authorities in the markets where the Communications Group and its ventures plan 
to operate. While the Communications Group believes that such equipment will be 
type approved, there is no assurance that this will occur and the failure to    
obtain such type approvals could have a materially adverse effect on many of the
Communications Group's proposed telephony operations. In addition, while the    
Communications Group believes that it will be able to acquire sufficient amounts
of wireless local loop telephony equipment from its supplier on a timely basis, 
there can be no assurance that this will be the case or that the Communications 
Group would be able to procure alternative equipment.                           

TECHNOLOGICAL OBSOLESCENCE                                                  

   The communications industry has been characterized in recent years by rapid
and significant technological changes. New market entrants could introduce new  
or enhanced technologies with features which would render the Communications    
Group's technology obsolete or significantly less marketable. The ability of the
Communications Group to compete successfully will depend to a large extent on   
its ability to respond quickly and adapt to technological changes and advances  
in its industry. There can be no assurance that the Communications Group will be
able to keep pace, or will have the financial resources to keep pace, with the  
technological demands of the marketplace.                                       

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INFORMATION REGARDING THE MEETING 

THE ANNUAL MEETING                                                              

    The Annual Meeting is scheduled to be held in the Orion Pictures Corporation
Screening Room at 1888 Century Park East, Los Angeles, California 90067, on July
10, 1997, beginning at 9:00 a.m., Los Angeles time. MMG Stockholders will be    
asked to vote upon (i) a proposal to consider and approve the Stock Purchase    
Agreement and the consummation of the transactions contemplated thereby,        
including the Proposed Transaction (Proposal No. 1); (ii) the election of two   
persons to serve three-year terms as Class II Directors of MMG's Board of       
Directors (Proposal No. 2), (iii) a proposal to ratify the selection of KPMG    
Peat Marwick LLP as MMG's independent accountants for the year ending December  
31, 1997 (Proposal No. 3), and (iv) a proposal submitted by a Stockholder of MMG
which requests that the Board of Directors take action to amend the Company's   
Certificate of Incorporation to provide that Stockholders may call special      
meetings and take action by written consent (Proposal No. 4).                   

 The Board of Directors of MMG knows of no business that will be presented
for consideration at the Annual Meeting other than the matters described in this
Proxy Statement.                                                                

    RECORD DATE; QUORUM.  Only holders of record of Common Stock as of the close
of business on June 13, 1997 (the "Record Date") will be entitled to notice of  
and to vote at the Annual Meeting. As of the Record Date, there were 66,157,971 
shares of Common Stock outstanding and entitled to vote at the Annual Meeting,  
held by approximately 7,732 stockholders of record, with each share entitled to 
one vote. Except with respect to broker non-votes, the consequences of which are
described below, shares of Common Stock represented by proxies marked "ABSTAIN" 
for any proposal presented at the Annual Meeting and shares of Common Stock held
by persons in attendance at the Annual Meeting who abstain from voting on any   
such proposal will be counted for purposes of determining the presence of a     
quorum but shall not be voted for or against such proposal. Because of the vote 
required (see below) to approve the proposals presented at the Annual Meeting,  
abstentions will have the effect of a vote against such proposal (other than    
Proposal No. 2). Shares as to which a broker indicates it has no discretion to  
vote and which are not voted will be considered not present at such meeting for 
purposes presented at the Annual Meeting. Because of the vote required to       
approve Proposals No. 1 and No. 4, broker non-votes with respect to such        
proposals will have the effect of a vote against Proposals No. 1 and No. 4 and  
because of the vote required to approve Proposals No. 2 and No. 3 at the Annual 
Meeting, broker non-votes will have no effect on the outcome of the vote on     
Proposals No. 2 and No. 3. With respect to the election of directors,           
abstentions and broker non-votes will be disregarded and will have no effect on 
the vote.                                                                       

    VOTE REQUIRED.  Each of the Proposals contained in this Proxy Statement will
be voted upon separately at the Annual Meeting. Because the Company has been    
advised by Paul Weiss that the Proposed Transaction constitutes a sale of       
"substantially all" of the assets of the Company for purposes of the Delaware   
General Corporation Law, consummation of the Proposed Transaction requires the  
approval of a majority of the outstanding shares of Common Stock, and,          
accordingly, the Company is soliciting proxies with respect thereto. Pursuant to
the Stockholders Agreement, the Metromedia Holders who collectively own, as of  
the Record Date, approximately 26% of the outstanding shares of Common Stock,   
have agreed to vote such shares in favor of Proposal No. 1. The affirmative vote
of the holders of a majority of all of the issued and outstanding shares of     
Common Stock (whether or not represented in person or by proxy at the Annual    
Meeting) is required to approve Proposals No. 1 and No. 4. The affirmative vote 
of the holders of a plurality of shares of Common Stock present in person or    
represented by proxy at the Annual Meeting will be required to elect each of the
Class II Directors to MMG's Board of Directors pursuant to Proposal No. 2. The  
affirmative vote of the holders of a majority of shares of Common Stock present 
in person or represented by proxy at the Annual Meeting will be required to     
approve and adopt Proposal No. 3.                                               

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PROPOSAL NO. 1--THE PROPOSED TRANSACTION

GENERAL                                                                         

Pursuant to the Stock Purchase Agreement, MMG proposes to sell to P&F   
substantially all of the Entertainment Group's assets and liabilities including 
its entire film and television library consisting of approximately 2,200 titles,
the production and distribution activities of the Entertainment Group, including
the operations of Orion, Goldwyn and MPCA, as well as 12 substantially completed
films and 5 direct-to-video features and substantially all of the liabilities of
these entities. MMG will retain and actively manage Landmark. The Company       
elected to proceed with the Proposed Transaction at this time because it is     
currently engaged in two capital-intensive industries and in light of the       
Entertainment Group's anticipated cash needs, continuing to manage the          
Entertainment Group would have required MMG to either direct cash resources away
from the Communications Group or reduce the Entertainment Group's production and
distribution activities. Moreover, the Board of Directors determined, in its    
business judgment, that the businesses of the Communications Group offered the  
best long-term potential for growth and profitability relative to the prospects 
of the Entertainment Companies. Consequently, the Company elected to enter into 
the Proposed Transaction in order to focus its resources in a single strategic  
business segment.                                                               

 Subject to the terms and conditions set forth therein, the Stock Purchase
Agreement provides for the purchase by P&F from MMG of all such assets of the   
Entertainment Companies for an aggregate purchase price of $573 million, less   
the sum of (i) the greater of (A) all amounts outstanding on December 31, 1996  
under the Orion Credit Facility, net of cash on hand of the Entertainment       
Companies as of such date and (B) all amounts outstanding on the Closing Date   
under the Orion Credit Facility, net of cash on hand of the Entertainment       
Companies on the Closing Date (approximately $271.8 million at May 31, 1997)    
plus (ii) accrued and unpaid interest on indebtedness under the Orion Credit    
Facility accrued to the Closing Date, plus (iii) the greater of (A) $13 million 
or (B) all other indebtedness (other than the Orion Credit Facility) of the     
Entertainment Companies and interest thereon accrued to, but not including the  
Closing Date (approximately $13.5 million at May 31, 1997) (the "Purchase       
Price"). P&F is obligated to repay all amounts outstanding under the Orion      
Credit Facility at closing and as a result, the Company anticipates that it will
receive approximately $287.7 million of net cash proceeds from P&F at the       
closing of the Proposed Transaction (assuming the total indebtedness of the     
Entertainment Companies does not exceed their indebtedness outstanding at May   
31, 1997).                                                                      

The consummation of the Proposed Transaction is subject to various      
conditions, including (i) the approval of the Stock Purchase Agreement by the   
holders of a majority of the outstanding shares of MMG Common Stock; (ii) the   
release of MMG and its affiliates from all obligations under the Orion Credit   
Facility; (iii) the release of MMG from all obligations under the Orion Lease;  
(iv) no change in any Entertainment Company, its assets or the Shares that has  
had or could be reasonably expected to have a material adverse effect; (v) the  
expiration or early termination of the waiting period under the Hart-Scott-     
Rodino Act; and (vi) the ownership of all of the outstanding stock of Landmark  
shall have been transferred to an affiliate of MMG (other than any Entertainment
Company). See "PROPOSAL NO. 1--THE PROPOSED TRANSACTION--Terms and Conditions of
the Stock Purchase Agreement." As a result, following consummation of the       
Proposed Transaction, MMG will continue to operate the Communications Group and 
to own Landmark, Snapper and its interest in RDM and maximize their long-term   
value to MMG Stockholders.                                                      

Consummation of the Proposed Transaction is not subject to P&F obtaining
financing. Prior to the execution of the Stock Purchase Agreement, P&F caused   
the delivery of (i) the Commitment Letter of Morgan which provides that Morgan  
is committed, subject to customary closing conditions and the consummation of   
the Proposed Transaction, to provide the Morgan Facility and (ii) an Investment 
Agreement that provides that the P&F Stockholders are committed to purchase an  
additional $360 million of the common stock of P&F to finance the remainder of  
the Purchase Price.                                                             

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   The 1996 Stock Plan provides that upon a sale of "substantially all" of the
Company's assets, all unvested outstanding options to acquire Common Stock under
such plan would vest and become immediately exercisable. The Company's          
Compensation Committee is empowered under the 1996 Stock Plan to interpret the  
provisions of such plan and the Compensation Committee has determined that,     
although the issue is not free from doubt, the Proposed Transaction constitutes 
a sale of "substantially all" of the Company's assets for purposes of the 1996  
Stock Plan, thereby accelerating all options outstanding under such plan. As of 
May 31, 1997, 4,304,656 options had been issued to the directors, officers and  
certain employees of the Company, the Entertainment Companies, and the          
Communications Group, and remain outstanding under the 1996 Stock Plan and      
2,929,641 of such options had not vested. All such options are exercisable at a 
price equal to $9.31 per share. In connection with the consummation of the      
Proposed Transaction, all directors, officers and employees (other than officers
and employees of the Entertainment Companies) will be asked to waive the        
acceleration of their unvested options (aggregating approximately 1,686,816     
options). While all of the directors of the Company have agreed to waive the    
accelerated vesting of their options, no assurance can be given that any officer
or employee will similarly agree. Based on a price equal to $11 3/4 per share of
Common Stock (the closing price per share of Common Stock reported by the AMEX  
on June 16, 1997), the aggregate value of all accelerated options (assuming NO  
optionee agrees to waive acceleration) is equal to $7,148,324.                  

USE OF PROCEEDS                                                                 

  The Company has been advised by its regular outside legal counsel that the
indentures for the Company's subordinated debentures require MMG to use         
approximately $140 million of such net cash proceeds from the sale of the       
Entertainment Companies to repay all of its outstanding subordinated debentures.
After repaying the Company's outstanding subordinated debentures, the Company   
intends to use the remaining net proceeds of approximately $147.7 million before
taxes to support the needs of the Communications Group's investments, including 
financing the continued build-out of the Communications Group's existing systems
and the completion of pre-operational systems, and to acquire interests in joint
ventures in new markets.                                                        

BACKGROUND OF THE PROPOSED TRANSACTION                                          

 Periodically over the last several years, the Company's senior management
has received 15 to 20 inquiries from potential purchasers regarding the sale of 
all or a portion of the Entertainment Group's assets. During this time, the     
Company's senior management viewed the Entertainment Group as a strategic       
business in their plan to build a global media, entertainment and communications
company, but believed that they had a fiduciary duty to the MMG Stockholders to 
maximize the value of its various assets. In evaluating potential offers, the   
Company's senior management focused on maximizing the aggregate consideration to
be paid by any potential purchaser, selling substantially all of the            
Entertainment Group's assets and liabilities as opposed to solely its library of
film and television titles, and maximizing the cash portion of any offer. In    
particular, due to the extensive capital requirements of the Communications     
Group and the necessity to repay all of the Company's subordinated debentures   
simultaneously with the closing of a transaction involving a sale of the        
Entertainment Group, the Company's senior management was particularly interested
in receiving offers that consisted largely of cash or cash equivalents. In late 
1996 and in early 1997, the Company's senior management received six inquiries  
(covering seven companies) from companies interested in conducting a due        
diligence investigation of the Entertainment Group. Senior management of the    
Company consequently had contact with two likely strategic purchasers (including
P&F) to ascertain whether they would be interested in acquiring all or a        
substantial portion of the Entertainment Group or whether the Entertainment     
Companies could be merged with or establish a joint venture with any such       
company. As a result, the Company entered into six confidentiality letters with 
third parties and permitted each party to conduct a preliminary due diligence   
investigation of the Entertainment Group. All such companies that began         
preliminary due diligence reviews of the Entertainment Group,                   

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except P&F and another domestic entertainment company, expressed an interest in 
acquiring only the Entertainment Group's film and television library, but not   
any of the other assets or liabilities.                                         

 In early 1997, three potential purchasers intensified their due diligence
review of the Entertainment Group and commenced discussions with the Company's  
senior management regarding the structure and terms of any potential transaction
and each of these potential purchasers provided the Company with an offer or    
expression of interest, as described below. The Company received an oral offer  
from an international entertainment company to acquire the Entertainment Group's
film and television library only for a cash purchase price that was lower than  
the Purchase Price. The Company considered this offer inferior to the offer made
by P&F because it provided less consideration to the Company and excluded       
significant portions of the assets and liabilities that the Company desired to  
sell. The Company also received an offer to combine all of the Entertainment    
Companies' assets and liabilities with another domestic entertainment company in
return for cash and an equity interest in the combined companies. Although the  
valuation placed on the Entertainment Companies by such company was             
approximately equivalent to the Purchase Price being paid by P&F, the Company   
determined that this offer was also inferior because it was not an all-cash     
offer and was subject to numerous contingencies. Except for the P&F offer, the  
Company considered these proposals to be significant expressions of interest but
because they were either less than the Purchase Price and constituted only      
select assets or consisted of a significant amount of non-cash consideration,   
they were not considered by the Board of Directors of the Company to be firm    
offers and the Board of Directors of the Company did not pursue extensive       
negotiations with these parties. After receiving these initial expressions of   
interest in the Entertainment Companies, the Company's senior management        
contacted on an informal basis one well-known major entertainment company that  
had the financial capability to pay for and may have had an interest in holding 
assets of this type to determine if it was interested in acquiring the          
Entertainment Companies. This inquiry did not produce an expression of interest 
and the Company otherwise did not actively solicit any other persons.           

In early April 1997, senior executives of the Company met with senior   
executives of P&F and representatives of J.P. Morgan, P&F's financial advisor,  
to begin a preliminary due diligence review of the Entertainment Group. At these
meetings the parties reviewed preliminary due diligence materials relating to   
the Entertainment Companies and discussed the general terms of a possible       
transaction pursuant to which P&F would acquire all of the assets and           
liabilities of the Entertainment Group other than Landmark (subject to P&F's    
satisfactory completion of its due diligence review). As the Company's senior   
management believed that the discussions with P&F's senior management           
contemplated an acquisition of all of the Entertainment Group's assets and      
liabilities (other than Landmark) and were at valuations that the Company's     
senior management believed were attractive, senior management permitted MGM and 
P&F to undertake a more intensive due diligence review. The Company's management
believed that P&F's valuations were attractive based upon reviews of other      
confidential valuations that had previously been conducted of the film and      
television libraries of the Entertainment Companies in connection with          
financings made available to the Company by its bank lenders, which were valued 
at amounts lower than the Purchase Price and based upon its own views on the    
value of the Entertainment Companies. As a result, during the week of April 14, 
1997 discussions intensified between senior management of P&F and the Company   
regarding the structure of the Proposed Transaction and the consideration to be 
paid by P&F. The senior officers of the Company that negotiated with P&F were   
primarily Stuart Subotnick, Vice Chairman, President and Chief Executive Officer
of MMG, Silvia Kessel, Executive Vice President and Chief Financial Officer of  
MMG and Arnold L. Wadler, Executive Vice President and General Counsel of MMG.  
As described below, Mr. Subotnick is a general partner of Metromedia and        
Metromedia will be released of certain guarantee obligations in connection with 
the consummation of the Proposed Transaction. See "--Interests of Certain       
Persons in the Proposed Transaction." These interests were disclosed to the     
Board of Directors of the Company at all meetings held to consider the Proposed 
Transaction and have been consistently disclosed in appropriate MMG public      
filings. The Board of Directors was notified that negotiations were taking place
and, because the Board of Directors was comfortable that (i) all interests of   
certain directors of the Company had been fully disclosed to the Board of       
Directors and would be fully                                                    

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disclosed to the Stockholders of the Company, (ii) that the interests of Mr.    
Subotnick, a member of the Board of Directors and, together with the other      
Metromedia Holders, the largest single stockholder of the Company, would be the 
same as the other stockholders of the Company, and (iii) the Company is not     
compelled to do so under Delaware law, the Board did not consider it necessary  
to appoint a special committee of the Board of Directors to conduct such        
negotiations. As senior management of the Company was confident that these      
discussions had progressed well, on April 21, 1997, senior management of MGM    
commenced a series of due diligence meetings in Los Angeles with senior         
management of both the Company and Orion. These meetings lasted through April   
25, 1997. Simultaneously, legal representatives of MGM, P&F and the Company     
commenced negotiations of the terms and provisions of the Stock Purchase        
Agreement. P&F's and MGM's legal representatives also began a more extensive    
review of due diligence materials supplied by the Entertainment Group.          

   On April 25, 1997, senior management of MGM, P&F and the Company reached an
understanding on the structure of the transaction and the consideration to be   
paid by P&F, subject to the satisfactory resolution of outstanding legal issues.
In addition, on April 25, the Company retained DLJ to evaluate the Proposed     
Transaction and determine whether, in its opinion, the consideration to be      
received by the Company in the Proposed Transaction was fair to the Company from
a financial point of view. Negotiations on the terms of a letter of intent and  
the definitive Stock Purchase Agreement continued from April 25, 1997 through   
April 27, 1997. On April 27, 1997, the parties reached an agreement in principle
on the terms of the Proposed Transaction and prepared a non-binding letter of   
intent reflecting their agreement. The Company's Board of Directors held a      
telephonic meeting on April 27, 1997, during which the letter of intent and the 
Proposed Transaction were discussed in detail by senior management and the      
Company's outside counsel. DLJ also participated in the April 27, 1997 meeting. 
At this meeting, the release of Mr. Kluge, Metromedia and Mr. Subotnick (in his 
capacity as a general partner of Metromedia) from their guarantee obligations to
Chase under the Orion Credit Facility were disclosed to and discussed by the    
Company's entire Board of Directors. In addition, counsel to the Company        
disclosed to the Board of Directors the terms and provisions of the Stockholders
Agreement and noted that the execution and delivery of this agreement was       
essential to inducing P&F to execute and deliver the Stock Purchase Agreement.  
Following a discussion, the Board of Directors approved the execution of the    
letter of intent and as a result, the Company's senior management entered into  
the letter of intent (to which the form of the Stock Purchase Agreement was     
attached as an exhibit) to complete the Proposed Transaction, subject to the    
approval of the definitive agreements by the Company's Board of Directors.      

 On May 2, 1997, the Company's Board of Directors held a second telephonic
meeting to consider the Proposed Transaction. At this meeting, the Board of     
Directors received DLJ's oral opinion (subsequently confirmed in writing) that  
the consideration to be paid in the Proposed Transaction was fair to the Company
from a financial point of view. Following a discussion and a disclosure of the  
interests of Mr. Kluge, Metromedia and Mr. Subotnick in the Proposed            
Transaction, the Board of Directors unanimously approved the Proposed           
Transaction and agreed to recommend the same to the MMG Stockholders at the     
Annual Meeting.                                                                 

REASONS FOR THE PROPOSED TRANSACTION                                            

In reaching its decision to recommend and approve the Stock Purchase    
Agreement, the MMG Board of Directors consulted with its advisors and considered
the material factors described below. Based upon its review of such factors, the
Board of Directors of MMG approved the Stock Purchase Agreement.                

   The MMG Board of Directors considered the following factors in reaching the
conclusion to approve the Stock Purchase Agreement and the transactions         
contemplated thereby:                                                           

 - Both the Entertainment Group and the Communications Group currently are
    engaged in extremely capital intensive businesses and the disposition of
   the Entertainment Companies in accordance with the Proposed Transaction
     will enable the Company to narrow its strategic focus and to redeploy its

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     available resources into the Communications Group. Moreover, the Board of
      Directors determined, in its business judgment, that the businesses of the
    Communications Group offered the best long-term potential for growth and
   profitability relative to the prospects of the Entertainment Companies.

 - The consideration to be paid by P&F to the Company consists entirely of
cash thereby enabling the Company to repay substantially all of its 
     outstanding long-term indebtedness and providing funds for the operations
of the Communications Group.                                        

   - The offer by P&F was for all of the assets of the Entertainment Companies
     instead of solely the film and television library and, therefore, enabled
    the Company to maximize the purchase price for its entertainment assets.

 - The Stock Purchase Agreement does not contain a financing condition for
     P&F and, accordingly, the Company is not taking the risk that P&F will be
unable to obtain financing for the Proposed Transaction.            

   - P&F is assuming substantially all of the liabilities of the Entertainment
Group, except those related to Landmark and certain other specified 
  litigations and, therefore, the Company will benefit as it will not be
required to use its resources to satisfy such liabilities.          

- The Company's financial advisor opined that the consideration to be   
      received by the Company in the Proposed Transaction is fair to the Company
from a financial point of view.                                     

The MMG Board of Directors also considered the following risks and      
uncertainties associated with consummation of the Proposed Transaction:         

- Following consummation of the Proposed Transaction, the Company's sole
   remaining strategic business will be the Communications Group, which is
capital intensive and in the early stages of development.           

  - The Company has been advised by Paul Weiss that the Proposed Transaction
would constitute a sale of the Company's assets "substantially as an
     entirety" that would require the Company to use a portion of the net cash
      proceeds from the Proposed Transaction to repay the Company's subordinated
debentures.                                                         

 - The Company's Compensation Committee determined that, although not free
     from doubt, the Proposed Transaction constitutes a sale of "substantially
     all" of the Company's assets for purposes of the 1996 Stock Plan, and, as
  a result, all unvested options to acquire shares of Common Stock under
 such plan would vest and become immediately exercisable. However, the
Board of Directors of the Company did not consider the impact of the
    acceleration of the Company's stock options as a material factor because
(i) the number of shares that could be acquired upon the exercise of
     accelerated options represents less than 4% of the Common Stock (assuming
    that no optionees agreed to waive acceleration); (ii) as a result of the
     capital-intensive nature of the businesses transacted by the Company, the
    Company does not report net income and does not anticipate reporting net
   income for the foreseeable future and, accordingly, the acceleration of
     options will not dilute the Company's reported earnings; and (iii) as the
 optionees are required to tender cash upon exercise of an option, the
     Company will generate substantial cash from the exercise of these options
over time.                                                          

     In analyzing the Proposed Transaction and related transactions and in
its deliberations regarding the recommendation of the Stock Purchase    
Agreement, the MMG Board of Directors also considered a number of other 
factors, including (i) its knowledge of the business, operations,       
properties, assets, financial condition and operating results of the    
 Entertainment Group; (ii) judgments as to MMG's future prospects with and
  without the Entertainment Companies; (iii) the terms of the Stock Purchase
 Agreement, which were the product of extensive arm's length negotiations;
and (iv) the potential for                                              

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   enhanced stockholder value due to the resulting cash infusion and reduction
    of debt of the Company. The MMG Board of Directors did not find it practical
  to and did not quantify or attempt to attach relative weight to any of the
    specific factors considered by it. The MMG Board of Directors concluded that
   the opportunities for the Company to streamline its operations by narrowing
the focus of its business were compelling.                              

     Notwithstanding expectations of MMG's senior management regarding the
  benefits to be realized from the Proposed Transaction, no assurance can be
   given that MMG will be able to realize such benefits or compete effectively
against certain other competitors that possess significantly greater    
   resources and marketing capabilities than it. See "CERTAIN CONSIDERATIONS."

RECOMMENDATION OF MMG'S BOARD OF DIRECTORS                                      

At the meeting of MMG's Board of Directors held to consider the Stock   
Purchase Agreement, the Board of Directors unanimously approved the Proposed    
Transaction as being in the best interests of the Company and MMG's             
Stockholders. FOR THE REASONS DISCUSSED ABOVE, THE BOARD OF DIRECTORS OF MMG    
UNANIMOUSLY APPROVED THE PROPOSED TRANSACTION AND RECOMMENDS THAT MMG           
STOCKHOLDERS VOTE "FOR" THE APPROVAL OF THE PROPOSED TRANSACTION AND ALL OTHER  
MATTERS RELATING TO THE PROPOSED TRANSACTION TO BE PRESENTED FOR THE            
CONSIDERATION AND VOTE OF THE MMG STOCKHOLDERS.                                 

OPINION OF FINANCIAL ADVISOR                                                    

    MMG engaged DLJ to act as its financial advisor in connection with the Stock
Purchase Agreement and the Proposed Transaction contemplated thereby based upon 
DLJ's qualifications, expertise and reputation, as well as DLJ's prior          
investment banking relationship and familiarity with MMG. DLJ was not requested 
to recommend the amount of consideration to be received by MMG; it was requested
to evaluate, from a financial point of view, the fairness of the consideration  
to be received by MMG, which was determined by negotiation between MMG and P&F. 
On May 2, 1997, DLJ rendered an oral opinion to the MMG Board, which was        
confirmed by delivery of its written opinion dated May 5, 1997 (the "DLJ        
Fairness Opinion"), to the effect that, as of such date, and based upon and     
subject to the assumptions, limitations and qualifications set forth in such    
opinion, the Purchase Price was fair to MMG from a financial point of view.     

    THE FULL TEXT OF THE DLJ FAIRNESS OPINION IS SET FORTH AS APPENDIX C TO THIS
PROXY STATEMENT AND SHOULD BE READ CAREFULLY IN ITS ENTIRETY FOR ASSUMPTIONS    
MADE, PROCEDURES FOLLOWED, OTHER MATTERS CONSIDERED AND LIMITATIONS OF THE      
REVIEW BY DLJ. THE DLJ FAIRNESS OPINION WAS PREPARED FOR THE MMG BOARD OF       
DIRECTORS AND ADDRESSES ONLY THE FAIRNESS OF THE PURCHASE PRICE TO MMG FROM A   
FINANCIAL POINT OF VIEW AND DOES NOT CONSTITUTE A RECOMMENDATION TO ANY MMG     
STOCKHOLDER AS TO HOW SUCH STOCKHOLDER SHOULD VOTE AT THE ANNUAL MEETING. THE   
SUMMARY OF THE DLJ FAIRNESS OPINION SET FORTH IN THIS PROXY STATEMENT IS        
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT OF SUCH OPINION.        

   In arriving at its opinion, DLJ, among other things, (i) reviewed the April
27, 1997 draft of the Stock Purchase Agreement; (ii) reviewed certain           
publicly-available financial information concerning the Entertainment Companies 
as well as certain non-public information, including financial forecasts,       
concerning the Entertainment Companies; (iii) compared the financial data of the
Entertainment Companies with that of various other companies whose securities   
are traded in public markets; (iv) reviewed the financial terms of certain      
recent business combinations that DLJ deemed comparable in whole or in part; (v)
met with management of the Entertainment Companies to discuss their respective  
businesses and prospects; and (vi) considered such other information and other  
factors that DLJ deemed appropriate.                                            

  In rendering its opinion, DLJ did not independently verify the information
provided to it and assumed the accuracy, completeness and fairness of all such  
information. With respect to financial forecasts and                            

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other information relating to the prospects of the Entertainment Companies, DLJ 
assumed that such forecasts and other information were reasonably prepared and  
reflected the best currently available estimates and good faith judgment of the 
Entertainment Companies as to the likely future financial performance of the    
Entertainment Companies. DLJ did not conduct a physical inspection of the       
properties or facilities, or make an independent evaluation or appraisal of the 
assets, of any of the Entertainment Companies, nor was DLJ furnished with any   
such evaluation or appraisal. DLJ did not make any independent investigation of 
any legal matters affecting any of the Entertainment Companies, and assumed the 
correctness of all legal advice given to each of them and to the MMG Board of   
Directors, including advice as to the tax consequences of the Proposed          
Transaction to the Company. DLJ was not requested to, nor did it, solicit the   
interest of any other party in purchasing the Entertainment Companies. While DLJ
believes that its review as described herein is an adequate basis for the DLJ   
Fairness Opinion it has expressed, the opinion is necessarily based upon        
financial, economic, monetary, political, market and other conditions that      
existed and could be evaluated as of the date of the opinion, and any           
significant change in such conditions thereafter would require a reevaluation of
the opinion.                                                                    

 DLJ did not express any opinion as to the price at which the Common Stock
will trade subsequent to the Proposed Transaction. In addition, DLJ did not     
participate in negotiating the terms of the Proposed Transaction or any other   
aspect of the Proposed Transaction contemplated thereby, and received no        
instruction to and did not, seek or solicit alternative transactions.           

   In preparing the DLJ Fairness Opinion, DLJ performed a variety of analyses,
and considered a variety of factors, of which the material analyses and factors 
are described below. The following summary of such analyses and factors         
considered does not purport to be a complete description of the analyses and    
factors underlying the DLJ Fairness Opinion. Preparation of a fairness opinion  
is a complex process involving various determinations as to the most appropriate
analyses and factors to consider, and the application of those analyses and     
factors under the particular circumstances. As a result, the process involved in
preparing such opinion is not readily summarized. No public company utilized for
reference purposes is identical to the Entertainment Companies, and none of the 
acquisitions or other business combinations considered in connection with the   
DLJ Fairness Opinion is identical to the Proposed Transaction.                  

  In arriving at its opinion, DLJ did not attribute any particular weight to
any one analysis or factor considered by it, but rather, in reaching its        
conclusion, DLJ considered the results of the analyses in light of each other.  
DLJ did not consider any one analysis or factor to the exclusion of any other   
analyses or factors. Further, DLJ's conclusions involved significant elements of
subjective judgment and qualitative analyses as well as the financial and       
quantitative analyses. Accordingly, DLJ believes that its analyses and opinion  
must be considered as a whole and that selecting portions of its analyses and   
factors, without considering all such analyses and factors, could create a      
misleading or incomplete view of the processes underlying the preparation of the
DLJ Fairness Opinion. In its analyses, DLJ necessarily made numerous assumptions
with respect to the Entertainment Companies, industry performance, general      
business, regulatory, economic, political, market and financial conditions and  
other matters, many of which are beyond the Entertainment Companies' control. In
addition, analyses relating to the value of businesses or securities do not     
purport to be appraisals, or to reflect the prices at which such businesses or  
securities can actually be sold. Accordingly, because such estimates are        
inherently subject to substantial uncertainty, DLJ does not assume              
responsibility for their accuracy.                                              

ANALYSIS OF SELECTED PUBLIC COMPANIES                                       

   To provide contextual data and comparative market information, DLJ compared
the operating performance of the Entertainment Companies to selected companies  
whose securities are publicly traded. As there are no publicly traded companies 
that are primarily comprised of significant film libraries and movie production 
operations, DLJ analyzed companies primarily engaged in the production and      
distribution of television programming or film distribution without significant 
library content. The selected                                                   

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companies included: Film Roman, Inc., Spelling Entertainment Group, All-American
Communications, Dick Clark Productions and King World Productions (the          
"Comparable Companies").                                                        

    DLJ computed enterprise value (defined as market value of common equity plus
book value of total debt plus liquidation value of preferred stock less cash) as
a multiple of latest twelve months ("LTM") revenue, EBITDA, and EBIT, and equity
value as a multiple of LTM earnings, and projected 1997 and 1998 earnings and   
book equity value for the Comparable Companies. Because the Entertainment       
Companies had negative EBITDA, EBIT and Net Income in the year ended December   
31, 1996 ("Fiscal 1996") as well as negative book value at December 31, 1996,   
DLJ believes that the implied enterprise value of the Entertainment Companies   
based on multiples of revenues was the most relevant comparison. The enterprise 
value as a multiple of revenues for the Comparable Companies ranged from 0.1x to
1.7x, with a mean (excluding high and low values) of 1.2x. This analysis        
indicated an enterprise value range, based on the Entertainment Companies' pro  
forma (to give effect to the exclusion of Landmark from the assets to be sold   
and the estimated full year impact of the acquisitions of Goldwyn and MPCA      
completed on July 2, 1996) estimated Fiscal 1996 revenue, of approximately $19.1
million to $324.9 million, and an enterprise value of $229.3 million based on   
the mean multiple. DLJ compared this range of enterprise values to the aggregate
consideration of $573 million to be received by the Company in the Proposed     
Transaction.                                                                    

 Because the Entertainment Companies only recently resumed the acquisition
and production of new film product, the Entertainment Companies are currently   
experiencing high cash expenses for new film product. These expenses, while     
expected to generate revenues and EBITDA, have contributed to the Entertainment 
Companies' negative 1996 EBITDA. Accordingly, DLJ also analyzed the             
Entertainment Companies' Fiscal 1996 Net Operating Cash Flow excluding new      
production ("Library Net Cash Flow"). The range of enterprise values of the     
Comparable Companies as a multiple of EBITDA (which DLJ believes reasonably     
approximates Net Operating Cash Flow) ranged from 4.3x to 25.7x, with a mean    
(again excluding high and low values) of 7.0x. This analysis indicated an       
enterprise value range, based on the Entertainment Companies' Fiscal 1996       
Library Net Cash Flow of approximately $179.3 million to $1,071.7 million, and  
an enterprise value of $291.0 million based on the mean multiple. DLJ compared  
this range of enterprise values to the aggregate consideration of $573 million  
to be received by the Company in the Proposed Transaction.                      

  No company utilized in the comparable company analysis is identical to the
Entertainment Companies. Accordingly, an analysis of the results of the         
foregoing necessarily involves complex considerations and judgments concerning  
differences in financial and operating characteristics of the Entertainment     
Companies and other factors that could affect the public trading value of the   
selected companies or company to which they are being compared. Mathematical    
analysis such as determining the mean is not in itself a meaningful method of   
using comparable company data.                                                  

ANALYSIS OF SELECTED MERGERS AND ACQUISITIONS                               

Utilizing publicly available information, DLJ also evaluated a series of
transactions involving companies in the film and television production and      
distribution industries. The transactions considered included                   
Hanna-Barbera/Turner Broadcasting Systems, Spelling Entertainment Group/Charter 
Financial, Imagine Films/Management Group, Spelling Entertainment               
Group/Blockbuster Entertainment Corp., New Line Cinema Corp./Turner Broadcasting
Systems, Republic Pictures/Spelling Entertainment Group, Fremantle              
International/All-American Communications, MCA/Seagram Cos., Mark Goodson       
Productions/All-American Communications and The Samuel Goldwyn Company/MMG (the 
"Selected Transactions").                                                       

DLJ computed enterprise value as a multiple of LTM revenues, EBITDA and 
EBIT, and equity value as a multiple of LTM earnings and book equity value.     
Because the Entertainment Companies had negative EBITDA, EBIT and Net Income in 
Fiscal 1996 as well as negative book value at December 31, 1996, DLJ believes   
that the implied enterprise value of the Entertainment Companies based on       
multiples of revenues was the most relevant comparison. The enterprise value as 
a multiple of revenues for the Selected                                         

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Transactions ranged from 0.8x to 4.4x, with a mean (excluding high and low      
values) of 1.9x. This analysis indicated an enterprise value range, based on the
Entertainment Companies' pro forma (to give effect to the exclusion of the      
Landmark from the assets to be sold and the estimated full year impact of the   
acquisitions of Goldwyn and MPCA completed on July 2, 1996) estimated Fiscal    
1996 revenue, of approximately $152.9 million to $840.8 million, and an         
enterprise value of $363.1 million based on the mean multiple. DLJ compared this
range of enterprise values to the aggregate consideration of $573 million to be 
received by the Company in the Proposed Transaction.                            

 Because the Entertainment Companies only recently resumed the acquisition
and production of new film product, the Entertainment Companies are currently   
experiencing high cash expenses for new film product. These expenses, while     
expected to generate revenues and EBITDA, have contributed to the Entertainment 
Companies' negative 1996 EBITDA. Accordingly, DLJ also analyzed the             
Entertainment Companies' Fiscal 1996 Library Net Cash Flow. The range of        
enterprise values of the Selected Transactions as a multiple of EBITDA (which   
DLJ believes reasonably approximates Net Operating Cash Flow) ranged from 4.7x  
to 21.4x, with a mean (again excluding high and low values) of 15.3x. This      
analysis indicated an enterprise value range, based on the Entertainment        
Companies' Fiscal 1996 Library Net Cash Flow of approximately $192.6 million to 
$892.4 million, and an enterprise value of $638.0 million based on the mean     
multiple. DLJ compared this range of enterprise values to the aggregate         
consideration of $573 million to be received by the Company in the Proposed     
Transaction.                                                                    

   No transaction utilized in the comparable transaction analysis is identical
to the Proposed Transaction. Accordingly, an analysis of the results of the     
foregoing necessarily involves complex considerations and judgments concerning  
differences in financial and operating characteristics of the Entertainment     
Companies and other factors that could affect the acquisition value of the      
companies to which they are being compared. Mathematical analysis such as       
determining the mean is not itself a meaningful method of using comparable      
transactions data.                                                              

LIBRARY TRANSFER ANALYSIS                                                   

DLJ analyzed the Entertainment Companies' library, and examined certain 
other library transfer transactions, to derive a value for the Entertainment    
Companies based on its library. Because the valuation of motion picture feature 
titles is different than those of made-for-TV movies or made-for-TV series, and 
in turn those of made-for-video product, and the value of rights with respect to
a particular title is a function of the geographic, media and temporal          
limitations of the Entertainment Companies' distribution rights, DLJ analyzed   
the implied library value based on two different methodologies of counting the  
number of titles to enable it to more accurately assess the value of the        
Entertainment Companies' library compared to other transactions involving       
transfers of significant motion picture title libraries (i) the raw number of   
titles in the Entertainment Companies' library and (ii) the number of key titles
(as defined by Paul Kagan Associates) in the Entertainment Companies' library.  
DLJ analyzed the library value and number of titles involved in the             
transactions/library sales by The Samuel Goldwyn Company, MPCA, Orion, Carolco  
Pictures, New Line Cinema Corp. and Weintraub, deriving multiples based on both 
the number of titles and the number of key titles. DLJ compared this range of   
enterprise values to the aggregate consideration of $573 million to be received 
by the Company in the Proposed Transaction. DLJ applied these multiples to the  
respective title counts to arrive at a total enterprise value. This indicated an
enterprise value based on the mean value per key title implied by the selected  
sales of $617.2 million and an enterprise value based on the mean value per key 
title implied by the selected sales of $740.9 million. DLJ also performed the   
library transfer analysis using the mean value per title and value per key title
implied by the above selected transactions/library sales (excluding the Carolco 
Pictures and New Line Cinema Corp. sales), which implied an enterprise value of 
$391.4 million and $543.6 million, respectively. DLJ compared this range of     
enterprise values to the aggregate consideration of $573 million to be received 
by the Company in the Proposed Transaction. DLJ believes that mathematical      
analyses such as determining the mean is not itself a useful analytical tool in 
that it tends to overstate the importance of                                    

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mathematical conclusions without giving due consideration to conclusions reached
based on the experience and judgment of DLJ. DLJ believes that the Carolco      
Pictures and the New Line sales are less comparable to the Proposed Transaction 
than the other transactions/library sales analyzed due to the substantially     
higher content (as compared to the Entertainment Companies' library) of recent  
and commercially successful film and television titles in their respective      
libraries.                                                                      

DISCOUNTED CASH FLOW ANALYSIS                                               

  DLJ performed a discounted cash flow ("DCF") analysis of the projected Net
Operating Cash Flow (defined as cash receipts less operating cash disbursements 
before debt service, and not necessarily conforming to Generally Accepted       
Accounting Principles) of the Entertainment Companies for the five-year period  
ending with the 2001 fiscal year based upon a financial model provided by the   
management of the Entertainment Companies. DLJ performed the DCF analysis using 
two different methodologies (i) by calculating a range of values based on the   
Entertainment Companies' combined library and new production Net Operating Cash 
Flow using a range of multiples of Net Operating Cash Flow to estimate terminal 
values and a range of discount rates to discount the interim cash flows and     
terminal value to the present and (ii) by calculating a range of values on a    
component basis for (a) the library operations alone and (b) the new production 
operations alone. The methodology in (ii) above is based upon the assumption    
that the expected Net Operating Cash Flow from the library is inherently less   
risky than the expected Net Operating Cash Flow from the new production         
operations. Thus, to value each of the library and new production on a component
basis, DLJ used a lower range of terminal value multiples and lower range of    
discount rates to value the library as compared to the range of terminal value  
multiples and discount rates used to value the new production operations. Based 
on the methodology in (i) above and using a range of terminal value multiples of
10.0x to 15.0x and a range of discount rates of 12.0% to 18.0%, DLJ calculated a
range of enterprise values for the Entertainment Companies of $259.8 million to 
$437.2 million. Based on the methodology in (ii) above, DLJ calculated the      
following: (a) using a range of terminal value multiples of 10.0x to 15.0x and a
range of discount rates of 12.0% to 18.0% on the projected Net Operating Cash   
Flow from the library, the range of enterprise values calculated for the library
was $183.0 million to $265.1 million; (b) using a range of terminal value       
multiples of 12.0x to 17.0x and a range of discount rates of 15.0% to 21.0% on  
the projected Net Operating Cash Flow from the new production operations, the   
range of enterprise value multiples calculated for the new production operations
was $81.5 million to $169.7 million. On a combined basis, the range of          
enterprise values calculated using the methodology in (ii) above was $264.5     
million to $434.8 million.                                                      

  Pursuant to a letter agreement between MMG and DLJ, dated May 2, 1997 (the
"DLJ Engagement Letter"), DLJ is entitled to a fee of $350,000 payable at the   
time DLJ notifies the MMG Board that it is prepared to deliver its opinion to   
the MMG Board. In addition, MMG has agreed to reimburse DLJ for its             
out-of-pocket expenses, including reasonable fees and expenses of its counsel,  
and to indemnify DLJ for certain liabilities and expenses arising out of the    
Proposed Transaction, including liabilities under federal securities laws. The  
terms of the fee arrangement with DLJ, which DLJ and MMG believe are customary  
in transactions of this nature, were negotiated at arm's length between MMG and 
DLJ and the MMG Board was aware of such arrangement.                            

DLJ was selected to render an opinion in connection with the Proposed   
Transaction based upon DLJ's qualifications, expertise and reputation, including
the fact that DLJ, as part of its investment banking business, is regularly     
engaged in the valuation of businesses and their securities in connection with  
mergers and acquisitions, underwritings, sales and distributions of listed and  
unlisted securities, private placements and valuations for corporate and other  
purposes.                                                                       

   DLJ provides a full-range of financial, advisory and brokerage services and
in the course of its normal trading activities may from time to time effect     
transactions and hold positions in the securities or options on the securities  
of MMG for its own account and for the account of customers. DLJ has performed  
investment banking and other services for the Company in the past and has been  
compensated for such                                                            

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services. Over the past two years, DLJ has advised the Company with respect to  
its merger with Orion, MCEG Sterling, Inc. and MITI in November 1995; advised   
the Company with respect to its acquisitions of The Samuel Goldwyn Company and  
MPCA in July 1996; and was lead-manager with respect to the Company's $202.4    
million offering of the Common Stock in July 1996, for each of which DLJ        
received usual and customary compensation. In addition, DLJ is currently acting 
as lead-manager with respect to the Company's proposed $125 million convertible 
preferred stock offering. No determination has been made as to whether the      
Company will proceed with this offering. DLJ also owns 131,453 shares of the    
Common Stock, of which 67,601 were purchased in 1993 and 63,852 shares (the "Fee
Shares") were received in 1995 as partial consideration for DLJ's services in   
advising the Company in its formation. The Fee Shares have the benefit of a     
make-whole arrangement pursuant to which the Company will provide DLJ with the  
difference between $1.125 million and the proceeds from the sale of the Fee     
Shares, either in cash or additional shares of Common Stock. If DLJ should sell 
these shares for more than $1.125 million, DLJ is required to pay any such      
excess to the Company.                                                          

INTERESTS OF CERTAIN PERSONS                                                    

 In considering the Proposed Transaction, MMG Stockholders should be aware
that certain officers and directors of the Company have certain interests in the
transactions contemplated thereby that are in addition to the interests of the  
MMG Stockholders generally.                                                     

Messrs. Kluge and Subotnick, the general partners of Metromedia, are    
collectively MMG's largest stockholders, and together they beneficially own     
approximately 26% of the outstanding shares of Common Stock. Mr. Kluge serves as
Chairman of the Board of Directors of MMG and Mr. Subotnick serves as Vice      
Chairman of the Board of Directors, President and Chief Executive Officer of    
MMG. Pursuant to the terms of the Stockholders Agreement, Metromedia and Messrs.
Kluge and Subotnick have agreed, among other things, (i) to vote their shares of
Common Stock in favor of the Proposed Transaction; (ii) to vote their shares of 
Common Stock against another proposal (except if such vote would violate their  
fiduciary duties) to sell all or substantially all of the Shares or any or all  
of the assets of the Entertainment Companies; (iii) not to transfer any shares  
of Common Stock held by them until the later of September 30, 1997 and 90 days  
after the date of the MMG Stockholders meeting to be held for the purpose of    
approving the Proposed Transaction (as long as such meeting is held by September
30, 1997); and (iv)(a) to discontinue any discussions or negotiations with      
respect to any acquisition of all or any material portion of the assets of, or  
any equity interest in, any Entertainment Company and (b) except as otherwise   
permitted under the Stock Purchase Agreement, not to initiate, solicit or       
knowingly encourage or take any other action to knowingly facilitate any        
inquiries or the making of any proposals with respect to a possible transaction 
of the type described in clause (a) above.                                      

   Furthermore, as a condition to the closing of the Stock Purchase Agreement,
there shall be a release of the guarantees given in favor of Chase by (i) Mr.   
Kluge and Metromedia with respect to the $100 million revolving credit portion  
of the Orion Credit Facility ($94.3 million of which was outstanding at May 31, 
1997) and (ii) Metromedia with respect to the payment of a certain third party  
accounts receivable owed to Orion (approximately $11.4 million of which was     
outstanding at May 31, 1997) so that the entire face amount of such accounts    
receivable could be included in the borrowing base for the Orion Credit         
Facility. See "INFORMATION REGARDING MMG--Certain Relationships and Related     
Transactions."                                                                  

The Company believes that the Proposed Transaction will not trigger any 
"change of control" provisions in any agreements or other contracts to which the
Company is a party except for (i) the Metromedia License Agreement, which       
provides Metromedia with a termination right upon a sale of substantially all of
the assets of the Company, which right Metromedia has agreed to waive, and (ii) 
the 1996 Stock Plan, which provides that upon a sale of "substantially all" of  
the Company's assets, all unvested outstanding options to acquire Common Stock  
under such plan would vest and become immediately exercisable. The Company's    
Compensation Committee is empowered under the 1996 Stock Plan to interpret the  
provisions of such plan and the Compensation Committee has determined that,     

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although the issue is not free from doubt, the Proposed Transaction constitutes 
a sale of "substantially all" of the Company's assets for purposes of the 1996  
Stock Plan, thereby accelerating all options outstanding under such plan. As of 
May 31, 1997, 4,304,656 options had been issued to the directors, officers and  
certain employees of the Company, the Entertainment Companies, and the          
Communications Group, and remain outstanding under the 1996 Stock Plan and      
2,929,641 of such options had not vested. All such options are exercisable at a 
price equal to $9.31 per share. In connection with the consummation of the      
Proposed Transaction, all of such officers and employees (other than officers   
and employees of the Entertainment Companies) will be asked to waive the        
acceleration of their unvested options (aggregating approximately 1,686,816     
options). While all of the directors of the Company have agreed to waive the    
accelerated vesting of their options, no assurance can be given that any officer
or employee will similarly agree. Based on a price equal to $11 3/4 per share of
Common Stock (the closing price per share of Common Stock reported by the AMEX  
on June 16, 1997), the aggregate value of all accelerated options (assuming NO  
optionee agrees to waive acceleration) is equal to $7,148,324.                  

TERMS AND CONDITIONS OF THE STOCK PURCHASE AGREEMENT                            

    Set forth below is a description of the material terms and conditions of the
Stock Purchase Agreement. The description is qualified in its entirety by       
reference to the Stock Purchase Agreement.                                      

P&F CLOSING CONDITIONS                                                      

 P&F's obligation to consummate the Proposed Transaction is subject to the
satisfaction or waiver of certain conditions, including the following:          

        1.  Each of MMG and Orion shall have performed its obligations under the
Stock Purchase Agreement, the representations and warranties of MMG     
  contained in the Stock Purchase Agreement shall be true and correct at and
as of the Closing Date except for breaches that could not reasonably be 
    expected to result in a material adverse effect, and P&F shall have received
an officer's certificate from MMG to that effect;                       

      2.  Since the date of the Stock Purchase Agreement, no change or event
   shall have occurred which has had or could reasonably be expected to have a
  material adverse effect with respect to the Entertainment Companies or the
Shares;                                                                 

       3.  All required consents or approvals to be obtained by the Company or
   the Entertainment Companies under applicable law or under certain specified
contracts by virtue of the Stock Purchase Agreement or the transactions 
contemplated thereby shall have been obtained;                          

       4.  The transactions contemplated by the Stock Purchase Agreement shall
not violate any applicable law and no injunction, order, decree or other
legal restraint shall be in effect which restricts or prohibits the     
consummation of the Proposed Transaction or which imposes materially    
burdensome conditions on the Entertainment Companies, P&F or the Shares;

       5.  P&F shall have received a legal opinion from Paul Weiss in form and
substance reasonably satisfactory to P&F, which P&F expects to include  
customary and standard terms concerning corporate law matters;          

      6.  P&F and its subsidiaries shall have obtained all required consents
    or approvals under the existing MGM credit facility to be obtained by any of
them by virtue of the Stock Purchase Agreement or the transactions      
contemplated thereby;                                                   

     7.  All of the directors of any Entertainment Company whose principal
employment is not as an officer and/or employee of such Entertainment   
Company shall have resigned such directorships; and                     

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        8.  P&F shall have received written evidence satisfactory to it that all
  of the issued and outstanding stock of Landmark has been transferred to an
affiliate of MMG that is not an Entertainment Company.                  

MMG CLOSING CONDITIONS                                                      

 MMG's obligation to consummate the Proposed Transaction is subject to the
satisfaction or waiver of certain conditions, including the following:          

    1.  P&F shall have performed each of its obligations under the Stock
  Purchase Agreement, the representations and warranties of P&F contained in
the Stock Purchase Agreement shall be true and correct at and as of the 
 Closing Date except for breaches that could not reasonably be expected to
    result in a material adverse effect and MMG shall have received an officer's
certificate from P&F to that effect;                                    

  2.  All required consents or approvals to be obtained by P&F under
  applicable law or under certain specified contracts by virtue of the Stock
   Purchase Agreement or the transactions contemplated thereby shall have been
obtained;                                                               

       3.  The transactions contemplated by the Stock Purchase Agreement shall
not violate any applicable law and no injunction, order, decree or other
legal restraint shall be in effect which restrains or prohibits the     
consummation of the Proposed Transaction or which imposes materially    
burdensome conditions on MMG or its Affiliates;                         

        4.  MMG shall have received a legal opinion from Gibson, Dunn & Crutcher
    LLP, in form and substance reasonably satisfactory to MMG, which MMG expects
 to include customary and standard terms concerning corporate law matters;

5.  MMG shall have obtained the approval of the MMG Stockholders
 required to be obtained by MMG by virtue of the execution and delivery of
the Stock Purchase Agreement and the consummation of the transactions   
contemplated thereby;                                                   

       6.  MMG shall have been released of all obligations as guarantor of the
Orion Lease; and                                                        

        7.  MMG and its affiliates shall have been released from all obligations
thereof in connection with the Orion Credit Facility.                   

TERMINATION                                                                 

 The Stock Purchase Agreement may be terminated (subject to a break-up fee
under certain circumstances) at any time prior to the Closing Date (whether     
before or after approval by the MMG Stockholders):                              

1.  by mutual written agreement of the parties;                 

       2.  by either MMG or P&F, if a breach of any representation or warranty
has occurred that would cause a closing condition of either MMG or P&F, 
 respectively, to be unsatisfied (subject to a 15 day notice period in the
    case of a breach that is not capable of being cured on or before the Closing
Date);                                                                  

       3.  by either MMG or P&F, if either or MMG or any Entertainment Company
or P&F, as the case may be, fails to perform any of their respective    
   obligations under the Stock Purchase Agreement and if the aggregate of such
failures is material (subject to a 15 day notice period in the case of a
  failure that is not capable of being cured on or before the Closing Date);

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        4.  by MMG or P&F, if the Proposed Transaction is not consummated before
   September 30, 1997, unless the party wishing to terminate on such date, due
  to its material failure to perform under the Stock Purchase Agreement, was
the cause of the failure to consummate the Proposed Transaction;        

    5.  by any party thereto, if any Federal, state or foreign law would
   make the Proposed Transaction illegal or if any order, judgment, injunction
    or decree shall have been entered enjoining the consummation of the Proposed
   Transaction and such order or such other action shall have become final and
non-appealable;                                                         

        6.  by or MMG or P&F, if MMG has convened a MMG Stockholder's meeting to
  vote upon the Stock Purchase Agreement and the proper consent and approval
is not obtained;                                                        

     7.  by MMG, if the Proposed Transaction has been submitted to the MMG
   Stockholders and the DLJ Fairness Opinion has been withdrawn (either before
or after such meeting) or if MMG's Board of Directors has withdrawn,    
  modified or amended in any material respect its approval or recommendation
    of the Stock Purchase Agreement or the Proposed Transaction and MMG receives
 a legal opinion that submission of this Agreement to the MMG Stockholders
would be unlawful under Delaware law; or                                

     8.  by MMG, if at any time prior to the MMG Stockholder's approval of
 the Stock Purchase Agreement, MMG's Board of Directors determines in good
  faith (on the basis of counsel's advice) that the approval and adoption of
the Stock Purchase Agreement and the Proposed Transaction would be      
inconsistent with MMG's Board of Directors' fiduciary duties under      
applicable law.                                                         

EXPENSES                                                                    

The Stock Purchase Agreement provides that each party will bear their   
respective expenses incurred in connection with the preparation, execution and  
performance of the Stock Purchase Agreement and the transactions contemplated   
thereby.                                                                        

BREAK-UP FEE                                                                

MMG will pay to P&F a $30 million break-up fee, if the Stock Purchase   
Agreement is terminated (i) by MMG because the DLJ Fairness Opinion has been    
withdrawn or materially modified; (ii) by MMG because MMG's Board of Directors  
shall have withdrawn or materially modified its approval or recommendation with 
respect to the Stock Purchase Agreement; (iii) by MMG, prior to obtaining the   
MMG's Stockholders' approval of the Stock Purchase Agreement; (iv) by MMG if    
MMG's Board of Directors determines that the approval and adoption of the Stock 
Purchase Agreement is inconsistent with MMG's Board of Directors' fiduciary     
duties; (v) by MMG or P&F if prior to the Annual Meeting (A) MMG's Board of     
Directors withdraws or materially modifies, or resolves to withdraw or          
materially modify, its approval or recommendation of the Stock Purchase         
Agreement, (B) MMG's Board of Directors recommends acceptance, or resolves to   
recommend acceptance, of an alternative proposal for the sale of the stock or of
any substantial part of the assets of any Entertainment Company (other than     
certain acquisitions of equity of MMG) (each, an "Alternative Proposal") or (C) 
MMG or any of its affiliates shall have entered into an agreement providing for 
an Alternative Proposal; (vi) by MMG or P&F if (A) prior to the Annual Meeting  
an Alternative Proposal shall become publicly known or the DLJ Fairness Opinion 
is withdrawn or materially modified, (B) MMG's Board of Directors has not       
withdrawn or materially modified its recommendation with respect to the Stock   
Purchase Agreement, MMG's Board of Directors shall not have recommended         
acceptance of an Alternative Proposal, nor resolved to do so, and neither MMG   
nor any of its Affiliates shall have entered into an agreement for an           
Alternative Proposal with a party other than P&F, nor resolved to do so; and (C)
during the term of the Stock Purchase Agreement, or within one year after its   
termination, MMG's Board of Directors recommends an Alternative Proposal with a 
party other than P&F or MMG or any of its affiliates recommends or enters into  
an Alternative Proposal with a party other than P&F in which the purchase price 
of the Shares or the portion allocable                                          

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thereto, including an adjustment for assets transferred to the Entertainment    
Companies is higher than the Purchase Price set forth in the Stock Purchase     
Agreement. The failure of MMG's Stockholders to approve the Proposed Transaction
at the Annual Meeting will not in itself trigger MMG's obligation to pay the $30
million break-up fee.                                                           

MMG agrees to reimburse P&F and its affiliates for actual out-of-pocket 
expenses, not to exceed $10 million, if the Stock Purchase Agreement is         
terminated for any of the reasons listed above; such reimbursed expenses will be
deducted from the $30 million break-up fee otherwise due.                       

Any payment required to be made pursuant to the foregoing shall be made 
either at the time of termination of the Stock Purchase Agreement or on the next
business day thereafter, each as specified in the Stock Purchase Agreement.     

  CONDUCT OF BUSINESS OF THE ENTERTAINMENT COMPANIES PRIOR TO THE CLOSING OF THE
PROPOSED TRANSACTION                                                        

The Stock Purchase Agreement provides that each of the Entertainment    
Companies shall carry on its business operations in the ordinary course of      
business consistent with past practice, and that MMG and Orion will (i) cause   
each Entertainment Company to maintain its assets; (ii) cause each Entertainment
Company to comply with all applicable laws; (iii) file all required tax returns;
(iv) use reasonable commercial efforts to obtain required consents; (v) cause   
each Entertainment Company to maintain all permits; (vi) promptly notify P&F of 
(a) any facts or circumstances likely to have a material adverse effect, (b) any
proceeding commenced against MMG or any Entertainment Company or (c) any breach 
by MMG of any representation, warranty, covenant or agreement contained in the  
Stock Purchase Agreement; and (vii) continue to make expenditures in accordance 
with the budgets for all films in progress.                                     

   In addition, until the Closing Date, without P&F's consent, neither MMG nor
Orion will permit any Entertainment Company to (i) purchase, acquire, license,  
sell or dispose of any assets other than in the ordinary course of business     
consistent with past practice; (ii) make or commit to make any expenditures of  
amounts in excess of the budgeted expenditures for any film in progress; (iii)  
repay or accelerate any liabilities or the rendering of services by any         
Entertainment Company outside the ordinary course of business; (iv) amend,      
modify or terminate any material contracts; (v) take any action materially      
impairing any of its rights (other than in the ordinary course); (vi) make or   
commit to make any capital expenditure (other than certain scheduled capital    
expenditures) exceeding $250,000; (vii) enter into any material contract; (viii)
create, incur or guarantee any additional debt in excess of $50,000 (other than 
pursuant to the Orion Credit Facility or a negative pick-up loan with the Union 
Bank of California); (ix) increase the compensation payable to any director,    
officer or employee (other than in the ordinary course of business), or pay any 
pension, retirement, bonus or incentive benefits or enter into any employment   
agreements; (x) change its accounting methods; (xi) declare or pay any dividends
or make any distributions; (xii) amend its charter or by-laws; (xiii) organize  
any new subsidiary or acquire equity securities of any corporation or business  
entity; (xiv) pay or discharge any obligation (a) not reserved against in the   
Company's 1996 balance sheet or not made in the ordinary course of business, (b)
to any Entertainment Company of MMG or any of MMG's non-Entertainment Company   
affiliates or (c) owed to MMG or any of MMG's non-Entertainment Company         
affiliates by any Entertainment Company; (xv) prepay any indebtedness (other    
than payments of revolving loans under the Orion Credit Facility); (xvi) write  
down or write-off any inventory or accounts receivable; (xvii) allow any        
intellectual property right (not material to the business of the Entertainment  
Company) to lapse or be disposed of; or (xviii) merge or consolidate with or    
acquire control of any other corporation. In order to induce the employees of   
the Entertainment Companies not to resign their positions, Orion has agreed to  
pay each employee the greater of (x) six months of such employee's base salary  
or (y) their existing severance benefits if their employment is terminated in   
connection with the Proposed Transaction. P&F has agreed to indemnify the       
Company for all such expenses in the event the Proposed Transaction is not      
consummated.                                                                    

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AGREEMENT NOT TO SOLICIT OTHER OFFERS                                       

  Neither MMG nor any of its subsidiaries shall solicit, initiate, encourage
(including by way of furnishing information) or take any other action to        
facilitate, any inquiry or the making of any proposal which constitutes, or may 
reasonably be expected to lead to an Alternative Proposal or agree to or endorse
any Alternative Proposal or propose, enter into or participate in any           
discussions or negotiations regarding any of the foregoing unless MMG's Board of
Directors is required to consider such Alternative Proposal as a result of its  
fiduciary obligations (upon advice of legal counsel) and in such case (i) MMG   
must notify P&F of such Alternative Proposal within 48 hours of receipt thereof 
and (ii) MMG may engage in discussions with such third party as long as such    
offer is in writing, contains terms superior to the Proposed Transaction and    
demonstrates required financing is in place.                                    

RIGHT OF FIRST NEGOTIATION                                                  

  For five years following the consummation of the Proposed Transaction, MMG
has a right of first negotiation to obtain from P&F the right to distribute by  
wired or wireless cable on the Communications Group's systems in 9 territories, 
all films owned by P&F and any of its subsidiaries (including the Entertainment 
Companies), all library films and all films produced after the date of the Stock
Purchase Agreement by P&F or any of its subsidiaries including, without         
limitation, the Entertainment Companies, to the extent that P&F owns such rights
in such specified territories and subject to any existing licenses. If P&F      
elects to dispose of any distribution rights covered by the right of first      
negotiation to any third party, P&F and MMG must negotiate in good faith for a  
period of 15 days with respect to the terms under which the distribution rights 
may be conveyed to MMG. If the parties are unable to reach an agreement within  
15 days with respect to the conveyance of the distribution rights to MMG, P&F is
free to dispose of the distribution rights without any further obligation to    
MMG.                                                                            

INDEMNIFICATION; LIMITATION ON DAMAGES                                      

    MMG will indemnify P&F for damages incurred as a result of any (i) breach of
or failure to perform any representation, warranty, covenant, and/or agreement  
of MMG contained in the Stock Purchase Agreement; provided, that no             
indemnification shall be required unless and until the aggregate amount of the  
damages so incurred exceed $15 million (and only to the extent of such excess,  
except that such limit shall not apply to certain specified types of claims)    
(with a maximum amount for such indemnification equal to the Purchase Price);   
(ii) violation or infringement of any material applicable law, but only to the  
extent such violation or infringement occurs prior to the Closing Date; and     
(iii) liability arising out of or in connection with any existing shareholder   
litigation. P&F will indemnify MMG and its affiliates for damages incurred as a 
result of (a) any breach of or failure to perform any representation, warranty, 
covenant, and/or agreement of P&F contained in the Stock Purchase Agreement and 
(b) P&F's operation of the Entertainment Companies or ownership of the Shares   
after the Closing Date. In addition, in any action brought by P&F against MMG   
for a breach of any representation of warranty (other than certain specified    
representations), MMG shall only be liable to the extent such damages exceed $15
million.                                                                        

ACCOUNTING TREATMENT FOR THE PROPOSED TRANSACTION                               

The Proposed Transaction will be accounted for as a sale of the         
Entertainment Companies.                                                        

DISSENTERS' RIGHTS                                                              

MMG Stockholders are not entitled to dissenter's rights of appraisal or 
other dissenter's rights under Delaware law with respect to the Proposed        
Transaction or any other transactions contemplated by the Stock Purchase        
Agreement.                                                                      

REGULATORY FILINGS AND APPROVALS                                                

Pursuant to the Stock Purchase Agreement, the parties have made the     
appropriate filings required under the Hart-Scott-Rodino Act in connection with 
the transactions contemplated by the Stock Purchase Agreement and the           
consummation of the Proposed Transaction is subject to the expiration or early  
termination of the waiting period prescribed under such Act. The applicable     
waiting period under the Hart-Scott-Rodino Act expired on June 12, 1997.        

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PRO FORMA CONSOLIDATED CONDENSED FINANCIAL
INFORMATION OF THE COMPANY

   The following unaudited Pro Forma Balance Sheet of MMG as of March 31, 1997
and unaudited Pro Forma Statement of Operations for the three months ended March
31, 1997 and year ended December 31, 1996 illustrate the effect of the sale of  
the Entertainment Group, exclusive of Landmark and the repayment of the Orion   
Credit Facility and its other long term indebtedness and the 6 1/2% Convertible 
Debentures, 9 1/2% Debentures and 10% Debentures. In addition, the Pro Forma    
Statement of Operations for the year ended December 31, 1996 reflects the       
consolidation of Landmark and Snapper at the beginning of the period presented. 
The unaudited Pro Forma Balance Sheet assumes that the Pro Forma Transactions   
occurred on March 31, 1997 and the Unaudited Pro Forma Combining Statement of   
Operations assumes that the foregoing transactions occurred at the beginning of 
the period presented.                                                           

  The unaudited Pro Forma Combining Financial Statements are not necessarily
indicative of either future results of operations or results that might have    
been achieved if the foregoing transactions had been consummated as of the      
indicated dates. The audited Pro Forma Combining Financial Statements should be 
read in conjunction with the consolidated financial statements and the related  
notes thereto of the Company and "Management's Discussion and Analysis of       
Financial Condition and Results of Operations" contained in the Company's       
Quarterly Report on Form 10-Q for the quarter ended March 31, 1997 and Annual   
Report on Form 10-K, as amended, for the year ended December 31, 1996, each of  
which is contained elsewhere in this Proxy Statement.                           

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METROMEDIA INTERNATIONAL GROUP, INC.

UNAUDITED PRO FORMA BALANCE SHEET 

(IN THOUSANDS)

                                                        [Enlarge/Download Table]

                                                                           MARCH 31, 1997                       
                                                      --------------------------------------------------------- 
                                                                                                                
                                                                                     PRO FORMA                  
                                                                                 SALE TRANSACTION               
                                                                                        AND                     
                                                                                   REPAYMENT OF                 
                                                                  METROMEDIA          CERTAIN                   
                                                                 ENTERTAINMENT  ENTERTAINMENT GROUP             
                                                                     GROUP         AND MMG DEBT                 
                                                      HISTORICAL   PRO FORMA        ADJUSTMENTS      PRO FORMA  
                                                      ---------  -------------  -------------------  ---------- 
Cash and cash equivalents............................ $  35,142   $     2,620       $   573,000(1)   $  189,881 
                                                                                       (273,690)(1)             
                                                                                         (2,000)(1)             
                                                                                       (139,951)(2)             
Accounts receivable..................................    80,676        24,618           --               56,058 
Inventories..........................................    59,457       --                --               59,457 
Film inventories.....................................    67,045        67,045           --               --     
Other current assets.................................     8,639         3,446           --                5,193 
                                                      ---------  -------------       ----------      ---------- 
Current assets.......................................   250,959        97,729           157,359         310,589 
Film inventories.....................................   194,029       194,029           --               --     
Property and equipment, net..........................    73,865         3,115           --               70,750 
Intangibles..........................................   323,081       108,400           --              214,681 
Other assets.........................................   156,844        24,506           --              132,338 
                                                      ---------  -------------       ----------      ---------- 
  Total assets....................................... $ 998,778   $   427,779       $   157,359      $  728,358 
                                                      ---------  -------------       ----------      ---------- 
                                                      ---------  -------------       ----------      ---------- 
Accounts payable and accrued expenses................ $ 141,171   $    27,743       $   --           $  113,428 
Short-term debt......................................    41,327        38,368           (38,368)(1)       2,412 
                                                                                           (547)(2)             
Other current liabilities............................    62,238        62,238           --               --     
                                                      ---------  -------------       ----------      ---------- 
Current liabilities..................................   244,736       128,349           (38,915)        115,840 
Deferred revenues....................................    48,008        48,008           --               --     
Long-term debt.......................................   421,202       235,322          (235,322)(1)      61,125 
                                                                                       (124,755)(2)             
Other liabilities....................................    14,876         5,049           --                9,827 
Due to Stockholder...................................    --            84,903           (84,903)(1)      --     
                                                      ---------  -------------       ----------      ---------- 
  Total liabilities..................................   728,822       501,631          (483,895)        186,792 
                                                      ---------  -------------       ----------      ---------- 
                                                      ---------  -------------       ----------      ---------- 

Minority interest....................................    41,142       --                --               41,142 
Common stock.........................................    66,159       --                --               66,159 
Paid-in surplus......................................   994,665       314,610          (314,610)(1)     994,665 
Other................................................    (6,403)      --                  2,381(9)       (4,022)
Accumulated deficit..................................  (825,607)     (388,462)          388,462(1)     (556,378)
                                                                                        286,259(1)              
                                                                                        (14,649)(2)             
                                                                                         (2,381)(9)             
                                                      ---------  -------------       ----------      ---------- 
Total stockholders' equity...........................   228,814       (73,852)          345,462         500,424 
                                                      ---------  -------------       ----------      ---------- 
                                                      ---------  -------------       ----------      ---------- 
Total liabilities and stockholders' equity........... $ 998,778   $   427,779       $  (138,433)     $  728,358 
                                                      ---------  -------------       ----------      ---------- 
                                                      ---------  -------------       ----------      ---------- 

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METROMEDIA INTERNATIONAL GROUP, INC.

UNAUDITED METROMEDIA ENTERTAINMENT GROUP PRO FORMA BALANCE SHEET

(IN THOUSANDS)

                                                        [Enlarge/Download Table]

                                                                               MARCH 31, 1997                    
                                                            -----------------------------------------------------
                                                                                                                 
                                                                METROMEDIA                        METROMEDIA     
                                                            ENTERTAINMENT GROUP   LANDMARK    ENTERTAINMENT GROUP
                                                                HISTORICAL       HISTORICAL        PRO FORMA     
                                                            -------------------  -----------  -------------------
Cash and cash equivalents..................................      $   2,620        $  --            $   2,620     
Accounts receivable........................................         24,864              246           24,618     
Film inventories...........................................         67,045           --               67,045     
Other current assets.......................................          4,183              737            3,446     
                                                                  --------       -----------        --------     
Current assets.............................................         98,712              983           97,729     

Film inventories...........................................        194,029           --              194,029     
Property and equipment, net................................         37,994           34,879            3,115     
Intangibles................................................        130,788           22,388          108,400     
Other assets...............................................         25,002              496           24,506     
                                                                  --------       -----------        --------     
Total assets...............................................      $ 486,525        $  58,746        $ 427,779     
                                                                  --------       -----------        --------     
                                                                  --------       -----------        --------     

Accounts payable and accrued expenses......................         33,146            5,403           27,743     
Short-term debt............................................         40,274            1,906           38,368     
Other current liabilities..................................         62,238           --               62,238     
                                                                  --------       -----------        --------     
Current liabilities........................................        135,658            7,309          128,349     

Deferred revenues..........................................         48,008           --               48,008     
Long-term debt.............................................        242,391            7,069          235,322     
Due to Stockholder.........................................         84,903           --               84,903     
Other liabilities..........................................         11,394            6,345            5,049     
                                                                  --------       -----------        --------     

Total liabilities..........................................        522,354           20,723          501,631     
                                                                  --------       -----------        --------     

Stockholders equity (deficit)..............................        (35,829)          38,023          (73,852)    
                                                                  --------       -----------        --------     

Total liabilities and stockholders' equity.................      $ 486,525        $  58,746        $ 427,779     
                                                                  --------       -----------        --------     
                                                                  --------       -----------        --------     

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METROMEDIA INTERNATIONAL GROUP, INC.
UNAUDITED PRO FORMA COMBINING STATEMENT OF OPERATIONS 
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

                                                        [Enlarge/Download Table]

                                                             THREE MONTHS ENDED MARCH 31, 1997                      
                                        ----------------------------------------------------------------------------
                                                                                                                    
                                                                                        PRO FORMA                   
                                                                                   SALE TRANSACTION AND             
                                                      METROMEDIA                   REPAYMENT OF CERTAIN             
                                                    ENTERTAINMENT                  ENTERTAINMENT GROUP     COMPANY  
                                         COMPANY        GROUP         LANDMARK         AND MMG DEBT       PRO FORMA 
                                        HISTORICAL    HISTORICAL     HISTORICAL        ADJUSTMENTS       AS ADJUSTED
                                        ----------  --------------  -------------  --------------------  -----------


                                                    (UNAUDITED)(6)  (UNAUDITED)(7)                                  
                                                                                                                    
Revenues............................... $  103,418    $   44,443      $  17,023         $                 $  75,998 
Cost and expenses:                                                                                                  
  Cost of rentals and operating                                                                                     
    expenses...........................    (75,284)      (37,289)       (13,070)            --              (51,065)
  Selling, general and administrative..    (35,335)       (8,050)        (1,211)            (2,381)(9)      (30,877)
  Depreciation and amortization........     (6,411)       (2,552)        (1,177)                             (5,036)
                                        ----------       -------    -------------          -------       -----------
Operating income (loss)................    (13,612)       (3,448)         1,565             (2,381)         (10,980)
Interest expense.......................    (10,736)       (5,144)          (215)             3,466(3)        (2,341)
Interest income........................      2,746            39         --                 --                2,707 
                                        ----------       -------    -------------          -------       -----------
Income (loss) before provision for                                                                                  
  income taxes and equity in losses in                                                                              
  joint ventures.......................    (21,602)       (8,553)         1,350              1,085          (10,614)
Provision for income taxes.............       (298)         (200)        --                                     (98)
Equity in losses of joint ventures.....     (1,598)       --             --                 --               (1,598)
Minority interest......................      1,240        --             --                 --                1,240 
Income (loss) from continuing                                                                                       
  operations........................... $  (22,258)   $   (8,753)         1,350         $    1,085          (11,070)
                                        ----------       -------    -------------                        -----------
Number of shares issued and                                                                                         
  outstanding..........................     66,155       n/a             n/a                                 66,155 
                                        ----------       -------    -------------                        -----------
Loss per share......................... $    (0.34)      n/a             n/a                              $   (0.17)
                                        ----------       -------    -------------                        -----------

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METROMEDIA INTERNATIONAL GROUP, INC.
UNAUDITED PRO FORMA COMBINING STATEMENT OF OPERATIONS 
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

                                                        [Enlarge/Download Table]

                                                      YEAR ENDED DECEMBER 31, 1996                                   
                      --------------------------------------------------------------------------------------------   
                                                                                                                     
                                                                                      PRO FORMA                      
                                                                                SALE TRANSACTION AND                 
                                    METROMEDIA                                  REPAYMENT OF CERTAIN                 
                                   ENTERTAINMENT                                 ENTERTAINMENT GROUP     COMPANY     
                        COMPANY        GROUP        LANDMARK        SNAPPER         AND MMG DEBT        PRO FORMA    
                      HISTORICAL    HISTORICAL     HISTORICAL     HISTORICAL         ADJUSTMENTS       AS ADJUSTED   
                      -----------  -------------  -------------  -------------  ---------------------  -----------   


                                   (UNAUDITED)(6) (UNAUDITED)(7) (UNAUDITED)(5)                                      
                                                                                                                     

Revenues............   $ 201,755     $ 165,164      $  56,501      $ 130,623          $                 $ 223,715    
Cost and expenses:                                                                                                   
  Cost of rentals                                                                                                    
    and operating                                                                                                    
    expenses........    (161,564)     (139,307)       (45,411)      (102,687)            --              (103,044)   
  Selling, general                                                                                                   
    and                                                                                                              
   administrative...     (81,481)      (24,709)        (4,969)       (38,658)            (2,645)(9)      (103,573)   
  Depreciation and                                                                                                   
    amortization....     (13,232)       (5,555)        (4,468)        (6,001)              (697)(4)       (18,843)   
                      -----------  -------------  -------------  -------------          -------        -----------   
Operating income                                                                                                     
  (loss)............     (54,522)       (4,407)         1,653        (16,723)            (3,342)          (68,527)   
Interest expense....     (36,256)      (17,166)        (1,024)        (6,859)            13,924(3)        (13,049)   
Interest income.....       8,838           286         --             --                 --                 8,552    
                      -----------  -------------  -------------  -------------          -------        -----------   
Income (loss) before                                                                                                 
  provision for                                                                                                      
  income taxes and                                                                                                   
  equity in losses                                                                                                   
  in joint                                                                                                           
  ventures..........     (81,940)      (21,287)           629        (23,582)            10,582           (73,024)   
Provision for income                                                                                                 
  taxes.............      (1,414)       (1,000)          (463)        --                    463(8)           (414)   
Equity in losses of                                                                                                  
  joint ventures....     (11,079)       --             --             --                 --               (11,079)   
                      -----------  -------------  -------------  -------------          -------        -----------   
Income (loss) from                                                                                                   
  continuing                                                                                                         
  operations........   $ (94,433)    $ (22,287)           166        (23,582)            11,045           (84,517)   
                      -----------  -------------  -------------  -------------          -------        -----------   
Number of shares                                                                                                     
  issued and                                                                                                         
  outstanding.......      54,293           n/a            n/a            n/a                               56,812(10)
                      -----------  -------------  -------------  -------------                         -----------   
Loss per share......   $   (1.74)          n/a            n/a            n/a                            $   (1.49)   
                      -----------  -------------  -------------  -------------                         -----------   

------------------------------                                                  
(1) Reflects the sale of the Entertainment Group, exclusive of Landmark, the  
   repayment of the Entertainment Group's long term debt and transaction costs
as follows (in thousands):                                              

                                                        [Enlarge/Download Table]
                                                                                                   
Gross sales proceeds.................................................................... $ 573,000 
Repayment of the Entertainment Group's long term debt...................................   273,690 
                                                                                         --------- 
Adjusted sales proceeds.................................................................   299,310 
Due from Metromedia Entertainment Group.................................................   (84,903)
Entertainment Group's net stockholder's equity..........................................    73,852 
Transaction costs.......................................................................    (2,000)
                                                                                         --------- 
Gain from sale.......................................................................... $ 286,259 
                                                                                         --------- 
                                                                                         --------- 

   The Company has made a preliminary calculation of the estimated gain on the
    sale of the Entertainment Group, exclusive of Landmark. However there can be
    no assurance that the actual gain will not differ significantly from the pro
  forma adjustment. The foregoing does not account for any taxes that may be
   payable upon consummation of the Proposed Transaction. The Company does not
believe that the taxes payable as a result of the consummation of the   
 Proposed Transaction will have a material adverse effect on the Company's
results of operations and financial condition.                          

                                         (FOOTNOTES CONTINUED ON FOLLOWING PAGE)

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(2) Reflects the repayment of the Company's 6 1/2% Convertible Debentures,    
    9 1/2% Debentures and 10% Debentures at par value as follows (in thousands):

                                                        [Enlarge/Download Table]
                                                                                                  
6 1/2% Convertible Debentures........................................................... $  75,000
9 1/2% Debentures.......................................................................    59,484
10% Debentures..........................................................................     5,467
                                                                                         ---------
                                                                                           139,951
Debt balance at March 31, 1997..........................................................   125,302
                                                                                         ---------
Extraordinary loss on early extinguishment of debt...................................... $  14,649
                                                                                         ---------
                                                                                         ---------

(3) Reflects elimination of interest expense attributable to the Company's    
6 1/2% Convertible Debentures, 9 1/2% Debentures and 10% Debentures.    

(4) Reflects ten months of amortization of goodwill related to the            
consolidation of Snapper.                                               

(5) Reflects Snapper's results of operations for the period January 1, 1996   
through October 31, 1996.                                               

(6) Reflects the elimination of results of operations of the Entertainment    
Group, including the results of operations of Goldwyn and MPCA for the  
period July 2, 1996 to December 31, 1996.                               

(7) Reflects the results of operations of Landmark (formerly known as the     
Samuel Goldwyn Theatre Group, acquired in July, 1996) for the year ended
December 31, 1996 adjusted for a full year of goodwill amortization.    

(8) Reflects elimination of historical Landmark income tax expense.           

(9) Reflects vesting of restricted stock issued in connection with the MPCA   
acquisition due to the sales transaction.                               

(10) Reflects issuance of stock related to the acquisitions of Goldwyn and MPCA 
as if outstanding for the entire period presented.                      

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SELECTED CONSOLIDATED FINANCIAL DATA

    The following selected consolidated financial data presented below as of and
for the quarters ended March 31, 1997 and March 31, 1996 are derived from the   
unaudited consolidated financial statements of the Company. The selected        
consolidated financial data presented below as of and for the years ended       
December 31, 1996 and December 31, 1995 and as of and for each of the years in  
the three year period ended February 28, 1995 have been derived from financial  
statements audited by KPMG Peat Marwick LLP, independent certified public       
accountants. The unaudited consolidated financial statements as of March 31,    
1997 and March 31, 1996 are included in the Company's Quarterly Report on Form  
10-Q for the quarter ended March 31, 1997 and the consolidated financial        
statements as of December 31, 1996 and December 31, 1995 and for each of the    
years in the two year period ended December 31, 1996 and for the year ended     
February 28, 1995 together with the report of KPMG Peat Marwick LLP, are        
included in the Company's Annual Report on Form 10-K, as amended, for the year  
ended December 31, 1996, each of which are contained elsewhere in this Proxy    
Statement.                                                                      

                                                        [Enlarge/Download Table]

                                          THREE MONTHS ENDED                                                               
                                              MARCH 31,                                                                    
                                        ----------------------        YEAR ENDED                                           
                                                                     DECEMBER 31,            YEARS ENDED FEBRUARY 28,      
                                             (UNAUDITED)        ----------------------  ---------------------------------- 
                                           1997        1996      1996(1)     1995(2)       1995        1994        1993    
                                        ----------  ----------  ----------  ----------  ----------  ----------  ---------- 
                                                                                                                           
                                                              (IN THOUSANDS, EXCEPT PER SHARE DATA)                        

STATEMENT OF OPERATIONS DATA:                                                                                              

    Revenues........................... $  103,418  $   30,805  $  201,755  $  138,970  $  194,789  $  175,713  $  222,318 

    Equity in losses of joint                                                                                              
    ventures...........................     (1,598)     (1,783)    (11,079)     (7,981)     (2,257)       (777)         -- 

    Loss from continuing operations                                                                                        
    before discontinued operations and                                                                                     
    extraordinary item.................    (22,258)    (19,141)    (94,433)    (87,024)    (69,411)   (132,530)    (72,973)

    Net income (loss)..................    (22,258)    (19,141)   (115,243)   (412,976)    (69,411)   (132,530)    250,240 

    Loss per common share from                                                                                             
    continuing operations before                                                                                           
    discontinued operations and                                                                                            
    extraordinary item.................      (0.34)      (0.45)      (1.74)      (3.54)      (3.43)      (7.71)     (19.75)

    Loss before extraordinary item per                                                                                     
    common share.......................      (0.34)      (0.45)      (2.04)     (15.51)      (3.43)      (7.71)     (19.75)

    Net income (loss) per common                                                                                           
    share..............................      (0.34)      (0.45)      (2.12)     (16.83)      (3.43)      (7.71)      67.74 

    Weighted average common shares                                                                                         
    outstanding........................     66,155      42,615      54,293      24,541      20,246      17,188       3,694 

    Dividends per common share.........         --          --          --          --          --          --          -- 

BALANCE SHEET DATA (AT END OF PERIOD):                                                                                     

    Total assets....................... $  998,778  $  567,133  $  944,740  $  599,638  $  391,870  $  520,651  $  704,356 

    Total debt.........................    462,529     304,932     459,059     304,643     237,027     284,500     325,158 

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

(1) The consolidated financial statements for the twelve months ended December  
  31, 1996 include two months (November and December 1996) of the results of
operations of Snapper and the results of operations for Goldwyn and MPCA
since July 2, 1996.                                                     

(2) The consolidated financial statements for the twelve months ended December  
 31, 1995 include operations for Actava and Sterling from November 1, 1995
  and two months for Orion (January and February 1995) that were included in
 the February 28, 1995 consolidated financial statements. The revenues and
net loss for the two month duplicate period are $22.5 million and $11.4 
million, respectively.                                                  

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CERTAIN FEDERAL INCOME TAX CONSEQUENCES 

ELECTION TO TREAT SALE OF THE SHARES AS SALE OF ASSETS                          

   Pursuant to the Stock Purchase Agreement, the Company will join with P&F in
electing under Section 338(g) and Section 338(h)(10) of the Internal Revenue    
Code of 1986, as amended (the "Code"), and any state, local and foreign         
counterparts to treat the sale of all of the Shares as a sale of the assets of  
Orion and the other Entertainment Companies for Federal, state, local and       
foreign income tax purposes. Under Section 338(h)(10) of the Code, and under    
most state and local tax laws, the sale of the Shares by the Company will be    
ignored for tax purposes and treated as if Orion and the other Entertainment    
Companies sold their assets to P&F and then liquidated into the Company in a    
tax-free liquidation. Accordingly, no gain or loss will be recognized by the    
Company upon the sale of the Shares or upon the consummation of the transfer of 
the outstanding capital stock of Landmark (formerly a wholly-owned subsidiary of
Goldwyn) from Orion to the Company or an affiliate thereof. Similarly, no gain  
or loss will be recognized by Goldwyn or Orion upon the transfer of the capital 
stock of Landmark under Section 337 of the Code and under most state and local  
tax laws. As a result of the Proposed Transaction, however, Orion and the other 
Entertainment Companies will recognize gain or loss equal to the difference     
between (i) the portion of the cash received by the Company and the liabilities 
of Orion satisfied or assumed in connection with the sale of the Shares         
allocated to particular assets of the Entertainment Companies and (ii) the tax  
basis with respect to such assets. The Company intends, subject to the          
limitations discussed in the following section, to use net operating loss       
carryforwards to offset any gain so recognized by the Entertainment Companies.  

LIMITATIONS ON LOSS CARRYFORWARDS                                               

In addition to the November 1 Merger, on July 2, 1996, wholly-owned     
subsidiaries of the Company merged with and into Goldwyn and MPCA (the "July 2  
Merger"). For their taxable years ending on or before the November 1 Merger or  
the July 2 Merger, respectively, Orion, Actava, MITI and Sterling and Goldwyn   
and MPCA, respectively, and the subsidiaries included in their respective       
affiliated groups of corporations which filed consolidated Federal income tax   
returns with Orion, Actava, MITI, Sterling, Goldwyn and MPCA as the parent      
corporation (such Orion, Actava, MITI, Sterling, Goldwyn and MPCA affiliated    
groups hereinafter being referred to as the "Orion Group," the "Actava Group,"  
the "MITI Group," the "Sterling Group," the "Goldwyn Group," and the "MPCA      
Group," individually as a "Former Group" and, collectively, the "Former Groups")
reported, or will report net operating loss carryforwards. As a result of       
November 1 Merger and the July 2 Merger, certain limitations apply to the use of
pre-merger net operating loss carryforwards of the Former Groups by the Company 
and its subsidiaries included in the affiliated group of corporations which file
consolidated Federal income tax returns with the Company as the parent          
corporation (the "MMG Group").                                                  

    Under Section 382 of the Code, annual limitations generally apply to the use
of the pre-merger net operating loss carryforwards of the Former Groups by the  
MMG Group. The amount of any such limitation with respect to a Former Group     
would generally be increased by the amount of any recognized "built-in" gains of
corporations which were members of such Former Group. Finally, to the extent    
pre-merger net operating loss carryforwards equal to the annual limitation with 
respect to any Former Group are not used in any year, the unused amount would   
generally be available to be carried forward and used to increase the limitation
with respect to such Former Group in the succeeding year.                       

Under Section 384 of the Code, the pre-merger net operating loss        
carryforwards of a Former Group will also be separately limited to the income   
and gains recognized by corporations which were members of such Former Group.   
Thus, for example, the pre-merger net operating loss carryforwards of the Actava
Group or the MITI Group would not be available under such section to offset any 
"built-in" gains of the corporations which were members of the Orion Group.     

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    Finally, the use of pre-merger net operating loss carryforwards of the Orion
Group, the MITI Group, the Sterling Group, the Goldwyn Group and the MPCA Group 
will also be separately limited by the income and gains recognized by the       
corporations that were members of each of the Orion Group, the MITI Group, the  
Sterling Group, the Goldwyn Group and the MPCA Group, respectively. Under       
proposed Treasury Regulations, such pre-merger net operating loss carryforwards 
of any Former Group would be usable on an aggregate basis to the extent of any  
income and gains recognized by the corporations that were members of such Former
Group on an aggregate basis.                                                    

Notwithstanding these limitations, the Company believes that electing to
treat the sale of the Shares Orion as a sale of assets pursuant to Section      
338(h)(10) of the Code and any state, local and foreign counterparts will       
maximize the use of net operating loss carryforwards by the Company and the     
Entertainment Companies for Federal, state, local and foreign income tax        
purposes. MMG has not completed its calculations of the gain which will be      
recognized as a result of the sale of the Entertainment Companies. While MMG    
estimates that its net operating loss carryforwards will be sufficient to offset
most of any gain so recognized for Federal income tax purposes, MMG currently   
believes that it will be required to pay Federal, state, local and foreign      
taxes. At the present time, however, it is not practicable to accurately        
quantify the amount of taxes that will be payable upon consummation of the      
Proposed Transaction. The Company does not believe that the taxes payable as a  
result of the consummation of the Proposed Transaction will have a material     
adverse effect on the Company's results of operations and financial condition.  

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INFORMATION REGARDING MMG 

BUSINESS OF MMG                                                                 

 MMG is a global communications, entertainment and media company currently
engaged in two strategic businesses, (i) the development and operation of       
communications businesses, including wireless cable television, AM/FM radio,    
paging, cellular telecommunications, international toll calling and trunked     
mobile radio, in Eastern Europe, the republics of the former Soviet Union, the  
PRC and other selected emerging markets, through its Communications Group and   
(ii) the production and worldwide distribution in all media of motion pictures, 
television programming and other filmed entertainment and the exploitation of   
its library of over 2,200 feature film and television titles, through its       
Entertainment Group. If the Proposed Transaction is approved and consummated,   
substantially all of the Entertainment Group's assets will be sold and the      
Company will narrow its strategic focus to operating the Communications Group.  
Following consummation of the Proposed Transaction, the Company will continue to
own and operate Landmark in order to maximize the value of these assets. The    
Company believes that Landmark, which operated 50 theaters with 138 screens at  
December 31, 1996, is the largest exhibitor of specialized motion pictures and  
art films in the United States. The Company also owns two non-core assets,      
Snapper and an interest in RDM. The Company intends to actively manage Snapper  
in order to maximize Snapper's long-term value. The Company is continuing to    
pursue opportunities for a sale of its investment in RDM.                       

THE COMMUNICATIONS GROUP                                                    

The Communications Group was founded in 1990 to take advantage of the   
rapidly growing demand for modern communications services in Eastern Europe, the
republics of the former Soviet Union and in other selected emerging markets and 
launched its first operating system in 1992. At December 31, 1996, the          
Communications Group owned interests in and participated with partners in the   
management of joint ventures that had 29 operational systems, consisting of 9   
wireless cable television systems, 6 AM/FM radio stations, 9 paging systems, 1  
international toll calling service and 4 trunked mobile radio systems. In       
addition, the Communications Group has interests in and participates with       
partners in the management of joint ventures that, as of December 31, 1996, had 
6 pre-operational systems, consisting of 1 wireless cable television system, 1  
paging system, 2 cellular telecommunications systems, 1 trunked mobile radio    
system and 1 company providing sales, financing and service for wireless local  
loop telecommunications equipment to telecommunications operators, each of which
the Company believes will be launched during 1997. The Communications Group     
generally owns 50% or more of the joint ventures in which it invests. The       
Company believes that the Communications Group is poised for significant growth,
as it continues to expand its existing systems' subscriber base, construct and  
launch new systems in areas where it is currently licensed and obtain new       
licenses in other attractive markets. The Company's objective is to establish   
the Communications Group as a major multiple-market provider of modern          
communications services in Eastern Europe, the republics of the former Soviet   
Union, the PRC and other selected emerging markets.                             

 The Communications Group's markets generally have large populations, with
high density and strong economic potential, but lack reliable and efficient     
communications services. The Communications Group believes that most of these   
markets have a growing number of persons who desire and can afford high quality 
communications services. The Communications Group has assembled a management    
team consisting of executives who have significant experience in the            
communications services industry and developing markets. This management team   
believes that the Communications Group's systems can be constructed with        
relatively low capital investments and focuses on markets where the Company can 
provide multiple communications services. The Company believes that the         
establishment of a far-reaching communications infrastructure is crucial to the 
development of the economies of these countries, and such development will, in  
turn, supplement the growth of the Communications Group.                        

    The Communications Group believes that the performance of its joint ventures
has demonstrated that there is demand for its services in its license areas.    
While the Communications Group's operating systems                              

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have experienced significant growth to date, many of the systems are still in   
the early stages of rolling out their services, and, therefore, the             
Communications Group believes it will increase its subscriber and customer bases
as these systems mature. In addition, as one of the first entrants into these   
markets, the Communications Group believes that it has developed a reputation   
for providing quality service and has formed important relationships with local 
entities. As a result, the Company believes it is well positioned to capitalize 
on opportunities to provide additional communications services in its markets as
new licenses are awarded.                                                       

   In addition to its existing projects and licenses, the Communications Group
is exploring a number of investment opportunities in wireless telephony systems 
in certain markets in Eastern Europe, including Romania, the republics of the   
former Soviet Union, including Kazakstan, the PRC and other selected emerging   
markets and has installed test systems in certain of these markets. The         
Communications Group believes that its wireless local loop telephony technology 
will be a high quality and cost effective alternative to the existing, often    
antiquated and overloaded telephone systems in these markets. The Communications
Group also believes that its system has a competitive advantage in these markets
because its equipment can be installed quickly and at a competitive price, as   
compared to alternative wireline providers which often take several years to    
provide telephone service. In addition, unlike certain other existing wireless  
telephony systems in the Communications Group's target markets, the equipment   
the Communications Group uses utilizes digital, high-speed technology, which can
be used for facsimile and data transmission, including Internet access. In      
February 1997, the Communications Group, through Metromedia Asia Corporation, a 
Delaware corporation that is controlled by MITI ("MAC"), acquired Asian American
Telecommunications Corporation ("AAT"), which owns interests in and participates
in the management of two separate joint ventures in the PRC. These joint        
ventures have entered into agreements in the PRC with China United              
Telecommunications Corporation to (i) construct and develop a local telephone   
network for up to 1,000,000 lines in the Sichuan Province, which will utilize   
wireless local loop technology and (ii) construct and develop a wireless GSM    
cellular telecommunications system for up to 50,000 subscribers in the City of  
Ningbo.                                                                         

THE ENTERTAINMENT GROUP                                                     

Currently, the Entertainment Group is one of the largest independent    
producers and distributors of motion picture and television product in the      
United States and one of the few entertainment companies, other than the major  
motion picture studios and their affiliates, that is capable of distributing    
entertainment product in all media worldwide. The Entertainment Group also holds
a valuable library of over 2,200 feature film and television titles. The        
Entertainment Group currently distributes feature films produced or acquired by 
it to domestic theaters and distributes motion pictures and television          
entertainment product in the domestic home video and television markets through 
its in-house distribution divisions and subsidiaries. Through its Orion, Orion  
Classics and Goldwyn labels, the Entertainment Group produces and acquires a    
full range of commercial films with well-defined target audiences.              

    The Entertainment Group also owns Landmark, which management believes is the
leading specialty theater circuit in the United States, consisting of, as of    
December 31, 1996, 50 theaters with a total of 138 screens. After the           
consummation of the Proposed Transaction, Landmark will constitute the sole     
business of the Entertainment Group. The Company intends to actively manage     
Landmark after the consummation of the Proposed Transaction in order to maximize
its value to MMG Stockholders.                                                  

    The Company and its Board of Directors, consistent with their fiduciary duty
to Stockholders, continually evaluates opportunities as they arise to determine 
whether Stockholder value would be maximized by disposing of its assets.        

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS                                 

  The following table sets forth, as of the Record Date, certain information
regarding each person (including any "group" as that term is used in Section    
13(d)(3) of the Exchange Act) known (based solely upon filings with the         
Commission prior to such date pursuant to Sections 13(d) or 13(g) of the        
Exchange Act) to own beneficially (as such term is defined in Rule 13d-3 under  
the Exchange Act) more than 5% of the outstanding Common Stock. In accordance   
with the rules promulgated by the Commission, such ownership includes shares    
currently owned as well as shares which the named person has the right to       
acquire beneficial ownership of within 60 days, including, but not limited to,  
shares which the named person has the right to acquire through the exercise of  
any option, warrant or right, or through the conversion of a security.          
Accordingly, more than one person may be deemed to be a beneficial owner of the 
same securities.                                                                

                                                        [Enlarge/Download Table]

                                                                                 NUMBER OF SHARE OF                  
                                                                                    COMMON STOCK       PERCENTAGE OF 
                                                                                    BENEFICIALLY        OUTSTANDING  
NAME AND ADDRESS OF BENEFICIAL OWNER                                                  OWNED(1)         COMMON STOCK  
------------------------------------------------------------------------------  --------------------  ---------------
                                                                                                                     
John W. Kluge, Stuart Subotnick, Metromedia                                                                          
  Company and                                                                                                        
  Met Telcell.................................................................        17,219,737(2)             26%  
  One Meadowlands Plaza                                                                                              
  East Rutherford, NJ 07073-2137                                                                                     
Dietche & Field Advisers, Inc.................................................         3,160,000              5.02%  
  437 Madison Avenue                                                                                                 
  New York, N.Y. 10022                                                                                               

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

(1) Unless otherwise indicated by footnote, the named persons have sole voting  
   and investment power with respect to the share of Common Stock beneficially
owned.                                                                  

(2) Metromedia is a Delaware general partnership owned and controlled by John W.
 Kluge and Stuart Subotnick, each of whom is a director of MMG. The amount
  set forth in the table above includes 12,415,455 shares owned by Mr. Kluge
    and Mr. Subotnick beneficially through Metromedia Company (7,989,206 shares)
and Met Telcell (4,426,249 shares), and 4,353,057 and 451,225 shares of 
 Common Stock, respectively, owned directly by a trust affiliated with Mr.
  Kluge and by Mr. Subotnick, respectively. The amount also includes options
   to acquire 440,000 shares of Common Stock exercisable within 60 days of the
date hereof.                                                            

 The foregoing information is based on a review, as of the Record Date, by
MMG of statements filed with the Commission under Sections 13(d) and 13(g) of   
the Exchange Act. To the best knowledge of MMG, except as set forth above, no   
person owns beneficially more than 5% of the outstanding Common Stock.          

SECURITIES BENEFICIALLY OWNED BY DIRECTORS AND EXECUTIVE OFFICERS               

  The following table sets forth the beneficial ownership of Common Stock as
of the Record Date with respect to (i) each director and director nominee of    
MMG; (ii) each executive officer named in the                                   

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Summary Compensation Table under "Executive Compensation;" and (iii) all        
directors and executive officers of MMG as a group.                             

                                                        [Enlarge/Download Table]

                                                                                   NUMBER OF SHARES OF                
                                                                                      COMMON STOCK       PERCENTAGE OF
NAME OF BENEFICIAL OWNER                                                          BENEFICIALLY OWNED(1)  COMMON STOCK 
--------------------------------------------------------------------------------  ---------------------  -------------
                                                                                                                      
John P. Imlay, Jr...............................................................       20,000(2)            *         
Clark A. Johnson................................................................       38,000(2)(3)         *         
John W. Kluge...................................................................   16,768,512(4)(5)          25.3%    
Silvia Kessel...................................................................      103,085(6)            *         
Robert A. Maresca...............................................................       30,000(7)            *         
Carl E. Sanders.................................................................       62,097(2)(3)(8)      *         
Richard J. Sherwin..............................................................      912,605(9)              1.4%    
Stuart Subotnick................................................................   12,866,680(5)(10)         19.4%    
Arnold L. Wadler................................................................      115,415(6)            *         
Leonard White...................................................................      100,000(6)            *         
All Directors and Officers as a group (10 persons)..............................   18,600,939                27.5%    

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

*   Holdings do not exceed one percent of the total outstanding shares of Common
Stock.                                                                  

(1) Unless otherwise indicated by footnote, the named individuals have sole     
voting and investment power with respect to the shares of Common Stock  
beneficially owned.                                                     

(2) Includes options to acquire 20,000 shares of Common Stock issued under the  
1996 Stock Plan exercisable within 60 days of the date hereof. The 1996 
Stock Plan was approved by the Company's stockholders at the 1996 Annual
Meeting of Stockholders of the Company.                                 

(3) Includes 10,000 shares subject to purchase within 60 days of the date hereof
under the Company's 1991 Non-Employee Director Stock Option Plan.       

(4) Represents 12,415,455 shares beneficially owned through Metromedia Company  
 and Met Telcell, and 4,353,057 shares of Common Stock owned directly by a
trust affiliated with Mr. Kluge.                                        

(5) Includes options to acquire 220,000 shares of Common Stock exercisable      
within 60 days of the date hereof.                                      

(6) Includes 100,000 options issued under the 1996 Stock Plan, exercisable      
within 60 days of the date hereof.                                      

(7) Includes 30,000 options issued under the 1996 Stock Plan, exercisable within
60 days of the date hereof.                                             

(8) Includes 600 shares subject to purchase by Mr. Sanders within 60 days of the
    date hereof pursuant to the conversion of the $25,000 face amount (less than
    1%) of the Company's 6 1/2% Convertible Debentures beneficially owned by Mr.
 Sanders, which are convertible into Common Stock at a conversion price of
$41 5/8 per share.                                                      

(9) Includes options to purchase 657,917 shares of Common Stock, exercisable    
within 60 days of the date hereof at an exercise price equal to $1.08.  

(10) Represents 12,415,455 shares beneficially owned through Metromedia Company 
and Met Telcell and 451,225 shares owned directly by Mr. Subotnick.     

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DIRECTORS OF MMG                                                                

   The Board of Directors of MMG, which presently consists of nine members, is
divided into three classes. The Class I Directors were elected for a term       
expiring at the annual meeting of stockholders to be held in 1999, the Class II 
Directors were elected for a term expiring at the Annual Meeting, and the Class 
III Directors were elected for a term expiring at the annual meeting of         
stockholders to be held in 1998. Members of each class will hold office until   
their successors are elected and qualified. At each succeeding annual meeting of
the stockholders of MMG, the successors of the class of directors whose terms   
expire at that meeting shall be elected by a plurality vote of all votes cast at
such meeting and will hold office for three-year terms. The Class I Directors,  
whose terms expire at the annual meeting of stockholders to be held in 1999, are
John W. Kluge, Stuart Subotnick and John P. Imlay, Jr. The Class II Directors,  
whose terms expire at the Annual Meeting are Richard J. Sherwin and Leonard     
White. The Class III Directors, whose term expires at the annual meeting of     
stockholders to be held in 2000, are Silvia Kessel, Carl E. Sanders, Arnold L.  
Wadler and Clark A. Johnson.                                                    

For more information regarding each of MMG's directors, including       
biographical information, See "PROPOSAL NO. 2--ELECTION OF DIRECTORS."          

MEETINGS AND CERTAIN COMMITTEES OF THE BOARD                                    

  The Board of Directors held one regular meeting and three special meetings
during 1996. In addition, the Board of Directors took action by unanimous       
written consent one time in 1996. On December 4, 1996, John D. Phillips resigned
as President and Chief Executive Officer and as a Director of the Company. All  
directors attended at least 75% of the aggregate total number of meetings of the
Board of Directors and all committees of the Board of Directors on which they   
served.                                                                         

The Board of Directors has delegated certain functions to the following 
standing committees:                                                            

    THE EXECUTIVE COMMITTEE.  The Executive Committee is authorized to exercise,
to the extent permitted by law, all of the powers of the Board of Directors in  
the management and affairs of the Company. The Executive Committee held thirteen
meetings in 1996. The members of the Executive Committee are Messrs. Kluge and  
Subotnick.                                                                      

  THE AUDIT COMMITTEE.  The Audit Committee is responsible for (a) reviewing
the professional services and independence of MMG's independent auditors and the
scope of the annual external audit recommended by the independent auditors, (b) 
ensuring that the scope of the annual external audit is sufficiently            
comprehensive, (c) reviewing, in consultation with MMG's independent auditors   
and MMG's internal auditors, the plan and results of the annual external audit, 
the adequacy of MMG's internal control systems and the results of MMG's internal
audit and (d) reviewing with management and MMG's independent auditors MMG's    
annual financial statements, financial reporting practices and the results of   
such external audit. The Audit Committee met once during 1996. The current      
members of the Audit Committee are Messrs. Subotnick, Imlay and Johnson.        

  THE COMPENSATION COMMITTEE.  The Compensation Committee's functions are to
review, approve, recommend and report to the Board of Directors on matters      
specifically relating to the compensation of MMG's executive officers and other 
key executives and to administer MMG's stock option plans. The Compensation     
Committee held one meeting during 1996. The current members of the Compensation 
Committee are Messrs. Sanders, Imlay and Johnson.                               

   THE NOMINATING COMMITTEE.  The Nominating Committee's principal function is
to identify candidates and recommend to the Board of Directors nominees for     
membership on the Board of Directors. The Nominating Committee expects normally 
to be able to identify from its own resources the names of qualified nominees,  
but it will accept from stockholders recommendations of individuals to be       
considered as nominees, provided MMG Stockholders follow the procedures         
specified in MMG's By-laws. These                                               

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procedures provide that, in order to nominate an individual to the Board of     
Directors, a MMG Stockholder must provide timely notice of such nomination in   
writing to the Secretary of MMG and a written statement by the candidate of his 
or her willingness to serve. Such notice must include the information required  
to be disclosed in solicitations for proxies for election of directors pursuant 
to Regulation 14A under the Exchange Act, along with the name, record address,  
class and number of shares of Common Stock beneficially owned by the stockholder
giving such notice. To be timely, notice must be received by MMG not less than  
60 days nor more than 90 days prior to the first anniversary of the date of     
MMG's annual meeting for the preceding year; provided, however, that in the     
event the date of such annual meeting of stockholders is advanced by more than  
30 days or delayed by more than 60 days from such anniversary date, such notice 
must be received within 10 days following public disclosure by MMG of the date  
of the annual or special meeting at which directors are to be elected. For      
purposes of this notice requirement, disclosure shall be deemed to be first made
when disclosure of such date of the annual or special meeting of stockholders is
first made in a press release reported by the Dow Jones News Service, Associated
Press or other comparable national news services, or in a document which has    
been publicly filed by MMG with the Commission pursuant to Sections 13, 14 or   
15(d) of the Exchange Act. Any such nominations should be submitted in writing  
to MMG, One Meadowlands Plaza, East Rutherford, New Jersey 07073-2137,          
Attention: Secretary. The Nominating Committee did not hold any formal meetings 
in 1996. The current members of the Nominating Committee are Messrs. Subotnick  
and Wadler and Ms. Kessel.                                                      

COMPENSATION OF DIRECTORS                                                       

During 1996, each director of the Company who was not employed by the   
Company or affiliated with Metromedia Company (the "Non-Employee Directors")    
received a $2,000 monthly retainer plus a separate attendance fee for each      
meeting of the Board of Directors or committee of the Board of Directors in     
which such director participated. During 1996, the attendance fees were $1,200  
for each meeting of the Board of Directors attended by a Non-Employee Director  
in person and $500 for each meeting of the Board of Directors in which a        
Non-Employee Director participated by conference telephone call. Members of     
committees of the Board of Directors are paid $500 for each meeting attended.   

   Prior to December 13, 1995, Non-Employee Directors were entitled to receive
options to purchase shares of Common Stock under the Company's 1991 Non-Employee
Director Stock Option Plan (as amended, the "Director Plan"). Under the Director
Plan, each Non-Employee Director who was a director of the Company on August 3, 
1992 was granted an option to purchase 10,000 shares of Common Stock at an      
exercise price of $11.875, the closing price of the Common Stock on the trading 
day immediately preceding the date of grant. Options granted to these           
Non-Employee Directors became fully vested as to all 10,000 shares upon approval
of certain amendments to the Director Plan at the Company's 1993 Annual Meeting 
of Stockholders.                                                                

The Director Plan further provided that each person who became a        
Non-Employee Director of the Company after August 3, 1992 would receive an      
option to purchase 10,000 shares of Common Stock on the day such director is    
elected as a director, at an exercise price equal to the closing price of the   
Common Stock on the trading day preceding such director's election. Options     
granted to these Non-Employee Directors became fully vested and exercisable as  
to all 10,000 shares on March 31 in the year after the date the Non-Employee    
Director was elected, provided the Company had net income for the year in which 
the Non-Employee Director was elected or earnings equal to or better than       
budgeted results for such year.                                                 

All options granted under the Director Plan had a term of ten years. The
Director Plan had originally been scheduled to terminate on June 27, 2001.      
However, at a meeting of the Board of Directors held on December 13, 1995, the  
Board of Directors terminated the Director Plan. Options outstanding as of      
December 13, 1995 are unaffected by the termination of the Director Plan.       

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On August 29, 1996, the MMG Stockholders adopted the 1996 Stock Plan.   
Pursuant to the 1996 Stock Plan, at a Compensation Committee meeting held on    
January 31, 1996, each director was granted options to purchase 50,000 shares of
Common Stock at an exercise price of $12.75, the closing price of the Common    
Stock on the trading day immediately preceding the date of grant. Subsequent to 
December 31, 1996, all such options were canceled and reissued. See Footnote 2  
of "INFORMATION REGARDING MMG--Option/SAR Grants During the Year Ended December 
31, 1996." On January 31, 1996, 10,000 shares vested, and the remainder of the  
options are scheduled to vest ratably over a four year period beginning January 
31, 1996.                                                                       

EXECUTIVE COMPENSATION                                                          

The following Summary Compensation Table sets forth information on      
compensation awarded to, earned by or paid to the Chief Executive Officer and   
MMG's other most highly compensated executive officers during the fiscal years  
ended December 31, 1996, December 31, 1995 and December 31, 1994 for services   
rendered in all capacities to MMG and its subsidiaries. In addition, the Summary
Compensation Table sets forth similar information for such periods with respect 
to John D. Phillips, who would have been among MMG's four most highly           
compensated executive officers during 1996 but for the fact that he was not     
serving as an executive officer of MMG at the end of 1996. The persons listed in
the table below are referred to as the "Named Executive Officers."              

  SUMMARY COMPENSATION.  The following table sets forth compensation awarded
to, earned by or paid to the Named Executive Officers for services rendered to  
MMG and its subsidiaries during the fiscal year ended December 31, 1996,        
December 31, 1995 and December 31, 1994. During each year, Messrs. Subotnick,   
Wadler, Maresca and Ms. Kessel, each of whom serves as an executive officer of  
the Company, were employed and paid by Metromedia Company. The amounts shown    
below as salary with respect to each of such Named Executive Officers reflect   
the portion of their compensation paid by MMG to Metromedia Company in respect  
of such executive's services to MMG and its subsidiaries, pursuant to the       
Management Agreement (as described below). The compensation expended by the     
Company and paid to Metromedia Company pursuant to the Management Agreement     
includes payment for salary only and does not include any payment relating to   
bonus or other compensation. No other amounts were paid by                      

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MMG to such Named Executive Officers during 1996. During 1996, Mr. Phillips was 
paid directly by MMG.                                                           

                                                        [Enlarge/Download Table]

                                                  ANNUAL COMPENSATION                    LONG TERM COMPENSATION               
                                            -------------------------------  -----------------------------------------------  
                                                                                                                              
                                                                                                     AWARDS                   
                                                                                    OTHER           NUMBER OF                 
                 NAME AND                                                          ANNUAL          SECURITIES     ALL OTHER   
                PRINCIPAL                                                       COMPENSATION       UNDERLYING     COMPENS.    
                 POSITION                     YEAR     SALARY($)  BONUS($)         ($)(1)         STOCK OPTIONS    ($)(2)     
------------------------------------------  ---------  ---------  ---------  -------------------  -------------  -----------  
John D. Phillips..........................       1996  $ 604,454         --                                 0     $ 300,121(5)
Former President and Chief                       1995  $ 624,984  $ 700,000              --                 0     $  15,096   
Executive Officer(1)(3)                          1994   $438,289   $438,289           -- --                 0       $13,336   

Stuart Subotnick..........................       1996  $  55,328(4)        --                              --                 
President and Chief                              1995         --         --          50,000                --                 
Executive Officer (4)                            1994         --         --           -- --                --                 

Silvia Kessel.............................       1996  $ 350,000         --                           250,000            --   
Executive Vice President and                     1995         --         --              --                --            --   
Chief Financial Officer                          1994         --         --           -- --                --            --   

Arnold L. Wadler..........................       1996  $ 350,000         --                           250,000            --   
Executive Vice President, General                1995         --         --              --                --            --   
Counsel and Secretary                            1994         --         --           -- --                --            --   

Robert A. Maresca.........................       1996  $ 200,000         --                            75,000            --   
Senior Vice President and Chief                  1995         --         --              --                --            --   
Accounting Officer                               1994         --         --           -- --                --            --   

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

(1) John D. Phillips served as President and Chief Executive Officer of MMG from
    January 1, 1996 through December 4, 1996, and during such period the Company
   provided perquisites and other personal benefits to Mr. Phillips. The value
of the perquisites and benefits provided Mr. Phillips during 1994, 1995,
 1996 did not exceed the lesser of $50,000 or 10% of such officer's salary
plus annual bonus.                                                      

(2) The amounts in this column include premiums paid by the Company on behalf of
  Mr. Phillips under life insurance policies providing death benefits to the
   designated beneficiaries of the Named Executive Officers, including premium
 payments of (i) $13,336 made by the Company to Mr. Phillips in 1994; (ii)
$15,096 made by the Company to Mr. Phillips in 1995 in lieu of his      
  participation in the life insurance programs maintained by the Company for
its executive officers; and (iii) $15,721 made by the Company to Mr.    
Phillips in 1996.                                                       

(3) The amounts shown for 1994 and 1996 reflect less than a full year of        
    compensation for Mr. Phillips who was employed by the Company from April 19,
1994 through December 4, 1996.                                          

(4) Mr. Subotnick was appointed President and Chief Executive Officer of MMG on 
    December 4, 1996. The amounts shown for Mr. Subotnick reflect the portion of
the payment made by MMG to Metromedia Company for this period.          

(5) Includes payments aggregating $284,400 made by the Company to JDP Aircraft  
during the year ended 1996, a company owned and controlled by John D.   
  Phillips, which payments the Company believes were made on an arm's-length
basis and do not constitute payments of salary and/or bonus to the Named
Executive Officer.                                                      

PENSION PLANS                                                                   

The Company maintains a qualified defined benefit pension plan and a    
nonqualified supplemental pension plan for the benefit of eligible participants,
including certain of the Company's former executive                             

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officers. The Company's nonqualified supplemental pension plan provides benefits
that would otherwise be denied participants by reason of certain limitations    
under the Internal Revenue Code on qualified plan benefits and provides certain 
other supplemental pension benefits to certain of the Company's executive       
officers and highly compensated employees. On December 13, 1995, the Board of   
Directors of the Company amended the pension plan and the supplemental pension  
plan to cease benefit accruals after December 31, 1995. Accordingly, the only   
benefits that will be payable under these plans are those benefits that had     
accrued as of December 31, 1995.                                                

A participant's compensation covered by the Company's pension plan and  
supplemental pension plan is his or her average annual compensation for the five
consecutive calendar plan years during the last ten years of the participant's  
career for which such average is the highest or, in the case of a participant   
who has been employed for less than five full calendar years, the period of his 
or her employment with the Company and its subsidiaries ("covered               
compensation"). A participant's covered compensation generally means the total  
taxable compensation required to be reported on the participant's Form W-2 for  
income tax purposes, except that this amount (excluding bonuses) is annualized  
for periods covering less than a full calendar year. Generally, a participant   
earns retirement benefits at the rate of 2% of such participant's covered       
compensation for the first 20 years of service and 1% for each additional 20    
years of service. Participants become vested in their retirement benefits after 
completing at least five years of service or attaining age 50 or upon retirement
after age 62 with at least one year of service. The estimated years of service  
for each Named Executive Officer as of December 31, 1996 was as follows: Mr.    
Phillips: 2 2/3 years. Based on these provisions and the number of years of     
service completed, the annual vested retirement benefits as of December 31, 1996
were $45,015 for Mr. Phillips. Mr. Phillip's covered compensation for purposes  
of the pension plan differs from compensation reported in the Summary           
Compensation Table (the "Table") in that (i) covered compensation includes      
certain taxable employee benefits not required to be reported in the Table and  
(ii) covered compensation includes all compensation received by the executive   
during the year (regardless of when it was earned), whereas the Table includes  
only compensation earned during the year.                                       

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OPTION/SAR GRANTS DURING THE YEAR ENDED DECEMBER 31, 1996                       

    The following table sets forth individual grants of stock options or limited
stock appreciation rights ("SARs") by MMG pursuant to the 1996 Stock Plan to the
Named Executive Officers during the fiscal year ended December 31, 1996.        

                                                        [Enlarge/Download Table]

                                          SECURITIES                                                                     
                                         OPTIONS/ SARS       % OF TOTAL                                                  
                                             UNDER           GRANTED TO                                                  
                                         OPTIONS/SARS       EMPLOYEES IN      EXERCISE       EXPIRATION      GRANT-DATE  
NAME                                    GRANTED (#)(1)       FISCAL YEAR      PRICE(2)         DATE(3)       VALUATION(4)
-------------------------------------  -----------------  -----------------  -----------  -----------------  ----------- 
                                                                                                                         
Stuart Subotnick.....................          *                  *               *               *               *      
Silvia Kessel........................        250,000                9.6%      $   12.75   January 31, 2006    $1,240,250 
Arnold L. Wadler.....................        250,000                9.6%      $   12.75   January 31, 2006    $1,240,250 
Robert A. Maresca....................         75,000                2.9%      $   12.75   January 31, 2006    $ 368,250  

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

(1) The date of grant for these options was January 31, 1996.                   

(2) The exercise price of the options granted during 1996 is equal to the fair  
   market value of shares of Common Stock on the date of grant of the options.
The exercise price may be paid in cash, or at the discretion of the     
  Compensation Committee, by tendering already owned shares of Common Stock,
    or a combination thereof. On March 26, 1997, the Board of Directors approved
   a cancellation and reissuance of the existing options issued under the 1996
   Stock Plan at a price of $9.3125, the fair market value of the Common Stock
on such date.                                                           

(3) Options expire ten years from date of grant or, in case of retirement or    
    termination of employment, the date three months from such date of cessation
   of employment. Options became 20% exercisable on the date of grant and then
    vest ratably over a four year period. To the extent not already exercisable,
   the options become fully exercisable in the event of a "change of control,"
as defined in the 1996 Stock Plan.                                      

(4) As permitted by the Commission, the Black-Scholes method of option valuation
    has been used to determine grant date present value. The assumptions used in
the Black-Scholes option valuation calculation are (i) estimated future 
annual stock price volatility of 38.951%; (ii) a United States risk-free
  rate of return of 5.228%; and (iii) no future dividend yield. MMG does not
advocate or necessarily agree that the Black-Scholes method or any other
 method permitted by the Commission can properly determine the value of an
    option. However, no gain to the optionees is possible without an increase in
  the stock price. Thus a zero increase or decrease in stock price, compared
to the exercise price, will not produce any gain for the optionee.      

 * Mr. Subotnick was granted 50,000 options in his capacity as a Director of the
Company. During the year ended December 31, 1996, Mr. Subotnick did not 
   receive any stock option grants in his capacity as Chief Executive Officer.
Subsequent to December 31, 1996, Mr. Subotnick and Mr. Kluge each were  
 granted options to purchase 1,000,000 shares of Common Stock, 20% of such
   options vested on the date of grant and an additional 20% will vest on each
annual anniversary thereafter. All such options are exercisable at the  
closing sales price for the Common Stock on the AMEX on the date of the 
grant.                                                                  

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AGGREGATED OPTION AND SAR EXERCISES IN 1996 AND FISCAL YEAR-END OPTION AND SAR  
VALUES                                                                      

The following table sets forth information concerning the exercise of   
options or SARs by the Named Executive Officers during the 1996 fiscal year and 
the number of unexercised options and SARs held by such officers at the end of  
the 1996 fiscal year.                                                           

                                                        [Enlarge/Download Table]

                                                               VALUE REALIZED                                 FISCAL YEAR 
                                                                   (MARKET                                     END VALUE  
                                               SHARES             PRICE AT                                      $9.8750   
                                              ACQUIRED          EXERCISE LESS                                 ----------- 
NAME                                         ON EXERCISE       EXERCISE PRICE)    EXERCISABLE  UNEXERCISABLE  EXERCISABLE 
----------------------------------------  -----------------  -------------------  -----------  -------------  ----------- 
                                                                                                                          
                                                                                                               VALUE OF   
                                                                                                              UNEXERCISED 
                                                                                                                IN THE    
                                                                                                                 MONEY    
                                                                                     NUMBER OF SECURITIES     OPTIONS/SARS
                                                                                    UNDERLYING UNEXERCISED    AT          
                                                                                        OPTIONS/SAR'S         FISCAL YEAR 
                                                                                    AT FISCAL YEAR END(#)       END ($)   
                                                                                  --------------------------  ----------- 
John D. Phillips........................         -0-                 -0-             310,000        40,000    $ 1,050,000 
Stuart Subotnick........................         -0-                 -0-              10,000        40,000        -0-     
Arnold L. Wadler........................         -0-                 -0-              50,000       200,000        -0-     
Silvia Kessel...........................         -0-                 -0-              50,000       200,000        -0-     
Robert A. Maresca.......................         -0-                 -0-              15,000        60,000        -0-     



NAME                                        UNEXERCISABLE                                                                 
----------------------------------------  -----------------                                                               
                                                                                                                          

John D. Phillips........................         -0-                                                                      
Stuart Subotnick........................         -0-                                                                      
Arnold L. Wadler........................         -0-                                                                      
Silvia Kessel...........................         -0-                                                                      
Robert A. Maresca.......................         -0-                                                                      

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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                                  

MMG'S RELATIONSHIP WITH METROMEDIA COMPANY                                  

 The Metromedia Holders are collectively the largest single stockholder of
the Company, owning, as of the Record Date, approximately 26% of the issued and 
outstanding shares of Common Stock. Prior to the November 1 Merger, Metromedia  
and its affiliates were the principal stockholders of Orion and MITI.           

Prior to the November 1 Merger, Orion, MITI and Sterling were party to a
number of material contracts and other arrangements with Metromedia and certain 
affiliates of Metromedia pursuant to which Metromedia and certain of its        
affiliates made loans or provided financing to, or paid obligations on behalf   
of, each of Orion, MITI and Sterling (collectively, the "Metromedia             
Obligations"). In connection with the consummation of the November 1 Merger, the
Metromedia Obligations were refinanced, repaid or converted into equity of the  
Company.                                                                        

 MMG is a party to a number of agreements and arrangements with Metromedia
and its affiliates, the material terms of which are summarized below.           

  ORION CREDIT FACILITY.  On June 27, 1996, Orion and Chase entered into the
Orion Credit Facility, a $300 million facility consisting of a $200 million term
loan and a $100 million revolving credit facility. Orion's obligations under the
Orion Credit Facility are guaranteed on a joint and several basis by all of     
Orion's active subsidiaries. In addition, in order further to induce Chase and  
the other lenders to provide the revolving portion of the Orion Credit Facility,
John W. Kluge and Metromedia each guaranteed the due and punctual payment of all
funds due under the revolving credit loan portion of such credit facility,      
including all related costs and attorneys' fees, up to a maximum amount of the  
lesser of (i) $100 million and (ii) the amount, if any, by which Orion's        
outstanding obligations under the revolver exceed the amount by which the       
borrowing base under the Orion Credit Facility exceeds the term loan portion of 
such credit facility. As of May 31, 1997, Orion owed approximately $94.3 million
under the revolving portion of the Orion Credit Facility, none of which was     
reserved for outstanding letters of credit and all of which will be repaid upon 
consummation of the Proposed Transaction. See "PROPOSAL NO. 1--THE PROPOSED     
TRANSACTION--General." Neither Mr. Kluge nor Metromedia received any            
consideration for guaranteeing Orion's obligations under the Orion Credit       
Facility. Their guarantees were, however, a condition to Chase's agreeing to    
provide the revolving portion of such Facility. In addition, Metromedia has     
guaranteed the payment by Orion to Chase of certain fees payable in connection  
with the execution of the commitment letter with Chemical (the                  
predecessor-in-interest to Chase) for the Orion Credit Facility. All such fees  
were paid by Orion on January 5, 1996. Furthermore, Metromedia guaranteed the   
payment of certain third party accounts receivable owed to Orion so that the    
entire face amount of such accounts could be included in the borrowing base for 
the Orion Credit Facility. Neither Mr. Kluge nor Metromedia received any        
consideration for providing such guarantees. As noted above, in connection with 
the consummation of the Proposed Transaction, all such guarantees will be       
terminated and released. See "PROPOSAL NO. 1-- THE PROPOSED TRANSACTION."       

SNAPPER CREDIT FACILITY.  On November 26, 1996, Snapper entered into a  
credit agreement (the "Snapper Credit Agreement") with AmSouth Bank of Alabama  
("AmSouth"), pursuant to which AmSouth has agreed to make available to Snapper a
revolving line of credit up to $55 million, upon the terms and subject to       
conditions contained in the Snapper Credit Agreement (the "Snapper Revolver")   
for a period ending on January 1, 1999 (the "Snapper Revolver Termination       
Date"). The Snapper Revolver is guaranteed by the Company. At March 31, 1997,   
$51.7 million was outstanding under the Snapper Revolver.                       

    Interest under the Snapper Revolver is payable at Snapper's option at a rate
equal to either (i) prime plus .5% (from November 26, 1996 through May 25, 1997)
or prime plus 1.5% (from May 26, 1997 to the Snapper Revolver Termination Date) 
or (ii) LIBOR (as defined in the Snapper Credit Agreement) plus 2.5% (from      
November 26, 1996 through May 25, 1997) or LIBOR plus 3.5% (from May 26, 1997 to
the                                                                             

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Snapper Revolver Termination Date). The Snapper Credit Agreement is secured by a
first priority security interest in all of Snapper's assets and properties and  
is also entitled to the benefit of a replenishable $1 million cash collateral   
account, which was initially funded by Snapper. Under the Snapper Credit        
Agreement, AmSouth may draw upon amounts in this cash collateral account to     
satisfy any payment defaults by Snapper, and Messrs. Kluge and Subotnick are    
obligated to replenish such account any time amounts are so withdrawn, up to the
entire amount of the Snapper Revolver.                                          

  At December 31, 1996, Snapper was not in compliance with certain financial
covenants under the Snapper Revolver. On April 30, 1997, Snapper and AmSouth    
amended the Snapper Credit Agreement. As part of the amendment to the Snapper   
Credit Agreement, AmSouth waived the covenant defaults as of December 31, 1996. 
The amendment replaces certain existing financial covenants with covenants      
regarding minimum quarterly cash flow and equity requirements (as defined in the
amendment). In addition, on April 30, 1997, Snapper and AmSouth entered into an 
additional a $10 million working credit facility. As additional consideration   
for AmSouth making this new facility available, Snapper will provide AmSouth    
with either (i) the joint and several guarantees of Messrs. Kluge and Subotnick 
on the new facility only; or (ii) an additional $10 million interest-bearing    
deposit made by the Company at AmSouth. This deposit will not be specifically   
pledged to secure the Snapper Revolver or to secure Snapper's obligations       
thereunder, but AmSouth shall have the right to offset against such deposit as  
granted by law and set forth in the Snapper Revolver.                           

    MANAGEMENT AGREEMENT.  The Company is a party to a management agreement with
Metromedia, dated November 1, 1995, as amended on January 1, 1997 (the          
"Management Agreement"), pursuant to which Metromedia provides the Company with 
management services, including legal, insurance, payroll and financial          
accounting systems and cash management, tax and benefit plans. The Management   
Agreement terminates on October 31, 1997, and is automatically renewed for      
successive one year terms unless either party terminates upon 60 days prior     
written notice. The management fee under the Management Agreement was $1.5      
million until December 31, 1996. Pursuant to an amendment dated January 1, 1997,
the management fee under the Management Agreement was increased to $3.25 million
per year, payable monthly at a rate of $270,833.33 per month. The increase is a 
function, in part, of a detailed analysis conducted by Metromedia concerning the
market value of the services provided by Metromedia Company to the Company,     
including the compensation of the Company's executive officers. The Company is  
also obligated to reimburse Metromedia for its out-of-pocket costs and expenses 
incurred and advances paid by Metromedia in connection with the Management      
Agreement. Pursuant to the Management Agreement, the Company has agreed to      
indemnify and hold Metromedia harmless from and against any and all damages,    
liabilities, losses, claims, actions, suits, proceedings, fees, costs or        
expenses (including reasonable attorneys' fees and other costs and expenses     
incident to any suit, proceeding or investigation of any kind) imposed on,      
incurred by or asserted against Metromedia in connection with the Management    
Agreement. In fiscal 1996 and to date in 1997, Metromedia received no money for 
its out-of-pocket costs and expenses or for interest on advances extended by it 
to the Company pursuant to the Management Agreement.                            

   TRADEMARK LICENSE AGREEMENT.  The Company is a party to a license agreement
with Metromedia (the "Metromedia License Agreement"), dated November 1, 1995, as
amended on June 13, 1996, pursuant to which Metromedia has granted the Company a
non-exclusive, non-transferable, non-assignable right and license, without the  
right to grant sublicenses, to use the trade name, trademark and corporate name 
"Metromedia" in the United States and, with respect to MITI, worldwide,         
royalty-free for a term of 10 years. The Metromedia License Agreement can be    
terminated by Metromedia upon one month's prior written notice in the event of  
(i) the expiration or termination of the Management Agreement; (ii) a "change in
control" of the Company (as defined below); or (iii) any of the stock or all or 
substantially all of the assets of any of the subsidiaries of the Company are   
sold or transferred, in which case, the Metromedia License Agreement shall      
terminate with respect to such subsidiary. A "change in control" of the Company 
is defined as (a) a transaction in which a person or "group" (within the meaning
of Section 13(d)(3) of the Exchange Act) not in existence at the time of the    
execution of the Metromedia License Agreement                                   

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becomes the beneficial owner of stock entitling such person or group to exercise
50% or more of the combined voting power of all classes of stock of the Company;
(b) a change in the composition of the Company's Board of Directors whereby a   
majority of the members thereof are not directors serving on the board at the   
time of the Metromedia License Agreement or any person succeeding such director 
who was recommended or elected by such directors; (c) a reorganization, merger  
or consolidation whereby, following the consummation thereof, Metromedia would  
hold less than 10% of the combined voting power of all classes of the Company's 
stock; (d) a sale or other disposition of all or substantially all of the assets
of the Company; or (e) any transaction the result of which would be that the    
Common Stock would not be required to be registered under the Exchange Act and  
the holders of Common Stock would not receive common stock of the survivor of   
the transaction which is required to be registered under the Exchange Act. In   
connection with the consummation of the Proposed Transaction, Metromedia will   
waive any right it may have to terminate the Metromedia License Agreement.      

  In addition, Metromedia has reserved the right to terminate the Metromedia
License Agreement in its entirety immediately upon written notice to the        
Company, if, in Metromedia's sole judgment, the Company's continued use of      
"Metromedia" as a trade name would jeopardize or be detrimental to the goodwill 
and reputation of Metromedia.                                                   

Pursuant to the Metromedia License Agreement, the Company has agreed to 
indemnify and hold Metromedia harmless against any and all losses, claims,      
suits, actions, proceedings, investigations, judgments, deficiencies, damages,  
settlements, liabilities and reasonable legal (and other expenses related       
thereto) arising in connection with the Metromedia License Agreement.           

 IMAGE OUTPUT AGREEMENT.  Mr. Kluge beneficially owns more than 10% of the
common stock of Image Investors Co., a Delaware corporation ("Image Investors").
Image Investors owns approximately 40% of the common stock of Image             
Entertainment, Inc. ("Image"). Orion Home Entertainment Corporation, a          
subsidiary of Orion ("OHEC"), was a party to an output license agreement with   
Image (which terminated on December 31, 1995), pursuant to which OHEC granted to
Image the rights to manufacture, market and sell on laser discs for private     
in-home use certain feature length programs released by Orion on videocassette  
for a period of three years from the date of first release by Image on laserdisc
in consideration of a royalty payment payable with respect to each program.     
Orion, OHEC and Image are currently negotiating the terms of a new output       
agreement. Since December 31, 1996, the parties have been operating as if the   
old output agreement is still in effect. For the year ended December 31, 1996,  
Image paid to Orion approximately $565,404 under the agreement. In addition,    
subsequent to December 31, 1996, Image reached an agreement in principle with   
OHEC pursuant to which Image will manufacture, market and sell certain Orion    
titles for the digital variable disc ("DVD") market for a period of years. Image
will pay Orion a $500,000 advance against royalties payable under the license.  
The agreement is terminable on the first date that two million DVD players have 
been sold in the United States.                                                 

 The Company believes that the terms of each of the transactions described
above were no less favorable to the Company than could have been obtained from  
non-affiliated parties.                                                         

CERTAIN AGREEMENTS REGARDING EMPLOYMENT                                     

   PHILLIPS EMPLOYMENT AGREEMENT. Mr. Phillips and the Company were parties to
an Employment Agreement, dated as of April 19, 1994, as amended on November 1,  
1995 (the "Phillips Employment Agreement"), under which the Company employed Mr.
Phillips as its President and Chief Executive Officer. On December 4, 1996, Mr. 
Phillip's resigned from the Company and the Phillip's Employment Agreement was  
terminated. Pursuant to the Phillips Employment Agreement, Mr. Phillips is      
entitled to receive payment in the amount of his base salary (at an annual rate 
of $625,000 per year) for one year following the termination. He will also      
continue to receive certain benefits, including health, medical and             

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life insurance and an office and secretary designated by the Company and        
clerical assistance during such one year period.                                

In connection with his employment, Mr. Phillips also received from the  
Company an option (the "Phillips Option") to purchase 300,000 shares of Common  
Stock at a price of $6.375 per share. The Phillips Option may be exercised at   
any time through April 18, 2001. Mr. Phillips has the right to transfer the     
Phillips Option in whole or in part at any time. The Company has also agreed to 
register with the Commission any shares purchased upon the exercise of the      
Phillips Option.                                                                

  POST-EMPLOYMENT CONSULTING AGREEMENT--TOD CHMAR.  On December 5, 1996, Mr.
Chmar resigned from the Company and executed a Release of Claims and a          
Post-Employment Consulting Agreement (the ("Consulting Agreement"). Pursuant to 
the Consulting Agreement, Mr. Chmar will receive consulting fees of $235,000    
during the one year consulting term ending December 5, 1997.                    

MISCELLANEOUS.  Mr. Phillips is the sole stockholder of JDP Aircraft II,
Inc., a Georgia corporation ("JDP Aircraft"). On October 21, 1994, the Company  
and JDP Aircraft entered into a lease agreement under which JDP Aircraft        
provides the Company with the use of a Citation Jet owned by JDP Aircraft. The  
lease agreement terminated on December 4, 1996. The Company paid $248,400 to JDP
Aircraft under the lease agreement for services provided during 1996. The       
Company believes that the arrangements with JDP Aircraft were conducted on an   
arm's-length basis.                                                             

 On April 19, 1994, Mr. Phillips was elected President and Chief Executive
Officer of the Company. He was elected to the Board of Directors of the Company 
on the same date. At this time, Renaissance Partners, a company in which Mr.    
Phillips serves as a general partner, purchased 700,000 shares of Common Stock  
from the Company for $4,462,500, at a price of $6.375 per share. This price     
represents the last sale price of the Common Stock on the New York Stock        
Exchange (on which the Common Stock was traded prior to the November 1 Merger)  
on April 11, 1994, the date before the Company announced that it had received an
investment proposal from Mr. Phillips. The Company also entered into a          
Registration Rights Agreement with Renaissance Partners pursuant to which the   
Company agreed to register with the Commission the 700,000 shares of Common     
Stock purchased by Renaissance Partners. Such shares were registered with the   
Commission in November, 1995.                                                   

INDEMNIFICATION AGREEMENTS                                                  

MMG has entered into indemnification agreements (the "Indemnification   
Agreements") with certain officers and directors of MMG. The Indemnification    
Agreements provide for indemnification of such directors and officers to the    
fullest extent authorized or permitted by law. The Indemnification Agreements   
also provide for (i) advancement by MMG of expenses incurred by the director or 
officer in defending certain litigation; (ii) the appointment in certain        
circumstances of an independent legal counsel to determine whether the director 
or officer is entitled to indemnification; and (iii) the continued maintenance  
by MMG of directors' and officers' liability insurance (which currently consists
of $15 million of primary coverage). These Indemnification Agreements were      
approved by the MMG Stockholders at the 1993 Annual Meeting of Stockholders.    

COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT                               

Section 16(a) of the Exchange Act requires MMG's directors and executive
officers, and persons who beneficially own more than 10% of the outstanding     
Common Stock, to file with the Commission and the AMEX initial reports of       
ownership and reports of changes in ownership of the Common Stock. Such         
officers, directors and greater than 10% Stockholders are required by the       
regulations of the Commission to furnish MMG with copies of all reports that    
they file under Section 16(a). To MMG's knowledge, based solely on a review of  
the copies of such reports furnished to MMG and written representations that no 
other reports were required, all Section 16(a) filing requirements applicable to
MMG's officers, directors                                                       

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and greater than 10% beneficial owners were complied with by such persons during
fiscal year ended December 31, 1996.                                            

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION                     

The Compensation Committee of the Board of Directors (the "Compensation 
Committee") consists of Messrs. Sanders, Imlay and Johnson.                     

COMPENSATION COMMITTEE REPORT ON COMPENSATION                                   

 The Compensation Committee is comprised entirely of independent directors
and is responsible for developing and making recommendations to the Board with  
respect to MMG's executive compensation policies.                               

    The following report of the Compensation Committee discusses MMG's executive
compensation policies generally and, specifically, the relationship of MMG's    
performance in 1996 to the compensation of its executive officers:              

With the exception of Mr. Phillips, the Company's executive officers are
employed and paid by Metromedia, and a portion of such compensation is expensed 
by the Company and paid by the Company to Metromedia pursuant to the Management 
Agreement. The amounts paid by the Company to Metromedia for the compensation of
the Company's executive officers consist of compensation only and not any bonus 
or other compensation payments. No additional amounts are paid by the Company to
any of the executive officers employed by Metromedia.                           

In general, the Compensation Committee seeks to link the compensation   
attributable to each executive officer to the performance of MMG and that of the
compensation attributable to each such executive officer. Within these          
parameters, the executive compensation program attempts to provide an overall   
level of executive compensation that is competitive with companies of comparable
size and with similar market and operating characteristics, including those     
included in the Comparison Group (as defined below).                            

   During 1996, the Compensation Committee reviewed total officer compensation
against a market comparison group of approximately 12 companies in the          
communications industry (the "Comparison Group") to assess the current          
competitiveness of the compensation of MMG's executive officers. The            
Compensation Committee considered MMG's executive compensation in view of the   
Company's size, the number of operating units, and the role and responsibilities
of MMG's executive officers. In comparing the compensation of its executives    
with that of executives of companies in the Comparison Group, the Compensation  
Committee considered the competitiveness of the aggregate amount paid to Mr.    
Phillips and the amount expensed by MMG and paid to Metromedia pursuant to the  
Management Agreement.                                                           

  The companies included in the NASDAQ Telecommunications Index for purposes
of analyzing the performance of the Common Stock during 1996 (see "--Performance
Graph" below) are not identical to the 12 companies in the Comparison Group     
whose compensation policies were reviewed by the Compensation Committee in 1996 
in assessing the competitiveness of the base salaries of MMG's executive        
officers. Nevertheless, MMG believes that the cross-section of companies        
included in the NASDAQ Telecommunications Index and the Comparison Group are    
sufficiently similar and provide a reasonable basis for the Compensation        
Committee to develop justified compensation policies and for an investor to     
evaluate the performance of the Common Stock.                                   

  CHIEF EXECUTIVE OFFICER COMPENSATION.  Amounts earned during 1996 by MMG's
former President and Chief Executive Officer, John D. Phillips, and MMG's       
President and Chief Executive Officer, Stuart Subotnick are shown in the Summary
Compensation Table. Mr. Phillips' base salary was established in April 1994, the
time at which he became the CEO, at the same amount earned by his predecessor.  
This amount remained unchanged from February 1991 through December 4, 1996. Mr. 
Phillips' compensation                                                          

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for 1996 consisted of a base salary and the right to participate in certain     
benefit plans generally available to MMG employees, including MMG's health,     
disability and life insurance programs. In addition, Mr. Phillips participated  
in the Company's lifetime defined benefit pension plan and its nonqualified     
supplemental pension. Benefit accruals under these plans ceased at December 31, 
1995. See "INFORMATION REGARDING MMG--Pension Plans."                           

Mr. Subotnick's base salary was established in December 1996 upon the   
resignation of Mr. Phillips. The Company expenses the amount of Mr. Subotnick's 
base salary only and such amounts are included in the payments made by the      
Company to Metromedia under the Management Agreement. Mr. Subotnick's base      
salary was determined by analyzing the compensation of chief executive officers 
in the Comparison Group, along with the amounts previously paid to Mr. Phillips.
The Company believes such analysis is reasonable.                               

 COMPLIANCE WITH INTERNAL REVENUE CODE SECTION 162(M).  One of the factors
the Compensation Committee considers in connection with compensation matters is 
the anticipated tax treatment to the Company and to the executive officers of   
the compensation arrangements. The deductibility of certain types of            
compensation depends upon the timing of an executive officer's vesting in, or   
exercise of, previously granted rights. Moreover, interpretation of, and changes
in, the tax laws and other factors beyond the Compensation Committee's control  
also affect the deductibility of compensation. Accordingly, the Compensation    
Committee will not necessarily limit executive compensation to that deductible  
under Section 162(m) of the Code. The Compensation Committee will consider      
various alternatives to preserving the deductibility of compensation payments   
and benefits to the extent consistent with its other compensation objectives.   

    The foregoing report of the Compensation Committee shall not be deemed to be
incorporated by reference into any filing of MMG under the Securities Act of    
1933, as amended, or the Exchange Act, except to the extent that the Company    
specifically incorporates such information by reference, and shall not otherwise
be deemed filed under such Acts.                                                

                                 Submitted by the Compensation
                               Committee of MMG's Board of
                                  Directors as of March 26, 1996

                      John P. Imlay, Jr.
                    Clark A. Johnson
                Carl Sanders

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PERFORMANCE GRAPH                                                               

    The following graph sets forth MMG's total stockholder return as compared to
the Standard & Poor's 500 Index, the Standard & Poor's Consumer Goods Index (the
"CONSUMER GOODS INDEX") and the NASDAQ Telecommunications Stock Index for the   
five year period from January 1, 1991 through December 31, 1996 (with the       
exception of the Consumer Goods Index for 1996 as that index was not published  
for such period). The total stockholder return assumes $100 invested at the     
beginning of the period in the Common Stock, the Standard & Poor's 500 Index,   
the Consumer Goods Index, and the NASDAQ Telecommunications Index.              

    In 1995, the Company used the Consumer Goods Index for purposes of analyzing
the performance of the Common Stock. As a result of the Company's decision to   
change its business focus to communications, media and entertainment, the       
Compensation Committee has decided to analyze MMG's Common Stock relative to the
NASDAQ Telecommunications Stock Index. The Committee believes that the Consumer 
Goods Index is no longer an appropriate gauge to measure performance.           
Nonetheless, in accordance with the rules and regulations of the Commission, the
Company is required to include the Consumer Goods Index in its comparison for   
1996. Since such index is no longer published, it is not included in this Proxy 
Statement.                                                                      

METROMEDIA INTERNATIONAL GROUP CUMULATIVE TOTAL SHAREHOLDER RETURN          

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC                     

                                                        [Enlarge/Download Table]

                                       1991     1992     1993     1994     1995     1996   
                                                                                           
Metromedia International Group Inc.       $100      $92      $58      $70     $107      $76
S&P 500                                   $100     $108     $118     $120     $165     $203
NASDAQ Telecommunications Stock Index     $100     $123     $189     $158     $207     $212
S&P Consumer Goods Index                  $100     $107     $106     $106     $141      N/A

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INFORMATION REGARDING P&F 

BUSINESS OF P&F                                                                 

    P&F owns all of the outstanding capital stock of MGM, a major motion picture
studio engaged in the production and worldwide distribution of motion pictures  
and television programming. MGM is actively engaged in the worldwide production 
and distribution of entertainment products, including motion pictures,          
television programming, home video, interactive media, music, licensed          
merchandise, a current 1,600-title film library, a 4,500-title home video       
library, and a significant television library. The company's operating units    
include Metro-Goldwyn-Mayer Pictures, United Artists Pictures, MGM Worldwide    
Television, MGM Telecommunications Group, MGM Distribution Co., MGM Home        
Entertainment/Consumer Products, Metro-Goldwyn-Mayer Music and MGM Interactive, 
among others.                                                                   

P&F was incorporated in Delaware in 1996.                               

   The principal executive offices of P&F are located at 2500 Broadway Street,
Fifth Floor, Santa Monica, California 90404, and its telephone number is (310)  
449-3000.                                                                       

P&F SHAREHOLDERS                                                                

 P&F is controlled (directly or indirectly) by two principal stockholders,
Tracinda and Seven. Tracinda is a privately held corporation owned and          
controlled by Mr. Kirk Kerkorian. Seven operates a leading television network in
Australia whose shares are publicly traded on the Australian Stock Exchange     
Limited.                                                                        

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PROPOSAL NO. 2--ELECTION OF DIRECTORS 

The following table sets forth certain information with respect to the  
members of MMG's Board of Directors, including the two incumbent Class II       
Directors (Messrs. Sherwin and White) who have been nominated by the Board of   
Directors for re-election as Class II Directors at the Annual Meeting.          

 The Board of Directors knows of no reason why any of its nominees will be
unable or will refuse to accept election. If any nominee becomes unable or      
refuses to accept election, the Board of Directors will either reduce the number
of directors to be elected or select a substitute nominee. If a substitute      
nominee is selected, proxies will be voted in favor of such nominee.            

    The affirmative vote of the holders of a plurality of shares of Common Stock
present in person or represented by proxy at the Annual Meeting will be required
to elect each of the three Class I Directors to MMG's Board.                    

                                                        [Enlarge/Download Table]

                         NAME, PRINCIPAL OCCUPATION FOR PAST                                     CLASS OF    DIRECTOR  
                         FIVE YEARS AND CERTAIN DIRECTORSHIPS                           AGE     DIRECTORS      SINCE   
                      -----------------------------------------                         ---     ----------  -----------
                                                                                                                       
John P. Imlay, Jr.....................................................................      60  Class I           1993 
Director of the Company since 1993. Served since 1990 as Chairman of Dun & Bradstreet                                  
  Software Services, Inc., an application software company located in Atlanta,                                         
  Georgia. Mr. Imlay is the former Chairman of Management Science America, a mainframe                                 
  applications software company. Management Science America was acquired by Dun &                                      
  Bradstreet Software Services, Inc. in 1990. Mr. Imlay is also a Director of the                                      
  Atlanta Falcons, a National Football League team, and The Gartner Group. Mr. Imlay                                   
  is a member of the Audit Committee and the Compensation Committee.                                                   

John W. Kluge.........................................................................      82  Class I           1995 
Chairman of the Board of Directors of the Company since November 1, 1995. Chairman of                                  
  the Board and a director of Orion since 1992. Chairman and President of Metromedia                                   
  and its predecessor-in-interest, Metromedia, Inc., for over five years. Mr. Kluge is                                 
  also a Director of The Bear Stearns Companies, Inc., Conair Corporation and                                          
  Occidental Petroleum Corporation. Mr. Kluge is Chairman of the Executive Committee.                                  

Stuart Subotnick......................................................................      55  Class I           1995 
President and Chief Executive Officer since December 4, 1996 and Vice Chairman of the                                  
  Board of Directors of the Company since November 1, 1995. Vice Chairman of the Board                                 
  and a director of Orion since 1992. Executive Vice President of Metromedia and its                                   
  predecessor-in-interest, Metromedia, Inc. for over five years. Mr. Subotnick is also                                 
  a Director of Carnival Cruise Lines, Inc., a cruise ship company and RDM. Mr.                                        
  Subotnick is Chairman of the Audit Committee and a member of the Executive and                                       
  Nominating Committees.                                                                                               

Richard J. Sherwin....................................................................      53  Class II          1995 
President of MITI. Mr. Sherwin has served as Co-President and Director of MITI and its                                 
  predecessor companies since October 1990. Prior to that, Mr. Sherwin served as the                                   
  Chief Operating Officer of Graphic Scanning Corp., a paging and wireless                                             
  telecommunications company.                                                                                          

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                         NAME, PRINCIPAL OCCUPATION FOR PAST                                     CLASS OF    DIRECTOR  
                         FIVE YEARS AND CERTAIN DIRECTORSHIPS                           AGE     DIRECTORS      SINCE   
                      -----------------------------------------                         ---     ----------  -----------
                                                                                                                       
Leonard White.........................................................................      58  Class II          1995 
President and Chief Executive Officer of Orion from March 1992 through November 1,                                     
  1995. Interim President and Chief Executive Officer of Orion from March 1992 until                                   
  November 1992. Chairman of the Board and Chief Executive Officer of OHEC from March                                  
  1991 until March 1992. President and Chief Operating Officer of Orion Home Video                                     
  division of Orion from March 1987 until March 1991.                                                                  

Clark A. Johnson......................................................................      65  Class III         1993 
Director of the Company since April 27, 1990. Mr. Johnson has served as Chairman and                                   
  Chief Executive Officer of Pier One Imports, Inc., a specialty retailer of                                           
  decorative home furnishings, since August 1988. Mr. Johnson is also a Director of                                    
  Albertson's, Inc., Anacomp, Inc., Heritage Media Corporation, InterTAN, Inc. and                                     
  Pier One Imports, Inc. Mr. Johnson is a member of the Compensation and Audit                                         
  Committees.                                                                                                          

Silvia Kessel.........................................................................      46  Class III         1995 
Executive Vice President since August 29, 1996 and Senior Vice President, Chief                                        
  Financial Officer and Treasurer of the Company since the November 1, 1995. Executive                                 
  Vice President and a director of Orion since January 1993. Senior Vice President of                                  
  Orion from June 1991 to November 1992. Senior Vice President of Metromedia since                                     
  January 1994. President of Kluge & Company from January 1992 through the present.                                    
  Managing Director of Kluge & Company (and its predecessor) from April 1990 to                                        
  January 1994. Ms. Kessel is also a Director of RDM. Ms. Kessel is a member of the                                    
  Nominating Committee.                                                                                                

Carl E. Sanders.......................................................................      71  Class III         1967 
Engaged in the private practice of law as Chairman of Troutman Sanders, a law firm                                     
  located in Atlanta, Georgia. Director of the Company since 1967, except for a                                        
  one-year period from April 1970 to April 1971. Former Governor of the State of                                       
  Georgia and a Director of Carmike Cinemas, Inc., Norrell Corporation, Healthdyne,                                    
  Inc., and RDM. Mr. Sanders is Chairman of the Compensation Committee.                                                

Arnold L. Wadler......................................................................      53  Class III         1995 
Executive Vice President since August 29, 1996 and Senior Vice President, General                                      
  Counsel and Secretary of the Company since November 1, 1995. Senior Vice President,                                  
  Secretary and General Counsel of Metromedia and its predecessor-in-interest,                                         
  Metromedia, Inc., for over five years. Director of Orion since 1992. Mr. Wadler is                                   
  Chairman of the Nominating Committee.                                                                                

 On December 11 and 12, 1991 (the "Filing Date"), Orion and certain of its
subsidiaries filed voluntary bankruptcy petitions under Chapter 11 of the United
State Bankruptcy Code. The United States Bankruptcy Court for the Southern      
District of New York confirmed Orion's Modified Third Amended Joint Consolidated
Plan of Reorganization (the "Plan") on October 10, 1992 and the Plan was        
consummated on November 5, 1992. Silvia Kessel and Leonard White, current       
Directors of the Company, each served as executive officers of Orion on the     
Filing Date.                                                                    

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PROPOSAL NO. 3--RATIFICATION OF 
THE APPOINTMENT OF INDEPENDENT AUDITORS 

 The Board of Directors of MMG has appointed the firm of KPMG Peat Marwick
LLP, independent auditors, to audit the consolidated financial statements of MMG
and its subsidiaries for the fiscal year ending December 31, 1997, subject to   
ratification by the MMG Stockholders.                                           

  A partner of KPMG Peat Marwick LLP is expected to be present at the Annual
Meeting and to be provided with an opportunity to make a statement if such      
partner desires to do so and to be available to respond to appropriate questions
from stockholders.                                                              

   If the MMG Stockholders do not ratify the appointment KPMG Peat Marwick LLP
as MMG's independent auditors for the forthcoming fiscal year, such appointment 
will be reconsidered by the Audit Committee and the Board of Directors.         

   The affirmative vote of the holders of a majority of shares of Common Stock
present in person or represented by proxy at the Annual Meeting will be required
to approve and adopt Proposal Number 3.                                         

   THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" RATIFICATION
OF THE APPOINTMENT OF KPMG PEAT MARWICK LLP AS THE INDEPENDENT AUDITORS OF MMG'S
CONSOLIDATED FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDING DECEMBER 31, 1997. 

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PROPOSAL NO. 4--STOCKHOLDER PROPOSAL

Alan G. Hevesi, investment adviser and a trustee of the New York City   
Teachers' Retirement System ("NYCTRS"), c/o The City of New York, Office of the 
Comptroller, 1 Centre Street, New York, New York 10007-2341, owner of 15,900    
shares of Common Stock, has submitted the following proposal on behalf of       
NYCTRS:                                                                         

"BE IT RESOLVED, that the shareholders of Metromedia International Group
  request that the Board of Directors amend the certificate of incorporation
to reinstate the rights of the shareholders to take action by written   
consent and to call special meetings".                                  

STATEMENT IN SUPPORT: "The rights of the shareholders to take action by 
written consent and to call special meetings should not be abridged.    

The Company's elimination of these rights, in our opinion, effectively  
  removes important processes by which shareholders can act expeditiously to
protect their investment interests.                                     

   For example, the right of shareholders to act to remove incumbent directors
for egregious conduct should not be limited to the annual meeting. Also,
  shareholders should not be prevented from giving timely consideration to a
bidder's proposal to acquire control of the Company, or a dissident     
shareholder's slate of nominees for election to the Board of Directors, 
because such proposals are required to be presented only at the annual  
meeting."                                                               

   STATEMENT OF THE BOARD OF DIRECTORS: Presently, the Restated Certificate of
Incorporation and By-laws of the Company (collectively, the "Corporate          
Documents") (i) require, among other things, that special meetings of           
Stockholders for any purpose be called by either the Chairman or Vice Chairman  
of the Board of Directors and (ii) do not provide for Stockholder action by     
written consent. If the Company amended the Corporate Documents as proposed, it 
would be allowing its Stockholders to call special meetings and act without a   
meeting whenever, however frequently and for whatever reason such Stockholders  
may desire. For the reasons stated below, the Board of Directors believes that  
the requested amendments to the Corporate Documents are not in the best         
interests of the Company and its Stockholders.                                  

Applicable Delaware law does not grant stockholders of a corporation the
absolute right to call a special meeting or act by written consent, and instead 
permits each individual corporation to determine in its Corporate Documents     
whether stockholders will have such rights. The Board of Directors believes that
the Delaware legislature adopted this approach due to the significant financial 
and administrative burdens that a special meeting or stockholder action by      
consent can impose on a public corporation.                                     

Approximately 7,788 persons and entities are the record and beneficial  
owners of the Common Stock, each of whom, if Proposal No. 4 is approved, would  
be entitled under the proposal to demand a special meeting or institute action  
by written consent. Each such Stockholder would also be entitled to notice of,  
and to receive proxy materials relating to, any special meeting, thereby        
necessitating actual expenditures (legal, printing and postage) in addition to  
those associated with the Company's annual meeting. In addition, the calling of 
a special meeting would necessitate the diversion of corporate officers and     
employees from their other duties in order to prepare for such a meeting. The   
Board of Directors believes that the interest of the Company's Stockholders     
would be better served utilizing these resources to improve its businesses.     
Similarly, the Board of Directors believes that permitting action to be taken by
written consent would create confusion as multiple stockholders would be able to
solicit written consents on various matters and would divert valuable corporate 
resources to this process.                                                      

    In light of the foregoing, the Board of Directors believes that the adoption
of Proposal No. 4 could leave the Company exposed to numerous calls for special 
meetings and stockholder action by consent that may be of little or no benefit  
to Stockholders and which are a significant burden to the Company. Stockholders,
such as the proponent of Proposal No. 4, remain free to make proposals at the   
Company's                                                                       

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annual meeting. The Board of Directors believe that the Chairman and Vice       
Chairman of the Board of Directors are in the best position to determine if a   
special meeting is warranted.                                                   

   FOR THE REASONS STATED ABOVE, THE BOARD OF DIRECTORS BELIEVES THAT PROPOSAL
NO. 4 IS NOT IN THE BEST INTERESTS OF THE COMPANY AND ITS STOCKHOLDERS. 
ACCORDINGLY, THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE
AGAINST PROPOSAL NO. 4.                                                 

Approval by the affirmative vote of the holders of a majority of the    
outstanding shares of Common Stock is required for approval of Proposal No. 4.  

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ANNUAL REPORT; INCORPORATION BY REFERENCE 

 The Company's Annual Report on Form 10-K, as amended, for the fiscal year
ended December 31, 1996 (which includes the Company's audited consolidated      
financial statements) is contained elsewhere in this Proxy Statement. To the    
extent this Proxy Statement has been or will be specifically incorporated by    
reference into any filing by the Company under the Securities Act of 1933, as   
amended, or the Exchange Act, the sections of the Proxy Statement entitled      
"Board of Directors Report on Compensation" and "Performance Graph" shall not be
deemed to be so incorporated unless specifically otherwise provided in any such 
filing.                                                                         

STOCKHOLDER PROPOSALS FOR 1998 ANNUAL MEETING 

Any MMG Stockholder who wishes to present a proposal at the 1998 Annual 
Meeting of Stockholders of MMG, and who wishes to have such proposal included in
MMG's proxy statement for that meeting, must deliver a copy of such proposal to 
MMG at One Meadowlands Plaza, East Rutherford, New Jersey 07073-2137, Attention:
Corporate Secretary, no later than March 12, 1998; PROVIDED, HOWEVER, that if   
the 1998 Annual Meeting of Stockholders is held on a date more than 30 days     
before or after the corresponding date of the 1997 Annual Meeting of            
Stockholders, any Stockholder who wishes to have a proposal included in MMG's   
proxy statement for that meeting must deliver a copy of the proposal to MMG a   
reasonable time before the proxy solicitation is made. MMG reserves the right to
decline to include in MMG's proxy statement any stockholder's proposal which    
does not comply with the rules of the Commission for inclusion therein.         

OTHER BUSINESS

 The Board of Directors does not intend to bring any other business before
the Annual Meeting and it is not aware that anyone else intends to do so. If any
other business comes before the meeting, it is the intention of the persons     
named in the enclosed form of proxy to vote as proxies in accordance with their 
best judgment.                                                                  

PLEASE EXERCISE YOUR RIGHT TO VOTE BY PROMPTLY COMPLETING, SIGNING AND  
RETURNING THE ENCLOSED PROXY FORM. You may later revoke the proxy and, if you   
are able to attend the meeting, you may vote your shares in person.             

                                       By Order of the Board of Directors,

                    Arnold L. Wadler

                             EXECUTIVE VICE PRESIDENT,

                                 GENERAL COUNSEL AND SECRETARY

June 18, 1997                                                                   

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                                                                      APPENDIX A

STOCK PURCHASE AGREEMENT

AMONG 

METROMEDIA INTERNATIONAL GROUP, INC., 

ORION PICTURES CORPORATION

AND 

P&F ACQUISITION CORP. 

DATED AS OF MAY 2, 1997 

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TABLE OF CONTENTS 

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                                                                                                              -----  
                                                                                                                     
ARTICLE I. DEFINITIONS.......................................................................................       1
    1.01.  Definitions.......................................................................................       1
    1.02.  Index of Other Defined Terms......................................................................       9

ARTICLE II. TRANSFER OF ASSETS...............................................................................      11
    2.01.  Sale of Stock.....................................................................................      11
    2.02.  Closing...........................................................................................      11
    2.03.  Purchase Price....................................................................................      11

ARTICLE III. REPRESENTATIONS AND WARRANTIES OF SELLER........................................................      13
    3.01.  Ownership of Stock................................................................................      13
    3.02.  Corporate Existence and Power.....................................................................      13
    3.03.  Corporate Authorization of Seller.................................................................      13
    3.04.  Subsidiaries......................................................................................      13
    3.05.  Entertainment Group...............................................................................      14
    3.06.  Corporate Authorization...........................................................................      14
    3.07.  Governmental Authorization........................................................................      14
    3.08.  Non-Contravention.................................................................................      14
    3.09.  Financial Statements; Undisclosed Liabilities.....................................................      15
    3.10.  Absence of Certain Changes........................................................................      15
    3.11.  Properties; Tangible Assets.......................................................................      17
    3.12.  Affiliates........................................................................................      17
    3.13.  Litigation........................................................................................      18
    3.14.  Contracts.........................................................................................      18
    3.15.  Permits; Required Consents........................................................................      20
    3.16.  Compliance with Applicable Laws...................................................................      20
    3.17.  Employment Agreements; Change in Control; and Employee Benefits...................................      20
    3.18.  Labor and Employment Matters......................................................................      23
    3.19.  Intellectual Property.............................................................................      24
    3.20.  Library Films.....................................................................................      25
    3.21.  Films In Progress.................................................................................      27
    3.22.  Development Projects..............................................................................      30
    3.23.  Advisory Fees.....................................................................................      30
    3.24.  Environmental Compliance..........................................................................      30
    3.25.  Insurance.........................................................................................      31
    3.26.  Tax Matters.......................................................................................      31
    3.27.  SEC Documents.....................................................................................      31
    3.28.  Disclosure........................................................................................      31
    3.29.  Financial Statements of Landmark..................................................................      32
    3.30.  No Contract With Landmark.........................................................................      32
    3.31.  Board Recommendations.............................................................................      32
    3.32.  Bankruptcy........................................................................................      33

ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF BUYER..........................................................      33
    4.01.  Corporate Existence and Power.....................................................................      33
    4.02.  Corporate Authorization...........................................................................      33
    4.03.  Governmental Authorization........................................................................      33
    4.04.  Non-Contravention.................................................................................      34
    4.05.  Advisory Fees.....................................................................................      34

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    4.06.  Litigation........................................................................................      34
    4.07.  Purchase for Investment...........................................................................      34
    4.08.  Ownership of MGM..................................................................................      34

ARTICLE V. COVENANTS OF SELLER AND ORION.....................................................................      34
    5.01.  Conduct of the Business...........................................................................      35
    5.02.  Access to Information.............................................................................      38
    5.03.  Compliance with Terms of Required Governmental Approvals and Required Contractual Consents........      38
    5.04.  Maintenance of Insurance Policies.................................................................      38
    5.05.  Confidentiality...................................................................................      39
    5.06.  Specific Performance..............................................................................      40
    5.07.  Bankruptcy Cases..................................................................................      40
    5.08.  No Solicitations..................................................................................      40
    5.09.  Transfer of Assets................................................................................      41
    5.10.  Use of Trade Names................................................................................      42

ARTICLE VI. COVENANTS OF BUYER...............................................................................      42
    6.01.  Compliance with Terms of Required Governmental Approvals and Required Contractual Consents........      42
    6.02.  Confidentiality...................................................................................      42
    6.03.  Specific Performance..............................................................................      42
    6.04.  Use of Metromedia Name............................................................................      43
    6.05.  Bank Waivers......................................................................................      43

ARTICLE VII. COVENANTS OF ALL PARTIES........................................................................      43
    7.01.  Further Assurances................................................................................      43
    7.02.  Certain Filings...................................................................................      43
    7.03.  Public Announcements..............................................................................      43
    7.04.  Administration of Accounts........................................................................      44
    7.05.  Specific Performance..............................................................................      44
    7.06.  Right of First Negotiation........................................................................      44
    7.07.  Proxy Consent Solicitation........................................................................      44
    7.08.  Refinancing of Debt...............................................................................      45

ARTICLE VIII. CONDITIONS TO CLOSING..........................................................................      46
    8.01.  Conditions to Obligation of Buyer.................................................................      46
    8.02.  Conditions to Obligation of Seller................................................................      47

ARTICLE IX. INDEMNIFICATION..................................................................................      49
    9.01.  Indemnification of Buyer..........................................................................      49
    9.02.  Indemnification of Seller.........................................................................      49
    9.03.  Survival of Representations, Warranties and Covenants.............................................      50
    9.04.  Claims for Indemnification........................................................................      50
    9.05.  Defense of Claims.................................................................................      51
    9.06.  Nature of Payments................................................................................      52
    9.07.  Taxes                                                                                                   52

ARTICLE X. TERMINATION.......................................................................................      52
   10.01.  Grounds for Termination...........................................................................      52
   10.02.  Effect of Termination.............................................................................      54
   10.03.  Commitment Fee....................................................................................      54

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ARTICLE XI. TAX MATTERS......................................................................................      57
   11.01.  Tax Returns and Payments..........................................................................      57
   11.02.  Section 338(h)(10)................................................................................      58
   11.03.  Indemnification...................................................................................      59
   11.04.  Procedures for Indemnification....................................................................      59

ARTICLE XII. MISCELLANEOUS...................................................................................      60
   12.01.  Notices...........................................................................................      60
   12.02.  Amendments; No Waivers............................................................................      62
   12.03.  Construction......................................................................................      62
   12.04.  Expenses..........................................................................................      63
   12.05.  Successors and Assigns............................................................................      63
   12.06.  Governing Law.....................................................................................      63
   12.07.  Counterparts; Effectiveness.......................................................................      63
   12.08.  Entire Agreement..................................................................................      63
   12.09.  Captions..........................................................................................      63
   12.10.  Severability......................................................................................      63
   12.11.  Forum; Attorneys' Fees............................................................................      63
   12.12.  Cumulative Remedies...............................................................................      64
   12.13.  Third Party Beneficiaries.........................................................................      64
   12.14.  Knowledge.........................................................................................      64

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SCHEDULES 

                                                                [Download Table]
                                                                       
Schedule 1.01             Permitted Liens                              
Schedule 1.02             Statement of Assumptions                     
Schedule 3.04             Subsidiaries                                 
Schedule 3.08(c)          Conflicts                                    
Schedule 3.09             Financial Statements; Undisclosed Liabilities
Schedule 3.10(e)          Absence of Certain Changes                   
Schedule 3.10(h)          Distributions                                
Schedule 3.11(a)          Liens                                        
Schedule 3.11(c)          Leases                                       
Schedule 3.11(d)          Real Property Owned                          
Schedule 3.12             Affiliates                                   
Schedule 3.13             Litigation                                   
Schedule 3.14(a)          Scheduled Contracts                          
Schedule 3.14(b)          Valid and Binding Contracts                  
Schedule 3.14(c)          Participations                               
Schedule 3.15(a)          Permits                                      
Schedule 3.15(b)          Required Consents                            
Schedule 3.16             Compliance with Applicable Laws              
Schedule 3.17(a)          Certain Employment Agreements                
Schedule 3.17(b)          Other Employment Agreements                  
Schedule 3.17(c)          Benefit Plans                                
Schedule 3.17(d)          Employee Pension Benefit Plans               
Schedule 3.17(e)          Multiemployer Plans                          
Schedule 3.17(f)          Entertainment Plans                          
Schedule 3.18(a)          Labor and Employment Matters                 
Schedule 3.18(b)          Labor Disputes                               
Schedule 3.19(a)          Owned Intellectual Property Rights           
Schedule 3.19(b)          Licensed Intellectual Property Rights        
Schedule 3.19(c)          Licenses                                     
Schedule 3.19(d)          Claims                                       
Schedule 3.19(e)          Royalties                                    
Schedule 3.20(a)          Library Films                                
Schedule 3.20(a)(i)       Availability Dates                           
Schedule 3.20(a)(ii)      Film Rights                                  
Schedule 3.20(a)(iii)     Dormant Films                                
Schedule 3.20(a)(iv)      Film Liens                                   
Schedule 3.20(b)          Ratings                                      
Schedule 3.20(c)          Elements                                     
Schedule 3.20(f)          Copyrights                                   

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                                                                [Download Table]
                                                                       
Schedule 3.20(g)          Music                                        
Schedule 3.20(i)          Insurance Claims                             
Schedule 3.20(j)          Rights                                       
Schedule 3.20(l)          Participations                               
Schedule 3.21(a)          Films In Progress                            
Schedule 3.21(b)          Ownership                                    
Schedule 3.21(c)          Ratings                                      
Schedule 3.21(d)          Elements                                     
Schedule 3.21(i)          Copyrights                                   
Schedule 3.21(j)          Music                                        
Schedule 3.21(l)          Insurance Claims                             
Schedule 3.21(m)          Rights                                       
Schedule 3.21(o)          Participations                               
Schedule 3.22             Development Projects                         
Schedule 3.24(a)          Environmental Permits                        
Schedule 3.24(b)          Compliance with Environmental Laws           
Schedule 3.24(c)          Continuing Compliance with Environmental Laws
Schedule 3.25             Insurance                                    
Schedule 3.26             Tax Matters                                  
Schedule 3.29(a)          Landmark Financial Statements                
Schedule 3.29(b)          Landmark Transferred Assets                  
Schedule 3.30             Contracts with Landmark                      
Schedule 3.32(c)          Plan Liens                                   
Schedule 5.01(a)(ix)      Budgets                                      
Schedule 7.06             First Negotiation Territories                
Schedule 9.01(c)          Indemnified Litigation                       

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STOCK PURCHASE AGREEMENT

  This STOCK PURCHASE AGREEMENT (the "Agreement") dated as of May 2, 1997 is
by and among METROMEDIA INTERNATIONAL GROUP, INC., a Delaware corporation       
("Seller"), ORION PICTURES CORPORATION, a Delaware corporation ("Orion" and,    
together with all of its direct and indirect subsidiaries other than the        
Landmark Theater Group and its subsidiaries ("Landmark"), the "Entertainment    
Companies"), and P&F ACQUISITION CORP., a Delaware corporation ("Buyer").       

R E C I T A L S 

    A. The Entertainment Companies are engaged in the business of the production
and worldwide distribution and exploitation in all media of motion pictures,    
television programming and other filmed entertainment, including the            
exploitation of a library of motion pictures, television programming and other  
filmed entertainment;                                                           

B. Seller owns all of the issued and outstanding stock of Orion (the    
"Shares"); and                                                                  

    C. Seller desires to sell and Buyer desires to purchase all of the Shares on
the terms and conditions set forth herein.                                      

A G R E E M E N T 

NOW, THEREFORE, in consideration of the premises, and the mutual        
representations, warranties, covenants and agreements hereinafter set forth, the
parties hereto agree as follows.                                                

ARTICLE I 

DEFINITIONS 

    1.01.  DEFINITIONS.  The following terms, as used herein, have the following
meanings:                                                                       

"AFFILIATE" means, with respect to any Person, any Person directly or   
indirectly controlling, controlled by or under direct or indirect common control
with such Person.                                                               

   "ALTERNATIVE PROPOSAL" shall mean a proposal or offer (other than by Buyer)
for a stock purchase, asset acquisition, merger, consolidation or other business
combination involving any Entertainment Company or any proposal to acquire in   
any manner a direct or indirect substantial equity interest in, or all or any   
substantial part of the assets of, any Entertainment Company, but shall not     
include a proposal or offer to acquire an equity interest in Seller by a Person 
that agrees for the benefit of Buyer to cause Seller to comply with the terms of
this Agreement and to vote all shares of Seller's common stock or other equity  
securities beneficially owned by such Person in favor of approval of this       
Agreement and the transactions contemplated hereby.                             

    "APPLICABLE LAW" means, with respect to any Person, any domestic or foreign,
federal, state or local statute, law, ordinance, rule, administrative           
interpretation, regulation, order, writ, injunction, directive, judgment, decree
or other requirement of any Governmental Authority (including any Environmental 
Law) applicable to such Person or any of its Affiliates or Plan Affiliates or   
any of their respective properties, assets, officers, directors, employees,     
consultants or agents (in connection with such officer's, director's,           
employee's, consultant's or agent's activities on behalf of such Person or any  
of its Affiliates or Plan Affiliates).                                          

    "ASSOCIATE" or "ASSOCIATED WITH" means, when used to indicate a relationship
with any Person, (a) any other Person of which such Person is an officer or     
partner or is, directly or indirectly, the beneficial owner of ten percent (10%)
or more of any class of equity securities issued by such other Person, (b) any  
trust or other estate in which such Person has a substantial beneficial interest
or as to which such Person serves as trustee or in a similar fiduciary capacity,
and (c) any relative or spouse of such Person, or any relative of such spouse   
who has the same home as such Person or who is a director or officer of such    
Person or any Affiliate thereof.                                                

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    "BANKRUPTCY CASES" means the bankruptcy cases of IN RE ORION PICTURES, INC.,
A DELAWARE CORPORATION, ET. AL., DEBTORS, jointly administered under case number
91 B 15635 (BRL) commenced in the Bankruptcy Court under title 11 of the United 
States Bankruptcy Code.                                                         

    "BANKRUPTCY COURT" means the United States Bankruptcy Court for the Southern
District of New York acting in any of the Bankruptcy Cases.                     

   "BENEFIT ARRANGEMENT" means any material benefit arrangement that is not an
Employee Benefit Plan, including, without limitation, (i) each employment or    
consulting agreement, (ii) each arrangement providing for insurance coverage or 
workers' compensation benefits, (iii) each incentive bonus or deferred bonus    
arrangement, (iv) each arrangement providing termination allowance, severance or
similar benefits, (v) each equity compensation plan, (vi) each deferred         
compensation plan and (vii) each compensation policy and practice maintained by 
Seller or any Entertainment Company or any ERISA Affiliate of any of the        
foregoing covering the employees, former employees, directors and former        
directors thereof and the beneficiaries of any of them.                         

"BENEFIT PLAN" means an Employee Benefit Plan or Benefit Arrangement.   

"BUSINESS DAY" means a day other than a Saturday, Sunday or other day on
which commercial banks in New York, New York are authorized or required by law  
to close.                                                                       

"BUYER AFFILIATED GROUP" shall mean Buyer and members of the affiliated 
group, within the meaning of Section 1504 of the Code, of which Buyer is the    
common parent.                                                                  

"CODE" means the Internal Revenue Code of 1986, as amended.             

"CONFIRMATION DOCUMENTS" means the Plan of Reorganization and the Order 
Confirming Plan, and any other orders of the Bankruptcy Court entered in the    
Bankruptcy Cases, which modifies the treatment of the claims of creditors or of 
equity security holders or that limits the power or authority of any            
Entertainment Company to use, sell or lease its property as authorized by       
applicable non-bankruptcy law, or that requires any Entertainment Company to    
give notice to or obtain the approval of the Bankruptcy Court in connection with
the conduct of its business and affairs.                                        

"CONTRACTS" means all contracts, agreements, options, leases, License   
Agreements, output agreements, distribution contracts, sales and purchase       
orders, commitments, instruments and other obligations of any kind, whether     
written or oral, inclusive of amendments, to which any Entertainment Company is 
a party on the Closing Date, including the Scheduled Contracts and the          
Subsequent Material Contracts.                                                  

    "CONSOLIDATED RETURNS" shall mean federal Income Tax Returns that Seller has
elected to file on a consolidated basis.                                        

"DAMAGES" means all demands, claims, actions or causes of action,       
assessments, losses, damages, costs, expenses, liabilities, judgments, awards,  
fines, sanctions, penalties, charges and amounts paid in settlement net of      
insurance proceeds actually received, including without limitation (i) interest 
on cash disbursements in respect of any of the foregoing at the Reference Rate  
in effect from time to time, compounded quarterly, from the date each such cash 
disbursement is made until the Person incurring the same shall have been        
indemnified in respect thereof and (ii) reasonable costs, fees and expenses of  
attorneys, accountants and other agents of such Person.                         

  "DEBT" means any indebtedness of any Entertainment Company, whether or not
contingent, in respect of borrowed money or evidenced by bonds, notes,          
debentures or other similar instruments or letters of credit (or reimbursement  
obligations in respect thereof) or banker's acceptances or representing         
capitalized lease obligations or the balance deferred and unpaid of the purchase
price of any property, except any such balance that constitutes an accrued      
expense or account payable, in each case incurred in the ordinary course of     
business, as well as all indebtedness of others secured by a Lien on any asset  
of any Entertainment Company (whether or not such indebtedness is assumed by an 
Entertainment Company)                                                          

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and, to the extent not otherwise included, any Guaranty by any Entertainment    
Company of any indebtedness of any other Person (other than another             
Entertainment Company).                                                         

"ELEMENTS" means negative and positive film, soundtracks, music tracks, 
effects tracks, optical, audio, video and advertising materials and supplies    
associated with any Film.                                                       

"EMPLOYEE BENEFIT PLAN" means any employee benefit plan, as defined in  
Section 3(3) of ERISA, that is sponsored or contributed to by Seller or any     
Entertainment Company or any ERISA Affiliate thereof covering employees or      
former employees of any Entertainment Company.                                  

   "EMPLOYEE PENSION BENEFIT PLAN" means any employee pension benefit plan, as
defined in Section 3(2) of ERISA, that is subject to Title IV of ERISA, other   
than a Multiemployer Plan.                                                      

    "ENVIRONMENTAL LAWS" means all Applicable Laws relating to the protection of
the environment or human health including, without limitation, (i) all          
requirements pertaining to reporting, licensing, permitting, controlling,       
investigating or remediating emissions, discharges, releases or threatened      
releases of Hazardous Substances, chemical substances, pollutants, contaminants 
or toxic substances, materials or wastes, whether solid, liquid or gaseous in   
nature, into the air, surface water, groundwater or land; (ii) all requirements 
relating to the manufacture, processing, distribution, use, treatment, storage, 
disposal, transport or handling of Hazardous Substances, chemical substances,   
pollutants, contaminants or toxic substances, materials or wastes, whether      
solid, liquid or gaseous in nature; and (iii) the Resource Conservation and     
Recovery Act ("RCRA"), the Comprehensive Environmental Response, Compensation   
and Liability Act ("CERCLA"), the Clean Air Act, the Water Pollution Control    
Act, the Safe Drinking Water Act, the Toxic Substances Control Act ("TSCA") and 
all regulations promulgated pursuant to any of these or analogous state or local
statutes.                                                                       

  "ENVIRONMENTAL LIABILITIES" means Liabilities of a Person that arise under
any Environmental Law.                                                          

"ERISA" means the Employee Retirement Income Security Act of 1974, as   
amended.                                                                        

  "ERISA AFFILIATE" of any Person means any other Person that, together with
such Person as of the relevant measuring date under ERISA, was or is required to
be treated as a single employer under Section 414 of the Code.                  

"EXISTING ORION CREDIT FACILITY" means the Amended and Restated Credit, 
Guaranty and Security Agreement, dated as of June 27, 1996, by and among Orion, 
the lenders listed therein and The Chase Manhattan Bank, as agent.              

   "FILMS" means motion pictures (including feature films), shorts, television
programming, animated programming or other filmed entertainment, and the        
components thereof (whether or not now known or recognized) as to which any     
Entertainment Company owns any right, title or interest including, without      
limitation, Library Films, Films In Progress and Development Projects and       
including, without limitation: (i) completed, delivered and released projects;  
(ii) works in progress comprising projects in development, principal photography
and/or post-production, projects complete but not yet released, and unreleased  
or completed but undelivered pick-ups; (iii) underlying rights in and to the    
literary, musical and dramatic and other material associated with or related to 
or necessary to the exploitation of the works or projects referred to in clauses
(i) or (ii) including, without limitation, copyrights pertaining thereto; (iv)  
to the extent related to the works or projects referred to in clauses (i) or    
(ii), sequel, prequel and remake rights, all rights to novelization,            
merchandising, character, serialization, games and interactive video; (v) all   
other ancillary and subsidiary rights throughout the universe related to such   
works and projects; (vi) all Elements; and (vii) all contractual and other      
rights associated with or related to such works or projects and the related     
ancillary and subsidiary rights whether in any media now known or hereafter     
developed.                                                                      

    "GAAP" means generally accepted accounting principles, consistently applied.

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   "GOVERNMENTAL AUTHORITY" means any foreign, domestic, federal, territorial,
state or local governmental authority, quasi-governmental authority,            
instrumentality, court (including, without limitation, the Bankruptcy Court),   
government or self-regulatory organization, commission, tribunal or organization
or any regulatory, administrative or other agency, or any political or other    
subdivision, department or branch of any of the foregoing.                      

"GROUP HEALTH PLAN" means any group health plan, as defined in Section  
5000(b)(1) of the Code.                                                         

"GUARANTY" means, as to any Person (the "guaranteeing person"), any     
obligation of (a) the guaranteeing person or (b) another Person (including,     
without limitation, any bank under any letter of credit) to induce the creation 
of which the guaranteeing person has made or issued a guaranty, reimbursement,  
counterindemnity or similar obligation, in any case guaranteeing or in effect   
guaranteeing any Debt, lease, dividend or other obligation (the "primary        
obligation") of any ther Person (the "primary obligor"), in any manner, whether 
directly or indirectly, including, without limitation, any obligation of the    
guaranteeing person, whether or not contingent, (i) to purchase any such primary
obligation or any property constituting direct or indirect security therefor,   
(ii) to advance or supply funds (1) for the purchase or payment of any such     
primary obligation or (2) to maintain working capital or equity capital of the  
primary obligor or otherwise to maintain the net worth or solvency of the       
primary obligor, (iii) to purchase property, securities or services primarily   
for the purpose of assuring the owner of any such primary obligation of the     
payment thereof including, without limitation, any negative pick-up obligation, 
or (iv) otherwise to assure or hold harmless the owner of any such primary      
obligation against loss in respect thereof; PROVIDED, HOWEVER, that the term    
Guaranty shall not include (A) endorsements of instruments for deposit or       
collection in the ordinary course of business, (B) commitments to produce Films,
(C) minimum guaranteed payments in License Agreements with respect to Films, or 
(D) obligations in respect of Participations payable to others, which           
Participations were created in connection with the development, production,     
acquisition, distribution, exhibition, exploitation or financing of Films. The  
amount of any obligation in respect of a Guaranty shall be deemed to be the     
lower of (a) an amount equal to the stated or determinable amount of the primary
obligation in respect of which such Guaranty is made and (b) the maximum amount 
for which such guaranteeing person may be liable pursuant to the terms of the   
instrument embodying such Guaranty, unless such primary obligation and the      
maximum amount for which such guaranteeing person may be liable are not stated  
or determinable, in which case the amount of such Guaranty shall be such        
guaranteeing person's maximum reasonably anticipated liability in respect       
thereof as determined by Buyer in good faith.                                   

"HAZARDOUS SUBSTANCE" means any substance, waste or material: (i) the   
presence of which requires investigation or remediation under any Environmental 
Law; or (ii) the generation, storage, treatment, transportation, disposal,      
remediation, removal, handling or management of which is regulated by any       
Environmental Law; or (iii) that is defined as a "hazardous waste" or "hazardous
substance" under any Environmental Law; or (iv) that is toxic, explosive,       
corrosive, flammable, infectious, radioactive, carcinogenic or mutagenic or     
otherwise hazardous and is regulated by any Governmental Authority; or (v) the  
presence of which poses a hazard to the health or safety of Persons; or (vi) the
presence of which constitutes a nuisance, trespass or other tortious condition  
for which a Seller could be or is alleged to be liable; or (vii) without        
limitation, that contains gasoline, diesel fuel or other petroleum hydrocarbons,
polychlorinated biphenols (PCBs) or asbestos.                                   

    "HSR ACT" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended.                                                                        

    "INCOME TAX" shall mean all Taxes based upon, measured by or calculated with
respect to net income or profits, including any interest, penalty or addition   
thereto.                                                                        

"INDEMNIFYING PARTY" means: (i) with respect to any Buyer Indemnitee    
asserting a claim under Sections 9.01 or 12.12, Seller; and (ii) with respect to
any Seller Indemnitee asserting a claim under Sections 9.02 or 12.12, Buyer.    

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    "INDEMNITEE" means: (i) each of Buyer and its Affiliates with respect to any
claim for which Seller is an Indemnifying Party under Sections 9.01 or 12.12;   
and (ii) Seller and its Affiliates with respect to claims for which Buyer is an 
Indemnifying Party under Sections 9.02 or 12.12.                                

"IRS" means the Internal Revenue Service.                               

  "LIABILITY" means, with respect to any Person, any liability or obligation
of such Person of any kind, character or description, whether known or unknown, 
absolute or contingent, accrued or unaccrued, liquidated or unliquidated,       
secured or unsecured, joint or several, due or to become due, vested or         
unvested, executory, determined, determinable or otherwise and whether or not   
the same is required to be accrued on the financial statements of such Person.  

   "LICENSE AGREEMENTS" means agreements to which any Entertainment Company is
a party or by which any Entertainment Company is otherwise bound, pursuant to   
which an Entertainment Company grants or licenses to or acquires from a third   
party any right, title or interest elating to the distribution, exhibition or   
other exploitation of one or more Films.                                        

"LIEN" means, with respect to any asset, any mortgage, title defect or  
objection, lien, pledge, charge, security interest, hypothecation, restriction, 
encumbrance or charge of any kind in respect of such asset.                     

    "LIBOR" shall mean, with respect to each day during any applicable one month
period, the one month London interbank offered rate for Dollar deposits as of   
11:00 a.m. (London time) on the day which is two Business Days prior to the     
first day of such period, as quoted on Telerate page 3750 or on such replacement
system as is then customarily used to quote the London interbank offered rate.  
If two or more such rates appear on Telerate page 3750 or associated pages, the 
rate in respect of such period shall be the arithmetic mean of such offered     
rates (rounded upwards, if necessary, to the nearest 1/100th of one percent).   

 "MATERIAL ADVERSE EFFECT" means a material change in, or material adverse
effect on, the assets, liabilities, business, operations or financial condition 
of the Entertainment Companies taken as a whole.                                

  "MGM CREDIT FACILITY" means the $800 Million Credit Agreement, dated as of
October 10, 1996, among Metro-Goldwyn-Mayer Inc., the Lenders listed therein,   
the L/C issuers named therein and Morgan Guaranty Trust Company of New York, as 
agent, and all related documents.                                               

    "MULTIEMPLOYER PLAN" means a multiemployer plan, as defined in Section 3(37)
and 4001(a)(3) of ERISA.                                                        

   "NEW ORION CREDIT FACILITY" means a revolving credit facility, naming Orion
as borrower, that is to take effect concurrent with the Closing and that in all 
respects is in form and substance satisfactory to Buyer.                        

"ORDER CONFIRMING PLAN" means the order of the Bankruptcy Court entitled
"Order Confirming the Debtors' Modified Third Amended Joint Consolidated Plan of
Reorganization," dated October 20, 1992, entered in the Bankruptcy Cases.       

"PARTICIPATIONS" means, with respect to any Film, all amounts (whether  
described as a deferment, a gross participation or otherwise) which any         
Entertainment Company may be contractually obligated to pay to any person, for  
rights or services in connection with any Film and which are based on or        
dependent on all or any percentage of the proceeds of the Film (irrespective of 
the manner in which such proceeds are defined or computed), including royalties,
residuals and guild payments, whether or not such payment has then become due or
been made.                                                                      

"PERMITTED LIENS" means (i) Liens for Taxes or governmental assessments;
charges or claims the payment of which is not yet due, or for Taxes the validity
of which are being contested in good faith by appropriate proceedings; (ii)     
statutory Liens of landlords and Liens of carriers, warehousemen, mechanics,    
materialmen and other similar Persons and other Liens imposed by Applicable Law 
incurred in the ordinary course of business for sums not yet delinquent or being
contested in good faith; (iii) Liens relating                                   

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to deposits made in the ordinary course of business in connection with workers' 
compensation, unemployment insurance and other types of social security or to   
secure the performance of leases, trade contracts or other similar agreements;  
(iv) Liens securing executory obligations under any Lease that constitutes an   
"operating lease" under GAAP; (v) guild Liens; (vi) customary Liens (a) granted 
in the ordinary course to secure a licensee's ability to retain distribution    
rights under a License Agreement to which the licensee is a party and (b) which 
Liens, if enforced, in the aggregate would not have a Material Adverse Effect;  
and (vii) other Liens set forth on SCHEDULE 1.01 hereto. Notwithstanding the    
foregoing, no Lien arising under the Code or ERISA with respect to the          
operation, termination, restoration or funding of any Benefit Plan sponsored by,
maintained by or contributed to by Seller or any Entertainment Company or by any
of their ERISA Affiliates or arising in connection with any material excise tax 
or penalty tax with respect to such Benefit Plan shall be a Permitted Lien.     

   "PERSON" means an individual, corporation, partnership, association, trust,
estate or other entity or organization, including a Governmental Authority.     

"PLAN AFFILIATE" means, with respect to any Person, any employee benefit
plan or arrangement sponsored by, maintained by or contributed to by such       
Person, and with respect to any employee benefit plan or arrangement, any Person
sponsoring, maintaining or contributing to such plan or arrangement.            

"PLAN OF REORGANIZATION" means the "Debtors' Third Amended Joint        
Consolidated Plan of Reorganization," dated September 3, 1992, filed in the     
Bankruptcy Cases.                                                               

 "POST-CLOSING PERIOD" shall mean any Taxable period that begins after the
Closing Date.                                                                   

 "PRE-CLOSING PERIOD" shall mean any Taxable period that ends on or before
the Closing Date.                                                               

    "PROCEEDING" means an action, suit, hearing, arbitration, proceeding (public
or private) or, to Seller's knowledge, governmental investigation, that has been
brought by or against any Governmental Authority or any other Person.           

"PROHIBITED TRANSACTION" means a transaction that is prohibited under   
Section 4975 of the Code or Section 406 of ERISA and not exempt under Section   
4975 of the Code or Section 408 of ERISA, respectively.                         

   "REFERENCE RATE" means LIBOR as in effect from time to time plus 1.00%. The
party to whom interest is payable hereunder shall determine LIBOR for successive
one month periods until the obligation bearing interest is paid in full.        

 "SELLER AFFILIATED GROUP" shall mean Seller and members of the affiliated
group, within the meaning of Section 1504 of the Code, of which Seller is the   
common parent.                                                                  

"SHARE ENCUMBRANCES" means, with respect to any of the Shares, any lien,
charge, claim, option, pledge, right of other parties, voting trust, proxy,     
stockholder or similar agreement, restriction, adverse claim or any other       
encumbrance of any nature whatsoever.                                           

"STATEMENT OF ASSUMPTIONS" means the statement of assumptions derived by
Buyer from information made available to it in its due diligence investigation  
of the Entertainment Companies prior to the date of this Agreement that is      
attached as SCHEDULE 1.02 hereto.                                               

   "STRADDLE PERIOD" shall mean any Taxable period that begins before and ends
after the Closing Date.                                                         

 "SUBSIDIARY" means, with respect to any Person, (i) any corporation as to
which more than 10% of the outstanding stock having ordinary voting rights or   
power (and excluding stock having voting rights only upon the occurrence of a   
contingency unless and until such contingency occurs and such rights may be     
exercised) is owned or controlled, directly or indirectly, by such Person and/or
by one or more of such Person's Subsidiaries, and (ii) any partnership, joint   
venture or other similar relationship between such                              

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Person (or any Subsidiary thereof) and any other Person (whether pursuant to a  
written agreement or otherwise), if such Person has a 10% or more equity        
interest therein.                                                               

"TAX" shall mean all federal, state, local and foreign income, gross    
receipts, license, payroll, employment, excise, severance, stamp, occupation,   
premium, windfall profits, environmental, customs, duties, capital stock,       
franchise, profits, withholding, social security (or similar), unemployment,    
disability, real property, personal property, sales, use, transfer,             
registration, value added, alternative or add-on minimum, estimated, or other   
tax of any kind whatsoever, including any interest, penalty, or addition        
thereto, irrespective of whether imposed directly or indirectly, as a successor 
or transferee liability, as a joint and several liability pursuant to Section   
1.1502-6 of the Treasury Regulations or comparable or similar provisions of     
state, local or foreign law, or whether by reason of any tax sharing, tax       
reimbursement or tax indemnification agreement, or by reason of a tax treaty.   
"Taxes" and "Taxable" shall have the correlative meanings.                      

"TAX RETURN" means all returns, reports, statements, forms or other     
materials or information required to be filed with respect to any Tax.          

"UNION BANK LOAN" means the loan in the amount of Seven Million Dollars 
($7,000,000) from Union Bank of California on the Film entitled "Music From     
Another Room" which is secured solely by the assets of such Film and which is   
otherwise without recourse against any Entertainment Company.                   

1.02.  INDEX OF OTHER DEFINED TERMS.  In addition to those terms defined
above, the following terms shall have the respective meanings given thereto in  
the sections indicated below:                                                   

                                                        [Enlarge/Download Table]

DEFINED TERM                                                                         SECTION   
---------------------------------------------------------------------------------  ----------- 
                                                                                               
"1996 Balance Sheet".............................................................         3.09 
"A Films"........................................................................       3.20(a)
"Annual Statements"..............................................................         3.09 
"ASCAP"..........................................................................       3.20(g)
"B Films"........................................................................       3.20(a)
"BMI"............................................................................       3.20(g)
"Buyer"..........................................................................     Preamble 
"Closing"........................................................................         2.02 
"Closing Date"...................................................................         2.02 
"Commitment Fee".................................................................        10.03 
"Development Projects"...........................................................         3.22 
"Distributions"..................................................................       3.10(h)
"Employment Agreements"..........................................................       3.17(a)
"Entertainment Companies"........................................................     Preamble 
"Entertainment Plan".............................................................       3.17(c)
"Equity Securities"..............................................................         3.01 
"Essential Consents".............................................................       3.15(b)
"Film Rentals"...................................................................         5.09 
"Films In Progress"..............................................................       3.21(a)
"Final Statement"................................................................       2.03(c)
"Financial Statements"...........................................................         3.09 
"Insurance Policies".............................................................         3.25 
"Intellectual Property Rights"...................................................       3.19(b)
"Interim Statements".............................................................         3.09 
"Landmark".......................................................................     Preamble 
"Landmark Financial Statements"..................................................         3.29 
"Leases".........................................................................       3.11(c)
"Library Films"..................................................................       3.20(a)

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DEFINED TERM                                                                         SECTION       
---------------------------------------------------------------------------------  -----------     
                                                                                                   
"Licensed Intellectual Property Rights"..........................................       3.19(b)    
"MPAA"...........................................................................       3.20(b)    
"Orion"..........................................................................     Preamble     
"Overpayment"....................................................................       2.03(e)    
"Owned Intellectual Property Rights".............................................       3.19(a)    
"P&A"............................................................................       5.01(a)(ix)
"Permits"........................................................................       3.15(a)    
"Personal Property Leases".......................................................       3.11(c)    
"Preliminary Purchase Price".....................................................       2.03(b)    
"Preliminary Statement"..........................................................       2.03(b)    
"Proceedings"....................................................................         3.13     
"Pro Forma Statements"...........................................................         3.09     
"Purchase Price".................................................................       2.03(a)    
"Real Property Leases"...........................................................       3.11(c)    
"Required Consents"..............................................................       3.15(b)    
"Required Contractual Consent"...................................................       3.15(b)    
"Required Governmental Approval".................................................       3.15(b)    
"Scheduled Contracts"............................................................       3.14(a)    
"SEC"............................................................................         3.05     
"SEC Documents"..................................................................         3.27     
"Section 338 Elections"..........................................................      11.02(a)    
"Section 338 Taxes"..............................................................      11.02(c)    
"Securities Act".................................................................       7.07(a)    
"Selected Firm"..................................................................       2.03(c)    
"Seller".........................................................................     Preamble     
"Seller Indemnitees".............................................................         9.02     
"Shares".........................................................................     Recitals     
"Subsequent Material Contract"...................................................       5.01(b)(v) 
"Tax Claim"......................................................................      11.04(a)    
"Tax Indemnitee".................................................................      11.04(a)    
"Tax Indemnitor".................................................................      11.04(a)    
"Unaffiliated Production Company"................................................       3.21(b)    
"Unpaid Balance".................................................................       2.03(d)    

ARTICLE II

SALE OF STOCK 

   2.01.  SALE OF STOCK.  Upon the terms and subject to the conditions of this
Agreement and in reliance upon the representations, warranties and agreements   
herein set forth, Buyer agrees to purchase from Seller and Seller agrees to sell
to Buyer all of the Shares on the Closing Date. At the Closing, Seller shall    
deliver to Buyer a certificate evidencing the Shares duly endorsed for transfer 
and with all transfer stamps attached and such other instruments as may be      
reasonably requested by Buyer to transfer full legal and beneficial ownership of
the Shares to Buyer, free and clear of all Share Encumbrances.                  

2.02.  CLOSING.  The closing (the "Closing") of the transactions        
contemplated by this Agreement shall take place at the offices of Gibson, Dunn &
Crutcher LLP, 333 South Grand Avenue, Los Angeles, California 90071 on the date 
on which the last of the conditions to Closing set forth in Sections 8.01 and   
8.02 have been satisfied or waived by the party or parties entitled to waive the
same or such other date as to which Buyer and Seller may agree (the "Closing    
Date"). At the Closing, Buyer shall deliver to Seller the Purchase Price.       

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2.03.  PURCHASE PRICE.                                                  

(a) As consideration for the Shares and the covenants and agreements of 
Seller set forth herein, Buyer shall deliver to Seller at the Closing in        
immediately available funds to be delivered by wire transfer (to a bank account 
designated at least three business days prior to the Closing Date in writing by 
Seller) an amount (the "Purchase Price") equal to Five Hundred Seventy Three    
Million Dollars ($573,000,000) less the sum of: (i) the greater of (A) all Debt 
and other amounts outstanding under the Existing Orion Credit Facility on       
December 31, 1996, net of cash on hand of the Entertainment Companies on        
December 31, 1996, or (B) all Debt and other amounts outstanding under the      
Existing Orion Credit Facility on the Closing Date, net of cash on hand of the  
Entertainment Companies on the Closing Date; plus (ii) unpaid interest on Debt  
under the Existing Orion Credit Facility accrued to, but not including, the     
Closing Date; plus (iii) the greater of (A) Thirteen Million Dollars            
($13,000,000) or (B) all Debt of the Entertainment Companies (other than Debt   
outstanding under the Existing Orion Credit Facility on the Closing Date)       
outstanding on the Closing Date; plus (iv) unpaid interest on such Debt (other  
than the Existing Orion Credit Facility) accrued to, but not including, the     
Closing Date.                                                                   

(b) Not later than three Business Days prior to the Closing Date, Seller
shall prepare and deliver to Buyer a statement (the "Preliminary Statement")    
containing (i) a schedule of total Debt anticipated to be outstanding on the    
Closing Date and an estimate of unpaid interest to be accrued thereon as of the 
Closing Date and other amounts that then will be payable with respect thereto,  
and (ii) an estimate of cash that would be reflected on a consolidated balance  
sheet of Orion and its Subsidiaries prepared as of the Closing Date (adjusted,  
if necessary, to give pro forma effect to distribution to Seller of all capital 
stock of Landmark on the Closing Date). Based upon the Preliminary Statement, a 
preliminary determination of the Purchase Price shall be made (the "Preliminary 
Purchase Price"), which Preliminary Purchase Price shall be subject to          
adjustment as provided in Sections 2.03(d) and (e).                             

   (c) Within thirty (30) days after the Closing Date, Buyer shall prepare and
deliver to Seller a statement (the "Final Statement") containing (i) a schedule 
of total Debt outstanding on the Closing Date and accrued and unpaid interest   
thereon, and other amounts payable with respect thereto, as of the Closing Date 
(assuming that such Debt was repaid in full on that date), (ii) a calculation of
cash on hand that would be reflected on a consolidated balance sheet of Orion   
and its Subsidiaries prepared as of the Closing Date (adjusted, if necessary, to
give pro forma effect to distribution to Seller of all capital stock of Landmark
on the Closing Date), and (iii) a calculation of the Purchase Price. The Final  
Statement and the calculation of the Purchase Price shall be binding upon the   
parties to this Agreement unless Seller gives written notice of disagreement    
therewith to Buyer within thirty (30) days after its receipt of the Final       
Statement, specifying in reasonable detail the nature and extent of such        
disagreement. If Buyer and Seller mutually agree upon the Final Statement and   
the calculation of the Purchase Price within thirty (30) days after Seller's    
receipt of such notice from Buyer, such agreement shall be binding upon the     
parties to this Agreement. If Buyer and Seller are unable to resolve any such   
disagreement within such period, the disagreement shall be referred for final   
determination to an independent accounting firm of national reputation selected 
by the mutual agreement of Buyer and Seller (the "Selected Firm"), and the      
resolution of that disagreement and the calculation of the total Debt, cash on  
hand resulting therefrom and the Purchase Price shall be final and binding upon 
the parties hereto for purposes of this Agreement. The fees and disbursements of
the Selected Firm shall be paid by Buyer and Seller as the Selected Firm shall  
determine based upon its assessment of the relative merits of the positions     
taken by each in any disagreement presented to such firm. Buyer will grant      
Seller full access to the books and records of the Entertainment Companies and  
its relevant personnel in order for it to make its evaluations under this       
Section 2.03.                                                                   

   (d) If the Preliminary Purchase Price is less than the Purchase Price (such
difference being referred to herein as the "Unpaid Balance"), then, in addition 
to the amount payable to Seller under Section 2.01(a) of this Agreement, within 
five (5) Business Days after the final determination of the Final Statement and 
the Purchase Price, Buyer shall deliver to Seller an amount equal to the Unpaid 
Balance,                                                                        

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together with interest thereon at the Reference Rate in effect from time to time
from the Closing Date until the date of such payment, in cash in immediately    
available funds by wire transfer to a bank account designated in writing by     
Seller prior to the due date thereof.                                           

(e) If the Preliminary Purchase Price is greater than the Purchase Price
(such difference being referred to herein as an "Overpayment"), then within five
(5) Business Days after the final determination of the Final Statement and the  
Purchase Price, Seller shall reimburse to Buyer an amount equal to the          
Overpayment, together with interest thereon at the Reference Rate in effect from
time to time from the Closing Date until the date of such reimbursement, in cash
in immediately available funds by wire transfer to a bank account designated in 
writing by Buyer prior to the due date thereof.                                 

ARTICLE III 
REPRESENTATIONS AND WARRANTIES OF SELLER

Seller represents and warrants to Buyer as follows:                     

   3.01.  OWNERSHIP OF STOCK.  Seller is the legal and beneficial owner of all
of the Shares, free and clear of all Share Encumbrances. The delivery to Buyer  
of the Shares pursuant to the provisions of this Agreement will transfer to     
Buyer valid title thereto, free and clear of any and all Share Encumbrances. All
of the Shares have been duly authorized and were validly issued and are fully   
paid and nonassessable and were not issued in violation of any preemptive       
rights. The Shares represent all of the issued and outstanding shares of capital
stock of Orion. There are not, and on the Closing Date there will not be,       
outstanding (i) any options, warrants, rights of first refusal or other rights  
to purchase from Seller or Orion any capital stock of Orion, (ii) any securities
convertible into or exchangeable for shares of such stock or (iii) any other    
commitments of any kind for the issuance of additional shares of capital stock  
or options, warrants or other securities of Orion (such options, warrants,      
rights of first refusal or other rights, convertible securities, exchangeable   
securities or other commitments are referred to herein collectively as "Equity  
Securities"). There is no contract, right or option outstanding to require      
Seller or Orion to redeem, purchase or otherwise reacquire any Equity Securities
of Orion, and there are no preemptive rights with respect to any Equity         
Securities of Orion.                                                            

3.02.  CORPORATE EXISTENCE AND POWER.  Each of Seller and Orion is a    
corporation duly incorporated, validly existing and in good standing under the  
laws of the state of its incorporation, and has all corporate power and         
authority to enter this Agreement and consummate the transactions contemplated  
hereby. Orion is duly qualified to do business as a foreign corporation in each 
jurisdiction where the character of the property owned or leased by it or the   
nature of its activities makes such qualification necessary to carry on its     
business as now conducted, except for those jurisdictions where the failure to  
be so qualified has not been, and could not reasonably be expected to be,       
material.                                                                       

   3.03.  CORPORATE AUTHORIZATION OF SELLER.  This Agreement has been duly and
validly executed by Seller and constitutes the legal, valid and binding         
agreement of Seller, enforceable against it in accordance with its terms, except
as may be limited by applicable bankruptcy, insolvency, reorganization,         
moratorium or similar laws affecting creditors' rights generally; PROVIDED,     
HOWEVER, that the legality, validity, binding effect and enforceability of this 
Agreement against Seller is not limited by the Bankruptcy Cases; and PROVIDED,  
FURTHER, that the consummation by Seller of the Closing and the transfer of the 
Shares are subject to the approval of Seller's stockholders.                    

3.04.  SUBSIDIARIES.  Schedule 3.04 sets forth a complete list of each  
direct or indirect Subsidiary of Orion, its jurisdiction of organization, the   
authorized capital stock of each such Subsidiary, the number of shares of       
outstanding capital stock of each such Subsidiary and the owners thereof. All   
such issued and outstanding shares of capital stock of each such Subsidiary have
been duly authorized and validly issued and are fully paid and nonassessable and
were not issued in violation of any preemptive rights. Each Subsidiary is a     
corporation duly organized, validly existing and in good standing under the laws
of its                                                                          

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jurisdiction of incorporation and has all corporate power and all material      
governmental licenses, governmental authorizations, governmental consents and   
governmental approvals required to carry on the business as now conducted by    
such Subsidiary and to own and operate the business as now owned and operated by
such Subsidiary. Except as disclosed in SCHEDULE 3.04, no Subsidiary holds any  
of its issued and outstanding shares of capital stock in its treasury, and there
are not, and on the Closing Date there will not be, outstanding any Equity      
Securities of or with respect to such Subsidiary. Except as otherwise disclosed 
in SCHEDULE 3.04,Orion or a wholly-owned Subsidiary of Orion owns, directly or  
indirectly, free and clear of all Share Encumbrances, all of the outstanding    
capital stock or other Equity Securities of each of its Subsidiaries identified 
in SCHEDULE 3.04. No Subsidiary is required to be qualified to conduct business 
in any state other than: (a) the states set forth in SCHEDULE 3.04, in which    
states the relevant Subsidiary is duly qualified and in good standing, and (b)  
such states where the failure to be so qualified, whether singly or in the      
aggregate, could not reasonably be expected to have a Material Adverse Effect.  

   3.05.  ENTERTAINMENT GROUP.  Other than the assets of Landmark reflected in
the Landmark Financial Statements, Orion and its Subsidiaries together own all  
of the assets of the "Entertainment Group" as described in Seller's most recent 
report filed with the Securities and Exchange Commission (the "SEC") on Form    
10-K.                                                                           

3.06.  CORPORATE AUTHORIZATION OF ORION.  The execution, delivery and   
performance by Orion of this Agreement and the consummation by Orion of the     
transactions contemplated hereby are within Orion's corporate powers and have   
been duly authorized by all necessary corporate action on the part of Orion.    
This Agreement has been duly and validly executed by Orion and constitutes the  
legal, valid and binding agreement of Orion, enforceable against it in          
accordance with its terms, except as may be limited by applicable bankruptcy,   
insolvency, reorganization, moratorium or similar laws affecting creditors'     
rights generally; PROVIDED, HOWEVER, that the legality, validity, binding effect
and enforceability of this Agreement against Orion is not limited by the        
Bankruptcy Cases.                                                               

   3.07.  GOVERNMENTAL AUTHORIZATION.  The execution, delivery and performance
by Seller and Orion of this Agreement requires no action by, consent or approval
of, or filing with, any Governmental Authority other than (a) compliance with   
any applicable requirements of the HSR Act, (b) the filing of a preliminary and 
definitive proxy statement with the SEC and (c) any actions, consents, approvals
or filings otherwise expressly referred to in Section 3.15 hereof.              

    3.08.  NON-CONTRAVENTION.  The execution, delivery and performance by Seller
and Orion of this Agreement, and consummation of the transactions contemplated  
hereby, including without limitation, the transfer of the Shares to Buyer, do   
not and will not (a) contravene or conflict with the articles or certificate of 
incorporation or bylaws of Seller or any Entertainment Company, true and correct
copies of all of which have been delivered to Buyer by Seller; (b) assuming     
receipt of the Required Consents, contravene or conflict with or constitute a   
violation of any provision of any material Applicable Law binding upon or       
applicable to Seller or any Entertainment Company; (c) except as set forth on   
SCHEDULE 3.08(C), constitute a default under or give rise to any right of       
termination, cancellation or acceleration of, or to a loss of any benefit to    
which Seller or any Entertainment Company is entitled under, any material       
Contract to which it is a party or any material Permit or similar authorization;
or (d) except as set forth on SCHEDULE 3.08(C), result in the creation or       
imposition, under any Contract of any Entertainment Company or Applicable Law,  
or any Lien on the Shares or on any asset of any Entertainment Company or of    
Buyer or any Subsidiary of Buyer, or impose any contractual obligation or       
restriction under such Contract on Buyer or any Subsidiary of Buyer (other than 
Orion and its Subsidiaries).                                                    

3.09.  FINANCIAL STATEMENTS; UNDISCLOSED LIABILITIES.  SCHEDULE 3.09    
contains true and complete copies of (i) the audited balance sheets and related 
statements of operations and retained earnings and of cash flows for Orion and  
its consolidated Subsidiaries for the years ended December 31, 1995 and December
31, 1996 (the "Annual Statements"), (ii) the pro forma balance sheets for Orion 
and its consolidated Subsidiaries as at December 31, 1996 and March 31, 1997    
(which March 31, 1997 balance sheet shall be                                    

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delivered on or before May 8, 1997), adjusted to reflect distribution of the    
capital stock of Landmark to Seller as if it had occurred on the date thereof   
(the "Pro Forma Statements") and (iii) the balance sheets and related statements
of operations for the three month periods ended March 31, 1996 and March 31,    
1997 which shall be delivered on or before May 8, 1997 (collectively, the       
"Interim Statements" and, together with the Annual Statements and the Pro Forma 
Statements, the "Financial Statements"). The December 31, 1996 balance sheet    
referred to in clause (i) above is referred to herein as the "1996 Balance      
Sheet." Each of the Financial Statements has been prepared based on the books   
and records of Orion and its Subsidiaries in accordance with GAAP and their     
normal accounting practices, consistent with past practice and with each other, 
and present fairly the financial condition, results of operations and cash flows
of Orion and its Subsidiaries as of the dates indicated or for the periods      
indicated, subject in the case of the Interim Statements to normal year-end     
audit adjustments, which adjustments in the aggregate are not material. The     
adjustments made to the balance sheet included in the Annual Statements and     
Interim Statements in the preparation of the Pro Forma Statements were          
reasonable in all material respects. Except as set forth on SCHEDULE 3.09, there
are no Liabilities of any Entertainment Company other than: (i) any Liability   
accrued as a Liability on the 1996 Balance Sheet; (ii) Liabilities specifically 
disclosed and identified as such in the schedules to this Agreement; (iii)      
Liabilities incurred since the date of the 1996 Balance Sheet that do not, and  
will not, individually or in the aggregate, have a Material Adverse Effect; and 
(iv) Liabilities incurred since the date of the 1996 Balance Sheet that have    
been incurred in the ordinary course of business of any of the Entertainment    
Companies.                                                                      

3.10.  ABSENCE OF CERTAIN CHANGES.  Since the date of the 1996 Balance  
Sheet, each Entertainment Company has conducted its business in the ordinary    
course consistent with past practice, and without limitation, there has not     
been:                                                                           

    (a) any event, occurrence, development or state of circumstances or facts or
change in the assets, liabilities, business, operations or financial conditions 
of any Entertainment Company that has had or that could reasonably be expected  
to have, either alone or together with all such events, occurrences,            
developments, states of circumstances or facts or changes, a Material Adverse   
Effect;                                                                         

    (b) any incurrence, assumption or guarantee of any Debt by any Entertainment
Company other than drawdowns under the Existing Orion Credit Facility and the   
Union Bank Loan;                                                                

(c) any creation, assumption or sufferance of the existence of any Lien 
other than Permitted Liens created, assumed or suffered to exist in the ordinary
course of business consistent with past practice;                               

    (d) any transaction or commitment made, or any Contract entered into, by any
Entertainment Company (including the acquisition or disposition of any assets), 
or any waiver, amendment, termination or cancellation of any Contract by any    
Entertainment Company, or any relinquishment of any rights thereunder by any    
Entertainment Company, or of any other right or debt owed to any Entertainment  
Company, other than in each such case actions taken in the ordinary course of   
business consistent with past practice;                                         

    (e) except as set forth in SCHEDULE 3.10(E), any (i) grant of any severance,
continuation or termination pay to any director, officer, stockholder or        
employee of any Entertainment Company or any Associate of any of the foregoing, 
(ii) entering into of any employment, deferred compensation or other similar    
agreement (or any amendment to any such existing agreement) with any director,  
officer, stockholder or employee of any Entertainment Company or any Associate  
of any of the foregoing, (iii) increase in benefits payable or potentially      
payable under any severance, continuation or termination pay policies or        
employment agreements with any director, officer, stockholder or employee of any
Entertainment Company or any Associate of any of the foregoing, (iv) increase in
compensation, bonus or other benefits payable or potentially payable to         
directors, officers, stockholders or employees of any Entertainment Company or  
any Associate of any of the foregoing, other than in the ordinary course of     
business consistent with past practice or pursuant to existing Contracts, or (v)
change in the terms of any bonus, pension,                                      

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insurance, health or other Benefit Plan of Seller or any of its Affiliates      
applicable to any Entertainment Company or of any Entertainment Company;        

(f) any loan to or guarantee or assumption of any loan or obligation on 
behalf of any stockholder, director, officer or employee of Seller or any of its
Affiliates or of any Associate of any of the foregoing, except business expense 
advances to employees of any Entertainment Company occurring in the ordinary    
course of business consistent with past practice;                               

(g) except as required by GAAP, any material change by any Entertainment
Company in its accounting principles, methods or practices or in the manner it  
keeps its books and records or any material change by any Entertainment Company 
of its current practices with regards to inventory, sales, receivables, payables
or accrued expenses which would affect the timing of collection of receivables  
or the payment of payables;                                                     

   (h) any distribution, dividend, bonus or other payment by any Entertainment
Company to Seller or any Affiliate of Seller (other than any Entertainment      
Company) or any officer, director, stockholder or Affiliate of Seller or any    
Entertainment Company or any of their respective Affiliates or Associates       
(collectively, "Distributions"), except for the distribution of Landmark as set 
forth in SCHEDULE 3.10(H) or occurring in the ordinary course of business       
consistent with past practice;                                                  

(i) any payment, discharge or satisfaction of any Liabilities of any    
Entertainment Company, other than payments, discharges or satisfactions in the  
ordinary course of business consistent with past practice; or (j) (i) any       
payment, discharge or other satisfaction of any claim, liability or obligation  
owed to any Entertainment Company by Seller or any of its Affiliates (other than
any Entertainment Company) or owed to Seller or any of its Affiliates (other    
than any Entertainment Company) by any Entertainment Company or (ii) any        
prepayment of any Debt (other than payments of revolving loans made under the   
Existing Orion Credit Facility).                                                

3.11.  PROPERTIES; LEASES; TANGIBLE ASSETS.                             

(a) Except for Permitted Liens and those Liens identified on SCHEDULE   
3.11(A), the Entertainment Companies own all of the assets (real, personal or   
mixed, tangible or intangible (including the Intellectual Property Rights))     
reflected in the 1996 Balance Sheet (except those assets disposed of in the     
ordinary course of business after the date thereof and the Films), free and     
clear of all Liens.                                                             

  (b) All tangible properties and assets (other than the Films) and premises
owned or leased by the Entertainment Companies are in good condition and repair 
and are adequate in all material respects for the uses to which they are put,   
and no tangible properties or assets necessary for the conduct of the business  
of any Entertainment Company in substantially the same manner as it has         
heretofore been conducted are in need of replacement, maintenance or repairs,   
except for routine and not materially deferred replacement, maintenance and     
repair.                                                                         

(c) SCHEDULE 3.11(C) sets forth a true and complete list of all material
personal property leases (the "Personal Property Leases") and all leases of real
property (the "Real Property Leases" and collectively with the Personal Property
Leases, the "Leases") to which any Entertainment Company is a party or by which 
any Entertainment Company is bound. With respect to the Leases, except as set   
forth on SCHEDULE 3.11(C), there exist no defaults by any Entertainment Company,
or, to the knowledge of Seller, any default or threatened default by any lessor 
or third party thereunder, that has affected or could reasonably be expected to 
materially affect the rights and privileges thereunder of any Entertainment     
Company. Assuming the Required Consents are obtained, the sale of the Shares to 
Buyer will not adversely affect any Leases with non-Affiliates to which any     
Entertainment Company is a party or by which any Entertainment Company is bound.

(d) No real property is owned by any Entertainment Company except as set
forth on SCHEDULE 3.11(D).                                                      

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  3.12.  AFFILIATES.  Except as set forth in SCHEDULE 3.12, to the knowledge
of Seller, no stockholder of Seller or any officer or director of Seller or any 
Entertainment Company (or any immediate family member of any such officer or    
director):                                                                      

 (a) now has or at any time subsequent to January 1, 1996 had, directly or
indirectly, an equity interest in, or holds debt of, any Person which furnishes 
or sells or during such period furnished or sold services or products to any    
Entertainment Company or purchases or during such period purchased from any     
Entertainment Company any goods or services, or otherwise does or during such   
period did business with any Entertainment Company; PROVIDED, HOWEVER, that no  
stockholder of Seller or any Entertainment Company or any of their respective   
officers, directors or other Affiliates shall be deemed to have such an interest
(A) solely by virtue of the ownership of less than five percent (5%) of the     
outstanding voting stock or debt securities of any publicly held company, the   
stock or debt securities of which are traded on a national stock exchange or    
quoted on the National Association of Securities Dealers Automated Quotation    
System or (B) by reason of having such an interest in Seller or such            
Entertainment Company; or                                                       

(b) now is or at any time subsequent to January 1, 1996 was, directly or
indirectly, a party to any contract, commitment or agreement to which any       
Entertainment Company is or during such period was a party or under which any   
Entertainment Company is or was obligated or bound or to which any Entertainment
Company's properties may be or may have been subject.                           

  3.13.  LITIGATION.  Except as disclosed in SCHEDULE 3.13, (i) there are no
actions, claims, suits, hearings, arbitrations, proceedings (public or private) 
or, to Seller's knowledge, governmental investigations, that have been brought  
by or against any Governmental Authority or any other Person (collectively,     
"Proceedings") pending or, to the knowledge of Seller, threatened, against or by
any Entertainment Company or against Seller with respect to or relating to any  
Entertainment Company other than collection actions by any Entertainment Company
involving claims of amounts less than Twenty Five Thousand Dollars ($25,000), or
which seek to enjoin or rescind the transactions contemplated by this Agreement 
or otherwise seek to prevent Seller or any Entertainment Company from complying 
with the terms and provisions of this Agreement, and (ii) there are no existing 
orders, judgments or decrees of any Governmental Authority affecting any of the 
Entertainment Companies. All matters identified on SCHEDULE 3.13 in the         
aggregate will not have a Material Adverse Effect.                              

3.14.  CONTRACTS.                                                       

 (a) SCHEDULE 3.14(A) sets forth a complete list of all material Contracts
(collectively with the Leases and the Employment Agreements, the "Scheduled     
Contracts") including, without limitation:                                      

(i) each Contract (other than License Agreements) between any   
Entertainment Company and (A) except as disclosed in SCHEDULE 3.12 and  
  SCHEDULE 3.17(A), each present or former director, officer or other member
of management or other personnel of any Entertainment Company, (B) any  
supplier of services or products (other than Films) to the Entertainment
   Companies whose dollar volume of sales to the Entertainment Companies taken
 as a whole exceeded in 1996 Five Hundred Thousand Dollars ($500,000), and
(C) any Person in which the aggregate payments made to the Entertainment
    Companies taken as a whole under such Contract exceeded in 1996 Five Hundred
Thousand Dollars ($500,000);                                            

     (ii) each other agreement or arrangement of any Entertainment Company
   that requires the payment or incurrence of Liabilities, or the rendering of
services, by any Entertainment Company, subsequent to the date hereof of
more than Five Hundred Thousand Dollars ($500,000) or that is reasonably
expected to require payment of more than Five Hundred Thousand Dollars  
($500,000) in the aggregate;                                            

    (iii) all Contracts relating to, and evidences of or guarantees of, or
providing security for, Debt or the deferred purchase price of property 
(whether incurred, assumed, guaranteed or secured by any asset);        

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(iv) all partnership, joint venture or other similar Contracts, 
arrangements or agreements, excluding those Contracts which relate to   
 partnerships or joint ventures formed for the purpose of producing one or
more Films;                                                             

        (v) all License Agreements to which any Entertainment Company is a party
or by which any Entertainment Company is otherwise bound in which the   
   aggregate payments to be made to or by any Entertainment Company under such
   License Agreement subsequent to the date hereof are more than Seven Hundred
Fifty Thousand Dollars ($750,000) or are reasonably expected to require 
   payment of more than Seven Hundred Fifty Thousand Dollars ($750,000) in the
aggregate; and                                                          

     (vi) all License Agreements or other Contracts that constitute output
deals or similar arrangements.                                          

(b) Except as disclosed in SCHEDULE 3.14(B), each Scheduled Contract    
relating to any Entertainment Company is a legal, valid and binding obligation  
of each Entertainment Company that is party thereto and, to the knowledge of    
Seller, each other party thereto, enforceable against each such Entertainment   
Company that is party thereto and, to the knowledge of Seller, each such other  
party thereto, in accordance with its terms, except to the extent that          
unenforceability would not adversely affect any Entertainment Company's rights  
thereunder or as may be limited by applicable bankruptcy, insolvency,           
reorganization, moratorium or similar laws affecting creditors' rights          
generally, and neither any Entertainment Company that is party thereto nor, to  
the knowledge of Seller, any other party thereto, is in material default or has 
failed to perform any material obligation thereunder. Complete and correct      
copies of each Scheduled Contract have been delivered or made available to      
Buyer. There is no default or failure to perform under other Contracts which    
could reasonably be expected to have a Material Adverse Effect.                 

   (c) Except as disclosed in SCHEDULE 3.14(C), each Entertainment Company has
paid all material Participations due and payable by it as of the date hereof in 
accordance with past practice as such practice relates to the timing of such    
payments, and no Entertainment Company is in default or has failed to perform   
any obligation with respect to the payment of any such material Participations. 

3.15.  PERMITS; REQUIRED CONSENTS.                                      

(a) SCHEDULE 3.15(A) sets forth all material approvals, authorizations, 
certificates, consents, licenses, orders and permits or other similar           
authorizations of all Governmental Authorities (and all other Persons) necessary
for the operation of the Entertainment Companies in substantially the same      
manner as currently operated or affecting or relating in any way to the         
Entertainment Companies (the "Permits").                                        

(b) SCHEDULE 3.15(B) lists (i) each governmental or other registration, 
filing, application, notice, transfer, consent, approval, order, qualification  
and waiver (each, a "Required Governmental Approval") required under Applicable 
Law to be obtained by Seller or any Entertainment Company by virtue of the      
execution and delivery of this Agreement or the consummation of the transactions
contemplated hereby to avoid the loss of any material Permit or otherwise, (ii) 
each Scheduled Contract with respect to which the consent of the other party or 
parties thereto must be obtained by Seller or any Entertainment Company by      
virtue of the execution and delivery of this Agreement or the consummation of   
the transactions contemplated hereby to avoid the invalidity of the transfer of 
such Contract, the termination thereof, a breach or default thereunder or any   
other change or modification to the terms thereof (each, a "Required Contractual
Consent") and (iii) each Required Contractual Consent which Seller and Buyer    
have mutually agreed is critical to the consummation of the transactions        
contemplated hereby as set forth on SCHEDULE 3.15(B) (each, an "Essential       
Consent" and collectively with the Required Governmental Approvals and the      
Required Contractual Consents, the "Required Consents"). Except as set forth in 
SCHEDULE 3.15(B), each Permit is valid and in full force and effect in all      
material respects and, assuming the related Required Consents have been obtained
prior to the Closing, are or will be transferable by Seller, and assuming the   
related Required Consents have been obtained prior to the Closing, none of the  
Permits will be terminated or become terminable or impaired in any material     
respect as a result of the transactions contemplated hereby. To the knowledge of
Seller, there are no facts relating to the identity or circumstances of Seller  
that would prevent or materially delay obtaining any of the Required Consents.  

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3.16.  COMPLIANCE WITH APPLICABLE LAWS.  Except as set forth in SCHEDULE
3.16, the operation of the respective business of each Entertainment Company has
not violated or infringed, and does not violate or infringe, any Applicable Law 
in a manner that could reasonably be expected to have, either alone or together 
with all such violations or infringements, a Material Adverse Effect.           

3.17.  EMPLOYMENT AGREEMENTS; CHANGE IN CONTROL; AND EMPLOYEE BENEFITS. 

(a) Except as set forth on SCHEDULE 3.17(A), there are no employment,   
consulting, severance pay, continuation pay, termination pay or indemnification 
agreements or other similar agreements of any nature whatsoever (collectively,  
"Employment Agreements") between or binding upon any Entertainment Company, on  
the one hand, and any current or former stockholder, officer, director, employee
or Affiliate of any Entertainment Company or any of their respective Associates 
or any consultant or agent of any Entertainment Company, on the other hand, that
are currently in effect other than any such Employment Agreement that does not  
provide for the payment of more than One Hundred Thousand Dollars ($100,000) in 
the aggregate in any year.                                                      

(b) Except as set forth on SCHEDULE 3.17(B), there are no Employment    
Agreements or any other similar agreements to which any Entertainment Company is
a party or by which it is bound under which the transactions contemplated by    
this Agreement (i) will require any payment by any Entertainment Company or     
Buyer, or any consent or waiver from any stockholder, officer, director,        
employee or Affiliate of any Entertainment Company or any of their respective   
Associates or any consultant or agent of any Entertainment Company, or Buyer or 
(ii) will result in any increase, acceleration, vesting or other change in the  
compensation, benefits or other rights of any stockholder, officer, director,   
employee or Affiliate of any Entertainment Company or any of their respective   
Associates or any consultant or agent of any Entertainment Company under any    
such Employment Agreement or other similar agreement.                           

 (c) SCHEDULE 3.17(C) sets forth all Benefit Plans of Seller, in which any
employees or former employees and their beneficiaries of any Entertainment      
Company participate ("Entertainment Plans"). Seller has made available to Buyer 
true and correct copies of all governing instruments and related agreements     
pertaining to such Entertainment Plans.                                         

(d) Except as set forth in SCHEDULE 3.17(D), neither Seller nor any     
Entertainment Company nor any Affiliate or ERISA Affiliate of Seller or any     
Entertainment Company sponsors or has ever sponsored, maintained, contributed   
to, or incurred an obligation to contribute to, any Employee Pension Benefit    
Plan. In connection with any Employee Pension Benefit Plan currently maintained 
by any Entertainment Company or any ERISA Affiliate, (i) there have been no     
accumulated funding deficiencies (within the meaning of Code Section 412),      
whether or not waived, (ii) there have been no reportable events (within the    
meaning of ERISA Section 4043(b)) other than any reportable event that may arise
in connection with the transactions contemplated by this Agreement, and (iii) no
circumstances exist that would warrant a termination of any such plan by the    
Pension Benefit Guaranty Corporation pursuant to ERISA Section 4042. No Employee
Pension Benefit Plan has been terminated within the last five (5) years in other
than a standard termination under Section 4041(b) of ERISA and all liabilities  
under such plans have been adequately and properly discharged. The foregoing    
applies only to the extent any of the events results in a material Liability of 
any Entertainment Company.                                                      

(e) Except as set forth in SCHEDULE 3.17(E), neither Seller nor any     
Entertainment Company nor any Affiliate or ERISA Affiliate of Seller or any     
Entertainment Company sponsors or has ever sponsored, maintained, contributed   
to, or incurred an obligation to contribute to any Multiemployer Plan. Neither  
Seller nor any Entertainment Company nor any of their ERISA Affiliates has at   
any time withdrawn from a Multiemployer Plan in a complete withdrawal or a      
partial withdrawal, as such terms are defined in ERISA Sections 4203 and 4205,  
respectively, so as to result in any liability, contingent or otherwise, to     
Seller, any Entertainment Company or any of their ERISA Affiliates. All         
contributions required to be made by Seller, any Entertainment Company or any of
their ERISA Affiliates to each Multiemployer Plan have been made when due. To   
the best knowledge of Seller, with respect to each Multiemployer Plan,          

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(i) no such plan has been terminated or has been in reorganization under ERISA  
so as to result, directly or indirectly, in any liability, contingent or        
otherwise, of Seller, any Entertainment Company or any of their ERISA Affiliates
under Title IV of ERISA; (ii) no proceeding has been initiated by any Person    
(including the PBGC) to terminate any such plan; (iii) Seller, any Entertainment
Company and any of their ERISA Affiliates have no reason to believe that any    
Multiemployer Plan will be terminated or reorganized; and (iv) Seller, each     
Entertainment Company and their ERISA Affiliates do not expect to withdraw from 
any Multiemployer Plan.                                                         

(f) Except as set forth in SCHEDULE 3.17(F), no agreement, commitment or
obligation exists to increase benefits under any Entertainment Plan or to adopt 
any new Entertainment Plan. Further, no individual shall accrue or receive      
additional benefits, service or accelerated rights to payments of benefits under
any Benefit Plan, including the right to receive any parachute payment, as      
defined in Section 280G of the Code, or become entitled to severance,           
termination allowance or similar payments as a direct result of the transactions
contemplated hereby, and neither Seller nor any Entertainment Company is a party
to any agreement or arrangement that could result in the payment of any such    
benefits or payments.                                                           

    (g) No Entertainment Plan has participated in, engaged in or been a party to
any non-exempt Prohibited Transaction, and none of Seller, any Entertainment    
Company or any Affiliate or ERISA Affiliate of Seller or any Entertainment      
Company has had asserted against it any material claim for taxes under Chapter  
43 of Subtitle A of the Code and Section 5000 of the Code, or for material      
penalties under ERISA Section 502(c), (i) or (l), with respect to any Employee  
Benefit Plan nor, to the knowledge of Seller, is there a material basis for any 
such claim. No officer, director or employee of Seller or any Entertainment     
Company has committed a material breach of any responsibility or obligation     
imposed upon fiduciaries by Title I of ERISA with respect to any Entertainment  
Plan, with respect to which breach Seller or any Entertainment Company is or    
could be directly or indirectly liable.                                         

    (h) Other than routine claims for benefits, there is no claim pending, or to
the knowledge of Seller, threatened, involving any Entertainment Plan by any    
Person against such plan or Entertainment Company. There is no pending, or to   
the knowledge of Seller, threatened, proceeding involving any Employee Benefit  
Plan before the IRS, the United States Department of Labor or any other         
Governmental Authority that affects any Entertainment Plan.                     

(i) There is no material violation of any reporting or disclosure       
requirement imposed by ERISA or the Code with respect to any Entertainment Plan.

    (j) Each Entertainment Plan has at all times prior hereto been maintained in
all material respects, by its terms and in operation, in accordance with ERISA  
and the Code. Seller, each Entertainment Company and their respective Affiliates
and ERISA Affiliates have made full and timely payment of all amounts required  
to be contributed under the terms of each Entertainment Plan and Applicable Law 
or required to be paid as expenses under such Entertainment Plan, and Seller and
each Entertainment Company and their respective Affiliates and ERISA Affiliates 
shall continue to do so through the Closing. Each Entertainment Plan that is    
intended to be qualified under Section 401(a) of the Code is and has always been
so qualified, and either has received a favorable determination letter with     
respect to such qualified status from the IRS or has filed a request for such a 
determination letter with the IRS within the remedial amendment period such that
such determination of qualified status will apply from and after the effective  
date of any such Entertainment Plan.                                            

(k) With respect to any Group Health Plans maintained by Seller, any    
Entertainment Company or any Affiliates or ERISA Affiliates of Seller or any    
Entertainment Company, whether or not for the benefit of the employees of       
Seller, any Entertainment Company, Affiliates or its ERISA Affiliates, Seller,  
the Entertainment Companies and their respective Affiliates and ERISA Affiliates
have complied in all material respects with the provisions of Part 6 of Title I 
of ERISA and 4980B of the Code. No Entertainment Company is obligated to provide
health care benefits of any kind to any retired employees                       

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pursuant to any Employee Benefit Plan, including without limitation any Group   
Health Plan, or pursuant to any agreement or understanding, other than as       
required by applicable law.                                                     

 (l) Seller and the Entertainment Companies have made available to Buyer a
copy of the three (3) most recently filed Federal Form 5500 series and          
accountant's opinion, if applicable, for each Entertainment Plan.               

3.18.  LABOR AND EMPLOYMENT MATTERS.                                    

(a) Except as set forth on SCHEDULE 3.18(A), no collective bargaining   
agreement exists that is binding on any Entertainment Company and, except as    
described on SCHEDULE 3.18(A), no petition has been filed or proceedings        
instituted by an employee or group of employees with any labor relations board  
seeking recognition of a bargaining representative at any time subsequent to    
January 1, 1993. SCHEDULE 3.18(A) describes any organizational effort currently 
being made or threatened by or on behalf of any labor union to organize any     
employees of any Entertainment Company.                                         

  (b) Except as set forth on SCHEDULE 3.18(B), (i) there is no labor strike,
dispute, slow down or stoppage pending or, to the knowledge of Seller,          
threatened, against or directly affecting any Entertainment Company, (ii) no    
grievance or arbitration proceeding arising out of or under any collective      
bargaining agreement is pending, and no claims therefor exist, and (iii) no     
Entertainment Company nor any Affiliate of any Entertainment Company has        
received any notice or has any knowledge of any threatened labor, employment or 
civil rights dispute, controversy or grievance or any other unfair labor        
practice proceeding or breach of contract claim or action with respect to claims
of, or obligations to, any employee or group of employees of any Entertainment  
Company.                                                                        

(c) Each of the Entertainment Companies has complied and are currently  
complying, in respect of all employees of any Entertainment Company, with any   
Applicable Law respecting employment and employment practices and the protection
of the health and safety of employees, from whatever source such law may be     
derived, including, without limitation, statutes, ordinances, laws, rules,      
regulations, policies, standards, judicial or administrative precedents,        
judgments, orders, decrees, awards, citations, licenses, official               
interpretations and guidelines, except for instances of noncompliance which     
could not be reasonably expected to have, alone or in the aggregate, a Material 
Adverse Effect.                                                                 

 (d) All individuals who are performing or have performed services for any
Entertainment Company or any Affiliate thereof and are or during 1995 or 1996   
were classified by any of the Entertainment Companies as "independent           
contractors" qualify for such classification under Section 530 of the Revenue   
Act of 1978 or Section 1706 of the Tax Reform Act of 1986, as applicable, except
for such instances which are not, in the aggregate, material.                   

3.19.  INTELLECTUAL PROPERTY.                                           

   (a) Other than copyright registrations, applications and claims relating to
the Films and common law trademark rights in the titles of the Films, SCHEDULE  
3.19(A) sets forth a complete and correct list of all (i) foreign and United    
States federal and state patent, trademark, trade name, service mark and        
copyright registrations, (ii) foreign and United States federal and state       
patent, trademark, trade name, service mark and copyright applications for      
registration, (iii) common law claims to trademarks, service marks and trade    
names, (iv) claims of copyright which exist although no registrations have been 
issued with respect thereto, (v) fictitious business name filings with any state
or local Governmental Authority and (vi) inventions, discoveries, concepts,     
ideas, drawings, designs, original works of authorship, computer programs, know-
how, research and development, techniques, data, trade secrets and other        
proprietary and intellectual property rights owned by any of the Entertainment  
Companies (collectively, the "OWNED INTELLECTUAL PROPERTY RIGHTS").             

   (b) Other than copyright registrations, applications and claims relating to
the Films and common law trademark rights in the titles of the Films, SCHEDULE  
3.19(B) sets forth a complete and correct list of all                           

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(i) foreign and United States federal and state patent, trademark, trade name,  
service mark and copyright registrations, (ii) foreign and United States federal
and state patent, trademark, trade name, service mark and copyright applications
for registration, (iii) common law claims to trademarks, service marks and trade
names, (iv) claims of copyright which exist although no registrations have been 
issued with respect thereto, (v) fictitious business name filings with any state
or local Governmental Authority and (vi) inventions, discoveries, concepts,     
ideas, drawings, designs, original works of authorship, computer programs, know-
how, research and development, techniques, data, trade secrets and other        
proprietary and intellectual property rights which any of the Entertainment     
Companies has a valid license to use, including a description of all Persons    
from whom any of the Entertainment Companies have obtained such rights and the  
material terms of such licenses (collectively, the "LICENSED INTELLECTUAL       
PROPERTY RIGHTS"). The Owned Intellectual Property Rights and the Licensed      
Intellectual Property Rights are collectively referred to herein as the         
"INTELLECTUAL PROPERTY RIGHTS."                                                 

(c) SCHEDULE 3.19(C) lists all licenses pursuant to which any of the    
Entertainment Companies have licensed any Person to use any Intellectual        
Property Rights. No Person is in default in any material respect with respect to
its obligations under any of the licenses set forth in SCHEDULE 3.19(C).        

   (d) Except as set forth in SCHEDULE 3.19(D), (i) no claim is pending or, to
Seller's knowledge, threatened to the effect that the present or past use of the
Intellectual Property Rights by any of the Entertainment Companies infringes    
upon or conflicts with or violates any patent, patent license, patent           
application, trademark, tradename, trademark or tradename registration,         
copyright, copyright registration, service mark or any pending application      
relating thereto, or any trade secret, know-how, program or process, or common  
law rights in respect of any of the foregoing, or any similar rights, of any    
Person, (ii) use, sale or licensing of the Intellectual Property Rights by the  
relevant Entertainment Company does not infringe upon or violate any rights of  
any other Person, (iii) to the knowledge of Seller, no Person is infringing in  
any material respect upon the rights of any of the Entertainment Companies in   
and to the Intellectual Property Rights and (iv) the Intellectual Property      
Rights are not subject to any Lien other than Permitted Liens and Liens granted 
in connection with the Existing Orion Credit Facility which shall be            
extinguished on or before the Closing. Except as set forth on SCHEDULE 3.19(D), 
no Intellectual Property Right of any of the Entertainment Companies is subject 
to any outstanding order, judgment, decree, stipulation or agreement restricting
the use thereof by the relevant Entertainment Company or, in the case of any    
Intellectual Property Right licensed to others, restricting the sale, transfer, 
assignment or licensing thereof by the relevant Entertainment Company to any    
Person.                                                                         

(e) Except for Participations or as set forth on SCHEDULE 3.19(E), no   
Entertainment Company is obligated to make royalty or other payments to any     
owner of, licensor of, other claimant to, or any other Person regarding any     
Intellectual Property Rights.                                                   

3.20.  LIBRARY FILMS.                                                   

(a) OWNERSHIP. All Films set forth on SCHEDULE 3.20(A) are designated   
therein as "A Films" and "B Films," and all of such A Films and B Films shall be
referred to collectively herein as the "Library Films." SCHEDULE 3.20(A)(I)     
identifies the availability dates of those A Films and B Films which are        
currently being exploited by Seller, in each media, in the territories          
indicated. SCHEDULE 3.20(A)(II) identifies all distribution rights owned or     
controlled by the Entertainment Companies with respect to each Library Film.    
SCHEDULE 3.20(A)(III) identifies all Films which Seller deems to be "dormant."  
Except as set forth on SCHEDULE 3.20(A)(IV), the Library Films are free and     
clear of all Liens other than Permitted Liens and Liens disclosed on SCHEDULE   
3.11(A).                                                                        

   (b) RATINGS. Except as disclosed in SCHEDULE 3.20(B), each A Film that is a
feature-length motion picture was produced in color on either 35MM or 70MM film,
was submitted to the Motion Picture Association of America ("MPAA") for rating, 
was released theatrically in the United States with a rating that is not more   
restrictive than the current rating equivalent to an "R" under the present      
system or its equivalent rating under any successor system and was produced     
primarily in the English language.                                              

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 (c) ELEMENTS. SCHEDULE 3.20(C) identifies all available Elements owned or
controlled by the Entertainment Companies relating to the Library Films listed  
therein. The Entertainment Companies have laboratory access letters with respect
to those Elements which the Entertainment Companies do not own. With respect to 
each such Library Film identified, the Elements identified are sufficient to    
produce copies, prints, video products and other reproductions for exploitation 
in the theatrical, non-theatrical, television and video and audio markets that  
are of such quality as is consistent with past practice of the Entertainment    
Companies. SCHEDULE 3.20(C) identifies the correct identification and location  
of each laboratory and other place which holds any of the foregoing Elements    
relating to such Library Films.                                                 

 (d) NO VIOLATION OF THIRD PARTY RIGHTS. No A Film, nor any B Film that is
currently being exploited by Seller, nor any part thereof, nor any of the       
literary, dramatic or musical material contained therein or upon which any such 
Film is based, nor the exercise by any authorized person or entity of any right 
granted to any of the Entertainment Companies in connection therewith will      
violate or infringe upon the trademark, service mark, tradename, copyright,     
literary, dramatic, music, artistic, personal, private, civil, contract or      
property right or rights of privacy or any other right, whether tangible or     
intangible, of any Person.                                                      

  (e) CLEARANCES. The relevant Entertainment Company has obtained proper and
effective licenses or grants of authority to use the results and proceeds of the
services of performers and other Persons connected with the production of the A 
Films to the extent reasonably necessary or desirable to exercise all rights of 
such Entertainment Company therein.                                             

    (f) COPYRIGHTS. Except as specified on SCHEDULE 3.20(F), good and sufficient
copyright notice is affixed to each A Film. Except as set forth in SCHEDULE     
3.20(F), each A Film has been registered with the United States Copyright       
Office.                                                                         

  (g) MUSIC. Except as set forth in SCHEDULE 3.20(G), all non-dramatic music
rights (so-called "small rights") contained in the A Films are (i) available by 
license from American Society for Composers, Authors and Publishers ("ASCAP"),  
Broadcast Music Inc. ("BMI") or SESAC, Inc., (ii) in the public domain, or (iii)
controlled by Orion or another Entertainment Company directly or through        
licenses.                                                                       

    (h) CREDITS. The credits contained in the main and end titles of the A Films
comply in all material respects with all obligations with respect thereto,      
including without limitation, contractual obligations to third parties who      
rendered services in connection with the A Films and all applicable guild       
agreements.                                                                     

   (i) INSURANCE CLAIMS. Except as set forth on SCHEDULE 3.20(I), no insurance
claims have been made and are currently outstanding and unsettled as of the date
of this Agreement on the producer's errors and omissions policies that Orion or 
another Entertainment Company or any of its predecessors maintained with respect
to the A Films.                                                                 

(j) RIGHTS. Except as set forth on SCHEDULE 3.20(J), which Schedule sets
forth any limitations out of the ordinary course with respect to the use of     
performers' names and likenesses, editing rights and credit rights and          
obligations with respect to the A Films, each relevant Entertainment Company    
has, and has the right to grant to its Affiliates, agents, subdistributors and  
licensees, the following rights on a non-exclusive basis to the extent          
reasonably necessary or desirable to exploit the A Films:                       

  (i) Use of Performers' Names: To disseminate, reproduce, print and
publish the name, likeness and biography of each performer, director,   
  producer, author and writer who rendered services in or in connection with
    the production of each A Film, for the purpose of advertising, promoting and
   exploiting such A Film, except that no use may be made so as to indicate or
    imply that any such person or performer is endorsing a commercial product or
service; and                                                            

  (ii) Editing Rights: To make such cuts, alterations, additions and
 variations of and in any part of the A Films (including the dubbing-in of
  languages) as may be deemed necessary or appropriate by such Entertainment
  Company in its sole discretion excluding, however, any right to delete any
logo,                                                                   

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   copyright notice or credit other than such rights which would not adversely
impact the value of each such A Film.                                   

    (k) COMPLIANCE WITH SECTION 507. Each Entertainment Company has conformed to
the requirements of Section 507 of the Federal Communications Act of 1934, as it
may be amended or replaced in a more or less restrictive version, concerning    
broadcast matter and disclosures required thereunder, insofar as that section   
applies to persons furnishing program material for television broadcasting. The 
following is an illustration of the parties' understanding of Section 507, but  
in case of conflict the terms of Section 507 will control. The Library Films do 
not include any matter for which any money, service or other valuable           
consideration is directly or indirectly paid, or promised to, or charged or     
accepted by Seller or any Entertainment Company or to Seller's knowledge by any 
producer or independent contractor connected with the Library Films. As used in 
this paragraph, the term "service or other valuable consideration" shall not    
include any service or property furnished without charge or at a nominal charge 
for use in, or in connection with the Library Films, "unless it is so furnished 
in consideration for an identification in a broadcast of any person, product,   
service, trademark or brand name beyond an identification which is reasonably   
related to the use of such service or property on the broadcast," as such terms 
are used in said Section 507. The provisions of this clause shall not apply to  
feature motion pictures produced initially and primarily for theater exhibition 
to the extent the Federal Communications Commission continues to waive the      
requirements of Section 317(b) of the Communications Act with respect to such   
motion pictures.                                                                

    (l) SCHEDULE 3.20(L) sets forth all Participations as of March 31, 1997 with
respect to each A Film.                                                         

3.21.  FILMS IN PROGRESS.                                               

(a) COSTS. SCHEDULE 3.21(A) sets forth for each Entertainment Company a 
complete list of all Films currently in principal photography, post-production  
or that have been completed but not delivered (collectively, the "Films In      
Progress"), together with (i) a complete summary of all costs and expenses paid 
by the relevant Entertainment Company in connection with each Film In Progress  
to the date set forth therein, and (ii) Seller's good-faith estimate of the cost
to complete and deliver each Film In Progress.                                  

(b) OWNERSHIP. Except as set forth on SCHEDULE 3.21(B), the relevant    
Entertainment Company, or an unaffiliated production company from whom an       
Entertainment Company has the right to acquire such rights pursuant to a        
Contract disclosed on a schedule to this Agreement (an "Unaffiliated Production 
Company"), owns all right, title and interest of every kind and nature,         
worldwide, in all media, whether now known or hereafter devised, in and to the  
Films In Progress. Except as set forth on SCHEDULE 3.21(B), the Films In        
Progress are, or will be when acquired by any Entertainment Company, free and   
clear of all Liens other than Permitted Liens and those Liens which are         
customarily incurred in connection with production financing.                   

   (c) RATINGS. Except as disclosed in SCHEDULE 3.21(C), each Film In Progress
that is a feature-length motion picture is being produced in color on either    
35MM or 70MM film, will be submitted to the MPAA for rating, will be released   
theatrically in the United States with a rating that is not more restrictive    
than the current rating equivalent to an "R" under the present system or its    
equivalent rating under any successor system and is being produced primarily in 
the English language.                                                           

 (d) ELEMENTS. SCHEDULE 3.21(D) identifies all available Elements owned or
controlled by the Entertainment Companies relating to the Films In Progress     
listed therein. The Entertainment Companies have laboratory access letters with 
respect to those Elements which the Companies do not own. With respect to each  
such Film In Progress identified, the Elements identified are sufficient to     
produce copies, prints, video products and other reproductions for exploitation 
in the theatrical, non-theatrical, television and video and audio markets that  
are of such quality as is consistent with past practice of the Entertainment    
Companies. SCHEDULE 3.21(D) sets forth the correct identification and location  
of each laboratory and other place which holds any of the foregoing Elements    
relating to such Films In Progress.                                             

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  (e) INSURANCE POLICIES. The relevant Entertainment Company or Unaffiliated
Production Company has in effect errors and omissions insurance coverage        
relating to each Film In Progress.                                              

(f) COMPLETION BOND. The relevant Entertainment Company or Unaffiliated 
Production Company has in effect a completion bond guaranteeing the completion  
and delivery of each Film In Progress according to its terms.                   

 (g) NO VIOLATION OF THIRD PARTY RIGHTS. No Film In Progress, nor any part
thereof, nor any of the literary, dramatic or musical material contained therein
or upon which any such Film In Progress is based, nor the exercise by any       
authorized person or entity of any right granted to any of the Entertainment    
Companies in connection therewith will violate or infringe upon the trademark,  
service mark, tradename, copyright, literary, dramatic, music, artistic,        
personal, private, civil, contract or property right or rights of privacy or any
other right, whether tangible or intangible, of any Person.                     

(h) CLEARANCES. The relevant Entertainment Company or Unaffiliated      
Production Company has obtained proper and effective licenses or grants of      
authority to use the results and proceeds of the services of performers and     
other Persons connected with the production of the Films In Progress to the     
extent reasonably necessary or desirable to exercise all rights of such         
Entertainment Company therein.                                                  

    (i) COPYRIGHTS. Good and sufficient copyright notice will be affixed to each
Film In Progress in each case where such affixation is possible. Except as set  
forth in SCHEDULE 3.21(I), all screenplay materials relating to each Film In    
Progress have been registered with the United States Copyright Office.          

  (j) MUSIC. Except as set forth in SCHEDULE 3.21(J), all non-dramatic music
rights (so-called "small rights") contained in the Films In Progress are (i)    
available by license from ASCAP, BMI or SESAC, Inc., (ii) in the public domain, 
or (iii) controlled by Orion or another Entertainment Company directly or       
through licenses.                                                               

  (k) CREDITS. The credits contained in the main and end titles of the Films
In Progress, if any, comply in all material respects with all obligations with  
respect thereto, including without limitation, contractual obligations to third 
parties who rendered services in connection with the Films In Progress and all  
applicable guild agreements.                                                    

   (l) INSURANCE CLAIMS. Except as set forth on SCHEDULE 3.21(L), no insurance
claims have been made and are currently outstanding and unsettled as of the date
of this Agreement on the producer's errors and omissions policies that Orion or 
another Entertainment Company or any of its predecessors maintained with respect
to the Films In Progress.                                                       

(m) RIGHTS. Except as set forth in SCHEDULE 3.21(M), which Schedule sets
forth any limitations out of the ordinary course with respect to the use of     
performers' names and likenesses, editing rights and credit rights and          
obligations with respect to the Films In Progress, each relevant Entertainment  
Company has, and has the right to grant to its Affiliates, agents,              
subdistributors and licensees the following rights on a non-exclusive basis to  
the extent reasonably necessary or desirable to exploit the Films In Progress:  

  (i) Use of Performers' Names: To disseminate, reproduce, print and
publish the name, likeness and biography of each performer, director,   
  producer, author and writer who rendered services in or in connection with
the production of each Film In Progress, for the purpose of advertising,
 promoting and exploiting such Film In Progress, except that no use may be
made so as to indicate or imply that any such person or performer is    
endorsing a commercial product or service; and                          

  (ii) Editing Rights: To make such cuts, alterations, additions and
variations of and in any part of the Films In Progress (including the   
 dubbing-in of languages) as may be deemed necessary or appropriate by the
 relevant Entertainment Company in its sole discretion excluding, however,
any right to delete any logo, copyright notice or credit other than such
rights which would not adversely impact the value of each such Film In  
Progress.                                                               

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    (n) COMPLIANCE WITH SECTION 507. Each Entertainment Company has conformed to
the requirements of Section 507 of the Federal Communications Act of 1934, as it
may be amended or replaced in a more or less restrictive version, concerning    
broadcast matter and disclosures required thereunder, insofar as that section   
applies to persons furnishing program material for television broadcasting. The 
following is an illustration of the parties' understanding of Section 507, but  
in case of conflict the terms of Section 507 will control. The Films In Progress
do not include any matter for which any money, service or other valuable        
consideration is directly or indirectly paid, or promised to, or charged or     
accepted by Seller or any Entertainment Company or to Seller's knowledge by any 
producer or independent contractor connected with the Films In Progress. As used
in this paragraph, the term "service or other valuable consideration" shall not 
include any service or property furnished without charge or at a nominal charge 
for use in, or in connection with the Films In Progress "unless it is so        
furnished in consideration for an identification in a broadcast of any person,  
product, service, trademark or brand name beyond an identification which is     
reasonably related to the use of such service or property on the broadcast," as 
such terms are used in said Section 507. The provisions of this clause shall not
apply to feature motion pictures produced initially and primarily for theater   
exhibition to the extent the Federal Communications Commission continues to     
waive the requirements of Section 317(b) of the Communications Act with respect 
to such motion pictures.                                                        

       (o) SCHEDULE 3.21(O) identifies all Participations as of March 31, 1997
with respect to each Film In Progress.                                  

3.22.  DEVELOPMENT PROJECTS.  SCHEDULE 3.22 identifies all projects in  
development by or on behalf of each Entertainment Company (the "Development     
Projects") and all material Contracts relating thereto. The relevant            
Entertainment Company owns all right, title and interest in and to such         
Development Projects to the extent described therein.                           

 3.23.  ADVISORY FEES.  Except for Donaldson, Lufkin & Jenrette Securities
Corporation (whose fees and expenses will be paid by Seller), there is no       
investment banker, broker, finder or other intermediary or advisor that has been
retained by or is authorized to act on behalf of Seller or any Entertainment    
Company who might be entitled to any fee, commission or reimbursement of        
expenses from Buyer or any of its Affiliates or any of their respective         
Associates or any Entertainment Company upon consummation of the transactions   
contemplated by this Agreement.                                                 

3.24.  ENVIRONMENTAL COMPLIANCE.                                        

       (a) Except as disclosed in SCHEDULE 3.24(A) the Entertainment Companies
have obtained all approvals, authorizations, certificates, consents,    
licenses, orders and permits or other similar authorizations of all     
   Governmental Authorities, or from any other Person, that are required under
any Environmental Law. Schedule 3.24(a) also sets forth all permits,    
   licenses and other authorizations issued under any Environmental Law to any
Entertainment Company.                                                  

        (b) Except as disclosed in SCHEDULE 3.24(B), the Entertainment Companies
   are in compliance in all material respects with all terms and conditions of
   all approvals, authorizations, certificates, consents, licenses, orders and
    permits or other similar authorizations of all Governmental Authorities (and
all other Persons) required under all Environmental Laws and are in     
compliance in all material respects with all other limitations,         
   restrictions, conditions, standards, requirements, schedules and timetables
required or imposed under all Environmental Laws.                       

 (c) Except as disclosed in SCHEDULE 3.24(C), there are no past or
    present events, conditions, circumstances, activities, practices, incidents,
actions, omissions or plans relating to or in any way affecting any     
    Entertainment Company that could reasonably be expected to interfere with or
    prevent continued compliance with any Environmental Law by any Entertainment
Company or Buyer after the Closing, or that may give rise to any        
  Environmental Liability, or otherwise form the basis of any claim, action,
demand, suit, Proceeding, hearing, study or investigation (i) under any 
   Environmental Law, (ii) based on or related to the manufacture, processing,
distribution, use, treatment, storage                                   

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(including without limitation underground storage tanks), disposal,     
transport or handling, or the emission, discharge, release or threatened
release of any Hazardous Substance, or (iii) resulting from exposure to 
workplace hazards.                                                      

  3.25.  INSURANCE.  SCHEDULE 3.25 sets forth a complete and correct list of
all insurance policies of any kind or nature whatsoever currently in force or in
force at any time subsequent to January 1, 1995 with respect to the             
Entertainment Companies (the "Insurance Policies"), including without limitation
all "occurrence based" liability policies, all errors and omissions policies and
all production package policies. For each Insurance Policy, SCHEDULE 3.25       
indicates the type of coverage, the name of the insureds, the insurer, the      
expiration date, the period to which it relates, the deductibles and loss       
retention amounts and the amounts of coverage. The Insurance Policies described 
as being material on SCHEDULE 3.25 and currently in effect are in full force and
effect and are valid, outstanding and enforceable, and all premiums due thereon 
have been paid. Except as set forth on SCHEDULE 3.25, no insurance claims of    
more than Fifty Thousand Dollars ($50,000) have been made and are currently     
outstanding and unsettled.                                                      

3.26.  TAX MATTERS.                                                     

(a) Except as set forth on SCHEDULE 3.26, Seller and each Entertainment 
Company (i) have accurately prepared and timely filed or caused to be filed with
the appropriate Tax authorities all material Tax Returns required to have been  
filed by them under applicable law, and (ii) have paid or caused to be paid to  
the appropriate Tax authorities all material Taxes required to have been paid by
them. No Tax liens or assessments have been filed by any Tax authority against  
the Entertainment Companies or any of their properties or assets.               

(b) The Entertainment Companies are not and have not been required to be
included in any state, local or foreign combined, unitary or consolidated Tax   
Return filed by Seller or any of Seller's Subsidiaries (other than the          
Entertainment Companies).                                                       

3.27.  SEC DOCUMENTS.  Seller has made available to Buyer a true and    
complete copy of each form, report, schedule, registration statement and        
definitive proxy statement filed by Seller with the SEC since January 1, 1995   
(as such documents have since the time of their filing been amended or          
supplemented, the "SEC Documents"), which constitute all of the documents (other
than preliminary material) that Seller was required to file with the SEC since  
such date.                                                                      

    3.28.  DISCLOSURE.  The Statement of Assumptions, taken as a whole, does not
contain an untrue statement of a material fact. None of (x) this Agreement and  
the schedules (other than the Statement of Assumptions) delivered pursuant      
hereto or certificates or other documents delivered to Buyer by or on behalf of 
Seller or any Entertainment Company pursuant hereto, (y) any of the SEC         
Documents or (z) any other document or written statement or other written       
information which has been, or at any time prior to the Closing Date will be,   
provided to Buyer by or on behalf of Seller or any Entertainment Company in     
connection with this Agreement or the transactions contemplated hereby (taken as
a whole, with respect to such documents, statements or other information        
relating to the same subject matter) contains or will contain an untrue         
statement of a material fact or omits or will omit any information or statement 
of a material fact necessary in order to make the information or statements     
herein or therein not misleading. After reasonable investigation, including,    
without limitation, consultation with the appropriate directors, officers and   
employees of Seller and the Entertainment Companies, there is no fact or        
condition within the knowledge of Seller which materially and adversely affects 
the assets, liabilities, business, operations or financial condition of the     
Entertainment Companies, taken as a whole, which has not been set forth in this 
Agreement or any schedule hereto or certificate or other document delivered in  
accordance with the terms hereof or any other written statement or other        
document delivered to Buyer by or on behalf of Seller or any Entertainment      
Company.                                                                        

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3.29.  FINANCIAL STATEMENTS OF LANDMARK.                                

 (a) SCHEDULE 3.29(A) sets forth true and complete copies of the unaudited
balance sheet and related statement of operations for Landmark for the year     
ended December 31, 1996 and the three-month period ended March 31, 1997 (the    
"Landmark Financial Statements"). The Landmark Financial Statements have been   
prepared based on the books and records of Landmark in accordance with GAAP and 
its normal accounting practices, consistent with past practice, and present     
fairly the financial condition and results of operations of Landmark as of the  
date and for the periods indicated, subject to normal year-end adjustments. (b) 
Since December 31, 1996, no Entertainment Company has transferred any asset or  
property to Landmark (whether in payment of indebtedness, as a contribution to  
capital or otherwise) except for (i) transfers of cash to Landmark in the       
ordinary course of business in an aggregate amount (net of cash returned to the 
Entertainment Companies) not exceeding Three Million Dollars ($3,000,000) and   
(ii) transfer of those assets identified in SCHEDULE 3.29(B).                   

3.30.  NO CONTRACT WITH LANDMARK.  Except as set forth on SCHEDULE 3.30,
none of the Entertainment Companies is a party to or is bound by any Contract   
with Landmark other than exhibition contracts with Orion negotiated on an       
arms-length film-by-film basis relating to Films the theatrical distribution    
rights to which are owned or controlled by Orion.                               

3.31.  BOARD RECOMMENDATIONS.  By the unanimous vote of the directors   
present at a meeting of Seller's Board of Directors (which meeting was duly     
called and held and at which a quorum was present), the Board of Directors of   
Seller (a) duly and validly approved this Agreement and the transactions        
contemplated hereby, and (b) resolved to recommend approval and adoption of this
Agreement and the transactions contemplated hereby by the stockholders of       
Seller. Seller's financial advisor, Donaldson, Lufkin & Jenrette Securities     
Corporation, has delivered to Seller's Board of Directors an oral opinion on the
date hereof (and has committed to deliver a written opinion not later than ten  
(10) days after the date hereof) to the effect that on such date, the Purchase  
Price is fair to Seller's stockholders from a financial point of view.          

3.32.  BANKRUPTCY.                                                      

  (a) On or about November 5, 1992, all property of the bankruptcy estate of
each Entertainment Company that was a debtor in the Bankruptcy Cases revested in
such Entertainment Company.                                                     

(b) The use, sale or lease of property of each Entertainment Company,   
whether or not such use, sale or lease is in the ordinary course of its business
and consistent with past practice, does not require any notice to or approval of
the Bankruptcy Court, the United States Trustee or any committee of creditors or
other representative of creditors appointed in the Bankruptcy Cases or pursuant 
to the Confirmation Documents.                                                  

  (c) Except for the claims set forth on SCHEDULE 3.32(C), all claims of the
creditors of each Entertainment Company that arose prior to the effective date  
of the Plan of Reorganization (as defined therein) have been paid in full or    
otherwise fully satisfied in accordance with the terms of the Confirmation      
Documents.                                                                      

ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER 

 As an inducement to Seller to enter into this Agreement and to consummate
the transactions contemplated herein, Buyer hereby represents and warrants to   
Seller that:                                                                    

4.01. CORPORATE EXISTENCE AND POWER. Buyer is a corporation duly        
incorporated, validly existing and in good standing under the laws of the State 
of Delaware, and has all corporate power to carry out its business as now       
conducted. Buyer is duly qualified to do business as a foreign corporation in   
each jurisdiction where the character of the property owned or leased by it or  
the nature of its activities makes                                              

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such qualification necessary to carry on its business as now conducted, except  
for those jurisdictions where the failure to be so qualified has not been, and  
could not reasonably be expected to be, material.                               

 4.02. CORPORATE AUTHORIZATION. The execution, delivery and performance by
Buyer of this Agreement and the consummation by Buyer of the transactions       
contemplated hereby are within its corporate powers and have been duly          
authorized by all necessary corporate action on its part. This Agreement has    
been duly and validly executed by Buyer and constitutes the legal, valid and    
binding agreement thereof, enforceable in accordance with its terms, except as  
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium 
or similar laws affecting creditors' rights generally.                          

    4.03. GOVERNMENTAL AUTHORIZATION. The execution, delivery and performance by
Buyer of this Agreement require no action by, consent or approval of, or filing 
with, any Governmental Authority other than (i) compliance with any applicable  
requirements of the HSR Act or (ii) any actions, consents, approvals or filings 
otherwise expressly referred to in this Agreement.                              

    4.04. NON-CONTRAVENTION. The execution, delivery and performance by Buyer of
this Agreement, and consummation of the transactions contemplated hereby, do not
and will not (a) contravene or conflict with the articles or certificate of     
incorporation or bylaws of Buyer, true and correct copies of all of which have  
been delivered to Seller by Buyer; (b) contravene or conflict with or constitute
a violation of any provision of any material Applicable Law binding upon or     
applicable to Buyer; (c) constitute a default under any material contract,      
agreement or understanding to which Buyer is a party or any material            
authorization, license or permit of any Governmental Authority; or (d) result in
the creation or imposition of any Lien on the assets of Buyer.                  

4.05. ADVISORY FEES. Except for J.P. Morgan & Co., Inc. (whose fees and 
expenses will be paid by Buyer), there is no investment banker, broker, finder  
or other intermediary or advisor that has been retained by or is authorized to  
act on behalf of Buyer who might be entitled to any fee, commission or          
reimbursement of expenses from Seller or any of their respective Affiliates or  
Associates upon consummation of the transactions contemplated by this Agreement.

4.06. LITIGATION. There is no Proceeding pending against, or to the     
knowledge of Buyer, threatened against or affecting, Buyer before any court or  
arbitrators or any governmental body, agency or official that in any matter     
challenges or seeks to prevent, enjoin, alter or materially delay the           
transactions contemplated by this Agreement.                                    

   4.07. PURCHASE FOR INVESTMENT. Buyer will acquire the Shares solely for its
own account for investment and not with a view toward any resale or distribution
thereof. Buyer agrees that the Shares may not be sold, transferred, offered for 
sale, pledged, hypothecated or otherwise disposed of without registration under 
the Securities Act of 1993, as amended, except pursuant to an exemption from    
such registration available under such Act, and without compliance with foreign 
securities laws, in each case, to the extent applicable. Buyer has such         
knowledge and experience in financial and business matters that it is capable of
evaluating the merits and risks of its purchase of the Shares. Buyer confirms   
that Seller has made available to Buyer the opportunity to ask questions of the 
officers and management employees of the Entertainment Companies and to acquire 
additional information about the business and financial condition of the        
Entertainment Companies.                                                        

    4.08. OWNERSHIP OF MGM. Buyer owns all of the issued and outstanding capital
stock of Metro-Goldwyn-Mayer Inc., a Delaware corporation.                      

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ARTICLE V 
COVENANTS OF SELLER AND ORION 

Each of Seller and Orion hereby agree that:                             

   5.01. CONDUCT OF THE BUSINESS. From the date hereof until the Closing Date,
it shall cause each Entertainment Company to conduct its business operations in 
the ordinary course of business consistent with past practice. Without limiting 
the generality of this Section 5.01, from the date hereof until the Closing     
Date:                                                                           

(a) Seller and Orion, as applicable, will:                      

        (i) (A) cause each Entertainment Company to maintain its assets in
   the ordinary course of business consistent with past practice in good
     operating order and condition, reasonable wear and tear, damage by fire
    and other casualty excepted, other than through the transfer of all of
     the issued and outstanding capital stock of Landmark to an Affiliate of
       Seller that is not an Entertainment Company, (B) promptly repair, restore
       or replace assets in the ordinary course of business consistent with past
  practice, and (C) upon any damage, destruction or loss to any of its
assets, apply any and all insurance proceeds received with respect
      thereto to the prompt repair, replacement and restoration thereof to the
condition of its assets before such event;                        

       (ii) cause each of the Entertainment Companies to comply with all
Applicable Laws;                                                  

           (iii) file all foreign, Federal, state and local Tax Returns required
   to be filed and make timely payment of all applicable Taxes when due;

    (iv) use reasonable commercial efforts to obtain, prior to the
Closing Date, all Required Consents;                              

          (v) cause each of the Entertainment Companies to take all reasonable
actions necessary to be in compliance with, and to maintain the   
effectiveness of, all material Permits;                           

           (vi) promptly notify Buyer in writing of any action, event, condition
or circumstance, or group of actions, events, conditions or       
       circumstances, that results in, or could reasonably be expected to result
   in, a Material Adverse Effect, other than changes in general economic
conditions;                                                       

       (vii) promptly notify Buyer in writing of the commencement of any
       Proceeding by or against Seller which relates to this Agreement or any of
     the Entertainment Companies or by or against any Entertainment Company,
   or Seller becoming aware of any threat, claim, action, suit, inquiry,
  proceeding, notice of violation, demand letter, subpoena, government
       audit or disallowance that could reasonably be expected to result in such
a Proceeding;                                                     

      (viii) promptly notify Buyer in writing of the occurrence of any
       breach by Seller of any representation or warranty, or by Seller or Orion
of any covenant or agreement, contained in this Agreement; and    

(ix) cause each Entertainment Company to continue to make 
    expenditures as required by and in accordance with the budget for each
   Film In Progress including, without limitation, all such expenditures
   required for prints and advertising ("P&A"), as contained in SCHEDULE
5.01(A)(IX).                                                      

    (b) without Buyer's prior written consent, Seller and Orion will not
permit any Entertainment Company to:                                    

          (i) purchase or otherwise acquire assets from any other Person other
    than in the ordinary course of business consistent with past practice;

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          (ii) sell, assign, lease, license, transfer or otherwise dispose of,
 or mortgage, pledge or encumber any of its assets other than in the
      ordinary course of business consistent with past practice or pursuant to
existing obligations of Seller as set forth in Schedule 3.11(a);  

           (iii) make or commit to make any expenditures of amounts in excess of
     the amounts set forth on SCHEDULE 5.01(A)(IX) with respect to each Film
In Progress including the budgeted expenditures for P&A; PROVIDED,
   HOWEVER, that the amount expended for P&A may be increased above that
budgeted in the event Buyer provides all of such excess amounts;  

     (iv) enter any agreement or arrangement that requires or allows
   payment, acceleration of payment or incurrence of Liabilities, or the
     rendering of services by any Entertainment Company outside the ordinary
      course of business or unless expressly contemplated by the terms of this
Agreement;                                                        

          (v) enter into, amend or modify in any material respect or terminate
any Scheduled Contract or any other Contract entered into by any  
       Entertainment Company after the date hereof which, if in existence on the
     date hereof, would be required to be set forth in SCHEDULE 3.14(A) as a
Scheduled Contract (each, a "Subsequent Material Contract");      

           (vi) except in the ordinary course of business, waive, cancel or take
any other action materially impairing any of its rights;          

      (vii) make or commit to make any capital expenditure (other than
       capital expenditures expressly required under any Scheduled Contract) if,
     after giving effect thereto, the aggregate of capital expenditures made
       or committed to be made after the date of this Agreement would exceed Two
Hundred Fifty Thousand Dollars ($250,000);                        

         (viii) enter into or commit or propose to enter into any Subsequent
Material Contract;                                                

       (ix) (A) create, incur, assume, or guarantee any indebtedness for
 borrowed money other than drawdowns under the Existing Orion Credit
      Facility or the Union Bank Loan or (B) incur any Liability relating to a
   documentary or standby letter of credit, other than in each such case
      referred to in this clause (ix) in the ordinary course of business where
      the aggregate dollar amount of all of the foregoing by the Entertainment
Companies does not exceed Fifty Thousand Dollars ($50,000);       

      (x) (A) increase the rate or terms of compensation payable or to
  become payable to its directors, officers or employees except in the
   ordinary course of business consistent with past practice, (B) pay or
      agree to pay any pension, retirement allowance or other employee benefit
   not provided for by any Employee Benefit Plan, Benefit Arrangement or
       Employment Agreement set forth in the schedules hereto, (C) commit itself
   to any additional pension, profit sharing, bonus, incentive, deferred
   compensation, stock purchase, stock option, stock appreciation right,
group insurance, severance pay, continuation pay, termination pay,
     retirement or other employee benefit plan, agreement or arrangement, or
increase the rate or terms of any Employee Benefit Plan or Benefit
  Arrangement, (D) enter into any employment agreement with or for the
      benefit of any Person, or (E) increase the rate of compensation under or
  otherwise change the terms of any Employment Agreement identified in
SCHEDULE 3.17(A);                                                 

        (xi) make any change in its accounting methods or in the manner of
       keeping its books and records or any change in its current practices with
     respect to inventory, sales, receivables, payables or accrued expenses,
except as required by GAAP;                                       

           (xii) declare or pay any dividend or make any distribution in respect
     of any of its capital stock, options, warrants, rights of first refusal
    or other rights to purchase capital stock of any Entertainment Company
      or, directly or indirectly, redeem, purchase or otherwise acquire any of
     its Equity Securities or the Equity Securities of any of its Affiliates
or make any other payments                                        

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   of any kind to the holders of any of its Equity Securities in respect
thereof or to the holders of any Equity Securities of any of its  
      Affiliates in respect thereof, or enter into any commitment agreement to
    do any of the foregoing other than the dividend or distribution of the
capital stock of Landmark;                                        

(xiii) amend its charter or Bylaws;                       

       (xiv) organize any new Subsidiary or acquire any capital stock or
 other equity securities or ownership interest of any corporation or
business entity;                                                  

       (xv) pay, discharge or satisfy any claim, liability or obligation
   (absolute, accrued, contingent or otherwise), other than the payment,
     discharge or satisfaction for fair and equivalent value in the ordinary
course of business consistent with past practice of liabilities or
    obligations reflected or reserved against in the 1996 Balance Sheet or
    incurred in the ordinary course of business since the date of the 1996
Balance Sheet;                                                    

 (xvi) (A) pay, discharge or satisfy any claim, liability or
 obligation (absolute, accrued, contingent or otherwise) owed to any
      Entertainment Company by Seller or any of its Affiliates (other than any
      Entertainment Company) or owed to Seller or any of its Affiliates (other
 than any Entertainment Company) by any Entertainment Company or (B)
    prepay any Debt (other than payments of revolving loans made under the
Existing Orion Credit Facility);                                  

  (xvii) write down the value of any inventory or write-off as
    uncollectible any notes or accounts receivable, except for write-downs
  and write-offs in accordance with GAAP and in the ordinary course of
  business consistent with past practice which are not material to the
Entertainment Companies, taken as a whole;                        

        (xviii) dispose of or permit to lapse any rights to the use of any
     Intellectual Property Rights or dispose of or disclose any Intellectual
Property Rights not a matter of public knowledge other than in the
 ordinary course of business consistent with past practice and which
collectively are not material to the business of the Entertainment
Companies, taken as a whole; or                                   

    (xix) merge or consolidate with any other corporation, acquire
control of all or substantially all of the assets of any other    
  corporation or business entity, or take any steps incident to, or in
furtherance of, any of such actions, whether by entering into an  
agreement or otherwise.                                           

5.02. ACCESS TO INFORMATION. Subject to compliance with Applicable Laws,
from the date of this Agreement until Closing, Seller and Orion will promptly:  
(a) give Buyer and its counsel, financial advisors, auditors and other          
authorized representatives reasonable access to the offices, properties, books  
and records of each Entertainment Company upon reasonable prior notice in order 
to conduct its due diligence investigation of the Entertainment Companies, (b)  
furnish to Buyer, its counsel, financial advisors, auditors and other authorized
representatives such information relating to the Entertainment Companies as     
Buyer may reasonably request in order to conduct its due diligence investigation
of the Entertainment Companies, and (c) instruct the directors, officers,       
employees, counsel, auditors and financial advisors of each Entertainment       
Company to cooperate with Buyer and its counsel, financial advisors, auditors   
and other authorized representatives in their due diligence investigation of the
Entertainment Companies and their preparation of all necessary certificates or  
similar documents required to be prepared and delivered by Buyer to Seller      
pursuant to this Agreement.                                                     

   5.03. COMPLIANCE WITH TERMS OF REQUIRED GOVERNMENTAL APPROVALS AND REQUIRED
CONTRACTUAL CONSENTS. On and after the Closing Date, Seller shall comply at its 
own expense with all conditions and requirements set forth in (i) all Required  
Governmental Approvals as necessary to keep the same in full force and effect   
assuming continued compliance with the terms thereof by Buyer and (ii) all      
Required Contractual Consents and Essential Consents as necessary to keep the   
same effective and enforceable against the                                      

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Persons giving such Required Contractual Consents and Essential Consents        
assuming continued compliance with the terms thereof by Buyer.                  

5.04. MAINTENANCE OF INSURANCE POLICIES. On and after the date hereof   
(including after the Closing Date), neither Seller nor Orion shall take or fail 
to take or permit any Entertainment Company to fail to take any action if such  
action or inaction, as the case may be, would adversely affect the applicability
of any insurance in effect on the date hereof that covers all or any part of the
assets of any Entertainment Company. Notwithstanding the foregoing, Seller shall
not have any obligation to make any monetary payment to maintain the            
effectiveness of any such insurance policy after the Closing Date.              

5.05. CONFIDENTIALITY.                                                  

   (a) Seller and Orion will, and will cause their representatives to,
   treat any data and information obtained with respect to Buyer or any of its
    Affiliates from any representative, officer, director, or employee of Buyer,
or from any books or records of Buyer in connection with this Agreement,
confidentially and with commercially reasonable care and discretion, and
   will not disclose any such information to third parties; PROVIDED, HOWEVER,
  that the foregoing shall not apply to (i) information in the public domain
   or that becomes public through disclosure by any party other than Seller or
   any Affiliate or representative of Seller or any such Affiliate, so long as
such other party is not in breach of a confidentiality obligation, (ii) 
   information that may be required to be disclosed by Applicable Law or (iii)
information required to be disclosed to obtain any Required Consents.   

        (b) In the event that the Closing fails to take place and this Agreement
 is terminated, Seller and Orion, upon the written request of Buyer, will,
and will cause their respective representatives to, promptly deliver to 
   Buyer any and all documents or other materials furnished by Buyer or any of
   its Affiliates to Seller or Orion in connection with this Agreement without
retaining any copy thereof. In the event of such request, all other     
documents, whether analyses, compilations or studies, that contain or   
otherwise reflect the information furnished by Buyer to Seller or Orion,
shall be destroyed by Seller or Orion or shall be returned to Buyer, and
   Seller or Orion, as the case may be, shall confirm to Buyer in writing that
  all such materials have been returned or destroyed. No failure or delay by
    Buyer in exercising any right, power or privilege hereunder shall operate as
   a waiver thereof, nor shall any single or partial exercise thereof preclude
    any other or further exercise thereof or the exercise of any right, power or
privilege hereunder.                                                    

(c) From and after the Closing, Seller will, and will cause its 
Subsidiaries and the representatives of Seller and its Subsidiaries to, 
 treat any data and information obtained with respect to any Entertainment
    Company from any representative, officer, director, or employee of Seller or
any Entertainment Company, or from any books or records of Seller or any
Entertainment Company (whether or not obtained in connection with this  
Agreement) confidentially and with commercially reasonable care and     
discretion, and will not disclose any such information to third parties;
   PROVIDED, HOWEVER, that the foregoing shall not apply to (i) information in
the public domain or that becomes public through disclosure by any party
   other than Seller or any Affiliate of Seller or representative of Seller or
any such Affiliate, so long as such other party is not in breach of a   
confidentiality obligation, (ii) information that may be required to be 
 disclosed by the rules of the American Stock Exchange, Inc. or Applicable
 Law, or (iii) information required to be disclosed to obtain any Required
Consents. To the extent permitted by the terms of any confidentiality   
agreements to which Seller or any of its Affiliates (other than any     
Entertainment Company) is a party relating to any of the Entertainment  
Companies or their respective businesses, Seller will assign to Buyer at
  Closing all right, title and interest of Seller under such confidentiality
 agreements. To the extent that Seller or any such Affiliate is prohibited
from assigning any of its right, title and interest under any such      
confidentiality agreement by the terms thereof, Seller or such Affiliate
shall use its reasonable commercial efforts to enforce its rights and   
 remedies thereunder, and Buyer agrees to advance Seller or such Affiliate
    for all actual out-of-pocket expenses incurred in connection with or arising
out of such enforcement (including, without                             

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 limitation, reasonable attorneys' fees and costs), if Buyer shall provide
Seller with an indemnification agreement reasonably acceptable to Seller
    that indemnifies Seller from and against all counterclaims asserted or other
losses incurred by Seller as a result of such attempted enforcement of  
rights or assertion of remedies thereunder.                             

  5.06. SPECIFIC PERFORMANCE. The parties hereto recognize and agree that in
the event of a breach by Seller or Orion of this Article V, money damages would 
not be an adequate remedy to Buyer or its Affiliates for such breach and, even  
if money damages were adequate, it would be impossible to ascertain or measure  
with any degree of accuracy the damages sustained by Buyer or its Affiliates    
therefrom. Accordingly, if there should be a breach or threatened breach by     
Seller or Orion of provisions of this Article V, Buyer and its Affiliates shall 
be entitled to an injunction restraining Seller and Orion from any breach       
without showing or proving actual damage sustained by Buyer or its Affiliates,  
as the case may be. Nothing in the preceding sentence shall limit or otherwise  
affect any remedies that Buyer may otherwise have under Applicable Law.         

    5.07. BANKRUPTCY CASES. Between the date hereof and the Closing Date, Seller
and Orion shall use commercially reasonable efforts to have the Bankruptcy Cases
closed in conformity with Applicable Law (it being understood that this covenant
shall not be a condition to Closing).                                           

   5.08. NO SOLICITATIONS. From and after the date hereof, Seller, without the
prior written consent of Buyer, will not, and will not authorize any of its or  
any of its Subsidiaries' officers, employees, directors, stockholders or other  
representatives to, directly or indirectly, solicit, initiate or encourage      
(including by way of furnishing information) or take any other action to        
facilitate knowingly any inquiries or the making of any proposal that           
constitutes or could be reasonably expected to lead to an Alternative Proposal  
from any Person, or engage in any discussions or negotiations relating thereto  
or accept any Alternative Proposal or make or authorize any statement,          
recommendation or solicitation in support of any Alternative Proposal; PROVIDED,
HOWEVER, that notwithstanding any other provision hereof, Seller may (a) at any 
time prior to the time Seller's stockholders shall have voted to approve this   
Agreement and the transactions contemplated hereby, engage in discussions or    
negotiations with a third party who (without any solicitation, initiation,      
encouragement, discussion or negotiation, directly or indirectly, by or with    
Seller or any of its Subsidiaries or any officer, employee, director,           
stockholder or other representative of Seller or any of its Subsidiaries after  
the date hereof) seeks to initiate such discussions or negotiations and may     
furnish such third party information concerning the Entertainment Companies if, 
and only to the extent that, (i) (x) such third party has first made, after the 
date hereof, an Alternative Proposal in writing the terms of which reflect a    
superior transaction than the transactions contemplated by this Agreement and   
has demonstrated that the funds necessary for the Alternative Proposal are      
reasonably likely to be available (as determined in good faith in each case by  
Seller's Board of Directors after consultation with its financial advisors) and 
(y) Seller's Board of Directors shall have determined in good faith, on the     
basis of advice of Paul, Weiss, Rifkind, Wharton & Garrison or other outside    
counsel of similar stature, that such action is necessary for the Board of      
Directors to comply with its fiduciary duties to stockholders under Applicable  
Law and (ii) prior to furnishing information to or entering into discussions or 
negotiations with such Person, Seller receives from such Person an executed     
confidentiality agreement in reasonably customary form and containing terms not 
in the aggregate materially more favorable to such Person than the terms        
contained in Section 6.02 or in any confidentiality agreement previously        
executed by Seller and Buyer or any of its Subsidiaries; or (b) comply with Rule
14e-2 promulgated under the Securities and Exchange Act of 1934 with regard to a
tender or exchange offer. Seller shall immediately cease and terminate any      
existing solicitation, initiation, engagement, activity, discussion or          
negotiation with any Persons conducted heretofore by Seller or any officer,     
employee, director, stockholder or other representative of Seller or any of its 
Subsidiaries with respect to the foregoing. Seller shall not release any third  
party from, or waive any provision of, any standstill agreement to which it is a
party or any confidentiality agreement between it and another Person who has    
made, or who may reasonably be considered likely to make, an Alternative        
Proposal, unless its Board of Directors shall determine in good faith, on the   
basis of                                                                        

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the advice of Paul, Weiss, Rifkind, Wharton & Garrison or other outside counsel 
of similar stature, that such action is necessary for the Board of Directors to 
comply with its fiduciary duties to stockholders under Applicable Law. Seller   
shall notify Buyer orally and in writing of any such inquiries (that are or     
appear to be serious or legitimate), offers or proposals (including the terms   
and conditions of any such offer or proposal, the identity of the Person making 
it and a copy of any written Alternative Proposal), as promptly as practicable  
and in any event within forty-eight (48) hours after the receipt thereof, shall 
keep Buyer informed of the status and details of any such inquiry, offer or     
proposal, and shall give Buyer five (5) days advance written notice of any      
agreement to be entered into with, or any information to be supplied to, any    
Person making such inquiry, offer or proposal.                                  

5.09. TRANSFER OF ASSETS. Between the date hereof and the Closing Date, 
neither Orion nor any other Entertainment Company will transfer to Landmark any 
assets of Orion or any other Entertainment Company other than (a) transfers of  
cash to Landmark in the ordinary course of business consistent with past        
practice in an aggregate amount (net of cash returned to the Entertainment      
Companies) not exceeding Five Million Dollars ($5,000,000) as long as all such  
amounts are funded from the Existing Orion Credit Facility (and Seller shall    
provide Buyer with reasonably satisfactory evidence of such funding upon Buyer's
request) and (b) transfer of those assets identified in SCHEDULE 3.29(B).       
Immediately prior to the Closing, Seller and Orion will cause (i) Landmark to   
offset against any amounts owing by Landmark to any Entertainment Company any   
amounts owed by Landmark to such Entertainment Company (other than Film rentals 
payable by Landmark with respect to the theatrical exhibition of Films ("Film   
Rentals")), and (ii) any balance owed to Landmark by any Entertainment Company  
shall be forgiven and any balance owed by Landmark to any Entertainment Company 
shall be contributed to the capital of Landmark. Since December 31, 1996,       
Landmark has paid, and between the date hereof and the Closing Date Landmark    
will pay, Film Rentals only in the ordinary course of business consistent with  
past practice.                                                                  

    5.10. USE OF TRADE NAMES. From and after the Closing, neither Seller nor any
Affiliate of Seller shall use the tradename of any Entertainment Company in the 
conduct of Seller's or such Affiliate's business without Buyer's prior written  
consent.                                                                        

ARTICLE VI
COVENANTS OF BUYER

    6.01.  COMPLIANCE WITH TERMS OF REQUIRED GOVERNMENTAL APPROVALS AND REQUIRED
CONTRACTUAL CONSENTS. On and after the Closing Date, Buyer shall comply at its  
own expense with all conditions and requirements set forth in (i) all Required  
Governmental Approvals as necessary to keep the same in full force and effect   
assuming continued compliance with the terms thereof by Seller and (ii) all     
Required Contractual Consents as necessary to keep the same effective and       
enforceable against the Persons giving such Required Contractual Consents       
assuming continued compliance with the terms thereof by Seller.                 

6.02.  CONFIDENTIALITY.                                                 

 (a) Buyer will, and will cause its representatives to, treat any data and
information obtained with respect to Seller from any representative, officer,   
director or employee of Seller, or from any books or records of Seller in       
connection with this Agreement, confidentially and with commercially reasonable 
care and discretion, and will not disclose any such information to third        
parties; PROVIDED, HOWEVER, that the foregoing shall not apply to (i)           
information in the public domain or that becomes public through disclosure by   
any party other than Buyer, or its Affiliates or representatives, so long as    
such other party is not in breach of a confidentiality obligation, (ii)         
information that may be required to be disclosed by Applicable Law, (iii)       
information required to be disclosed to obtain any Required Consents, or (iv)   
any information that is disclosed by Buyer or its Affiliates to any of their    
actual or prospective lenders or investors in connection with financing the     
transactions contemplated by this Agreement.                                    

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   (b) In the event that the Closing fails to take place and this Agreement is
terminated, Buyer, upon the written request of Seller, will, and will cause its 
representatives to, promptly deliver to Seller any and all documents or other   
materials furnished by Seller to Buyer in connection with this Agreement without
retaining any copy thereof and without using any confidential information of    
Seller to solicit any customers of Seller. In the event of such request, all    
other documents, whether analyses, compilations or studies, that contain or     
otherwise reflect the information furnished by Seller to Buyer, shall be        
destroyed by Buyer or shall be returned to Seller, and Buyer shall confirm to   
Seller in writing that all such materials have been returned or destroyed. No   
failure or delay by Seller in exercising any right, power or privilege hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise     
thereof preclude any other or further exercise thereof or the exercise of any   
right, power or privilege hereunder.                                            

    6.03.  SPECIFIC PERFORMANCE.  The parties hereto recognize and agree that in
the event of a breach by Buyer of this Article VI, money damages would not be an
adequate remedy to Seller for such breach and, even if money damages were       
adequate, it would be impossible to ascertain or measure with any degree of     
accuracy the damages sustained by Seller therefrom. Accordingly, if there should
be a breach or threatened breach by Buyer of provisions of this Article VI,     
Seller shall be entitled to an injunction restraining Buyer from any breach     
without showing or proving actual damage sustained by Seller. Nothing in the    
preceding sentence shall limit or otherwise affect any remedies that Seller may 
otherwise have under Applicable Law.                                            

6.04.  USE OF METROMEDIA NAME.  Neither Buyer nor any Affiliate of Buyer
shall use the "Metromedia" tradename in the conduct of its business after the   
Closing without Seller's prior written consent.                                 

6.05.  BANK WAIVERS.  Buyer shall use reasonable commercial efforts to  
obtain the requisite consents of the lenders under the MGM Credit Facility.     

ARTICLE VII 
COVENANTS OF ALL PARTIES

7.01.  FURTHER ASSURANCES.  Subject to the terms and conditions of this 
Agreement, each party will use all reasonable efforts to take, or cause to be   
taken, all actions and to do, or cause to be done, all things necessary or      
reasonably desirable under Applicable Law to consummate the transactions        
contemplated by this Agreement. Buyer and Seller agree to execute and deliver   
such other documents, certificates, agreements and other writings and to take   
such other actions as may be reasonably necessary or desirable in order to      
consummate or implement expeditiously the transactions contemplated by this     
Agreement.                                                                      

    7.02.  CERTAIN FILINGS.  The parties hereto shall cooperate with one another
in determining whether any action by or in respect of, or filing with, any      
Governmental Authority is required or reasonably appropriate, or any action,    
consent, approval or waiver from any party to any Contract is required or       
reasonably appropriate, in connection with the consummation of the transactions 
contemplated by this Agreement. Subject to the terms and conditions of this     
Agreement, in taking such actions or making any such filings, the parties hereto
shall furnish information required in connection therewith and seek timely to   
obtain any such actions, consents, approvals or waivers. Without limiting the   
foregoing, the parties hereto shall each promptly complete and file all reports 
and forms, and respond to all requests or further requests for additional       
information, if any, as may be required or authorized under the HSR Act.        

  7.03.  PUBLIC ANNOUNCEMENTS.  Up to (and including) the Closing Date, each
party agrees that, without the consent of the other party, it will not, except  
as may be required by the rules of the American Stock Exchange, Inc. or         
Applicable Law, issue any press release or make any public statement with       
respect to this Agreement or the transactions contemplated hereby. For a period 
of ten (10) days after the Closing Date, the parties agree to consult with each 
other before issuing any press release or making any public statement with      
respect to this Agreement or the transactions contemplated hereby, and, except  
as may be required by the rules of the American Stock Exchange, Inc. or         
Applicable Law, will not issue any such                                         

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press release or public statement prior to such consultation. Neither Seller nor
any officer, employee, director, stockholder or other representative shall, at  
any time from and after the Closing, issue any press release or make any public 
statement that is critical, disparaging or otherwise could reasonably be        
interpreted as being negative with respect to any of the Entertainment Companies
or their respective businesses or financial condition or officers, employees or 
directors.                                                                      

   7.04.  ADMINISTRATION OF ACCOUNTS.  All payments and reimbursements made in
the ordinary course by any third party in the name of or to Seller or any       
Affiliate thereof in connection with or arising out of the business of any      
Entertainment Company shall be held by Seller or such Affiliate in trust for the
benefit of the relevant Entertainment Company and, immediately upon receipt by  
Seller or such Affiliate of any such payment or reimbursement, Seller shall pay,
or cause to be paid, over to the relevant Entertainment Company the amount of   
such payment or reimbursement without right of set off.                         

    7.05.  SPECIFIC PERFORMANCE.  The parties hereto recognize and agree that in
the event of a breach by one party hereto of this Article VII, money damages    
would not be an adequate remedy to the other party for such breach and, even if 
money damages were adequate, it would be impossible to ascertain or measure with
any degree of accuracy the damages sustained by the non-breaching party         
therefrom. Accordingly, if there should be a breach or threatened breach by one 
party of provisions of this Article VII, the non-breaching party shall be       
entitled to an injunction restraining the breaching party from any breach       
without showing or proving actual damage sustained by the non-breaching party.  

    7.06.  RIGHT OF FIRST NEGOTIATION.  For a period of five (5) years following
consummation of the Closing, Buyer will afford Seller a right of first          
negotiation to obtain the right to distribute by wired or wireless cable, in the
territories noted on SCHEDULE 7.06, all Films owned by Buyer or any of its      
Subsidiaries, all Library Films and all Films hereafter produced by Buyer or any
of its Subsidiaries, including without limitation, the Entertainment Companies, 
to the extent Buyer owns such rights in the territories specified and subject to
any existing licenses or other agreements to which Buyer or any of its          
Subsidiaries is a party or by which Buyer or any of its Subsidiaries is bound.  
In the event Buyer elects to dispose of any rights covered by the first         
negotiation described herein to any third party, Buyer and Seller shall         
negotiate in good faith for a period of fifteen (15) days following written     
notice by Buyer to Seller of its desire to dispose of such rights for the       
purposes of agreeing upon the terms under which said rights may be conveyed to  
Seller. In the event the parties are unable to agree on terms within said       
fifteen (15) day period, Buyer shall be free to dispose of said rights without  
any further obligation of any kind to Seller.                                   

7.07.  PROXY CONSENT SOLICITATION.                                      

   (a) In connection with any proxy statement or consent solicitation that may
be distributed to stockholders of Seller with respect to the execution and      
delivery of this Agreement and the consummation of the transactions contemplated
hereby, Buyer will furnish to Seller in writing such information and documents  
concerning Buyer and its Subsidiaries as Seller reasonably requests for use in  
connection with any such proxy statement or consent solicitation and, to the    
extent permitted by law, will indemnify and hold harmless Seller, its directors 
and officers and each other Person who controls Seller (within the meaning of   
the Securities Act of 1933 (the "Securities Act")) against any losses, claims,  
damages, liabilities, joint or several, to which Seller or any such director or 
officer or controlling person may become subject under the Securities Act or    
otherwise, insofar as such losses, claims, damages or liabilities (or actions or
proceedings, whether commenced or threatened, in respect thereof) arise out of  
or are based upon (i) any untrue statement of a material fact contained in the  
proxy statement or consent solicitation or any amendment thereof or supplement  
thereto or (ii) any omission of a material fact required to be stated therein or
necessary to make the statements therein not misleading, but only to the extent 
that such untrue statement or omission is made in such proxy statement or       
consent solicitation or any amendment or supplement thereto in reliance upon and
in conformity with written information concerning Buyer or any of its Affiliates
prepared and furnished to Seller by Buyer expressly for use therein, and Buyer  
will                                                                            

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reimburse Seller and each such director, officer and controlling person for any 
legal or any other expenses incurred by them in connection with defending any   
such loss, claim, liability, action or proceeding.                              

   (b) To the extent permitted by law, Seller will indemnify and hold harmless
Buyer, its directors and officers and each other Person who controls Buyer      
(within the meaning of the Securities Act) against any losses, claims, damages, 
liabilities, joint or several, to which Buyer or any such director or officer or
controlling person may become subject under the Securities Act or otherwise,    
insofar as such losses, claims, damages or liabilities (or actions or           
proceedings, whether commenced or threatened, in respect thereof) arise out of  
or are based upon (i) any untrue statement of a material fact contained in the  
proxy statement or consent solicitation or any amendment thereof or supplement  
thereto or (ii) any omission of a material fact required to be stated therein or
necessary to make the statements therein not misleading, but only to the extent 
that such untrue statement or omission is not made in such proxy statement or   
consent solicitation or any amendment or supplement thereto in reliance upon and
in conformity with written information concerning Buyer or any of its Affiliates
prepared and furnished to Seller by Buyer expressly for use therein, and Seller 
will reimburse Buyer and each such director, officer and controlling person for 
any legal or any other expenses incurred by them in connection with defending   
any such loss, claim, liability, action or proceeding.                          

7.08.  REFINANCING OF DEBT.                                             

   (a) Concurrent with the Closing, Seller will (i) offset against any amounts
owing to Seller or any Affiliate of Seller (other than any Entertainment        
Company) from any Entertainment Company all payables owed from Seller or any    
Affiliate of Seller (other than any Entertainment Company) to such Entertainment
Company on the Closing Date and (ii) if following the offset provided for in    
(i), (A) there are any remaining amounts owing to Seller or any Affiliate of    
Seller (other than any Entertainment Company) by any Entertainment Company,     
contribute all such amounts to the capital of such Entertainment Company, or (B)
there are any remaining amounts owing to any Entertainment Company, pay all such
amounts.                                                                        

    (b) Seller and Orion shall cooperate with Buyer, between the date hereof and
the Closing Date, in order to assist Buyer in arranging for the New Orion Credit
Facility to be executed and become effective concurrent with the Closing, such  
that funds may be drawn thereunder to be utilized, along with other funds to be 
made available to Orion by Buyer concurrent with the Closing, to satisfy all of 
Orion's obligations under the Existing Orion Credit Facility. Buyer covenants to
deliver to Orion concurrent with the Closing an amount of cash such that such   
cash, together with funds available at such time under the New Orion Credit     
Facility, will be sufficient to permit Orion to satisfy all its obligations     
under the Existing Orion Credit Facility and cause Seller and its Affiliates to 
be released of all obligations thereunder.                                      

ARTICLE VIII
CONDITIONS TO CLOSING 

8.01.  CONDITIONS TO OBLIGATION OF BUYER.  The obligations of Buyer to  
consummate the Closing are subject to the satisfaction on or prior to the       
Closing Date of each of the following conditions:                               

   (a) (i) Each of Seller and Orion shall have performed and satisfied each of
its obligations hereunder required to be performed and satisfied by it on or    
prior to the Closing Date, (ii) each of the representations and warranties of   
Seller contained in this Agreement shall be true and correct, at and as of the  
Closing Date with the same force and effect as if made as of the Closing Date   
(except that representations and warranties made as of a specific date (other   
than the date of this Agreement) shall continue to be true and correct in all   
material respects as of such specific date), except for any breach of any such  
representations or warranties which, when combined with all other breaches of   
such representations and warranties, could not be reasonably expected to result 
in a Material Adverse Effect, and (iii) Buyer shall have received certificates  
signed by a duly authorized executive officer of Seller to the foregoing effect 
and                                                                             

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to the effect that, to the knowledge of such executive officer, the conditions  
specified in this Section 8.01 have been satisfied.                             

 (b) All Required Governmental Approvals and Essential Consents shall have
been obtained without the imposition of any conditions that are or would become 
applicable to any Entertainment Company or Buyer (or any of its Affiliates)     
after the Closing that Buyer in good faith determines would be materially       
burdensome upon the Entertainment Companies taken as a whole or Buyer (or any of
its Affiliates) or the businesses of the Entertainment Companies taken as a     
whole and Buyer substantially as such businesses have been conducted prior to   
the Closing Date or as said businesses, as of the date hereof, would reasonably 
be expected to be conducted after the Closing Date. All such Required           
Governmental Approvals and Essential Consents shall be in effect. All conditions
and requirements prescribed by any Required Governmental Approval and Essential 
Consent (or any such other consent) to be satisfied on or prior to the Closing  
Date shall have been satisfied allowing all such Required Governmental Approvals
and Essential Consents (and all such other consents) to be effective and        
enforceable, and to remain effective and enforceable against the Persons giving 
such Required Governmental Approvals and Essential Consents (and such other     
consents) assuming continued compliance with the terms thereof.                 

   (c) The transactions contemplated by this Agreement and the consummation of
the Closing shall not violate any Applicable Law. No temporary restraining      
order, preliminary or permanent injunction, cease and desist order or other     
order issued by any court of competent jurisdiction or any competent            
Governmental Authority or any other legal restraint or prohibition preventing   
the transfer and exchange contemplated hereby or the consummation of the        
Closing, or imposing Damages in respect thereto, shall be in effect, and there  
shall be no pending or threatened actions or proceedings (i) by any Governmental
Authority (or determinations by any Governmental Authority) challenging or in   
any manner seeking to restrict or prohibit the transactions contemplated hereby 
or the consummation of the Closing, (ii) or by any Governmental Authority (or   
determinations by any Governmental Authority) or by any other person or to      
impose conditions that Buyer reasonably determines would be materially          
burdensome upon the Entertainment Companies taken as a whole, the Shares or     
Buyer (or any of its Affiliates) or the businesses of the Entertainment         
Companies taken as a whole and Buyer substantially as such businesses have been 
conducted prior to the Closing Date or as said businesses, as of the date       
hereof, could be reasonably expected to be conducted after the Closing Date.    

(d) Since the date hereof, there shall not have been any change in any  
Entertainment Company, its assets or the Shares (including any damage,          
destruction or other casualty loss, but excluding any event, occurrence,        
development or state of circumstances or facts or change resulting from changes 
in general economic conditions) that has had or that could be reasonably        
expected to have, either alone or together with all such events, occurrences,   
developments, states of circumstances or facts or changes, a Material Adverse   
Effect.                                                                         

(e) Buyer shall have received an opinion of counsel from Paul, Weiss,   
Rifkind, Wharton & Garrison in form and substance reasonably satisfactory to    
Buyer.                                                                          

   (f) Buyer and its Subsidiaries shall have obtained in writing all consents,
approvals and waivers required to be obtained by Buyer and its Subsidiaries by  
virtue of the execution and delivery of this Agreement or the consummation of   
the transactions contemplated hereby under the MGM Credit Facility.             

(g) All Persons who are directors of any Entertainment Company whose    
principal employment is not as an officer and/or employee of an Entertainment   
Company shall have resigned such directorships.                                 

(h) Seller shall have provided to Buyer written evidence satisfactory to
Buyer of the consummation of the transfer of the ownership of all issued and    
outstanding stock of Landmark to an Affiliate of Seller that is not an          
Entertainment Company.                                                          

8.02.  CONDITIONS TO OBLIGATION OF SELLER.  The obligations of Seller to
consummate the Closing are subject to the satisfaction on or prior to the       
Closing Date of each of the following conditions:                               

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(a) (i) Buyer shall have performed and satisfied each of its obligations
hereunder required to be performed and satisfied by it on or prior to the       
Closing Date; (ii) the representations and warranties of Buyer contained in this
Agreement shall be true, complete and accurate in all material respects at and  
as of the Closing Date, as if made at and as of the Closing Date (except that   
representations and warranties made as of a specific date (other than the date  
of this Agreement) shall continue to be true and correct in all material        
respects as of such specific date) except for any breach of any such            
representations and warranties which, when combined with all other breaches of  
such representations and warranties, would not be materially adverse to Seller  
and (iii) Seller shall have received a certificate signed by a duly authorized  
senior officer of Buyer to the foregoing effect and to the effect that, to such 
senior officer's knowledge, the conditions specified in this Section 8.02 have  
been satisfied.                                                                 

 (b) All Required Governmental Approvals and Essential Consents shall have
been obtained without the imposition of any conditions that are or would become 
applicable to Seller (or any of its Affiliates) after the Closing that Seller in
good faith determines would be materially burdensome upon Seller (or any of its 
Affiliates) or the businesses of Seller taken as a whole and Buyer substantially
as such businesses have been conducted prior to the Closing Date or as said     
businesses, as of the date hereof, would reasonably be expected to be conducted 
after the Closing Date. All such Required Governmental Approvals and Essential  
Consents shall be in effect. All conditions and requirements prescribed by any  
Required Governmental Approval and Essential Consent (or any such other consent)
to be satisfied on or prior to the Closing Date shall have been satisfied       
allowing all such Required Governmental Approvals and Essential Consents (and   
all such other consents) to be effective and enforceable, and to remain         
effective and enforceable against the Persons giving such Required Governmental 
Approvals and Essential Consents (and such other consents) assuming continued   
compliance with the terms thereof.                                              

   (c) The transactions contemplated by this Agreement and the consummation of
the Closing shall not violate any Applicable Law. No temporary restraining      
order, preliminary or permanent injunction, cease and desist order or other     
order issued by any court of competent jurisdiction or any competent            
Governmental Authority or any other legal restraint or prohibition preventing   
the transfer and exchange contemplated hereby or the consummation of the        
Closing, or imposing Damages in respect thereto, shall be in effect, and there  
shall be no pending or threatened actions or proceedings (i) by any Governmental
Authority (or determinations by any Governmental Authority) challenging or in   
any manner seeking to restrict or prohibit the transactions contemplated hereby 
or the consummation of the Closing, (ii) or by any Governmental (or             
determinations by any Governmental Authority) or by any other person or to      
impose conditions that Seller reasonably determines would be materially         
burdensome upon Seller (or any of its Affiliates) or the businesses of Seller   
substantially as such businesses have been conducted prior to the Closing Date  
or as said businesses, as of the date hereof, could be reasonably expected to be
conducted after the Closing Date.                                               

(d) Seller shall have received an opinion of counsel from Gibson, Dunn &
Crutcher LLP in form and substance reasonably satisfactory to Seller.           

   (e) Seller shall have obtained the approval of its stockholders required to
be obtained by Seller by virtue of the execution and delivery of this Agreement 
and the consummation of the transactions contemplated hereby under its          
Certificate of Incorporation, its Bylaws or Applicable Law.                     

   (f) Seller shall have been released of all obligations as guarantor of that
certain Lease pertaining to the real property located at 1888 Century Park East,
Los Angeles, California, occupied by the Entertainment Companies on the date    
hereof.                                                                         

   (g) Seller and its Affiliates shall have been released from all obligations
thereof in connection with the Existing Orion Credit Facility.                  

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ARTICLE IX
INDEMNIFICATION 

9.01.  INDEMNIFICATION OF BUYER.  From and after the Closing Date and   
subject to the terms and conditions of this Section 9.01, Buyer and its         
Affiliates (collectively, the "Buyer Indemnitees") shall each be indemnified and
held harmless to the extent set forth in this Article IX by Seller in respect of
any and all Damages actually incurred by any Buyer Indemnitee:                  

      (a) as a result of any misrepresentation in or breach of or failure to
perform any representation, warranty, covenant and/or agreement made by 
 Seller in this Agreement; PROVIDED, HOWEVER, that Seller, with respect to
Damages incurred by any Buyer Indemnitee as a result of any such        
  misrepresentation, breach or failure other than those described in clauses
(i) or (ii) of Section 9.03(c) (as to which the limits described in this
   proviso shall not apply), shall have no obligation under this clause (i) of
    Section 9.01(a) unless and until the aggregate amount of Damages so incurred
by all Buyer Indemnitees collectively exceeds Fifteen Million Dollars   
($15,000,000), whereupon Seller shall be liable to indemnify the Buyer  
 Indemnitees for all such Damages in excess of such amount up to a maximum
amount equal to the Purchase Price;                                     

  (b) as a result of any violations or infringements of any material
    Applicable Law, or any order, writ, injunction or decree of any Governmental
    Authority, but only to the extent that such violation or infringement occurs
prior to the Closing Date; or                                           

 (c) as a result of any liability arising out of or in connection with the
litigation described in SCHEDULE 9.01(C) or by or among one or more of the      
parties to such litigation identified therein or arising out of the facts giving
rise to the matters described therein, and all counter-claims, cross-claims and 
other actions relating thereto. Any indemnity arising with respect to Taxes     
shall be governed by the provisions of Article XI below.                        

  9.02.  INDEMNIFICATION OF SELLER.  From and after the Closing Date, Seller
and its Affiliates (collectively, the "Seller Indemnitees") shall each be       
indemnified and held harmless to the extent set forth in this Article IX by     
Buyer in respect of any and all Damages actually incurred by any Seller         
Indemnitee (i) as a result of any misrepresentation in or breach of or failure  
to perform any representation, warranty, covenant or agreement made by Buyer in 
this Agreement and (ii) resulting from Buyer's operation of the Entertainment   
Companies or ownership of the Shares after the Closing Date.                    

9.03.  SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS.           

 (a) Except as otherwise provided in this Article IX, all representations,
warranties, covenants, agreements and obligations of each Indemnifying Party    
contained herein and all claims of any Buyer Indemnitee or Seller Indemnitee in 
respect of any breach of any representation, warranty, covenant, agreement or   
obligation of any Indemnifying Party contained in this Agreement, shall survive 
the Closing and any due diligence examination or investigation by Buyer,        
regardless of when it is conducted, and shall expire on the first anniversary of
the Closing Date.                                                               

(b) Notwithstanding Section 9.03(a), each of the representations and    
warranties of Seller set forth in Sections 3.20 and 3.21 shall survive the      
Closing Date and shall expire on the second anniversary of the Closing Date.    

   (c) Notwithstanding Section 9.03(a), each of the following representations,
warranties, covenants, agreements and obligations of Seller as Indemnifying     
Party shall survive the Closing Date until the expiration of thirty (30) days   
following any applicable statute of limitations, including extensions thereof:  
(i) any misrepresentation in or breach of any representation or warranty made in
Sections 3.01, 3.02, 3.03, 3.04, 3.17, 3.23, 3.24 or 3.26 and (ii) the breach or
failure to perform by Seller after the Closing Date of any of the covenants,    
agreements or obligations contained in this Agreement or in the Exhibits        
attached hereto required to be performed after the Closing Date, including those
contained in Section 7.07 and Article XI.                                       

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   (d) Notwithstanding Section 9.03(a), each of the following representations,
warranties, covenants, agreements and obligations of Buyer as an Indemnifying   
Party shall survive the Closing Date until the expiration of thirty (30) days   
following the applicable statute of limitations, including extensions thereof:  
(i) any misrepresentation in or breach of any representation or warranty made in
Sections 4.01, 4.02 or 4.05 and (ii) the breach or failure to perform by Buyer  
after the Closing Date of any of the covenants, agreements or obligations of    
Buyer contained in this Agreement or in the Exhibits attached hereto required to
be performed after the Closing Date.                                            

9.04.  CLAIMS FOR INDEMNIFICATION.                                      

(a) If any Indemnitee shall believe that such Indemnitee is entitled to 
indemnification pursuant to this Article IX in respect of any Damages, such     
Indemnitee shall promptly give the appropriate Indemnifying Party notice of such
claim (a "Notice of Claim") (but such Notice of Claim must be delivered within  
the time periods specified in Sections 9.03(a), (b) and (c)). Any such Notice of
Claim shall set forth in reasonable detail and to the extent then known the     
basis for such claim for indemnification and the amount of the claim, to the    
extent specified or otherwise known. The failure of such Indemnitee to give the 
Notice of Claim for indemnification promptly shall not adversely affect such    
Indemnitee's right to indemnity hereunder except to the extent that the defense 
of any claim is prejudiced by such failure.                                     

(b) No Person shall have any claim or cause of action as a result of any
misrepresentation in or breach of or failure to perform any representation,     
warranty, covenant, agreement or obligation of any Indemnifying Party referred  
to in this Article IX against any Affiliate, stockholder, director, officer,    
employee, consultant or agent of such Indemnifying Party unless any of the      
foregoing is a successor or assign of such Indemnifying Party. Nothing set forth
in this Article IX shall be deemed to prohibit or limit any Buyer Indemnitee's  
or Seller Indemnitee's right at any time before, on or after the Closing Date,  
to seek injunctive or other equitable relief for the failure of any Indemnifying
Party to perform any covenant or agreement contained herein.                    

9.05.  DEFENSE OF CLAIMS.                                               

    (a) In connection with any claim which may give rise to indemnity under this
Article IX resulting from or arising out of any claim or Proceeding against an  
Indemnitee by a Person that is not a party hereto, the Indemnifying Party may   
(unless such Indemnitee elects not to seek indemnity hereunder for such claim), 
upon written notice to the relevant Indemnitee, assume the defense of any such  
claim or Proceeding if all Indemnifying Parties with respect to such claim or   
Proceeding jointly acknowledge to the Indemnitee its right to indemnity pursuant
hereto in respect of the entirety of such claim (as such claim may have been    
modified through written agreement of the parties) and provide assurances,      
reasonably satisfactory to such Indemnitee, that the Indemnifying Parties will  
be financially able to satisfy such claim in full if such claim or Proceeding is
decided adversely. If the Indemnifying Parties assume the defense of any such   
claim or Proceeding, the Indemnifying Parties shall select counsel reasonably   
acceptable to such Indemnitee to conduct the defense of such claim or           
Proceeding, shall take all steps necessary in the defense or settlement thereof 
and shall at all times reasonably diligently and promptly pursue the resolution 
thereof. If the Indemnifying Parties shall have assumed the defense of any claim
or Proceeding in accordance with this Section 9.05, the Indemnifying Parties    
shall be authorized to consent to a settlement of, or the entry of any judgment 
arising from, any such claim or Proceeding, with the consent of the Indemnitee, 
which consent will be not unreasonably withheld or delayed; PROVIDED, that no   
such consent shall be required from such Indemnitee if the Indemnifying Parties 
shall pay or cause to be paid all amounts arising out of such settlement or     
judgment concurrently with the effectiveness thereof; PROVIDED, FURTHER, that   
the Indemnifying Parties shall not be authorized to encumber any of the assets  
of any Indemnitee or to agree to any restriction that would apply to any        
Indemnitee or to its conduct of business; and PROVIDED, FURTHER, that a         
condition to any such settlement shall be a complete release of such Indemnitee 
and its Affiliates, officers, employees and if named as a defendant, consultants
and agents with respect to such claim. Each Indemnitee shall be entitled to     
participate in the defense of any such action at its own cost and expense.      

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Each Indemnitee shall, and shall cause each of its Affiliates, officers,        
employees, consultants and agents to, cooperate fully with the Indemnifying     
Parties in the defense of any claim or Proceeding being defended by the         
Indemnifying Parties pursuant to this Section 9.05.                             

 (b) If the Indemnifying Parties do not assume the defense of any claim or
Proceeding resulting therefrom in accordance with the terms of this Section     
9.05(a), such Indemnitee may defend against such claim or Proceeding in the     
manner as it may deem appropriate, including settling such claim or Proceeding  
after giving notice of the same to the Indemnifying Parties, on such terms as   
such Indemnitee may deem appropriate. If the Indemnifying Parties seek to       
question the manner in which such Indemnitee defended such claim or Proceeding  
or the amount of or nature of any such settlement, the Indemnifying Parties     
shall have the burden to prove by a preponderance of the evidence that such     
Indemnitee did not defend such claim or Proceeding in a reasonably prudent      
manner.                                                                         

 (c) Although the indemnification rights provided in this Article IX shall
extend to the respective Affiliates of Buyer and Seller, for the purpose of the 
procedures set forth in this Section 9.05, any claims for indemnification shall 
be made by and through Buyer or Seller, as the case may be.                     

9.06.  NATURE OF PAYMENTS.  Any payment under this Article IX shall be  
treated for tax purposes as an adjustment of the Purchase Price to the extent   
such characterization is proper and permissible under relevant Tax authorities, 
including court decisions, statutes, regulations and administrative             
promulgations.                                                                  

  9.07.  TAXES  The provisions of this Article IX shall not be applicable to
Taxes, which shall be governed by Article XI.                                   

ARTICLE X 
TERMINATION 

 10.01.  GROUNDS FOR TERMINATION.  This Agreement may be terminated at any
time (except with respect to clauses (h), (i), (j) and (k) which contain certain
time limitations) prior to the Closing:                                         

(a) by mutual written agreement of all of the parties hereto;   

(b) by Buyer after written notice to Seller of any one or more  
   misrepresentations in or breaches of the representations or warranties made
by Seller contained herein that, if not cured on or prior to the Closing
   Date, could be reasonably expected to give Buyer grounds not to close under
Section 8.01 when taken into account with all other uncured             
  misrepresentations in or breaches of such representations or warranties as
to which Buyer shall have given notice to Seller as provided in this    
paragraph (b). A termination pursuant to this paragraph (b) shall become
effective (i) fifteen (15) days after such notice with respect to such a
  misrepresentation or breach that is not capable of being cured on or prior
  to the Closing Date, or (ii) immediately prior to the Closing with respect
    to such a misrepresentation or breach that is capable of being cured, but is
not cured, on or prior to the Closing Date;                             

       (c) by Buyer after written notice to Seller of the failure by Seller or
any Entertainment Company to perform and satisfy any of its obligations 
under this Agreement required to be performed and satisfied by Seller or
    such Entertainment Company on or prior to the Closing Date, if the aggregate
of all such failures shall be material. A termination pursuant to this  
    paragraph (c) shall become effective (i) fifteen (15) days after such notice
with respect to such a failure that is not capable of being cured on or 
prior to the Closing Date, or (ii) immediately prior to the Closing with
   respect to such a failure that is capable of being cured, but is not cured,
on or prior to the Closing Date;                                        

(d) by Seller after written notice to Buyer of any one or more  
   misrepresentations in or breaches of the representations or warranties made
  by Buyer herein which, if not cured on or prior to the Closing Date, could
be reasonably expected to give Seller grounds not to close under Section
8.02                                                                    

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when taken into account with all other uncured misrepresentations in or 
    breaches of such representations or warranties as to which Seller shall have
    given notice to Buyer as provided in this clause (d). A termination pursuant
to this paragraph (d) shall become effective (i) fifteen (15) days after
  such notice with respect to such a misrepresentation or breach that is not
   capable of being cured on or prior to the Closing Date, or (ii) immediately
    prior to the Closing with respect to such a misrepresentation or breach that
is capable of being cured, but is not cured, on or prior to the Closing 
Date;                                                                   

 (e) by Seller after written notice to Buyer of Buyer's failure to
   perform and satisfy any of its obligations under this Agreement required to
   be performed and satisfied by Buyer on or prior to the Closing Date, if the
   aggregate of all such failures shall be material. A termination pursuant to
  this paragraph (e) shall become effective (i) fifteen (15) days after such
   notice with respect to such a failure that is not capable of being cured on
   or prior to the Closing Date, or (ii) immediately prior to the Closing with
   respect to such a failure that is capable of being cured, but is not cured,
on or prior to the Closing Date;                                        

(f) by Buyer or by Seller, if the Closing shall not have been   
    consummated by September 30, 1997; PROVIDED, HOWEVER, that neither Buyer nor
Seller may terminate this Agreement pursuant to this clause (f) if the  
    Closing shall not have been consummated within such time period by reason of
the failure of such party or any of its Affiliates to perform in all    
material respects any of its or their respective covenants or agreements
contained in this Agreement;                                            

(g) by any party hereto if any Federal, state or foreign law or 
  regulation thereunder shall hereafter be enacted or become applicable that
makes the transactions contemplated hereby or the consummation of the   
Closing illegal or otherwise prohibited, or if any judgment, injunction,
order or decree enjoining either party hereto from consummating the     
   transactions contemplated hereby is entered, and such judgment, injunction,
order or decree shall become final and nonappealable;                   

       (h) by Buyer by written notice delivered to Seller at any time prior to
 5:00 p.m. (Los Angeles time) on May 9, 1997, if at any time prior to such
 time Buyer discovers any fact, occurrence or circumstance relating to any
Entertainment Company not known to Buyer on or before the date of this  
  Agreement that is materially adverse to the assets, liabilities, business,
   operations or financial condition of the Entertainment Companies taken as a
whole.                                                                  

     (i) by Buyer or Seller if Seller shall have convened a meeting of its
  stockholders to vote upon this Agreement and the transactions contemplated
hereby and at such meeting shall have failed to obtain in writing all   
    consents and approvals of its stockholders required to be obtained by Seller
by virtue of the execution and delivery of this Agreement or the        
    transactions contemplated hereby under its Certificate of Incorporation, its
Bylaws or Applicable Law.                                               

    (j) by Seller at any time after submission of this Agreement and the
    transactions contemplated herein by the stockholders of Seller in accordance
    with Applicable Law, if (i) Seller's financial advisors shall have withdrawn
  (either before or after such meeting) their opinion to the effect that the
 Purchase Price is fair to Seller's stockholders from a financial point of
  view or (ii) Seller's Board of Directors shall have withdrawn, modified or
amended in any material respect its approval or recommendation of this  
Agreement or the transactions contemplated hereby and Seller receives a 
   legal opinion of Delaware counsel that is reasonably acceptable to Buyer to
the effect that submission of this Agreement and the transactions       
contemplated hereby would be unlawful under Delaware law.               

     (k) by Seller at any time prior to the approval of this Agreement and
the transactions contemplated herein by the stockholders of Seller in   
    accordance with Applicable Law, if Seller's Board of Directors determines in
 good faith, on the basis of the advice of Paul, Weiss, Rifkind, Wharton &
  Garrison or other outside counsel of comparable stature, that the approval
and adoption of this Agreement and the transactions contemplated hereby 
    would be inconsistent with the compliance by the Board of Directors with its
fiduciary duties to stockholders under Applicable Law.                  

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The party desiring to terminate this Agreement pursuant to clauses (b)  
through (k) shall give written notice of such termination to the other party.   

    10.02.  EFFECT OF TERMINATION.  If this Agreement is terminated as permitted
by Section 10.01, such termination shall be without liability of any party to   
any other party to this Agreement except as hereinafter expressly provided in   
this Section 10.02. If such termination shall result from the breach by any     
party of its representations, warranties or covenants contained in this         
Agreement, such party shall be fully liable for any and all Damages incurred or 
suffered by the other parties as a result of such failure or breach. The        
provisions of Sections 5.05, 6.02, 12.04, 12.06 and 12.12 shall survive any     
termination of this Agreement pursuant to Article X, and each party hereto shall
be fully responsible for any breach of any such provision, whether or not such  
breach occurs prior to or after the termination of this Agreement.              

10.03. COMMITMENT FEE.                                                  

  (a) To compensate Buyer for entering into this Agreement and taking action
to consummate the transactions contemplated hereby and incurring the costs and  
expenses related thereto and other losses and expenses, including the foregoing 
by Buyer of other opportunities, Seller agrees to pay to Buyer an aggregate     
amount equal to Thirty Million Dollars ($30,000,000), less any amount due       
pursuant to Section 10.03(c) below (the "Commitment Fee") if this Agreement is  
terminated:                                                                     

(i) by Seller pursuant to Section 10.01(j) or (k);              

     (ii) by Buyer or Seller pursuant to Section 10.01(i), if, in any such
    case specified in this clause (ii), prior to the time of Seller's meeting of
   stockholders (A) Seller's Board of Directors shall have withdrawn, modified
 or amended in any material respect its approval or recommendation of this
   Agreement or the transactions contemplated hereby or shall have resolved to
do any of the foregoing, (B) Seller's Board of Directors shall have     
    recommended acceptance of any Alternative Proposal or shall have resolved to
do so or (C) Seller or any of its Affiliates shall have entered into an 
agreement providing for an Alternative Proposal with a party other than 
Buyer or shall have resolved to do so; or                               

    (iii) by Buyer or Seller pursuant to Section 10.01(i), if, in any such
case specified in this clause (iii) (A) prior to the time of Seller's   
meeting of stockholders an Alternative Proposal shall have been publicly
    announced or shall have become publicly known or Seller's financial advisors
shall have withdrawn, modified or amended in any material respect their 
opinion to the effect that the Purchase Price is fair to Seller's       
    stockholders from a financial point of view, (B) Seller's Board of Directors
 shall not have withdrawn, modified or amended in any material respect its
approval and recommendation of this Agreement and the transactions      
   contemplated hereby, Seller's Board of Directors shall not have recommended
    acceptance of any Alternative Proposal nor shall Seller's Board of Directors
  have resolved to do so, and neither Seller nor any of its Affiliates shall
   have entered into an agreement providing for an Alternative Proposal with a
   party other than Buyer nor shall any of them have resolved to do so and (C)
during the term of this Agreement or within one (1) year after the      
termination of this Agreement, Seller's Board of Directors recommends an
Alternative Proposal with a party other than Buyer, Seller or any of its
 Affiliates enters into an agreement providing for an Alternative Proposal
    with a party other than Buyer, or an Alternative Proposal with a party other
  than Buyer occurs, and, in any such case, the purchase price in respect of
such Alternative Proposal (or the portion thereof allocable to the      
Entertainment Companies or their assets, if such Alternative Proposal   
relates to Seller or assets and operations of Seller in addition to the 
Entertainment Companies) is higher than the Purchase Price; PROVIDED,   
 HOWEVER, that in determining such purchase price, there shall be included
therein the fair value of any property of any Entertainment Company     
transferred to Seller in connection with or in anticipation of such     
transaction.                                                            

    (b) The Commitment Fee and the reimbursement of expenses required by Section
10.03(c) shall be payable (i) at the time of termination if the termination is  
by Seller pursuant to Section 10.01(j) or (k), (ii) on the next business day    
following termination if the termination is by Buyer or Seller pursuant to      

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Section 10.01(i) and is covered by clause (ii) of Section 10.03(a) and (iii) on 
the next business day following the earliest of the recommendation of an        
Alternative Proposal, the entering into of an agreement providing for an        
Alternative Proposal or the occurrence of an Alternative Proposal, if the       
termination is by Seller or Buyer pursuant to Section 10.01(i) and such         
termination is covered by clause (iii) of Section 10.03(a).                     

    (c) Seller shall reimburse Buyer and its Affiliates for actual out-of-pocket
expenses, not to exceed Ten Million Dollars ($10,000,000), of Buyer and its     
Affiliates incurred in connection with or arising out of this Agreement and the 
transactions contemplated hereby (including, without limitation, amounts paid or
payable to investment bankers, fees and expenses of counsel, accountants and    
consultants, and printing expenses), regardless of when those expenses are      
incurred, if this Agreement is terminated:                                      

(i) by Seller pursuant to Section 10.01(j) or (k);              

       (ii) by Buyer or Seller pursuant to Section 10.01(i) or (j), if, in any
such case specified in this clause (ii), prior to the time of Seller's  
meeting of stockholders (A) Seller's Board of Directors shall have      
withdrawn, modified or amended in any material respect its approval or  
   recommendation of this Agreement or the transactions contemplated hereby or
shall have resolved to do any of the foregoing, (B) Seller's Board of   
  Directors shall have recommended acceptance of any Alternative Proposal or
 shall have resolved to do so or (C) Seller or any of its Affiliates shall
   have entered into an agreement providing for an Alternative Proposal with a
party other than Buyer or shall have resolved to do so; or              

    (iii) by Buyer or Seller pursuant to Section 10.01(i), if, in any such
case specified in this clause (iii) (A) prior to the time of Seller's   
meeting of stockholders an Alternative Proposal shall have been publicly
    announced or shall have become publicly known or Seller's financial advisors
shall have withdrawn, modified or amended in any material respect their 
opinion to the effect that the Purchase Price is fair to Seller's       
    stockholders from a financial point of view, (B) Seller's Board of Directors
 shall not have withdrawn, modified or amended in any material respect its
approval and recommendation of this Agreement and the transactions      
   contemplated hereby, Seller's Board of Directors shall not have recommended
    acceptance of any Alternative Proposal nor shall Seller's Board of Directors
  have resolved to do so, and neither Seller nor any of its Affiliates shall
   have entered into an agreement providing for an Alternative Proposal with a
   party other than Buyer nor shall any of them have resolved to do so and (C)
during the term of this Agreement or within one (1) year after the      
termination of this Agreement, Seller's Board of Directors recommends an
Alternative Proposal with a party other than Buyer, Seller or any of its
 Affiliates enters into an agreement providing for an Alternative Proposal
    with a party other than Buyer, or an Alternative Proposal with a party other
  than Buyer occurs, and, in any such case, the purchase price in respect of
such Alternative Proposal (or the portion thereof allocable to the      
Entertainment Companies or their assets, if such Alternative Proposal   
relates to Seller or assets and operations of Seller in addition to the 
Entertainment Companies) is higher than the Purchase Price; PROVIDED,   
 HOWEVER, that in determining such purchase price, there shall be included
therein the fair value of any property of any Entertainment Company     
transferred to Seller in connection with or in anticipation of such     
transaction.                                                            

   (d) Seller acknowledges that the agreements contained in this Section 10.03
are an integral part of the transactions contemplated by this Agreement, and    
that, without these agreements, Buyer would not enter into this Agreement.      
Accordingly, if Seller fails to pay any amounts owing pursuant to this Section  
10.03 when due, Seller shall in addition thereto pay to Buyer all costs and     
expenses (including attorneys' fees and costs) incurred in collecting such      
amounts, together with interest on such amounts (or any unpaid portion thereof) 
from the date such payment was required to be made until the date such payment  
is received by Buyer at one percentage point in excess of the Reference Rate as 
in effect from time to time during such period; provided, however, that in no   
event shall such interest rate exceed the maximum rate permitted by Applicable  
Law.                                                                            

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ARTICLE XI
TAX MATTERS 

11.01.  TAX RETURNS AND PAYMENTS.                                       

(a) Seller shall be responsible for the preparation and filing of all   
Seller's Consolidated Returns with respect to all Pre-Closing Periods, which    
shall include the Entertainment Companies, and for the payment of all federal   
Income Taxes with respect to such Consolidated Returns. Seller shall be entitled
to any refunds of Income Taxes with respect to such Tax Returns.                

     (b) (i) Seller shall be responsible for the preparation and filing of
all Tax Returns, other than Consolidated Returns, of the Entertainment  
 Companies for any Pre-Closing Period, that are required to be filed on or
 before the Closing Date, and for the payment of all Taxes with respect to
such Tax Returns. Seller shall be entitled to any refunds of Taxes with 
   respect to such Tax Returns. Such Tax Returns shall be prepared in a manner
consistent with prior practice, and shall utilize accounting methods,   
elections and conventions that do not have the effect of distorting the 
    allocation of income or expense between Pre-Closing Periods and Post-Closing
Periods.                                                                

       (ii) Buyer shall be responsible for the preparation and filing of all Tax
    Returns, other than Consolidated Returns, of the Entertainment Companies for
any Pre-Closing Period, that are required to be filed after the Closing 
    Date. Seller shall pay Buyer, in immediately available funds, any Taxes that
   are required to be paid with such Tax Returns, and shall be entitled to any
refunds of Taxes with respect to such Tax Returns.                      

(c) Buyer shall be responsible for the preparation and filing of all    
Straddle Period Tax Returns with respect to the Entertainment Companies, and for
the payment of all Taxes with respect to such returns. Seller shall reimburse   
Buyer, in immediately available funds, for the portion of any Tax relating to a 
Straddle Period that is allocable, in accordance with paragraph (f) below, to   
the pre-Closing portion of such Straddle Period, less any estimated Taxes paid  
by Seller or the Entertainment Companies with respect to such Straddle Period   
before the Closing Date. Any refunds of Straddle Period taxes shall be allocated
between the Seller and the Buyer based on the same principles.                  

(d) Buyer shall be responsible for the preparation and filing of all Tax
Returns and the payment of all other Taxes with respect to the Entertainment    
Companies for all Post-Closing Periods. Buyer shall be entitled to any refunds  
of such Taxes. In the case of any Post-Closing Tax Return where the Taxes       
payable by an Entertainment Company are dependent upon the Tax attributes of or 
are consistent with Tax accounting methods utilized by such Entertainment       
Company for a Pre-Closing Period, without Seller's consent Buyer shall not take 
a position that (i) is inconsistent with a position taken by Seller for such    
Pre-Closing Period and (ii) will have the effect of increasing the Seller's Tax 
liability for a Pre-Closing Period, unless in the opinion of Buyer's independent
tax counsel or accountant, Seller's position is not supported by "substantial   
authority" within the meaning of Section 6662 of the Code.                      

 (e) To the extent permitted by law, Seller and Buyer shall use their best
efforts to cause any Taxable period to close on the Closing Date.               

 (f) Taxes payable with respect to a Straddle Period shall be allocated to
the Pre-Closing Period and Post-Closing Period on the basis of a closing of the 
books as of the Closing Date or any other method agreed upon by Buyer and       
Seller, except that Taxes imposed on a periodic basis, such as real and personal
property Taxes, shall be prorated based on the number of days before and after  
the Closing Date.                                                               

 (g) Seller, Buyer and the Entertainment Companies shall cooperate in good
faith in (i) preparing and filing all Tax Returns, (ii) maintaining and making  
available to each other all records necessary in connection with the preparation
and filing of all Tax Returns and the payment of Taxes, and (iii) resolving all 
disputes and audits with respect to any Tax Returns and Taxes. Buyer and Seller 
recognize that each may                                                         

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need access, from time to time, after the Closing Date, to certain accounting   
and Tax records and information held by the other; therefore, Buyer and Seller  
agree (i) to retain and maintain Tax records relating to the Entertainment      
Companies for a period of five (5) years after the Closing Date, (ii) to allow  
each other and their agents and representatives, at times and dates mutually    
acceptable to the parties, to inspect, review and make copies of such records,  
such activities to be conducted during normal business hours and at the         
requesting party's expense, and (iii) and to offer the other parties such       
records before destroying such records.                                         

    (h) Seller shall pay any stock transfer taxes due as a result of the sale of
the Shares to Buyer pursuant to the transactions contemplated by this Agreement.

   (i) Seller shall cause the provisions of any tax sharing agreement to which
any of the Entertainment Companies is a party to be terminated on or before the 
Closing Date, and the Entertainment Companies shall have no liability to Seller 
or its Affiliates under any such agreements.                                    

(j) Seller shall have the sole and exclusive authority to file amended  
Consolidated Tax Returns for the Entertainment Companies for any Pre-Closing    
Period, and to control any Tax audits, disputes, administrative or judicial     
proceedings or settlements with respect to such Consolidated Tax Returns. Buyer 
and the Entertainment Companies shall have the sole and exclusive authority to  
file any other amended Tax Returns and to control any other Tax audits,         
disputes, administrative or judicial proceedings or settlements with respect to 
the Entertainment Companies; PROVIDED, HOWEVER, that Buyer shall not without    
Seller's consent file an amended Tax Return with respect to a Pre-Closing Period
or settle, compromise, challenge or litigate a Tax dispute with respect to a    
Pre-Closing Period, if any such action may materially increase Seller's         
liability for Taxes.                                                            

11.02.  SECTION 338(H)(10).                                             

(a) Seller shall join Buyer in making elections under Section 338(g) and
Section 338(h)(10) of the Code and any state, local and foreign counterparts    
with respect to the Entertainment Companies (the "Section 338 Elections").      
Seller and Buyer shall jointly complete and make the Section 338 Elections on   
the applicable forms and in accordance with Applicable Law. Seller shall deliver
such forms and related documents to Buyer at least ninety (90) days prior to the
due date for filing such elections or forms. Buyer shall deliver to Seller at   
least forty-five (45) days prior to the due date for filing, such completed     
forms as are required to be filed with respect to the Section 338 Elections.    
Buyer and Seller shall timely file the Section 338 Elections and any required   
forms and documents.                                                            

(b) Buyer and Seller shall act reasonably and in good faith to reach an 
agreement promptly, but in no event later than ninety (90) days after the       
Closing Date, on the allocation of the Purchase Price among the assets of the   
Entertainment Companies for purposes of the Section 338 Elections. If Buyer and 
Seller are unable to reach an agreement within such ninety (90) day period, they
shall submit the issue to arbitration by a nationally recognized accounting firm
mutually acceptable to Buyer and Seller, whose determination shall be final and 
binding on both parties, and whose expenses shall be shared equally by Buyer and
Seller. The valuations and allocations determined pursuant to this Section shall
be used for purposes of all relevant Tax Returns, but shall not have any effect 
on any other provision of this Agreement, except insofar as these other         
provisions relate to or affect Taxes or Tax Returns.                            

(c) Seller shall be responsible for the payment of any Taxes of Seller  
Affiliated Group or the Entertainment Companies that result from the Section 338
Elections (the "Section 338 Taxes").                                            

11.03.  INDEMNIFICATION.                                                

    (a) Seller shall indemnify Buyer and the Entertainment Companies for (i) all
liability for Taxes of the Seller Affiliated Group, including the Entertainment 
Companies, for all Pre-Closing Periods and for the portion of all Straddle      
Periods that end on the Closing Date, (ii) all Section 338 Taxes, and (iii) all 
liability                                                                       

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for reasonable legal and accounting fees and expenses incurred with respect to  
any item indemnified pursuant to clauses (i) and (ii) above.                    

    (b) Buyer and the Entertainment Companies shall indemnify Seller for (i) all
liability for Taxes of the Buyer Affiliated Group for any Post-Closing Taxable  
period, (ii) all liability for Taxes of the Entertainment Companies for the     
portion of all Straddle Periods that commence after the Closing Date, and (iii) 
all liability for reasonable legal and accounting expenses incurred with respect
to any item indemnified pursuant to clauses (i) and (ii) above.                 

11.04.  PROCEDURES FOR INDEMNIFICATION.                                 

   (a) If a claim is made by any Taxing authority, which, if successful, might
result in an indemnity payment by a party ("Tax Indemnitor") to another ("Tax   
Indemnitee") pursuant to Section 11.02, Tax Indemnitee shall promptly notify Tax
Indemnitor in writing of such claim (a "Tax Claim"). If notice of a Tax Claim is
not given to Tax Indemnitor within a sufficient period of time to allow Tax     
Indemnitor to effectively contest such Tax Claim, or in reasonable detail to    
apprise Tax Indemnitor of the nature of the Tax Claim, in each case taking into 
account the facts and circumstances with respect to such Tax Claim, Tax         
Indemnitor shall not be liable to Tax Indemnitee to the extent that Tax         
Indemnitor's ability to effectively contest such Tax Claim is actually          
prejudiced as a result thereof.                                                 

(b) With respect to any Tax Claim, Tax Indemnitor shall control all     
proceedings taken in connection with such Tax Claim (including, without         
limitation, selection of counsel) and, without limiting the foregoing, may in   
its sole discretion pursue or forego any and all administrative appeals,        
proceedings, hearings and conferences with any Taxing authority with respect    
thereto and may, in its sole discretion, either pay the Tax claimed and sue for 
a refund where Applicable Law permits such refund suits or contest the Tax Claim
in any permissible manner; PROVIDED, HOWEVER, that Tax Indemnitor shall not     
settle or compromise a Tax Claim without giving thirty (30) days notice to Tax  
Indemnitee and without Tax Indemnitee's consent, which shall not be unreasonably
withheld, if such settlement or compromise would result in a material Tax       
Liability of Tax Indemnitee or members of its affiliated group for any Taxable  
period. If Tax Indemnitee reasonably withholds its consent, the indemnification 
obligation of Tax Indemnitor to Tax Indemnitee under this Article XI shall be   
limited to the amount of such settlement or compromise, and Tax Indemnitee shall
have the right to take over the control of any proceedings with respect to such 
Tax Claim at its own expense.                                                   

  (c) Buyer and Seller shall cooperate with each other in contesting any Tax
Claim, which cooperation shall include, without limitation, granting powers of  
attorney to the party who is entitled to control the proceedings, retaining and 
providing records and information that are reasonably relevant to such Tax      
Claim, and making employees available on a mutually convenient basis to provide 
additional information or explanation of any material provided hereunder or to  
testify at proceedings relating to such Tax Claim.                              

  (d) Any payment under this Article XI shall be treated for tax purposes as
an adjustment of the Purchase Price to the extent such characterization is      
proper and permissible under relevant Tax authorities, including court          
decisions, statutes, regulations and administrative promulgations.              

    (e) The indemnification obligations of the parties set forth in this Article
XI shall survive until the expiration of the applicable statute of limitations  
relating to the Taxes that are the subject of the indemnification obligation.   

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ARTICLE XII 
MISCELLANEOUS 

12.01.  NOTICES.  All notices, requests, demands, claims and other      
communications hereunder shall be in writing. Any notice, request, demand,      
claim, or other communication hereunder shall be deemed duly given (i) if       
personally delivered, when so delivered, (ii) if mailed, two (2) Business Days  
after having been sent by registered or certified mail, return receipt          
requested, postage prepaid and addressed to the intended recipient as set forth 
below, (iii) if given by telex or telecopier, once such notice or other         
communication is transmitted to the telex or telecopier number specified below  
and the appropriate answer back or telephonic confirmation is received, provided
that such notice or other communication is promptly thereafter mailed in        
accordance with the provisions of clause (ii) above or (iv) if sent through an  
overnight delivery service in circumstances to which such service guarantees    
next day delivery, the day following being so sent:                             

        If to Seller or any Entertainment Company:

  Metromedia International Group, Inc.

c/o Metromedia Company            

215 East 67th Street              

New York, New York 10021          

Attention: President              

Facsimile: 212-535-3541           

with copies to:                   

  Metromedia International Group, Inc.

One Metromedia Plaza              

East Rutherford, New Jersey 07073 

Attention: General Counsel        

Facsimile: 201-531-2803           

and                               

      Paul, Weiss, Rifkind, Wharton & Garrison

1285 Avenue of the Americas       

New York, New York 10019          

Attention: James M. Dubin, Esq.   

Facsimile: 212-757-3990           

If to Buyer:                      

P&F Acquisition Corp.             

2500 Broadway Street              

Fifth Floor                       

Santa Monica, California 90404    

Attention: General Counsel        

Facsimile: 310-449-3011           

with a copy to:                   

Gibson, Dunn & Crutcher LLP       

333 S. Grand Avenue               

Los Angeles, California 90071     

Attention: Bruce D. Meyer, Esq.   

Facsimile: 213-229-7520           

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    Any party may give any notice, request, demand, claim or other communication
hereunder using any other means (including ordinary mail or electronic mail),   
but no such notice, request, demand, claim or other communication shall be      
deemed to have been duly given unless and until it actually is received by the  
individual for whom it is intended. Any party may change the address to which   
notices, requests, demands, claims and other communications hereunder are to be 
delivered by giving the other parties notice in the manner herein set forth.    

12.02.  AMENDMENTS; NO WAIVERS.                                         

 (a) Any provision of this Agreement may be amended or waived if, and only
if, such amendment or waiver is in writing and signed, in the case of an        
amendment, by all parties hereto, or in the case of a waiver, by the party      
against whom the waiver is to be effective.                                     

(b) No waiver by a party of any default, misrepresentation or breach of 
warranty or covenant hereunder, whether intentional or not, shall be deemed to  
extend to any prior or subsequent default, misrepresentation or breach of       
warranty or covenant hereunder or affect in any way any rights arising by virtue
of any prior or subsequent occurrence. No failure or delay by a party in        
exercising any right, power or privilege hereunder shall operate as a waiver    
thereof nor shall any single or partial exercise thereof preclude any other or  
further exercise thereof or the exercise of any other right, power or privilege.
The rights and remedies herein provided shall be cumulative and not exclusive of
any rights or remedies provided by law.                                         

12.03.  CONSTRUCTION.                                                   

 (a) The language used in this Agreement will be deemed to be the language
chosen by the parties hereto to express their mutual intent, and no rule of     
strict construction shall be applied against either party. Any reference to any 
Applicable Law shall be deemed also to refer to all rules and regulations       
promulgated thereunder, unless the context requires otherwise. Whenever required
by the context, any gender shall include any other gender, the singular shall   
include the plural and the plural shall include the singular. The words         
"herein," "hereof," "hereunder," and words of similar import refer to the       
Agreement as a whole and not to a particular section. Whenever the word         
"including" is used in this Agreement, it shall be deemed to mean "including,   
without limitation," "including, but not limited to" or other words of similar  
import such that the items following the word "including" shall be deemed to be 
a list by way of illustration only and shall not be deemed to be an exhaustive  
list of applicable items in the context thereof.                                

(b) The parties hereto intend that each representation, warranty, and   
covenant contained herein shall have independent significance. If any party has 
breached any representation, warranty or covenant contained herein in any       
respect, the fact that there exists another representation, warranty or covenant
relating to the same subject matter (regardless of the relative levels of       
specificity) that the party has not breached shall not detract from or mitigate 
the fact that the party is in breach of the first representation, warranty or   
covenant.                                                                       

12.04.  EXPENSES.  Except as otherwise provided herein, all costs and   
expenses incurred in connection with this Agreement shall be paid by the party  
incurring such cost or expense.                                                 

 12.05.  SUCCESSORS AND ASSIGNS.  This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and  
permitted assigns. No party hereto may assign either this Agreement or any of   
its rights, interests or obligations hereunder without the prior written        
approval of each other party, which approval shall not be unreasonably withheld.

    12.06.  GOVERNING LAW.  This Agreement shall be construed in accordance with
and governed by the internal laws (without reference to choice or conflict of   
laws) of the State of New York.                                                 

 12.07.  COUNTERPARTS; EFFECTIVENESS.  This Agreement may be signed in any
number of counterparts, each of which shall be an original, with the same effect
as if the signatures thereto and hereto were upon                               

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the same instrument. This Agreement shall become effective when each party      
hereto shall have received a counterpart hereof signed by the other parties     
hereto.                                                                         

12.08.  ENTIRE AGREEMENT.  This Agreement (including the Schedules and  
Exhibits referred to herein which are hereby incorporated by reference)         
constitutes the entire agreement between the parties with respect to the subject
matter hereof and supersedes all prior agreements, understandings and           
negotiations, both written and oral, between the parties with respect to the    
subject matter of this Agreement. Neither this Agreement nor any provision      
hereof is intended to confer upon any Person other than the parties hereto any  
rights or remedies hereunder.                                                   

12.09.  CAPTIONS.  The captions herein are included for convenience of  
reference only and shall be ignored in the construction or interpretation       
hereof. All references to an Article or Section include all subparts thereof.   

12.10.  SEVERABILITY.  If any provision of this Agreement, or the       
application thereof to any Person, place or circumstance, shall be held by a    
court of competent jurisdiction to be invalid, unenforceable or void, the       
remainder of this Agreement and such provisions as applied to other Persons,    
places and circumstances shall remain in full force and effect only if, after   
excluding the portion deemed to be unenforceable, the remaining terms shall     
provide for the consummation of the transactions contemplated hereby in         
substantially the same manner as originally set forth at the later of the date  
this Agreement was executed or last amended.                                    

 12.11.  FORUM; ATTORNEYS' FEES.  Any action or proceeding commenced under
this Agreement shall be brought solely in the federal or state courts located in
the States of New York or California. In any action commenced hereunder, the    
prevailing party shall be entitled to recover its attorneys' fees and costs from
the non-prevailing party in such action or proceeding. The parties agree that in
any action or claim for Damages brought by Buyer against Seller for a breach of 
any representation or warranty by Seller or Orion in Article III (other than    
those representations and warranties set forth in Sections 3.01, 3.02, 3.03,    
3.04, 3.17, 3.23, 3.24 and 3.26), Seller shall not be obligated to make any     
payments to Buyer until the aggregate amount of Damages so incurred exceeds     
Fifteen Million Dollars ($15,000,000), whereupon Seller shall be liable for all 
such Damages in excess of Fifteen Million Dollars ($15,000,000) up to a maximum 
amount equal to the Purchase Price.                                             

 12.12.  CUMULATIVE REMEDIES.  The rights, remedies, powers and privileges
herein provided are cumulative and not exclusive of any rights, remedies, powers
and privileges provided by law.                                                 

12.13.  THIRD PARTY BENEFICIARIES.  No provision of this Agreement shall
create any third party beneficiary rights in any Person, including any employee 
of Buyer or employee or former employee of any Seller or any Affiliate thereof  
(including any beneficiary or dependent thereof).                               

12.14.  KNOWLEDGE.  Whenever "KNOWLEDGE," "TO THE KNOWLEDGE OF," "HAS   
RECEIVED NO NOTICE" OR "IS NOT AWARE" (and all variants and derivatives thereof)
is used with respect to any Person, it means the actual knowledge of such       
Person, after reasonable inquiry. Notwithstanding the foregoing, the foregoing  
terms, when applied to Seller or the Entertainment Companies, shall mean the    
actual knowledge, after reasonable inquiry, of any and all officers,            
shareholders or directors of Seller or any Entertainment Company.               

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IN WITNESS WHEREOF, the parties hereto have caused this Stock Purchase  
Agreement to be duly executed by their respective authorized officers as of the 
day and year first above written.                                               

                    METROMEDIA INTERNATIONAL GROUP, INC.

         By:  /s/ STUART SUBOTNICK
                                   -----------------------------------------
                Name: Stuart Subotnick
                              Title: President and Chief Executive
 Officer

          ORION PICTURES CORPORATION

      By:  /s/ SILVIA KESSEL
                                   -----------------------------------------
             Name: Silvia Kessel
                                Title: Senior Executive Vice President

     P&F ACQUISITION CORP.

         By:  /s/ FRANK G. MANCUSO
                                   -----------------------------------------
                Name: Frank G. Mancuso
                             Title: Chairman and Chief Executive
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                                                                      APPENDIX B

STOCKHOLDERS AGREEMENT

This AGREEMENT, dated April 27, 1997 (this "Agreement"), by and among   
METROMEDIA INTERNATIONAL GROUP, INC., a Delaware corporation ("Seller"), P&F    
ACQUISITION CORP., a Delaware corporation ("Buyer"), and each of the other      
parties signatory hereto (each, a "Stockholder" and, collectively, the          
"Stockholders").                                                                

W I T N E S S E T H:

WHEREAS, concurrently herewith, Seller, Orion Pictures Corporation      
("Orion"), and Buyer are entering into a Letter of Intent (the "Letter of       
Intent") contemplating the execution of a Stock Purchase Agreement, a draft of  
which is attached to the Letter of Intent as Exhibit A (such Stock Purchase     
Agreement, in the form in which it may be executed by the parties and as it may 
be amended, supplemented or modified thereby shall hereinafter be referred to as
the "Stock Purchase Agreement;" capitalized terms used and not defined herein   
have the respective meanings ascribed to them in the Stock Purchase Agreement), 
pursuant to which Buyer will acquire from Seller all of the issued and          
outstanding stock of Orion (the "Stock Purchase");                              

   WHEREAS, each of the Stockholders Beneficially Owns (as defined herein) the
number of shares, par value $.01 per share, of common stock of Seller ("Seller  
Common Stock") set forth opposite such Stockholder's name on Schedule I hereto  
(the "Shares");                                                                 

WHEREAS, as an inducement and a condition to entering into the Stock    
Purchase Agreement, Buyer has required that the Stockholders agree, and the     
Stockholders have agreed, to enter into this Agreement;                         

  NOW, THEREFORE, in consideration of the foregoing and the mutual premises,
representations, warranties, covenants and agreements contained herein, the     
parties hereto hereby agree as follows:                                         

      1.  PROVISIONS CONCERNING SELLER COMMON STOCK. Each Stockholder hereby
 agrees that at any meeting of the holders of Seller Common Stock, however
  called, or in connection with any written consent of the holders of Seller
  Common Stock, such Stockholder shall vote (in the case of Shares for which
  the Stockholder has exclusive voting and dispositive power) or cause to be
  voted (in the case of Shares which the Stockholder "Beneficially Owns" (as
   defined below) but for which the Stockholder does not have exclusive voting
  and dispositive power) the Shares held of record or Beneficially Owned (as
 defined below) by such Stockholder, whether heretofore owned or hereafter
  acquired, (i) in favor of approval of the Stock Purchase Agreement and any
   actions required in furtherance thereof and hereof; (ii) against any action
  or agreement that would result in a breach in any respect of any covenant,
    representation or warranty or any other obligation or agreement of Seller or
Orion under the Stock Purchase Agreement (after giving effect to any    
  materiality or similar qualifications contained therein); and (iii) except
 as permitted by the Stock Purchase Agreement or as otherwise agreed to in
  writing in advance by Buyer, against the following actions (other than the
Stock Purchase and the transactions contemplated by the Stock Purchase  
  Agreement): (A) any extraordinary corporate transaction, such as a merger,
 consolidation or other business combination involving Orion or any of the
    Entertainment Companies; (B) a sale, lease, license, transfer or disposition
 of any assets outside the ordinary course of business or any which in the
  aggregate are material to Orion and its Subsidiaries (other than Landmark)
taken as a whole, or a reorganization, recapitalization, dissolution or 
liquidation of Seller or Orion; (C) (1) any change in a majority of the 
   persons who constitute the board of directors of the Seller; (2) any change
in the present capitalization of Orion or any of its Subsidiaries or any
   amendment of the Certificate of Incorporation or By-Laws of Orion or any of
  its Subsidiaries; (3) any other material change in the corporate structure
or business of Orion or any of its Subsidiaries; or (4) any other action
    which, in the case of each of the matters referred to in clauses C (1), (2),
(3) or (4) is intended, or could reasonably be expected, to impede,     
 interfere with, delay, postpone, or materially adversely affect the Stock
  Purchase and the transactions contemplated by this Agreement and the Stock
Purchase Agreement. Such Stockholder shall not enter into any agreement 

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or understanding with any Person (as defined below) the effect of which 
would be inconsistent or violative of the provisions and agreements     
contained in Section 1 or 2 hereof. For purposes of this Agreement,     
   "Beneficially Own" or "Beneficial Ownership" with respect to any securities
  shall mean having "beneficial ownership" of such securities (as determined
    pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as amended
  (the "Exchange Act")), including pursuant to any agreement, arrangement or
 understanding, whether or not in writing. Without duplicative counting of
  the same securities by the same holder, securities Beneficially Owned by a
    Person shall include securities Beneficially Owned by all other Persons with
 whom such Person would constitute a "group" within the meaning of Section
    13(d)(3) of the Exchange Act. For purposes of this Agreement, "Person" shall
 mean an individual, corporation, partnership, joint venture, association,
trust, unincorporated organization or other entity.                     

     2.  OTHER COVENANTS, REPRESENTATIONS AND WARRANTIES. Each Stockholder
hereby represents and warrants to Parent and Buyer as follows:          

       (a) OWNERSHIP OF SHARES. On the date hereof, the Shares set forth
     opposite such Stockholder's name on Schedule I hereto constitute all of
   the Shares owned of record or Beneficially Owned by such Stockholder.
      Schedule I hereto correctly indicates those Shares that are Beneficially
    Owned and held of record by such Stockholder and those shares that are
   Beneficially Owned by such Stockholder but not held of record by such
       Stockholder. Schedule I discloses the number of Shares Beneficially Owned
       by the Stockholder for which the Stockholder shares voting or dispositive
    power with another Person and identifies such other Person or Persons.
 Except as referenced in the preceding sentence and Schedule I, such
    Stockholder has sole voting power and sole power to issue instructions
      with respect to the matters set forth in Section 1 hereof, sole power of
  disposition, sole power to demand appraisal rights and sole power to
   agree to all of the matters set forth in this Agreement, in each case
     with respect to all of the Shares set forth opposite such Stockholder's
name on Schedule I hereto, with no limitations, qualifications or 
restrictions on such rights.                                      

  (b) POWER; BINDING AGREEMENT. Such Stockholder has the legal
 capacity, power and authority to enter into and perform all of such
     Stockholder's obligations under this Agreement. The execution, delivery
    and performance of this Agreement by such Stockholder will not violate
 any other agreement to which such Stockholder is a party including,
       without limitation, any voting agreement, stockholder agreement or voting
       trust. This Agreement has been duly and validly executed and delivered by
    such Stockholder and constitutes a valid and binding agreement of such
      Stockholder, enforceable against such Stockholder in accordance with its
       terms. There is no beneficiary or holder of a voting trust certificate or
     other interest of any trust of which such Stockholder is trustee who is
 not a party to this Agreement and whose consent is required for the
  execution and delivery of this Agreement or the consummation by such
      Stockholder of the transactions contemplated hereby. If such Stockholder
     is married and such Stockholder's Shares constitute community property,
     this Agreement has been duly authorized, executed and delivered by, and
      constitutes a valid and binding agreement of, such Stockholder's spouse,
enforceable against such person in accordance with its terms.     

     (c) NO CONFLICTS. No filing with, and no permit, authorization,
      consent or approval of, any state or federal public body or authority is
      necessary for the execution of this Agreement by such Stockholder or the
       consummation by such Stockholder of the transactions contemplated hereby.
       None of the execution and delivery of this Agreement by such Stockholder,
   the consummation by such Stockholder of the transactions contemplated
 hereby or compliance by such Stockholder with any of the provisions
      hereof shall (1) result in a violation or breach of, or constitute (with
    or without notice or lapse of time or both) a default (or give rise to
       any third party right of termination, cancellation, material modification
      or acceleration) under any of the terms, conditions or provisions of any
note, bond, mortgage, indenture, license, contract, commitment,   

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     arrangement, understanding, agreement or other instrument or obligation
of any kind to which such Stockholder is a party or by which such 
  Stockholder or any of such Stockholder's properties or assets may be
  bound, or (2) violate any order, writ, injunction, decree, judgment,
      order, statute, rule or regulation applicable to such Stockholder or any
of such Stockholder's properties or assets.                       

      (d) NO FINDER'S FEES. Other than existing financial advisory and
investment banking arrangements and agreements between Seller and 
       Donaldson, Lufkin & Jennrette Securities Corp., which have been disclosed
     in writing to Buyer, no broker, investment banker, financial adviser or
     other person is entitled to any broker's, finder's, financial adviser's
    or other similar fee or commission in connection with the transactions
       contemplated by the Stock Purchase Agreement based upon arrangements made
   by or on behalf of such Stockholder or any of its Affiliates (or than
    Seller and its Subsidiaries) or, to the knowledge of such Stockholder,
Seller or any of its Subsidiaries.                                

           (e) OTHER POTENTIAL ACQUIRORS. Such Stockholder (i) shall immediately
      cease any existing discussions or negotiations, if any, with any parties
conducted heretofore with respect to any acquisition of all or any
    material portion of the assets of, or any equity interest in, Orion or
     its Subsidiaries (other than Landmark) or any business combination with
 Orion or its Subsidiaries (other than Landmark), in his, her or its
capacity as such, and (ii) from and after the date hereof until   
     termination of the Stock Purchase Agreement, unless and until Seller is
     permitted to take such actions under Section 5.08 of the Stock Purchase
       Agreement, shall not, in such capacity, directly or indirectly, initiate,
      solicit or knowingly encourage (including by way of furnishing nonpublic
information or assistance), or take any other action to facilitate
      knowingly, any inquiries or the making of any proposal that constitutes,
or may reasonably be expected to lead to, any such transaction or 
      acquisition, or agree to or endorse any such transaction or acquisition,
   or authorize or permit any of such Stockholder's directors, officers,
    stockholders, employees or agents to do so, and such Stockholder shall
   promptly notify Buyer of any proposal and shall provide a copy of any
such written proposal and a summary of any oral proposal to Buyer 
     immediately after receipt thereof (and shall specify the material terms
 and conditions of such proposal and identify the person making such
     proposal) and thereafter keep Buyer promptly advised of any development
with respect thereto.                                             

            (f) RESTRICTION ON TRANSFER, PROXIES AND NON-INTERFERENCE. Except as
       contemplated by the Stock Purchase Agreement, such Stockholder shall not,
 directly or indirectly: (i) offer for sale, sell, transfer, tender,
 pledge, encumber, assign or otherwise dispose of, or enter into any
       contract, option or other arrangement or understanding with respect to or
consent to the offer for sale, sale, transfer, tender, pledge,    
 encumbrance, assignment or other disposition of, any or all of such
     Stockholder's Shares or any interest therein; (ii) grant any proxies or
      powers of attorney with respect to the subject matter of this Agreement,
     deposit any Shares into a voting trust or enter into a voting agreement
      with respect to any Shares; or (iii) take any action that would make any
       representation or warranty of such Stockholder contained herein untrue or
      incorrect or have the effect of preventing or disabling such Stockholder
  from performing such Stockholder's obligations under this Agreement.

          (g) RELIANCE BY BUYER. Such Stockholder understands and acknowledges
       that Buyer is entering into the Letter of Intent, and will enter into the
     Stock Purchase Agreement, in reliance upon such Stockholder's execution
and delivery of this Agreement.                                   

       3.  FURTHER ASSURANCES. From time to time, at the other party's request
and without further consideration, each party hereto shall execute and  
    deliver such additional documents and take all such further lawful action as
   may be necessary or desirable to consummate and make effective, in the most
expeditious manner practicable, the transactions contemplated by this   
Agreement.                                                              

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        4.  STOP TRANSFER, RESTRICTIVE LEGEND. (a) Each Stockholder agrees with,
   and covenants to, Buyer that such Stockholder shall not request that Seller
register the transfer (book-entry or otherwise) of any certificate or   
uncertificated interest representing any of such Stockholder's Shares,  
    unless such transfer is made in compliance with this Agreement. In the event
 of a stock dividend or distribution, or any change in the Seller's Common
Stock by reason of any stock dividend, split-up, recapitalization,      
combination, exchange of Shares or the like, the term "Shares" shall be 
deemed to refer to and include the Shares as well as all such stock     
 dividends and distributions and any shares into which or for which any or
all of the Shares may be changed or exchanged.                          

          (b) Upon the written request of Buyer, all certificates representing
  any of such Stockholder's Shares shall contain the following legend:

"The securities represented by this certificate, including certain
voting and transfer rights with respect thereto, are subject to   
the terms of a Stockholders Agreement, dated April 27, 1997, among
Metromedia International Group, Inc., P&F Acquisition Corp. and   
Orion Pictures Corporation, a copy of which is on file in the     
principal office of the Issuer."                                  

       5.  TERMINATION. Except as otherwise provided herein, the covenants and
   agreements contained herein with respect to the Shares shall terminate upon
   the later of (a) September 30, 1997, or (b) ninety (90) days after the date
 of the meeting of Seller's stockholders held for the purpose of approving
   and adopting the Stock Purchase Agreement and the transactions contemplated
 thereby (provided that, if no such meeting is held prior to September 30,
1997, the covenants and agreements contained herein with respect to the 
Shares shall terminate on September 30, 1997).                          

      6.  STOCKHOLDER CAPACITY. No person executing this Agreement who is or
   becomes during the term hereof a director of the Seller makes any agreement
or understanding herein in his or her capacity as such director. Each   
Stockholder signs solely in his or her capacity as the record and/or    
beneficial owner of such Stockholder's Shares.                          

7.  MISCELLANEOUS.                                              

        (a) ENTIRE AGREEMENT. This Agreement, the Letter of Intent and the
  Stock Purchase Agreement constitute the entire agreement between the
       Parties with respect to the subject matter hereof and supersede all other
     prior agreements and understandings, both written and oral, between the
parties with respect to the subject matter hereof.                

         (b) CERTAIN EVENTS. Each Stockholder agrees that this Agreement and
     the obligations hereunder shall attach to such Stockholder's Shares and
     shall be binding upon any person or entity to which legal or beneficial
 ownership of such Shares shall pass, whether by operation of law or
 otherwise, including, without limitation, such Stockholder's heirs,
      guardians, administrators or successors. Notwithstanding any transfer of
   Shares, the transferor shall remain liable for the performance of all
obligations under this Agreement of the transferor.               

          (c) ASSIGNMENT. This Agreement shall not be assigned by operation of
      law or otherwise by any Stockholder without the prior written consent of
      Buyer or by Buyer without the prior written consent of each Stockholder;
    provided that Buyer may assign, in its sole discretion, its rights and
     obligations hereunder to any direct or indirect wholly owned subsidiary
thereof, but no such assignment shall relieve such party of its   
       obligations hereunder if such assignee does not perform such obligations.

      (d) AMENDMENTS, WAIVERS, ETC. This Agreement may not be amended,
     changed, supplemented, waived or otherwise modified or terminated, with
    respect to any one or more Stockholders, except upon the execution and
 delivery of a written agreement executed by Buyer and such affected
 Stockholder or Stockholders; provided that Schedule I hereto may be
supplemented by                                                   

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    Buyer by adding the name and other relevant information concerning any
Stockholder of Seller who agrees to be bound by the terms of this 
       Agreement without the agreement of any other party hereto, and thereafter
such added Stockholder shall be treated as a "Stockholder" for all
purposes of this Agreement.                                       

   (e) NOTICES. All notices, requests, claims, demands and other
  communications hereunder shall be in writing and shall be given (and
       shall be deemed to have been duly received if so given) by hand delivery,
    telegram, telex or telecopy, or by mail (registered or certified mail,
   postage prepaid, return receipt requested) or by any courier service,
      such as Federal Express, providing proof of delivery. All communications
     hereunder shall be delivered to the respective parties at the following
addresses:                                                        

                                                                [Download Table]
                                                                         
If to Seller or any Stockholder:       c/o Metromedia Company            
                                       215 East 67th Street              
                                       New York, New York 10021          
                                       Attention: President              
                                       Facsimile: (212) 535-3541         

If to:                                 Metro-Goldwyn-Mayer Inc.          
                                       2500 Broadway Street              
                                       Santa Monica, California 90404    
                                       Attention: General Counsel        
                                       Facsimile: (310) 449-3011         

with a copy to:                        Gibson, Dunn & Crutcher           
                                       333 South Grand Avenue            
                                       Los Angeles, California 90071-3197
                                       Attention: Bruce D. Meyer, Esq.   
                                       Facsimile: (213) 229-7520         

or to such other address as the person to whom notice is given may have 
previously furnished to the others in writing in the manner set forth   
above.                                                                  

     (f) SEVERABILITY. Whenever possible, each provision or portion of any
provision of this Agreement will be interpreted in such manner as to be 
   effective and valid under applicable law but if any provision or portion of
any provision of this 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 will not  
    affect any other provision or portion of any provision in such jurisdiction,
and this Agreement will be reformed, construed and enforced in such     
jurisdiction as if such invalid, illegal or unenforceable provision or  
portion of any provision had never been contained herein.               

   (g) SPECIFIC PERFORMANCE. Each of the parties hereto recognizes and
    acknowledges that a breach by it of any covenants or agreements contained in
 this Agreement will cause the other party to sustain damages for which it
 would not have an adequate remedy at law for money damages, and therefore
  each of the parties hereto agrees that in the event of any such breach the
  aggrieved party shall be entitled to the remedy of specific performance of
  such covenants and agreements and injunctive and other equitable relief in
addition to any other remedy to which it may be entitled, at law or in  
equity.                                                                 

       (h) REMEDIES CUMULATIVE. All rights, powers and remedies provided under
   this Agreement or otherwise available in respect hereof at law or in equity
   shall be cumulative and not alternative, and the exercise of any thereof by
    any party shall not preclude the simultaneous or later exercise of any other
such right, power or remedy by such party.                              

     (i) NO WAIVER. The failure of any party hereto to exercise any right,
power or remedy provided under this Agreement or otherwise available in 
respect hereof at law or in equity, or to insist upon compliance by any 
other party hereto with its obligations hereunder, and any custom or    
practice of the                                                         

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   parties at variance with the terms hereof, shall not constitute a waiver by
    such party of its right to exercise any such or other right, power or remedy
or to demand such compliance.                                           

      (j) NO THIRD PARTY BENEFICIARIES. This Agreement is not intended to be
 for the benefit of, and shall not be enforceable by, any person or entity
who or which is not a party hereto.                                     

    (k) GOVERNING LAW. This Agreement shall be governed and construed in
   accordance with the laws of the State of Delaware, without giving effect to
the principles of conflicts of law thereof.                             

  (l) DESCRIPTIVE HEADINGS. The descriptive headings used herein are
  inserted for convenience of reference only and are not intended to be part
of or to affect the meaning or interpretation of this Agreement.        

      (m) COUNTERPARTS. This Agreement may be executed in counterparts, each
of which shall be deemed to be an original, but all of which, taken     
together, shall constitute one and the same Agreement.                  

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IN WITNESS WHEREOF, Seller, Buyer, each Stockholder have caused this    
Agreement to be duly executed as of the day and year first above written.       

                    METROMEDIA INTERNATIONAL GROUP, INC.

                  By:              /s/ SILVIA KESSEL
                                   -----------------------------------------
                                   Silvia Kessel
                                    EXECUTIVE VICE PRESIDENT

     P&F ACQUISITION CORP.

                    By:             /s/ DAVID G. JOHNSON
                                   -----------------------------------------
                                    David G. Johnson
                                    EXECUTIVE VICE PRESIDENT

                                   /s/ JOHN W. KLUGE
                                   -----------------------------------------
                                   John W. Kluge

                                    /s/ STUART SUBOTNICK
                                   -----------------------------------------
                                    Stuart Subotnick

  METROMEDIA COMPANY

                    By:             /s/ STUART SUBOTNICK
                                   -----------------------------------------
                                    Stuart Subotnick
                                   PRESIDENT

  MET TELLCELL, INC.

                    By:             /s/ STUART SUBOTNICK
                                   -----------------------------------------
                                    Stuart Subotnick
                                   PRESIDENT

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SCHEDULE I
STOCKHOLDERS AGREEMENT

                                                        [Enlarge/Download Table]
                                                                                           
Metromedia Company............................................................... 7,989,206
John W. Kluge.................................................................... 2,605,449
Stuart Subotnick.................................................................   231,225
Met Tellcell, Inc................................................................ 4,426,249

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                                                                      APPENDIX C

DONALDSON, LUFKIN & JENRETTE
Donaldson, Lufkin & Jenrette Securities Corporation 
277 Park Avenue, New York, New York 10172 - (212) 692-3000

   June 18, 1997

Board of Directors                                                              
Metromedia International Group, Inc.                                            
One Meadowlands Plaza                                                           
East Rutherford, New Jersey 07073-2137                                          
Dear Sirs:                                                                      

   You have requested our opinion as to the fairness from a financial point of
view to Metromedia International Group, Inc. (the "Company") of the             
consideration to be received by the Company pursuant to the terms of the Stock  
Purchase Agreement dated as of May 2, 1997 (the "Agreement"), among the Company,
the Company's wholly owned subsidiary, Orion Pictures Corporation ("Orion" and  
together with all of its direct and indirect subsidiaries other than the        
Landmark Theater Group and each of its subsidiaries, the "Entertainment         
Companies"), and P&F Acquisition Corp. (the "Buyer"), pursuant to which the     
Buyer will purchase all of the capital stock of Orion (the "Transaction").      

  You have advised us that pursuant to the Agreement, the Buyer will pay the
Company for the Entertainment Companies an amount in cash equal to $573 million,
less the Existing Indebtedness of the Entertainment Companies, and assume such  
Existing Indebtedness of the Entertainment Companies (the "Purchase             
Consideration"). You have also advised us that Orion will transfer the assets of
the Landmark Theater Group and each of its subsidiaries to the Company prior to 
the consummation of the Transaction.                                            

In arriving at our opinion, we have reviewed the Agreement, including   
exhibits thereto, as well as financial and other information that was publicly  
available or furnished to us by the Company including information provided      
during discussions with the Company's management. Included in the information   
provided during discussions with management were certain internal financial     
analyses and forecasts of the Entertainment Companies for the fiscal years      
ending December 31, 1997 through 2002 prepared by the Company's management. In  
addition, we have compared certain financial data of the Entertainment Companies
with various other companies whose securities are traded in public markets,     
reviewed prices paid in certain other business combinations and conducted such  
other financial studies, analyses and investigations as we deemed appropriate   
for purposes of this opinion. We were not requested to, nor did we, solicit the 
interest of any other party in purchasing the Entertainment Companies.          

  In rendering our opinion, we have relied upon and assumed the accuracy and
completeness of all of the financial and other information that was available to
us from public sources, that was provided to us by the Company or its           
representatives, or that was otherwise reviewed by us. With respect to the      
financial analysis and forecasts supplied to us, we have assumed that they have 
been reasonably prepared on the basis reflecting the best currently available   
estimates and judgments of the management of the Company as to the future       
operating and financial performance of the Entertainment Companies. We have not 
assumed any responsibility for making an independent evaluation of the          
Entertainment Companies' assets and                                             

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liabilities or for making any independent verification of any of the information
reviewed by us. We have relied as to certain legal matters on advice of counsel 
to the Company.                                                                 

Our opinion is necessarily based on economic market, financial and other
conditions as they exist on, and on the information made available to us as of, 
the date of this letter. It should be understood that, although subsequent      
developments may affect this opinion, we do not have any obligation to update,  
revise or reaffirm this opinion. Our opinion does not address the Board's       
decision to proceed with the Transaction. Our opinion does not constitute a     
recommendation to any stockholder as to how such stockholder should vote on the 
proposed transaction.                                                           

   Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ"), as part of its
investment banking services, is regularly engaged in the valuation of businesses
and securities in connection with mergers, acquisitions, underwritings, sales   
and distributions of listed and unlisted securities, private placements and     
valuations for estate, corporate and other purposes. DLJ has performed          
investment banking and other services for the Company in the past and has been  
compensated for such services. Over the past two years, DLJ has advised the     
Company with respect to its merger with Orion, MCEG Sterling, Inc. and          
Metromedia International Telecommunications, Inc. in November 1995; advised the 
Company with respect to its acquisitions of The Samuel Goldwyn Company and      
Motion Picture Corporation of America in July 1996; and lead-managed a $202.4   
million offering of the Company's common stock in July 1996, for each of which  
DLJ received usual and customary compensation. In addition, DLJ is currently    
acting as lead-manager with respect to the Company's proposed $125 million      
convertible preferred stock offering. DLJ also owns 131,453 shares of the       
Company's Common Stock, of which 63,852 shares are subject to a make-whole      
arrangement with the Company.                                                   

 Based upon the foregoing and other factors as we deem relevant, we are of
the opinion that the Purchase Price to be received by the Company is fair to the
Company from a financial point of view.                                         

                     Very truly yours,
                                DONALDSON, LUFKIN & JENRETTE
                              SECURITIES CORPORATION
                         By: /s/ Warren C. Woo
                       Warren C. Woo
                           Managing Director

2 

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘DEF 14A’ Filing		Date		First		Last			Other Filings
		1/31/06		61					8-K
		6/27/01		57
		4/18/01		66
		1/1/99		63
		3/12/98		76
		12/31/97		2		141			10-K
		12/5/97		66
		10/31/97		64
		9/30/97		6		136			10-Q
For Period End:		7/10/97		2		26
		6/19/97
Filed on:		6/18/97		1		141			10-K/A
		6/16/97		7		38
		6/13/97		4		26
		6/12/97		15		42
		5/31/97		5		63
		5/26/97		63
		5/25/97		63
		5/14/97		2		5			DEF 14A
		5/9/97		123
		5/8/97		94					SC 13D
		5/5/97		32
		5/2/97		2		141			8-K
		4/30/97		64
		4/27/97		5		136
		4/25/97		30
		4/21/97		30
		4/14/97		2		29
		4/4/97		20					S-3
		3/31/97		11		107			10-K405,  10-Q
		3/26/97		61
		2/11/97		11					8-K
		1/1/97		64
		12/31/96		11		114			10-K/A,  10-K405
		12/5/96		66
		12/4/96		56		71			8-K
		11/26/96		63
		11/1/96		19
		10/31/96		48
		10/10/96		87
		8/29/96		58		72			DEF 14A,  PRE 14A
		7/2/96		17		50			8-K,  S-8
		6/27/96		63		85			S-3/A
		6/13/96		64
		3/31/96		11		94			10-Q,  10-Q/A
		3/26/96		68
		1/31/96		58		61			8-K
		1/5/96		63
		1/1/96		48		96
		12/31/95		17		93			10-K,  10-K/A
		12/13/95		57		60			8-K
		11/1/95		11		72			8-K
		2/28/95		17		49
		1/1/95		106
		12/31/94		11		58			10-K,  10-K/A
		10/21/94		66					8-K
		4/19/94		59		66			8-K
		4/11/94		66
		1/1/93		100
		11/5/92		72		107
		10/20/92		87
		10/10/92		72
		9/3/92		88
		8/3/92		57
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