Comsat Corp. announced its long-awaited restructuring plan yesterday, but instead of winning cheers from Wall Street, the news was met with a yawn.
Bethesda-based Comsat said it plans to sell or spin off its 81 percent stake in money-losing Ascent Entertainment Group Inc. of Denver, which owns the National Basketball Association's Denver Nuggets and the National Hockey League's Colorado Avalanche in addition to the SpectraVision hotel movie-delivery business and other operations.
The company also said it will seek a buyer for Comsat RSI, which makes ground-based equipment for satellite communications, and push for a restructuring of the government-backed Intelsat satellite system, in which Comsat is the biggest stockholder and transmits thousands of broadcasts between the United States and the rest of the world.
After the restructuring, Comsat said it will be "a smaller, more focused company with a stronger balance sheet" focused on core businesses in satellite phone service and broadcasting support services.
But instead of getting the pop that often follows restructuring announcements, Comsat shares rose only 37.5 cents to $26.375 yesterday.
"It's just more of the same," said William Smith, president of William Smith Special Opportunities Research, a boutique research firm in Denver. "They continue to discuss the same issues over and over."
Comsat has signaled at least twice that it will try to sell or spin off its interest in Ascent, whose share price has fallen nearly 50 percent since last July. Analysts were also already aware that Comsat RSI was on the block, said Smith, who said the equipment business may be worth up to $350 million.
"They're getting serious competition on the communications services side" and need to sell the less profitable equipment business to raise investment capital, Smith said.
He contended the biggest announcement yesterday was Comsat's disclosure that it is indefinitely postponing its annual shareholders' meeting to let management focus on the restructuring.
"They're too busy to have a shareholders' meeting," Smith said. "That shows you what kind of management they have running the company."
The new management team took over last July, replacing a chief executive who was the author of the plan for diversifying into entertainment.
The executives have said they want to focus on more profitable communications businesses, but the performance of those businesses dipped sharply in the fourth quarter, when Comsat lost $11.5 million and saw operating profits from telecommunications fall to $17.1 million from $32.4 million in the fourth quarter of 1995.
Pub Date: 3/25/97