A Federal Communications Commission proposal to place restrictions on Communications Satellite Corp.'s dealings with its laboratories raises serious concerns about the company's future, John Harper, chairman of the Comsat board, told shareholders yesterday.
Harper said the company has "great reservations" about the proposal to place limits on the dealings between Comsat's branches.
"We are concerned that these proposals will not only impair a valuable corporate asset but also a unique national resource," Harper said. "These proposals raise significant impediments" and the company will pursue the issue in further FCC proceedings.
Harper also said that including government representatives in the meetings of two international communications organizations, Intelsat and Inmarsat, as proposed by the FCC, "would be counterproductive to effective representation in these international organizations."
But Harper said he was pleased with the FCC's recent decision suggestng the company should be permitted to use its expertise in new lines of business and said the company is agreeable to adopting FCC safeguards to design against potential conflicts of interest.
Harper's comments on the FCC's Comsat study were the company's first formal remarks on the subject. The remarks came as the company described to stockholders a short-term future that includes a number of major capital investment projects.
At a time when the company is faced with limited earnings from government contracts, for example, and is diversifying and investing in new projects such as Satellite Business Systems, Comsat's joint venture with International Business Machines Corp. and Aetna Life Insurance, earnings are likely to decrease this year, the company said.
"Although our basic business continues to grow and expand at a very encouraging rate, these factors, plus the very uncertain climate, produce a situation in which we do not expect our 1980 earnings level to equal that of 1979," said Joseph Charyk, Comsat's president.
Already the company has reported such a downturn as 1980 first-quarter profits dropped by 25 cents a share.
Charyk said the company's unprecedented proposal to offer home television service via satellite signals could become the company's "most innovative and far-reaching program," despite the fact that negotiations between Comsat and Sears Roebuck and Co. to provide that service collapsed last month.
"We are very much interested in the early establishment of a satellite-to-home system, and we are in discussions with a number of companies having strengths that complement our own," Charyk said.
The company still intends to file an application with the FCC to provide that service, Charyk said.
Similarly, Comsat's $125 million investment in SBS, the McLean communications partnership scheduled to launch its first satellite this fall, has yet to show a return.
Comsat will have to invest additional funds in SBS, Charyk said, noting that "the high level of this upfront investment attests to our belief that the longer-term outlook for this ambitious program is very bright."