<PAGE>

                                                                   EXHIBIT 10.3
[logo of Merrill Lynch] Merrill Lynch

Confirmation of OTC Variable Forward Sale
Transaction

                        AMENDED AND RESTATED CONFIRMATION
                        ---------------------------------

Effective as of:  April 5, 2002                                 ML Ref: 0281652

To:               Fisher Communications, Inc. ("Counterparty")
                                                ------------

Attention:        Warren J. Spector
                  tel: (206) 404-6789
                  fax: (206) 404-6766

From:             Merrill Lynch International ("MLI")
                  Ropemaker Place
                  25 Ropemaker Street
                  London EC2Y 9L4
-------------------------------------------------------------------------------

Dear Sir / Madam:

         This amended and restated confirmation (this "Confirmation") amends,
                                                       ------------
restates and supersedes confirmation dated April 5, 2002 (ML Ref: 0281652)
between Counterparty and MLI. The purpose of this Confirmation is to confirm the
terms and conditions of the above-referenced transaction entered into between
Counterparty and MLI through its agent Merrill Lynch, Pierce, Fenner & Smith
("MLPFS") on the Trade Date specified below (the "Transaction"). This
  -----                                           -----------
Confirmation constitutes a "Confirmation" as referred to in the Master Agreement
specified below.

         The definitions and provisions contained in the 2000 ISDA Definitions
(the "Swap Definitions") and the 1996 ISDA Equity Derivatives Definitions (the
      ----------------
"Equity Definitions" and, together with the Swap Definitions, the
 ------------------
"Definitions"), in each case as published by the International Swaps and
 -----------
Derivatives Association, Inc., are incorporated into this Confirmation. In the
event of any inconsistency between the Swap Definitions and the Equity
Definitions, the Equity Definitions will govern, and in the event of any
inconsistency between the Definitions and this Confirmation, this Confirmation
will govern.

         This Confirmation supplements, forms part of, and is subject to, the
ISDA Master Agreement (including the Schedule thereto) between Counterparty and
MLI dated as of April 5, 2002, as amended and supplemented from time to time
(the "Agreement"). All provisions contained in the Agreement govern this
      ---------
Confirmation except as expressly modified below.

         The terms of the particular Transaction to which this Confirmation
relates are as follows:

General Terms:
--------------

Trade Date:              March 21, 2002

Effective Date:          April 4, 2002

Termination Date:        September 29, 2005

Seller:                  Counterparty

<PAGE>

Buyer:                   MLI

Shares:                             The common stock of SAFECO Corporation
                                    (Security Symbol SAFC).

Issuer:                             SAFECO Corporation, a Washington
                                    corporation.

Number of Shares:                   650,000

Multiplier:                         One (1)

Initial Price:                      See pricing chart attached hereto on Annex A
                                    ("Annex A")
                                      -------

Floor Price:                        See Annex A

Cap Price:                          See Annex A

Participation Percentage:           20%

Final Price:                        See Annex A

Notional Amount:                    The USD amount, as determined by the
                                    Calculation Agent, equal to the product of
                                    the Initial Price and the Number of Shares.

Additional Payments:                In the event the Shares begin trading
                                    ex-dividend on any day from but
                                    excluding the Trade Date to and including
                                    the Termination Date (the "Dividend
                                                                --------
                                    Period"),  Counterparty shall pay on the
                                    ------
                                    third Business Day following each date that
                                    the respective dividend is paid by the
                                    Issuer to the holders of the Shares
                                    (each such third Business Day, an
                                    "Additional Payment Amount Payment Date")
                                     ----------------------------------------
                                    an amount equal to the Additional Payment
                                    Amount  (defined below) for such
                                    Additional Payment Amount Payment Date;
                                    provided that Counterparty may elect,  on
                                     not fewer than five  (5)  Business
                                    Days'  notice prior to any Additional
                                    Payment Amount Payment Date, that, in lieu
                                    of paying the Additional Payment Amount to
                                    MLI on such Additional Payment Amount
                                    Payment Date,  the Calculation Agent
                                    shall adjust the Cap Price in a
                                    commercially reasonable manner to
                                    compensate MLI for not receiving such
                                    Additional Payment Amount. The
                                    Calculation Agent shall give
                                    Counterparty and MLI notice of any such
                                    adjustment not later than the respective
                                    Additional Payment Amount Payment Date.

                                    The "Additional Payment Amount" for any
                                         -------------------------
                                    Additional Payment Amount Payment Date shall
                                    be equal to the product of (i) the Number of
                                    Shares multiplied by (ii) the Reference
                                    Delta (defined below) as of the ex-dividend
                                    date for such Additional Payment Amount
                                    Payment Date multiplied by (iii) the
                                    difference between the per Share dividend
                                    declared by the Issuer and USD 0.185
                                    (assuming a quarterly dividend with
                                    appropriate adjustments to the terms of this
                                    Transaction in the event that the Issuer
                                    pays dividends other than on a quarterly
                                    basis); provided that such difference is a
                                            --------
                                    positive number; and provided further that,
                                    for the avoidance of doubt, if an
                                    ex-dividend date occurs with respect to the
                                    Shares on or before the Termination Date and
                                    no corresponding payments have been received
                                    by shareholders of record of the Shares on
                                    or before the Termination Date, then the
                                    dividends to which such ex-dividend date
                                    relates shall nonetheless give rise to an
                                    Additional Payment Amount.

                                    "Reference Delta" means, for any date during
                                     ---------------
                                    the Term of this Transaction, the hedge
                                    ratio for this Transaction (expressed in
                                    percentage terms, provided such percentage
                                    shall not exceed 100%) as determined by MLI
                                    in its good faith discretion.

                                      2

<PAGE>

                                    Notwithstanding the foregoing, no Additional
                                    Payment Amount shall be payable in respect
                                    of, and the foregoing provisions shall not
                                    apply to, any extraordinary dividend (or
                                    other event) that gives rise to an
                                    Adjustment (as provided below).

Settlement Currency:                USD

Exchange:                           Nasdaq National Market

Related Exchange:                   Any exchange(s)  on which options
                                    contracts related to the Shares are
                                    principally traded.

Business Day:                       New York

Payment Terms:
--------------

Initial Proceeds:                   USD 16,024,024

Payment Period:                     The period commencing on the date three
                                    (3) Exchange Business Days after the
                                    Effective Date and ending on the Termination
                                    Date.

Payments:                           Counterparty may from time to time during
                                    the Payment Period designate a date on
                                    which a "Payment Amount" (as defined
                                    below) will be paid as described herein.
                                    Such designation will be made by
                                    providing MLI with (i) at least seven
                                    (7) Currency Business Days' prior written
                                    notice of the Currency Business Day
                                    during the Payment Period (a "Payment
                                                                  -------
                                    Amount Date") on which   such
                                    ------------
                                    payment is to be made, and (ii) notice of
                                    the portion expressed as a USD   amount of
                                    the Outstanding Notional Payment Amount
                                    for such Payment Amount Date (a "Payment
                                                                     -------
                                    Amount Portion").
                                    --------------

                                    Unless the Payment Amount Portion is equal
                                    to the entire Outstanding Notional Payment
                                    Amount on such Payment Amount Date, such
                                    Payment Amount Portion shall be equal to
                                    at least 20% of the Initial Notional
                                    Payment Amount.

                                    On each Payment Amount Date, MLI shall pay
                                    to Counterparty the Payment Amount.
                                    "Payment Amount" means an amount in USD
                                     --------------
                                    equal to the present value on a Payment
                                    Amount Date of the related Payment Amount
                                    Portion (such present value to be determined
                                    by the Calculation Agent using a discount
                                    rate equal to the Rate for the period from,
                                    and including, such Payment Amount Date to,
                                    but excluding, the Settlement Date (the
                                    "Payment Calculation Period"), plus Spread).
                                     ---------------------------

                                    Notwithstanding any provision in this
                                    Agreement to the contrary, if at any time
                                    during the Term of this Transaction any
                                    obligation (whether present or future,
                                    contingent or otherwise) is owed by
                                    Counterparty to Merrill Lynch, Pierce,
                                    Fenner & Smith, Incorporated ("MLPFS")
                                                                   -----
                                    (such obligation, a "Loan Obligation") in
                                                         ---------------
                                    respect of borrowed money ("Counterparty
                                                                ------------
                                    Loan"), Counterparty shall be deemed to
                                    ----
                                    have requested at such time a Payment
                                    Amount Portion equal to the entire
                                    Outstanding Notional Payment Amount, or if
                                    the related Payment Amount of the
                                    Outstanding Notional Payment Amount is
                                    greater than the Loan Obligation, a
                                    Payment Amount Portion with a related
                                    Payment Amount equal to the Loan
                                    Obligation. Such Payment Amount will not
                                    be paid to Counterparty on the related
                                    Payment Date, but instead shall be paid to
                                    MLPFS in satisfaction of all or part of
                                    such Loan Obligation. Counterparty hereby
                                    irrevocably authorizes and instructs MLI
                                    to use any such

                                      3

<PAGE>

                                    Payment Amount solely to satisfy, in whole
                                    or in part, on behalf of Counterparty, any
                                    Loan Obligation.

Initial Notional Payment            The Number of Shares  *  Floor Price
Amount:

Outstanding Notional Payment        As of any date during the term of this
Amount:                             Transaction, an amount in USD equal to the
                                    excess, if any, of (i) the Initial Notional
                                    Payment Amount over (ii) (a) the sum of the
                                    Payment Amount Portions for all Payment
                                    Amount Dates occurring prior to such date
                                    (the "Prepaid Notional Amount") less (b) the
                                          -----------------------
                                    sum of all prior Repayment Amounts.

Repayments:                         Counterparty may from time to time during
                                    the Payment Period designate a date   on
                                    which all or a portion of the Prepaid
                                    Notional Amount will be re-paid to   MLI as
                                    described herein. Such designation will be
                                    made by providing MLI with   (i) at least
                                    seven (7) Currency Business Days' prior
                                    written notice of the   Currency Business
                                    Day during the Payment Period (a "Repayment
                                                                      ---------
                                    Date") on which such payment is to be made,
                                    ----
                                    and (ii) notice of the portion expressed as
                                    a USD   amount of the Prepaid Notional
                                    Amount to be repaid on such Repayment Date
                                    (a "Repayment Amount"). Unless the Repayment
                                        ----------------
                                    Amount is equal to the entire Outstanding
                                    Notional Payment Amount on such Repayment
                                    Date, such Repayment   Amount shall be equal
                                    to at least 20% of the Initial Notional
                                    Payment Amount.

                                    On the Repayment Date, Counterparty shall
                                    pay to MLI an amount in USD equal to (i)
                                    the present value on such Repayment Date
                                    of the related Repayment Amount (such
                                    present value to be determined by the
                                    Calculation Agent using a discount rate
                                    equal to the Rate for the period from, and
                                    including, such Repayment Date, to but
                                    excluding, the Settlement Date (the
                                    "Repayment Calculation Period"), plus
                                     ----------------------------
                                    Spread) plus (ii) any breakage costs.
 Rate:
                                    If the Payment Calculation Period or the
                                    Repayment Calculation Period, as
                                    applicable, is (i) equal to or less than
                                    360 calendar days, the rate shall be the
                                    zero coupon rate derived from the
                                    prevailing LIBOR curve that appears on
                                    page IYC1 I5Z of Bloomberg. If such rate
                                    does not appear on page IYC1 I5Z of
                                    Bloomberg, the rate will be determined as
                                    if the parties had specified
                                    "USD-LIBOR-BBA", or (ii) greater than 360
                                    calendar days, the rate shall be the zero
                                    coupon rate derived from the prevailing
                                    rate curve that appears on page IYC1 I5Z
                                    of Bloomberg. If such rate does not appear
                                    on page IYC1 I5Z of Bloomberg, the rate
                                    will be determined as if the parties had
                                    specified "USD-ISDA-Swap Rate", in each
                                    case, (x) on a semi-annual basis, (y) with
                                    a Day Count Fraction (as defined in the
                                    2000 ISDA Definitions) equal to
                                    Actual/360, and (z) interpolated as
                                    necessary to account for the actual number
                                    of calendar days within such Payment
                                    Calculation Period or Repayment
                                    Calculation Period, as reasonably
                                    determined by the Calculation Agent

Spread:
                                    See Annex A
Valuation:
---------

Valuation Time:                     At the close of trading on the Exchange.

Valuation Date:                     Termination Date

                                      4

<PAGE>

Settlement Terms:                   Settlement of this Transaction shall
-----------------                   be either Cash Settlement or Physical
                                    Settlement, as determined by Counterparty in
                                    writing to MLI no less than ten (10)
                                    Business Days prior to the Termination Date.
                                    In the event MLI is not notified, the
                                    settlement method for this Transaction shall
                                    be Cash Settlement.

Physical Settlement Terms:
--------------------------

Physical Settlement:                On the Settlement Date,  Counterparty will
                                    deliver the Counterparty Settlement Shares
                                    to MLI, and MLI will pay the MLI Settlement
                                    Obligation to Counterparty.

Settlement Date:                    Three (3) Exchange Business Days after the
                                    Valuation Date.

                                    A.  MLI shall pay to Counterparty an amount
                                        in cash equal to the Outstanding
                                        Notional Payment Amount ("MLI Settlement
                                                                  --------------
                                        Obligation").
                                        ----------

                                    B.  Counterparty shall deliver to MLI a
                                        number of Shares equal to the Number of
                                        Shares multiplied by the Variability
                                        Factor ("Counterparty Settlement
                                                 -----------------------
                                        Shares").
                                        ------

Variability Factor:                 A factor calculated by the Calculation
                                    Agent on the Valuation Date based on one
                                    of the following three scenarios (as
                                    applicable):

           Scenario 1:
           ----------

                           If the Final Price is less than the Floor Price,
                           then:

                                    One (1)

           Scenario 2:
           ----------

                           If the Final Price is greater than the Cap Price,
                           then:

                           (Floor Price + ((Final Price - Cap Price) *
                           (1 -  Participation Percentage)))  / Final Price

           Scenario 3:
           ----------

                           If the Final Price is greater than the Floor Price
                           and less than the Cap Price, then:

                           Floor Price / Final Price

Cash Settlement Terms:
---------------------

Cash Settlement:                    If the Cash Settlement Amount is a positive
                                    number, MLI will pay the Cash Settlement
                                    Amount to Counterparty. If the Cash
                                    Settlement Amount is a negative number,
                                    Counterparty will pay the absolute value of
                                    the Cash Settlement Amount to MLI. Such
                                    amounts shall be paid on the Settlement
                                    Date.

Cash Settlement Amount:             An amount determined by the Calculation
                                    Agent on the Valuation Date based on the
                                    following formula:

                                    MLI Settlement Obligation - Counterparty
                                    Cash Settlement Amount;

                                    Where:

                  "Counterparty Cash Settlement Amount" means:
                   -----------------------------------

                                      5

<PAGE>

                                          Counterparty Settlement Shares  *
                                          Final Price

Conditions to Physical
Settlement:                         Notwithstanding anything contained herein
                                    to the contrary,  unless all of the
                                    following conditions are met, Cash
                                    Settlement shall apply to this Transaction:

                                    The Shares are in marketable form without
                                    restrictive legends, and such Shares shall
                                    not be subject to any Transfer Restrictions
                                    (as defined below) in connection with the
                                    delivery of the Shares to MLI hereunder or
                                    the sale or transfer of such Shares by MLI
                                    to a third party, all as determined by MLI
                                    in its sole discretion. "Transfer
                                                             --------
                                    Restriction" means any condition to or
                                    -----------
                                    restriction on the ability of the holder of
                                    the Shares to sell, assign or otherwise
                                    transfer such Shares, including, without
                                    limitation, (i) any registration or
                                    qualification requirement, prospectus
                                    delivery requirement or other similar
                                    requirements (other than any requirements
                                    arising from sales of the Shares by MLI
                                    pursuant to Rule 144), (ii) any requirement
                                    that any sale, assignment or other transfer
                                    or enforcement of such Shares be consented
                                    to or approved by any person, including,
                                    without limitation, the issuer thereof or
                                    any other obligor thereon, (iii) any
                                    limitations on the type or status, financial
                                    or otherwise, of any purchaser, pledgee,
                                    assignee or transferee of such Shares, and
                                    (iv) any requirement to deliver any
                                    certificate, consent, agreement, opinion of
                                    counsel, notice or any other document of any
                                    person to the issuer of, any other obligor
                                    on or any registrar or transfer agent for,
                                    such Shares, prior to the sale, pledge,
                                    assignment or other transfer or enforcement
                                    of such Shares.

Failure to Deliver:                 Not applicable.

Clearance System(s):                The principal domestic clearance system
                                    customarily settling trades on a delivery
                                    versus payment basis on the Shares.

Adjustments:
------------

Method of Adjustment:               Calculation Agent Adjustment; provided
                                                                   --------
                                    that in the event of the occurrence of a
                                    Potential Adjustment Event, the Calculation
                                    Agent will determine whether such Potential
                                    Adjustment Event has a diluting or
                                    concentrative effect on the theoretical
                                    value of the Shares and,  if so, will (i)
                                    make the corresponding adjustment(s), if
                                    any, to the Number of Shares,  the Floor
                                    Price and the Cap Price and, in any case,
                                    any other variable relevant to the
                                    settlement or payment terms of this
                                    Transaction as the Calculation Agent
                                    determines (in a commercially reasonable
                                    manner) appropriate to account for that
                                    diluting or concentrative effect and (ii)
                                    determine the effective   date(s)  of
                                    the adjustment(s).

Extraordinary Events:
--------------------

         Consequences of Merger Event:

         (a)                        Share-for-Share: Alternative Obligation on
                                    the Exchange Business Day immediately
                                    following the occurrence of a Merger Event
                                    with mutually agreed upon commercially
                                    reasonable adjustments to the terms of the
                                    Transaction to preserve the economics of the
                                    Transaction as originally bargained for
                                    pursuant to the terms stated herein;
                                    provided that after the Merger Event, MLI
                                    --------
                                    shall be permitted to elect Cancellation and
                                    Payment within three (3) Exchange Business
                                    Days immediately following such Merger
                                    Event.

                                      6

<PAGE>

         (b) Share-for-Other:       Cancellation and Payment on the Exchange
                                    Business Day immediately following the
                                    occurrence of a Merger Event.

         (c) Share-for-Combined:    As soon as practicable but not to exceed
                                    three (3) Exchange Business Days immediately
                                    following the occurrence of a Merger Event
                                    has occurred, the parties shall mutually
                                    agree upon appropriate adjustments to the
                                    terms of the Transaction, and, if the
                                    parties are unable to so agree, Cancellation
                                    and Payment shall apply.

         Nationalization or
         Insolvency:                Negotiated close out.

Additional Provisions:
---------------------

Events of Default:                  For the sole purpose of this
                                    Transaction and provided that no other
                                    transactions   under the Agreement other
                                    than this Transaction or other
                                    substantially similar variable forward
                                    sale transactions shall be outstanding
                                    between Counterparty and MLI, (i) the
                                    "Cross Default"  provisions of Section
                                    5(a)(vi)  of the   Agreement   will not
                                    apply to MLI and will apply to
                                    Counterparty,  and for such purpose,
                                    "Specified Indebtedness" means solely any
                                    Counterparty Loan and the  "Threshold
                                    Amount" means zero and (ii) the "Credit
                                    Event Upon Merger"  provisions of Section
                                    5(b)(iv) of the Agreement will not apply
                                    to MLI and will not apply to Counterparty.

Additional Termination Event:       The occurrence of a Hedging Disruption
                                    Event shall constitute an Additional
                                    Termination Event with respect to
                                    Counterparty,  giving MLI the right to
                                    designate an Early Termination Date in
                                    respect of this Transaction. For this
                                    purpose,  "Hedging Disruption Event"
                                    means (i) any inability of MLI due to
                                    market illiquidity,  Illegality (as defined
                                    in the Agreement,  but with respect to the
                                    transaction hedge) or lack of availability
                                    of third-party institutional stock
                                    lenders or MLI otherwise being unable
                                    to borrow the Shares,  to establish,
                                    re-establish or maintain any hedging
                                    transaction(s)  necessary in the normal
                                    course of MLI's business of hedging the
                                    price and market risk of entering into and
                                    performing under the Transaction,
                                    provided that if MLI is able to borrow
                                    Shares from MLPFS under the
                                    Counterparty Loan or from Counterparty
                                    (including by way of rehypothecation as
                                     contemplated in the Collateral provision
                                     hereunder)  this clause (i) shall not
                                    apply;  or (ii) an increase in the cost of
                                     borrowing the Shares  (from an entity
                                    other than Counterparty) and
                                    Counterparty's failure (within five (5)
                                    Business Days of its receipt of written
                                    notice from MLI in this regard) to agree to
                                     adjustments to the terms of the
                                    Transaction as the Calculation Agent,
                                    in its reasonable discretion,  deems
                                    necessary to compensate MLI for such
                                    increase in costs, including,  without
                                    limitation,  any costs incurred by MLI
                                    during such five (5) Business Day period.

Absence of Certain Events
Representation:                     Section 3(b) of the Agreement is hereby
                                    amended by adding the following clause at
                                    the beginning of the first line thereof:
                                    "Except as previously disclosed in writing
                                    by Counterparty to MLI,".

Calculation Agent:                  MLI;  provided that the Calculation
                                          --------
                                    Agent shall make all calculations and
                                    determinations in connection with this
                                    Transaction in good faith and in a
                                    commercially reasonable manner.

Non-Reliance:                       Each party represents to the other
                                    party that it is acting for its own
                                    account,  and has made its own
                                    independent decisions to enter into
                                    this Transaction and as to whether this
                                    Transaction is appropriate or proper for it
                                    based on its own

                                      7

<PAGE>

                                    judgment and upon advice from such
                                    advisors as it has deemed necessary. It is
                                    not relying on any communication
                                    (written or oral) of the other party as
                                    investment advice or as a recommendation
                                    to enter into this Transaction,  it being
                                    understood that information and
                                    explanations related to the terms and
                                    conditions of this Transaction   shall
                                    not be considered investment advice or
                                    a recommendation to enter into this
                                    Transaction. No communication  (written or
                                    oral)  received from the other party shall
                                    be deemed to be an assurance or guarantee
                                    as to the expected results of this
                                    Transaction.

Governing Law:                      The laws of the State of New York,
                                    including,  without limitation,  Sections
                                    5-1401 and 5-1402 of the New York General
                                    Obligations Law.

Collateral:                         On or prior to the Trade Date, Counterparty
                                    shall have delivered and shall thereafter
                                    continually maintain with MLI or its
                                    custodian ("Custodian") during the Term of
                                                ---------
                                    this Transaction, 650,000 Shares and a stock
                                    transfer power related thereto (such Shares,
                                    the "Collateral").
                                         ----------

                                    Counterparty represents that (i) it is the
                                    legal and record owner of all Collateral
                                    free of all liens, claims, equities, and
                                    encumbrances, (ii) it has the power and has
                                    obtained all of the necessary consents and
                                    approvals to grant to MLI a legal, valid,
                                    binding and enforceable first priority
                                    security interest in, and lien on, the
                                    Collateral, and (iii) the pledge of the
                                    Collateral shall not breach any covenant in
                                    any agreement or contract entered into by
                                    Counterparty or any Affiliate thereof.

                                    Counterparty represents that on the Trade
                                    Date it granted, and will grant throughout
                                    the Term of this Transaction, MLI a
                                    first-priority security interest in, and a
                                    first-priority lien on, the Collateral for
                                    its obligations under this Transaction and
                                    the Agreement; provided, however, that if
                                                   --------  -------
                                    any Counterparty Loan is outstanding at any
                                    time from and including the Trade Date to
                                    but excluding the third Exchange Business
                                    Day immediately following the Effective
                                    Date, MLI's security interest will be
                                    subordinate to any security interest and/or
                                    lien on the Collateral granted in favor of
                                    MLPFS in connection with such Counterparty
                                    Loan.

                                    Notwithstanding Section 9-207 of the New
                                    York Uniform Commerical Code, MLI will have
                                    the right to (i) sell, pledge,
                                    rehypothecate, assign, invest, use,
                                    commingle or otherwise dispose of, or
                                    otherwise use in its business, any
                                    Collateral it holds free from any claim or
                                    right of any nature whatsoever of
                                    Counterparty, including any equity or right
                                    of redemption by Counterparty ("Use of
                                                                    ------
                                    Collateral"), provided that MLI shall not
                                    ----------
                                    have Use of Collateral five Exchange
                                    Business Days following the effectiveness of
                                    notice from Counterparty to MLI restricting
                                    MLI's Use of Collateral, and (ii) register
                                    any Collateral in the name of MLI, its
                                    Custodian or a nominee for either. For the
                                    avoidance of doubt, nothing in the foregoing
                                    is intended to restrict or impede in any way
                                    MLI's ability to foreclose, sell, dispose
                                    of, or otherwise exercise its rights and
                                    remedies with respect to the Collateral upon
                                    a Counterparty Event of Default or
                                    Termination Event.

                                    Upon the occurrence of an Event of Default
                                    or Termination Event under the Agreement,
                                    MLI or its Custodian shall have all of the
                                    rights with respect to the Collateral of a
                                    secured party under the New York Uniform
                                    Commercial Code ("UCC"). MLI or its
                                                      ---
                                    Custodian shall not be liable for any loss
                                    or damages occasioned by any sale or
                                    disposal of the Collateral.

                                    Counterparty will use its best efforts to
                                    preserve and protect MLI's security interest
                                    in the Collateral, will defend MLI's right,
                                    title, lien, and security interest

                                      8

<PAGE>

                                    in and to the Collateral against the claims
                                    and demands of all persons whomsoever, and
                                    will do all such acts and things and deliver
                                    all such documents and instruments,
                                    including without limitation further
                                    pledges, assignments, financing statements,
                                    and continuation statements, as MLI and its
                                    Custodian may reasonably deem necessary or
                                    advisable from time to time in order to
                                    preserve, protect, and perfect such security
                                    interest or to enable MLI or its Custodian
                                    to exercise or enforce its rights with
                                    respect to any Collateral.

                                    Counterparty will not permit any lien,
                                    security interest, adverse claim,
                                    restriction on transfer or, other
                                    encumbrance, other than the lien and
                                    security interest Counterparty created
                                    hereby in favor of MLI, to exist upon any of
                                    the Collateral.

                                    Counterparty will not take any action that
                                    could in any way limit or adversely affect
                                    the ability of MLI to realize upon its
                                    rights in the Collateral.

                                    Each of Counterparty and MLI shall perform
                                    its obligations and exercise its rights
                                    hereunder, as applicable, in compliance with
                                    the terms of the UCC.

Representations
and Covenants of
Counterparty:                       Counterparty  (i) has such knowledge and
                                    experience in financial and business
                                    affairs as to be capable of evaluating
                                    the merits and risks of entering into the
                                    Transaction;  (ii) has consulted with its
                                    own legal, financial,  accounting and tax
                                    advisors in connection with the
                                    Transaction;  (iii) is entering into the
                                    Transaction for a bona fide business
                                    purpose to hedge an existing position;
                                    and (iv) acknowledges that in return for
                                    downside protection against a decline in
                                    the market   price of the Shares below
                                    the Floor Price, Counterparty is
                                    foregoing,  in part,  the upside value of
                                    an increase in the market price of the
                                    Shares above the Cap Price.

                                    Neither Counterparty nor any person who
                                    would be considered to be the same "person"
                                    (as such term is used in Rule 144(a)(2)
                                    under the Securities Act of 1933, as amended
                                    (the "Securities Act")), has sold any Shares
                                          --------------
                                    (or security entitlements in respect
                                    thereof) or hedged (through swaps, options,
                                    short sales or otherwise) any long position
                                    in the Shares (or security entitlements in
                                    respect thereof), including, without
                                    limitation, any sales pursuant to an
                                    agreement by any such persons to act in
                                    concert for the purpose of selling such
                                    Shares, during the preceding three (3)
                                    months prior to the Trade Date of this
                                    Transaction. Counterparty covenants and
                                    agrees that until the Effective Date, it
                                    will not sell, nor will it permit any person
                                    to sell, Shares without the prior written
                                    consent of MLI. For the purposes of this
                                    paragraph, Shares shall be deemed to include
                                    securities convertible into or exchangeable
                                    or exercisable for Shares and any other
                                    security or instrument that would be subject
                                    to aggregation under Rule 144(e) under the
                                    Securities Act. As of the Trade Date,
                                    Counterparty owns 3,002,376 Shares.

                                    Counterparty does not know or have any
                                    reason to believe that the Issuer has not
                                    complied with the reporting requirements
                                    contained in Rule 144(c)(1) under the
                                    Securities Act.

                                    Counterparty acknowledges and agrees that
                                    (i) it has not taken and will not take any
                                    action that would cause any sale deemed to
                                    be made under the Interpretive Letter (as
                                    defined below) to exceed the volume
                                    limitation of Rule 144(e), (ii) it has not
                                    taken and will not take any action that
                                    could cause any sale deemed to be made under
                                    the Interpretive Letter to fail to meet all
                                    applicable requirements of

                                      9

<PAGE>

                                    Rule 144 and (iii) on the Trade Date of
                                    this Transaction it has transmitted a Form
                                    144 for filing with the Securities and
                                    Exchange Commission. Counterparty covenants
                                    that it will send to MLI via facsimile a
                                    copy of each Form 144 and each filing under
                                    Section 13 or 16 of the Securities and
                                    Exchange Act relating to this Transaction
                                    concurrently with filing or transmission
                                    for filing, as the case may be, of such
                                    form to or with the SEC.

                                    As of the Trade Date of this Transaction,
                                    the Shares are eligible for resale under
                                    Rule 144. Counterparty shall comply with the
                                    terms of the interpretive letter from the
                                    SEC to Goldman, Sachs & Co. dated December
                                    20, 1999 (the "Interpretive Letter").
                                                   -------------------

                                    The directors, officers and/or employees of
                                    Counterparty ("Contract Persons") who are
                                                   ----------------
                                    directly or indirectly involved with the
                                    negotiation, execution and delivery of this
                                    Agreement and the performance of the
                                    transactions contemplated by this Agreement
                                    have no material, nonpublic information in
                                    respect of the Issuer and had no such
                                    information on each day from and including
                                    the Trade Date to and including the
                                    Effective Date. Counterparty further
                                    represents that (1) as of the Trade Date it
                                    had established and implemented written
                                    policies and procedures to ensure that no
                                    Contract Person will violate federal and
                                    state securities laws prohibiting the
                                    purchase or sale of securities on the basis
                                    of material nonpublic information in
                                    connection with this Agreement and this
                                    Transaction and (2) if any third-party cause
                                    of action asserts that Counterparty has
                                    violated such federal and state securities
                                    laws, Counterparty may duly and in good
                                    faith assert in its responsive pleading an
                                    affirmative defense under Rule 10b5-1 of the
                                    Securities Exchange Act of 1934, as amended.

                                    Counterparty represents that all proceeds
                                    from the Counterparty Loan and any other
                                    credit facility entered into by Counterparty
                                    as of the date hereof through and including
                                    March 31, 2002 shall be used to satisfy in
                                    full all outstanding payment obligations
                                    (principal, interest or otherwise) of
                                    Counterparty pursuant to (i) the Credit
                                    Agreement dated as of May 26, 1998 among
                                    Counterparty, Bank of America, N.A., and
                                    U.S. Bank National Association, as lenders,
                                    and Bank of America, N.A., as administrative
                                    agent, as amended; and (ii) the Credit
                                    Agreement dated as of June 24, 1999 among
                                    Counterparty, the various lenders thereto,
                                    Bank of America, N.A., as administrative
                                    agent, and Credit Suisse First Boston, as
                                    syndication agent, as amended. A breach of
                                    this representation shall constitute an
                                    Additional Termination Event with respect to
                                    Counterparty with Counterparty as the
                                    Affected Party, giving MLI a right to
                                    designate an Early Termination Date (as
                                    defined in the ISDA Master Agreement).

                                    Counterparty is not and has not been the
                                    subject of any civil proceeding of a
                                    judicial or administrative body of competent
                                    jurisdiction that could reasonably be
                                    expected to impair materially Counterparty's
                                    ability to perform its obligations
                                    hereunder.

                                    Counterparty will by the next succeeding
                                    Business Day notify MLI upon obtaining
                                    knowledge of the occurrence of any event
                                    that would constitute an Event of Default, a
                                    Potential Event of Default or a Potential
                                    Adjustment Event.

                                    As of the Effective Date, Counterparty is
                                    not insolvent.

Representation of MLI:              MLI hereby represents and warrants to, and
                                    agrees with, Counterparty that it shall
                                    comply with (i) the terms of the
                                    Interpretive Letter and (ii) the manner of

                                      10

<PAGE>

                                    sale requirements of Rule 144 (f) and (g) in
                                    connection with the sale of Shares during
                                    the hedge period.

Acknowledgements:                   (1) The parties acknowledge and agree that
                                    there are no other representations,
                                    agreements or other   undertakings   of
                                    the parties in relation to this
                                    Transaction, except as set forth in this
                                    Confirmation or in the Agreement.

                                    (2) The parties hereto intend for:

                                        (a) this Transaction to be a "securities
                                        contract" as defined in Section 741(7)
                                        of Title 11 of the United States Code
                                        (the "Bankruptcy Code"), qualifying for
                                              ---------------
                                        the protections under Section 555 of the
                                        Bankruptcy Code;

                                        (b) a party's right to liquidate this
                                        Transaction and to exercise any other
                                        remedies upon the occurrence of any
                                        Event of Default under the Agreement
                                        with respect to the other party to
                                        constitute a "contractual right" as
                                        defined in the Bankruptcy Code;

                                        (c) any cash, securities or other
                                        property provided as performance
                                        assurance, credit, support or collateral
                                        with respect to this Transaction to
                                        constitute "margin payments" as defined
                                        in the Bankruptcy Code; and

                                        (d) all payments for, under or in
                                        connection with this Transaction, all
                                        payments for the Shares and the transfer
                                        of such Shares to constitute "settlement
                                        payments" as defined in the Bankruptcy
                                        Code.

                                    (3) The parties acknowledge and agree that
                                    in the event of an Early Termination Date as
                                    a result of an Event of Default, the amount
                                    payable under the Agreement will be a cash
                                    amount calculated as described therein and
                                    that the deliveries specified in this
                                    Transaction will no longer be required.

                                    (4) Upon the execution of this Confirmation,
                                    the Agreement shall constitute a "Final
                                    Agreement" within the meaning of the
                                    Interpretive Letter.

Interpretation:                     For purposes of the Equity Definitions, this
                                    Transaction will be deemed to be a
                                    Physically-settled Share Option Transaction
                                    if Physical Settlement applies and a
                                    Cash-settled Share Option Transaction if
                                    Cash Settlement applies, in either case with
                                    an Exercise Date equal to the Valuation
                                    Date.

Indemnity:                          Counterparty agrees to indemnify MLI and
                                    its Affiliates and their respective
                                    directors,  officers,  agents and
                                    controlling parties (MLI and each such
                                    person being an  "Indemnified Party")
                                                      ------------------
                                    from and against any and all losses,
                                    claims, damages and liabilities,  joint and
                                    several,  to which such Indemnified Party
                                    may become subject under, in connection
                                    with,  relating to, or arising out of, this
                                    Agreement or Transaction with respect to
                                    any applicable securities laws and will
                                    reimburse any Indemnified   Party for
                                    all reasonable   expenses (including
                                    reasonable legal fees and reasonable
                                    expenses) as they are incurred in
                                    connection with the investigation of,
                                    preparation for, or defense of any pending
                                    or threatened claim or any action or
                                    proceeding arising therefrom, whether or
                                    not such Indemnified Party is a party
                                    thereto. Counterparty will not be liable
                                    under this Indemnity paragraph to the
                                    extent that any loss, claim, damage,
                                    liability or expense is found in a final
                                    judgment by a court to have resulted from
                                    MLI's gross negligence,  fraud,  bad faith
                                    and/or willful misconduct.

                                      11

<PAGE>

         Please confirm that the foregoing correctly sets forth the terms of
our agreement by executing the copy of this Confirmation enclosed for that
purpose and returning it to us by facsimile transmission to the attention
of: Peter Barna (Telecopier No. 212-738-1069).

Very truly yours,

MERRILL LYNCH INTERNATIONAL

By:  /s/ Cheryl Dennerlien
    -----------------------------------
     Name:
     Title:

Confirmed as of the date first above written:

FISHER COMMUNICATIONS, INC.

By:  /s/ Warren Spector
    -----------------------------------
     Name:
     Title:

Acknowledged and agreed as to matters relating to the Agent:

MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED,
      solely in its capacity as Agent hereunder

By:  /s/ Vivian Jackson
    -----------------------------------
     Name:
     Title:

                                      12