Comsat Dissident Vows A Battle To Oust Board

Company Reports Loss For Quarter, And Cut In Dividend

April 22, 1997|By Timothy J. Mullaney | Timothy J. Mullaney,SUN STAFF

A dissident shareholder of Comsat Corp. said yesterday that he will shortly unveil a slate of 12 candidates who will try to oust Comsat's directors in August, speaking after the Bethesda satellite-communications company disclosed another loss for the first quarter and a big dividend cut.

Comsat said it lost $5.3 million, or 11 cents a share, in the first quarter of 1997, compared with a profit of $9.3 million in the corresponding period of 1996. Comsat blamed the bulk of the loss on its 81 percent-owned subsidiary, Ascent Entertainment Group Inc., which owns two professional sports franchises and pay-per-view movie services targeted at hotel guests.

Consolidated revenues in the quarter were $281.7 million, up 13 percent from the first quarter of 1996.

Comsat said it would cut its quarterly dividend to 5 cents a share from 19.5 cents. Comsat Chief Executive Officer Betty Alewine, who took over last summer, said the move was necessary because the company has been paying out more in dividends than it has been making in profits.

And, backing away from an earlier announcement that it would postpone its annual meeting indefinitely in order to let management concentrate on the restructuring, Comsat set a shareholders meeting for Aug. 15.

The company tried to put a positive spin on the news by pointing out that it has already said it will sell or spin off its stake in Ascent and sell most of its Comsat RSI unit, which makes ground-based equipment for satellite communications systems. The service-oriented businesses that will be left after the spinoffs actually made a profit of $6.8 million during the first quarter, Comsat said.

"First-quarter results from our core satellite services and digital networking businesses are solid and provide the first indicators that our strategy of focusing on these businesses is the right one for this company," Alewine said.

Wall Street didn't make a big fuss over the numbers either way, as Comsat shares fell 75 cents to $22.875 on a day when technology stocks were broadly lower.

The one published analyst's estimate had been that Comsat would lose 6 cents a share, and Ascent had already disclosed its quarterly loss of $17.7 million, which it blamed on satellite failures affecting its SpectraVision hotel movie operations, lower attendance as the Denver Nuggets suffered through a 21-61 season and higher hockey expenses after Ascent's Colorado Avalanche unit won last year's Stanley Cup.

But general Wall Street sentiment is not Comsat's biggest problem these days. Its problem is Guy Wyser-Pratte, an arbitrageur turned money manager whose firm controls 2.56 percent of Comsat's stock.

Along with Providence Capital, another New York money-management firm that owns a small Comsat stake, Wyser-Pratte had threatened a proxy fight earlier in the month but had quickly offered to drop a demand for a special shareholders' meeting in exchange for concessions.

Yesterday, Wyser-Pratte said the dissidents have recruited a slate of 12 candidates to run for Comsat's 15-member board. The other three directors are appointed by the federal government, owing to Comsat's history as a federally chartered company. Wyser-Pratte said his slate will be disclosed to the U.S. Securities and Exchange Commission within 10 days.

"The culture of the board is wrong," Wyser-Pratte said. "A bunch of government bureaucrats are running the company. You need people with commercial experience, vision and interest in maximizing shareholder value."

But Wyser-Pratte said he has no criticism of the dividend cut because it is something the dissidents have wanted the board to do.

Janet Dewar, Comsat's chief spokeswoman, said Wyser-Pratte's criticism is unfair. She said the diversification into entertainment "is almost behind us," and she said Alewine has spent 10 years at Comsat running the most profitable parts of the business.

"There is no one more commercially oriented than the current CEO of this company," Dewar said. "She knows where the opportunities are in the market and how to seize them."

Pub Date: 4/22/97

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