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This is an unofficial announcement of Commission action. Release of the full text of a Commission order constitutes official action. See MCI v. FCC. 515 F 2d 385 (D.C. Circ 1974).
FCC AUTHORIZES LOCKHEED MARTIN TO PURCHASE UP TO 49 PERCENT OF COMSAT
Washington D.C. -- The Commission today approved the first phase of Lockheed
Martin's planned acquisition of Comsat Corporation (Comsat). Commission review of the
full merger will be subject to a future application that Lockheed Martin can only submit
upon Congressional action amending the Communications Satellite Act of 1962. |
This action authorizes Lockheed Martin Corporation, through its wholly owned subsidiary, Regulus, LLC (Regulus), to acquire Comsat Government Services, Inc. (CGSI), a wholly owned subsidiary of Comsat, and to purchase up to 49 percent of Comsat stock. The authority granted today allows Regulus, as part of its acquisition of CGSI, to acquire control of CGSI's FCC licenses and thus allows Lockheed Martin, its parent company, to become a common carrier. As an authorized carrier under the Satellite Act, Regulus may own a minority share of Comsat stock upon authorization from the Commission which was also granted today.
The Commission found that Regulus's purchase of CGSI would not have any adverse impact on the current level of competition for the provision of satellite services or the manufacture of communications satellites or other related equipment. The Commission also found that the acquisition of CGSI may have potential efficiencies associated with allowing Lockheed Martin, a major supplier of satellite technology, to also provide satellite services to the government. Based on the lack of potential competitive harm and potential beneficial efficiencies resulting from the transfer, the Commission concluded that the acquisition of CGSI by Lockheed Martin through Regulus is in the public interest and granted the request to acquire CGSI.
Having authorized Lockheed Martin, through Regulus, to become a common carrier, the Commission also considered whether to authorize Regulus to own up to 49 percent of Comsat stock. The Commission found that with the minority ownership contemplated, Lockheed Martin's resources, space system technology and experience as a satellite manufacturer in a competitive business environment could strengthen Comsat's position as one of a number of players in the competitive satellite services market. The Commission also determined that grant of the application would not violate the Satellite Act and would not result in a de facto transfer of control. The Commission, therefore, concluded that it was in the public interest, convenience and necessity to authorize Regulus to own up to 49 percent of Comsat stock.
The second phase of the merger agreement between Lockheed Martin and Comsat is not before the Commission at this time. Under the second phase, Lockheed Martin intends to acquire 100 percent of Comsat. Because the 1962 Satellite Act currently prohibits greater than 50 percent aggregate common carrier ownership in Comsat, the second phase of the proposed action cannot occur unless and until Congress amends the Satellite Act to lift the current ownership limitations. At that time, the companies would have to apply to the Commission for authority to transfer control of Comsat to Lockheed Martin.
Action by the Commission September 15, 1999, by Memorandum Order and Authorization (FCC 99-237). Chairman Kennard, Commissioners Ness, Powell and Tristani, with Commissioner Furchtgott-Roth abstaining.
International Bureau contacts: Peter Pappas at (202) 418-0746; Jim Ball at (202) 418- 0427; and Sasha Field at (202) 418-2064.
IB No. 99-29