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                                                                     Exhibit 4.2
                       AMENDMENT NO. 1 TO RIGHTS AGREEMENT


         AMENDMENT No. 1 dated as of December 15, 1998 to the RIGHTS AGREEMENT
dated as of October 10, 1996 (the "Rights Agreement"), between TIME WARNER INC.,
a Delaware corporation formerly named TW Inc. (the "Company"), and CHASEMELLON
SHAREHOLDER SERVICES L.L.C., as Rights Agent (the "Rights Agent").

         WHEREAS, the Company has determined that, in connection with a
two-for-one common stock split effective on December 15, 1998, it is
advantageous to adopt a book-entry form of registration for its Common Stock,
that permits uncertificated shares of Common Stock, through the Direct
Registration System and has done so;

         WHEREAS, the Company considers it advisable to amend the Rights
Agreement explicitly to provide for uncertificated shares of Common Stock; and

         WHEREAS, pursuant to Section 26 of the Rights Agreement, prior to the
Distribution Date, the Company may, and the Rights Agent shall if the Company so
directs, amend the Rights Agreement to provide for uncertificated shares of
Common Stock with associated Rights.

         NOW, THEREFORE, the Company and the Rights Agent hereby agree that the
Rights Agreement is hereby amended as follows by this Amendment No. 1 thereto
(the "Amendment"):

         1. Definitions. Capitalized terms used herein and not defined herein
have the meanings ascribed to such terms in the Rights Agreement.

         2. Amendments to Section 3 Regarding Issue of Rights and Rights
Certificates.

            (a) Subsection 3(b)(x) of the Rights Agreement is hereby amended to
read in its entirety as follows:

         "(x) the Rights will be evidenced by the certificates for Common Shares
         registered in the names of the holders thereof, or by a current
         ownership statement issued with respect to uncertificated Common Shares
         in lieu of such a 
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certificate (an "Ownership Statement"), and not by separate Rights Certificates
and"

                  (b) Subsection 3(c) of the Rights Agreement is hereby amended
to read in its entirety as follows:

                  "(c) With respect to any certificate for Common Shares, or any
         Ownership Statement, until the earliest of the Distribution Date, the
         Redemption Date or the Expiration Date, the Rights associated with the
         Common Shares represented by any such certificate, or covered by an
         Ownership Statement, shall be evidenced by such certificate, or
         Ownership Statement, alone, the registered holders of the Common Shares
         shall also be the registered holders of the associated Rights and the
         surrender for transfer of any such certificate, or the transfer of any
         Common Shares covered by such an Ownership Statement, shall also
         constitute the transfer of the Rights associated with the Common Shares
         represented or covered thereby."

                  (c) Subsection 3(d) of the Rights Agreement is hereby amended
to read in its entirety as follows:

                  "(d) Certificates (or Ownership Statements) issued for Common
         Shares after the Record Date (including, without limitation, upon
         transfer or exchange of outstanding Common Shares), but prior to the
         earliest of the Distribution Date, the Redemption Date or the
         Expiration Date, may have printed on, written on or otherwise affixed
         to them the following, or a substantially similar, legend:

                           This [certificate][statement] also evidences and
                  entitles the holder hereof to certain Rights as set forth in a
                  Rights Agreement dated as of October 10, 1996, as it may be
                  amended from time to time (the "Rights Agreement"), between
                  Time Warner Inc. (the "Company") and ChaseMellon Shareholder
                  Services L.L.C., as Rights Agent (the "Rights Agent"), the
                  terms of which are hereby incorporated herein by reference and
                  a copy of which is on file at the principal executive offices
                  of the Company. Under certain circumstances, as set forth in
                  the Rights Agreement, such Rights will be evidenced by
                  separate certificates and will no longer be evidenced by this
                  [certificate][statement]. The Rights Agent will mail to the
                  holder hereof a copy of the Rights Agreement without charge
                  after receipt of a written request 


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                  therefor. Rights beneficially owned by Acquiring Persons or
                  their Affiliates or Associates (as such terms are defined in
                  the Rights Agreement) and by any subsequent holder of such
                  Rights are null and void and nontransferable."

         3. Amendment to Section 17(c). Section 17(c) of the Rights Agreement is
hereby amended to read in its entirety as follows:

                  "(c) the Company and the Rights Agent may deem and treat the
         Person in whose name a Right Certificate (or, prior to the Distribution
         Date, the associated Common Shares) is registered as the absolute owner
         thereof and of the Rights evidenced thereby (notwithstanding any
         notations of ownership or writing on the Right Certificates or the
         associated certificate for Common Shares or Ownership Statement made by
         anyone other than the Company or the Rights Agent) for all purposes
         whatsoever, and neither the Company nor the Rights Agent shall be
         affected by any notice to the contrary."

         4. Amendment to Section 21(j). Section 21(j) of the Rights Agreement is
hereby amended by adding the following sentence at the end thereof:

         "Anything to the contrary notwithstanding, the Rights Agent shall not
         be liable for indirect, consequential or incidental loss or damage of
         any kind whatsoever (including but not limited to lost profits) except
         for any such loss or damage determined by a court of competent
         jurisdiction to be as a result of, or arising out of, the Rights
         Agent's bad faith or willful misconduct, even if the Rights Agent has
         been advised of the likelihood of such loss or damage."

         5. Amendment to Section 22. The fourth sentence of Section 22 of the
Rights Agreement is hereby amended to read in its entirety as follows:

         "If the Company shall fail to make such appointment within a period of
         30 days after giving notice of such removal or after it has been
         notified in writing of such resignation or incapacity by the resigning
         or incapacitated Rights Agent or by the holder of a Right Certificate
         (or, prior to the Distribution Date, of the Common Shares) (who shall,
         with such notice, submit his Right Certificate or, prior to the
         Distribution Date, the certificate representing his Common Shares or an
         Ownership Statement, for inspection by 


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         the Company), then the registered holder of any Right Certificate (or,
         prior to the Distribution Date, of the Common Shares) may apply to any
         court of competent jurisdiction for the appointment of a new Rights
         Agent."

         6. Effect on Rights Agreement. Except as expressly modified by this
Amendment, the Rights Agreement is in all respects ratified and confirmed and
all the terms, conditions and provisions thereof shall remain in full force and
effect.

         7. Governing Law. This Amendment shall be governed by and construed in
accordance with the law of the state of Delaware applicable to contracts to be
made and performed entirely within such state.

         8. Descriptive Headings. Descriptive headings used in this Amendment
are inserted for convenience only and shall not control or affect the meaning or
construction of any of the provisions of this Amendment.

         9. Counterparts. This Amendment may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one and
the same instrument.

         IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 1
to the Rights Agreement to be duly executed as of the day and year first above
written.

                                          TIME WARNER INC.



                                          By /s/Thomas W. McEnerney
                                             ---------------------------------
                                             Name:  Thomas W. McEnerney
                                             Title: Vice President


                                             CHASEMELLON SHAREHOLDER
                                             SERVICES L.L.C., as Rights
                                             Agent


                                           By /s/Gary D'Alessandro
                                              ---------------------------------
                                              Name:  Gary D'Alessandro
                                              Title: Vice President


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