A bill that could permit Lockheed Martin Corp. to complete the purchase of satellite services provider Comsat Corp. was introduced in the House yesterday, as lawmakers attempt to rewrite rules on international satellite competition before Congress adjourns.
The legislation, offered by House Commerce Committee Chairman Thomas J. Bliley Jr. (R-Va.), could accelerate a year-long debate over the future role of Comsat as the U.S. representative to the global satellite consortium Intelsat.
Approval of satellite policy reform would free Lockheed Martin to acquire the remaining 51 percent of Comsat, its Bethesda-based neighbor. It purchased 49 percent for $1.2 billion in September but is barred from going further by the 1962 Satellite Act.
Completion of the acquisition would likely lead to more changes.
Lockheed Martin, the leading U.S. defense contractor, has said it intends to seek an investment partner for its global telecommunications business, including Comsat, once the acquisition is completed.
With its revenue and earnings forecasts for 2000 sharply reduced, Lockheed wants a strong partner with the telecommunications expertise and capital to help make the venture a serious competitor.
But Lockheed also may be considering the outright sale of the telecommunications business, including Comsat, according to industry analysts, in order to focus more closely on defense sales. "I think that's still being debated internally," said Pierre Chao at Credit Suisse First Boston.
Lockheed and Comsat support a Senate-passed satellite policy bill, which would do less to disrupt Comsat's current role as the largest shareholder in the Intelsat satellite network.
Bliley's bill would permit companies to buy Intelsat's service directly rather than going through Comsat. But he dropped a provision that would have let U.S. firms renegotiate their current satellite access contracts with Comsat.
If the House passes the measure before adjournment, some unusual parliamentary steps would be needed to reconcile the differences between the two versions. Otherwise the issue will carry over into next year, legislative aides said--particularly if Lockheed and Comsat aren't on board.
In a statement yesterday, Lockheed Martin said it was pleased to see Bliley's bill introduced. While it has concerns with parts of the bill, it wants to see the measure enacted this year, the company said.
Comsat took a tougher stance, saying Bliley's bill "would systematically undermine Comsat's business," according to spokesman Jay Ziegler.
Business: Provides satellite capacity into and out of the United States for 700 international customers such as AT&T and MCI WorldCom, broadcasters, news-gathering organizations, and the U.S. government.
Established: 1963; adopted the Comsat name in 1993
1998 sales: $616.5 million
1998 net income:
Ticker symbol: CQ on the NYSE
Yesterday's closing stock price: $17.75, up $1
Web address: www.comsat.com
SOURCE: Hoover's, Bloomberg News