Purchase of Comsat nearing fruition

Senate approves bill to allow bid by Lockheed

Communications

March 04, 2000|By Mark Ribbing | Mark Ribbing,SUN STAFF

Lockheed Martin Corp's proposed $2.5 billion purchase of Comsat Corp. took a step closer to fruition when the U.S. Senate approved legislation that would allow the joining of the two Bethesda companies.

The bill, which would also remove some of Comsats privileges as a provider of communications-satellite access, was approved by the Senate late Thursday by unanimous consent.

The House of Representatives is expected to approve the measure Wednesday. Senate and House leaders produced a compromise bill Feb. 17 that ironed out differences between the two chambers versions of satellite legislation.

Were greatly encouraged by the passage of this legislation, and we commend the leadership for moving the entire process along, said Lockheed spokeswoman Sigrid Badinelli.

Lockheed, seeking to augment its military-contracting business by branching into telecommunications, announced its intention to buy the satellite-communications firm in September 1998, and assumed control of 49 percent control of Comsat last year.

However, this was a corporate acquisition with a twist; Comsat had been created by an act of Congress in 1962, and congressional action was needed before Lockheed could take the remaining 51 percent of the company.

The bill passed by the Senate would permit this to happen, and would allow phone and Internet companies to gain direct access to the important Intelsat satellite network. Such companies currently must go through Comsat to obtain such access.

In addition, the legislation requires Intelsat to privatize by April 2001. Intelsat is controlled by representatives from its member governments. Comsat is the United States representative to Intelsat and holds the largest ownership stake in the network -- more than 20 percent.

We believe that, on balance, the privatization criteria in the bill are workable, said Comsat spokesman Jay Ziegler.

Proponents of the satellite-reform bill say the measure is needed at a time when open access to sophisticated communications networks is more important than ever.

A privatized industry is more likely to spur innovation than a quasi-governmental monopoly that has no useful reasons to change, said Ben OConnell, a spokesman for Sen. Conrad Burns. As a leading member of the Senates commerce, science and transportation committee, the Montana Republican played a key role in the legislation.

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