Comsat was responsible for launching the first commercial communications satellite, Early Bird, in 1965 and from that historic achievement went on to launch numerous satellites in the decades to follow. Based in Bethesda, Maryland, the company was formed by the U.S. Congress to spearhead the country's interests in commercial satellite communications.
Comsat's unique position in the business world was carved out by the passage of the Communications Satellite Act of 1962, completed by the U.S. Congress on August 27, 1962. Signed by President John F. Kennedy four days later, the Communications Satellite Act established a national policy for the creation of a commercial communications satellite system in cooperation with other nations. Additionally, the act authorized the formation of a new, private company to represent the United States in the development and operation of the planned global satellite system. That company was Communications Satellite Corporation, or Comsat, a start-up company unlike any other business venture in the world. Its origins were singular, predicated on the decision by political leaders during the early 1960s to establish a commercial satellite network rather than spearheading such an undertaking through government agencies. Comsat, as the company was envisioned in August 1962, would be the first commercial satellite operator, a company operating in the private sector that would propel the United States into the commercial satellite arena and promote the commercial interests of the nation's businesses and population in satellite communications. Although unfettered in many respects from government control, Comsat would operate under the supervision of the Federal Communications Commission (FCC) as it endeavored, in the words of the Communications Satellite Act, "to provide global coverage at the earliest practicable date." Those words represented the marching orders for what Newsweek
heralded as "the biggest new company ever created."
The incorporators of Comsat were nominated by Kennedy and confirmed by the U.S. Senate in October 1962. Responsible for forming the company and selecting its management, the group of individuals tapped by Kennedy included top executives from across the country, partners of prestigious law firms, bank presidents, newspaper publishers, and labor leaders--12 individuals in all. On February 1, 1963, the distinguished board of incorporators accomplished their first major task when they incorporated Comsat. Later in the month, they secured a $5 million line of credit with commercial banks for the company's start-up costs. Next, in March 1963, the company's incorporators filled Comsat's top two executive posts. After trimming down a list of 50 candidates to eight finalists, the incorporators selected Leo D. Welch, the soon-to-retire chairman of Standard Oil Company
, as chairman and chief executive officer, and Dr. Joseph V. Charyk, Under Secretary of the Air Force for the previous three years, as president and chief operating officer. Each had specific roles to play for the company. Welch, with an extensive background in banking and international business, would be responsible for finances and negotiating international agreements, while Charyk, an aeronautical engineer with aerospace experience at Lockheed Aircraft
and Ford Motor Company
, would spend much of his time with technical studies, including the pressing decision of what type of satellite to use.
In April 1964 when the company awarded its first hardware contract to Hughes Aircraft Company
for the production of the first commercial communications satellites. Comsat ordered the creation of an experimental-operational satellite to test the feasibility of placing a satellite in geosynchronous orbit, that is, a satellite able to mirror the rotation of the earth and thus remain in a fixed position over a particular point on the earth's surface. As work got underway, the groundbreaking satellite became known as "Early Bird," gaining its official designation later as "Intelsat I."
A year after Hughes Aircraft began work on Early Bird, the satellite was ready to be launched. In April 1965, Early Bird took to the skies, soared 22,300 miles above the earth, and was successfully emplaced in geosynchronous orbit over the coast of Brazil, becoming the world's first commercial communications satellite. The benefits for commercial use were meaningful, enabling live, transatlantic television broadcast and increasing by nearly two-thirds the telephone capacity across the Atlantic Ocean. Having secured satellite coverage between the United States and Europe, the two Comsat leaders next moved to provide satellite coverage for the rest of the world.
One month after the successful launch of Intelsat I, the FCC awarded Comsat the sole responsibility for the design, construction, and operation of three initial U.S. earth stations for international communications. The three earth stations, with their giant satellite antennas, were the first of 65 earth stations constructed during Comsat's first decade of business. In November 1965, work began on the second generation of Intelsat satellites. Comsat awarded a contract to Hughes Aircraft for the Intelsat II satellites, which were expected to provide early communications support for NASA's Apollo moon-landing program. Before the first Intelsat II was launched, construction of the next generation of satellites began when Comsat contracted TRW Systems, Inc.
to build six Intelsat III satellites. With five times the capacity of Intelsat IIs, the Intelsat III satellites were slated to provide the final link connecting global satellite coverage.
Comsat's first major setback occurred in October 1966 when the first of the Intelsat II satellites failed to reach geosynchronous orbit. The second launch in January 1967 was successful, however, providing the first full-time satellite coverage over the Pacific Ocean. Construction of Intelsat IV satellites, which had five times the capacity of Intelsat IIIs, began in October 1968 under the auspices of Hughes Aircraft, but the most important event of the late 1960s occurred in July 1969 when an Intelsat III satellite was successfully emplaced in geosynchronous orbit over the Indian Ocean, providing full global satellite coverage for the first time.
Comsat's entire business revolved around its global satellite network, Intelsat, until the mid-1970s, when unwelcomed news arrived that intensified the need to establish other business ventures. In late 1975, after deliberating over the issue for nearly a decade, the FCC decided that Comsat was nothing more than a utility, subject to the same rate regulations as other, more conventional utilities. The FCC's decision dealt a considerable blow to Comsat, barring the company from using high rates to recover development costs and start-up expenses on new projects and strictly regulating the company's rate of return. Fortunately for Comsat, the company had begun to take its first measured steps into new business ventures just prior to the FCC's announcement. In 1975, through a subsidiary named Comsat General, the company formed Satellite Business Systems in a joint venture with IBM
and Aetna Life & Casualty
. Satellite Business Systems was created to provide extensive private communications networks to customers with widely dispersed facilities, enabling corporate clientele to transmit messages via satellite and bypass entirely the Bell telephone system. The problem for Comsat was that Satellite Business Systems would not be operational for a number of years and its start-up costs were hefty, leaving the company with no response to its dwindling profits. The company did find an answer in 1976, however, by starting its Marisat system, which provided maritime communications for the U.S. Navy, shipping companies, and offshore drilling operators. Also in 1976, Comsat established itself as a competitor in the domestic market with its Comstar system, which provided satellite services to AT&T;
In October 1982, Comsat formed Satellite Television Corporation to enter what was projected to be a $6 billion-a-year market. Headed, by Irving Goldstein, who joined Comsat in 1966, Satellite Television Corporation also was slated to market Comsat's own programming to the more than 20 million customers that the satellite television services were expected to attract.
By the mid-1980s, Comsat's record of diversification could be characterized as representing considerable potential, but delivering little in the way of positive, financial growth. In 1984, the company pulled out of its partnership with IBM Aetna Life in Satellite Business Systems after losing $50 million during the previous decade. In 1985, Comsat sold a company, Environmental Research and Technology, Inc., it had acquired in 1979 for less than the original purchase price, and, more devastating, plans were scrubbed for its direct pay-television venture. In 1985, Goldstein, was named chairman and chief executive officer, and promised wholesale changes, To support his claim, Goldstein pointed to a contract with NBC to distribute programming to affiliate stations that was expected to generate up to $400 million in revenues during the ensuing decade. For further evidence, he pointed to a contract with Holiday Inns
to provide hotel-room entertainment via a nationwide satellite that had the potential to bring in $200 million in revenues during the ensuing decade. During the late 1980s, the company moved heavily into the entertainment business, precipitated in part by the burgeoning growth during the late 1980s of fiber-optic networks, which threatened Comsat's primary business. Consequently, the need to diversify became more intense as the 1980s drew to a close, leading to the company's acquisition of 62 percent of the Denver Nuggets, a National Basketball Association franchise in 1989. The remainder of the Denver of Nuggets was purchased in 1992. In 1991, Comsat acquired a partial stake in On Command Video Corporation, a California-based company that developed and marketed a proprietary video entertainment system to hotels, and grouped the acquisition with its Denver Nuggets property in what would eventually be a subsidiary named Ascent Entertainment Group, Inc. In 1994, the scope of this subsidiary was widened with the acquisition of Beacon Communications Group, a film and television production company based in Los Angeles, and strengthened further with the acquisition in 1995 of the Quebec Nordiques, a National Hockey League franchise. The Nordiques were subsequently moved to Denver, Colorado and renamed the Avalanche, winning the Stanley Cup during their inaugural year.
Comsat entered the mid-1990s supported by three primary business segments: international communications, technology services, and entertainment. The composition of the company's operations soon changed, however, when new management, led by president and chief executive officer Betty C. Alewine and chairman C.J. Silas, took over in mid-1996 and immediately shedded its entertainment segment (Ascent Entertainment Group) and its manufacturing subsidiary, Comsat RSI.
In 1996, the company introduced Planet 1, a personal portable satellite telephone that served as a satellite terminal enabling data and voice transmissions via Comsat's network of earth stations and satellites.