By the end of this month Comsat Corp will have divested itself of another of its non-core businesses, when it hands its 80.6% share of loss-making Ascent Entertainment Group to its shareholders by way of a tax-free dividend. The Bethesda, Maryland, satellite operator called in Merrill Lynch & Co last year after its Standard & Poor Corp credit rating was reduced (CI No 2,844), to evaluate ways of ‘enhancing shareholder value’ (CI No 2,854). It decided to divest itself of its non-core businesses, and started the ball rolling by selling off its definitely non-core professional basketball team, hockey team and movie studio at the end of last year (CI No 3,036). Earlier this year the company announced a re-structuring, and said it would get rid of Ascent (CI No 3,127), whose sports and entertainment operations’ losses were consolidated with Comsat’s results. Comsat’s net loss for the three months ending March 31 was $5.3m. For the same period in 1996 it had recorded net profits of $9.3m. Without Ascent, Comsat would have recorded a first quarter net profit of $6.8m. Betty Alewine, Comsat’s president and chief executive said: We announced that we would divest Ascent by the end of the second half of 1997 and I am delighted to say that we are right on schedule with this key component of our restructuring plan. Charlie Lyons, Ascent’s president and chief executive was also pleased with the outcome. We strongly endorse this action, he said. There is no doubt that Ascent and Comsat are different companies in different industries. It’s better for both if they each go their separate ways. Following the spin-off, Ascent will operate as a separate media and entertainment company while Comsat will refocus on its satellite and networking services businesses. 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, Ms Alewine said. Comsat World Systems’ revenues rose by 2% to $66.8m and operating profit rose 10% to $28.1m, because of improved earnings on carrier-to-carrier contracts. The Ascent share distribution will be made on a pro rata basis, with Comsat shareholders receiving about one-half share of Ascent stock for each share of Comsat stock. The satellite and communications company owns 24 million shares of Ascent.
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