FCC Lets Lockheed Martin Buy Comsat

Communications Today, August 2, 2000

The FCC's International Bureau has cleared the way for Lockheed Martin [LMT] to complete its planned acquisition of Comsat [CQ] that let Comsat assign its space and earth stations licenses to a Lockheed Martin subsidiary.

The combination of the two companies will "promote wider service offerings and lower prices for consumers in the United States and abroad," according to the order. Lockheed Martin and Comsat intend to close the deal this week.

Comsat was authorized by Congress in 1962 to become a private, for-profit U.S. satellite communications company representing the United States as a shareholder in the Intelsat international fixed satellite consortium.

Comsat still serves as the U.S. Signatory to Intelsat and will continue in that role until Intelsat's planned privatization in 2001. Intelsat's more than 100 international Signatories would remain shareholders in the privatized company.

The FCC authorized Lockheed Martin to acquire Comsat Government Services, a unit of Comsat, and to buy up to 49 percent of Comsat stock last September. But at that time, Lockheed Martin could not purchase more than 49 percent of Comsat due to a limit set by the Communications Satellite Act of 1962.

The ownership ceiling was lifted March 17 when Congress enacted the Open- Market Reorganization for the Betterment of International Telecommunications Act, known as the ORBIT Act.

The FCC concluded that the sale of Comsat might have efficiencies that will allow the merged company to compete more effectively in the global communications marketplace. A lack of potential competitive harm and the beneficial efficiencies spurred the FCC to allow the ownership transfer, according to the order.

Paul Dykewicz