Communications Satellite Corp. chairman Joseph H. McConnell indicated yesterday that a decision on increasing the firm's dividend rate will not be made until a federal court rules on the validity of a Federal Communications Commission order requiring lower rates.
Anticipating an expression of concern about Comsat's long-stagnant dividend rate at the annual meeting here yesterday, McConnell said, "We have proceeded cautiously because we have had a number of uncertainties."
Comsat's quarterly dividend rate has been cents per share for 12 consecutive quarters, with the next distribution due June 13 to stockholders of record May 13.
McConnell said that "before long we should be in a better position to determine the appropriate level of dividends . . . and you can be sure that your directors will take a close look at the matter . . ."
The major factor causing the delay of consideration for a higher payout is the FCC decision of December 1975, ordering Comsat to reduce sharply its rates for international communications services.
In testimony before the U.S. Court of Appeals on Jan. 27, Comsat lawyers argued that the FCC action - if upheld - would not permit the Washington Company to recover a deficiency in profits during startup years or to earn what Comsat states is a "reasonable" profit on its overall investment in the international satellite communications system.
A decision in the case is pending. Comsat has said that if the FCC order prevails, it would have "a substantial adverse impact" on future profitability.
Comsat's profits have already been affected by the case. The company currently is setting aside revenues in an escrow account in an amount that would match the reduction in rates, if they are put into effect on a retroactive basis.
Profits last year were reduced $1.52 a share as a result of the escrow requirement, to $3.83 compared with $4.62 in 1975.
In the first quarter of 1977, profits totaled $8.88 million (89 cents a share) compared with $11.04 million ($1.10) in the same period last year, when the escrow fund was not in existence. Revenues of nearly $14.5 million (73 cents a share of earnings, after taxes) were set aside in the recent quarter.
However, McConnell noted yesterday, the first-quarter impact of the rate case was softened by the growing operations of Comsat General Corp., a young subsidiary that contributed 16 cents a share to quarterly profits.
Comsat was established as a private firm under a 1962 law and given responsibility by Congress for establishing a global satellite communications system with other nations. Comsat General, a wholly-owned subsidiary, is engaged in domestic and maritime satellite services.
Stockholders at yesterday's meeting in the Capital Hilton, voted down a third bid by Lillian R. Levy, of Chevy Chase, to become the first woman member of Comsat's board of directors.
In seeking election yesterday, Levy complained that the absence of a woman on Comsat's board was "beyond reason." She called on the firm to establish an equal employment opportunity program for the board. Her background includes a senior writing position with the National Aeronautics and Space Administration.
Also defeated by a wide margin was a proposal by annual meeting gadfly and professional stockholder Evelyn Y. Davis, seeking to have Comsat provide stockholders with data on former government employment of key officers.
Two new directors nominated by management were elected - Goodyear Tire & Rubber Co. chairman Charles J. Pilliod Jr. and former Procter & Gamble chairman Howard J. Morgens.