UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON D.C. 20549

                                    FORM 10-Q


            QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                  For the quarterly period ended June 30, 1998

                           Commission File No. 0-22531

                              PanAmSat Corporation
             (Exact Name of Registrant as Specified in its Charter)

                 Delaware                              95-4607698
     (State or other Jurisdiction of                (I.R.S.  Employer
      Incorporation or Organization)                Identification No.)

                    One Pickwick Plaza, Greenwich, CT 06830
                    (Address of Principal Executive Offices)

        Registrant's telephone number, including area code: 203-622-6664


Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  Registrant  was
required  to file  such  reports)  and  (2)  has  been  subject  to such  filing
requirements for the past 90 days.

                               YES X      NO

As of June 30, 1998, an aggregate of 149,199,433  shares of the Company's Common
Stock were outstanding.




<PAGE>


                              
Cautionary Statement For Purposes Of The "Safe Harbor"
Provisions Of The Private Securities Litigation Reform Act of 1995


This Quarterly Report on Form 10-Q contains certain forward-looking  statements.
The Private  Securities  Litigation  Reform Act of 1995 provides a "safe harbor"
for certain  forward-looking  statements.  When used in this Quarterly Report on
Form 10-Q, the words "estimate,"  "project,"  "anticipate,"  "expect," "intend,"
"believe" and other similar expressions are intended to identify forward-looking
statements  and  information.  The Company  identifies  the following  important
factors which could cause the Company's actual results to differ materially from
any results which might be projected,  forecasted,  estimated or budgeted by the
Company in  forward-looking  information:  (i) risks associated with technology,
(ii)  regulatory  risks,  and (iii)  litigation.  Such  factors  are more  fully
described  under  the  caption  "Risk  Factors"  in the  Company's  Registration
Statement on Form S-4, as amended  (Registration  No.  333-56227).  Reference is
also made to such other risks and  uncertainties  detailed  from time to time in
the Company's  other filings with the  Securities and Exchange  Commission.  The
Company cautions that the foregoing list of important  factors is not exclusive.
Furthermore,  the Company operates in an industry sector where securities values
may be volatile and may be influenced  by economic and other factors  beyond the
Company's control.



<PAGE>


                              PanAmSat Corporation
                          CONSOLIDATED BALANCE SHEETS
                                 (in thousands)

<TABLE>
<CAPTION>

                                                                       June 30,         December 31,
                                                                         1998               1997
                                                                     -----------        ------------
                                                                     (Unaudited)
<S>                                                                   <C>                 <C>
ASSETS

CURRENT ASSETS:
 Cash and cash equivalents                                           $   102,655         $    91,739
 Accounts receivable-net                                                  78,060              41,030
 Net investment in sales-type leases                                      21,488              27,757
 Prepaid expenses and other                                              101,618              77,891
 Deferred income taxes                                                    38,451              46,940
 Insurance claim receivable                                              162,510                   -
                                                                     -----------        ------------
Total current assets                                                     504,782             285,357

SATELLITES AND OTHER PROPERTY AND
 EQUIPMENT-Net                                                         2,663,504           2,506,082

NET INVESTMENT IN SALES-TYPE LEASES                                      231,090             324,689

GOODWILL-Net of amortization                                           2,466,018           2,498,498

DEFERRED CHARGES AND OTHER ASSETS                                         52,681              67,808
                                                                     -----------        ------------

TOTAL ASSETS                                                         $ 5,918,075         $ 5,682,434
                                                                     -----------        ------------

</TABLE>


                   The accompanying notes are an integral part
                   of these consolidated financial statements
<PAGE>


                              PanAmSat Corporation
                   CONSOLIDATED BALANCE SHEETS - (continued)
                       (in thousands, except share data)

<TABLE>
<CAPTION>

                                                                       June 30,         December 31,
                                                                         1998               1997
                                                                     -----------        ------------
                                                                     (Unaudited)
<S>                                                                   <C>                <C>
LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
 Current portion of long-term debt                                   $     4,106         $    16,398
 Accounts payable and accrued liabilities                                 71,510              26,828
 Deferred gains on sale-leasebacks                                        34,303              42,870
 Deferred revenues                                                        12,449              18,822
                                                                     -----------        ------------
TOTAL CURRENT LIABILITIES                                                122,368             104,918

DUE TO AFFILIATES (PRINCIPALLY MERGER-RELATED  
  INDEBTEDNESS)                                                        1,800,238           1,802,195

LONG-TERM DEBT                                                           859,208             640,123

DEFERRED GAINS ON SALE-LEASEBACKS                                        138,629             191,882

DEFERRED INCOME TAXES                                                    230,000             179,267

OTHER LIABILITIES AND DEFERRED CREDITS                                    87,629             103,029

ACCRUED OPERATING LEASEBACK  
  EXPENSE                                                                 54,148             100,184

                                                                     -----------        ------------

TOTAL LIABILITIES                                                      3,292,220           3,121,598
                                                                     -----------        ------------

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY:
 Common Stock, $0.01 par value 400,000,000
  shares authorized, 149,199,433 shares issued
  and outstanding                                                          1,492               1,491
 Additional paid-in-capital                                            2,503,257           2,501,344
 Retained earnings                                                       121,106              58,001
                                                                     -----------        ------------
Total Stockholders' Equity                                             2,625,855           2,560,836
                                                                     -----------        ------------

 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                          $ 5,918,075         $ 5,682,434
                                                                     -----------        ------------

</TABLE>

                   The accompanying notes are an integral part
                   of these consolidated financial statements

<PAGE>


                              PanAmSat Corporation
               CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
                 For the Six Months Ended June 30, 1998 and 1997
                        (in thousands, except share data)

<TABLE>
<CAPTION>
                                                                       June 30,           June 30,
                                                                         1998               1997
                                                                     -----------        ------------
<S>                                                                  <C>                 <C>   
REVENUES:
  Operating leases, satellite services and other                     $   367,065         $   209,561
  Outright sales and sales-type leases                                    17,040              52,184
                                                                     -----------        ------------
     Total revenues                                                      384,105             261,745
                                                                     -----------        ------------
OPERATING COSTS AND EXPENSES:
  Cost of outright sales and sales-type leases                                 -              20,476
  Leaseback expense, net of deferred gain                                 25,584              30,883
  Depreciation and amortization                                          118,917              45,574
  Direct operating costs                                                  46,547              16,347
  Selling, general and administrative expenses                            28,298              18,856
  Provision for loss on Galaxy IV                                          6,314                   -
                                                                     -----------        ------------
     Total operating costs and expenses                                  225,660             132,136
                                                                     -----------        ------------

INCOME FROM OPERATIONS                                                   158,445             129,609

INTEREST EXPENSE, NET                                                    (46,640)            (16,687)
OTHER INCOME                                                                   -                 385
                                                                     -----------        ------------
INCOME BEFORE INCOME TAXES AND MINORITY INTEREST                         111,805             113,307

INCOME TAXES                                                              48,700              47,737

MINORITY INTEREST                                                              -               3,815
                                                                     -----------        ------------
NET INCOME                                                           $    63,105         $    61,755
                                                                     -----------        ------------
NET INCOME PER COMMON SHARE - BASIC AND DILUTED                      $      0.42         $         -
                                                                     -----------        ------------
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING                           149,652,612                   -
                                                                     -----------        ------------
</TABLE>

                   The accompanying notes are an integral part
                   of these consolidated financial statements

<PAGE>


                              PanAmSat Corporation
               CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
                 For the Three Months Ended June 30, 1998 and 1997
                        (in thousands, except share data)
<TABLE>
<CAPTION>

                                                                       June 30,           June 30,
                                                                         1998               1997
                                                                     -----------        ------------
<S>                                                                  <C>                 <C>   
REVENUES:
  Operating leases, satellite services and other                     $   185,277        $    123,034
  Outright sales and sales-type leases                                     5,803              11,158
                                                                     -----------        ------------
     Total revenues                                                      191,080             134,192
                                                                     -----------        ------------
OPERATING COSTS AND EXPENSES:
  Cost of outright sales and sales-type leases                                 -               4,054
  Leaseback expense, net of deferred gain                                 11,822              15,466
  Depreciation and amortization                                           60,915              30,989
  Direct operating costs                                                  24,226               8,189
  Selling, general and administrative expenses                            14,234              13,396
  Provision for loss on Galaxy IV                                          6,314                   -
                                                                     -----------        ------------
     Total operating costs and expenses                                  117,511              72,094
                                                                     -----------        ------------

INCOME FROM OPERATIONS                                                    73,569              62,098

INTEREST EXPENSE, NET                                                    (24,432)            (14,909)
OTHER EXPENSE                                                                  -                (847)
                                                                     -----------        ------------
INCOME BEFORE INCOME TAXES AND MINORITY INTEREST                          49,137              46,342

INCOME TAXES                                                              21,380              22,625

MINORITY INTEREST                                                              -               3,815
                                                                     -----------        ------------
NET INCOME                                                           $    27,757         $    19,902
                                                                     -----------        ------------
NET INCOME PER COMMON SHARE - BASIC AND DILUTED                      $      0.19         $         -
                                                                     -----------        ------------
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING                           149,725,807                   -
                                                                     -----------        ------------
</TABLE>

                   The accompanying notes are an integral part
                   of these consolidated financial statements

<PAGE>

                              PanAmSat Corporation
                CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
                 For the Six Months Ended June 30, 1998 and 1997
                                 (in thousands)
<TABLE>
<CAPTION>

                                                                       June 30,           June 30, 
                                                                         1998               1997
                                                                     -----------        ------------
<S>                                                                  <C>                 <C>
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES:
Net income                                                            $   63,105         $    61,755
Adjustments to reconcile net income to
 net cash provided by operating activities:
 Gross profit on sales-type leases                                          -                (33,572)
 Depreciation and amortization                                           118,917              45,574
 Deferred income taxes                                                    59,222             (28,987)
 Amortization of gains on sale-leasebacks                                (18,988)            (21,435)
 Provision for uncollectible receivables                                       -              (4,534)
 Accretion of interest on senior subordinated discount notes                   -               5,585
 Interest expense capitalized                                            (28,984)            (19,139)
 Minority interest                                                             -               3,815
 Provision for loss on Galaxy IV                                           6,314                   -
 Changes in assets and liabilities, net of acquired assets 
 and liabilities:
  Collections on investments in sales-type leases                         30,380              11,509
  Operating lease and other receivables                                  (39,780)            (20,179)
  Prepaid expenses and other current assets                              (26,184)             16,513
  Accounts payable and accrued liabilities                                 1,724              96,461
  Accrued operating leaseback expense                                    (18,913)            (20,575)
  Deferred gains and revenues                                            (16,148)              3,577
                                                                     -----------        ------------
    NET CASH PROVIDED BY OPERATING ACTIVITIES                            130,665              96,368
                                                                     -----------        ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
 Acquisition of PanAmSat International, net of cash acquired                   -          (1,486,266)
 Capital expenditures                                                   (215,217)           (335,215)
 Purchase of marketable securities                                             -             (36,827)
 Decrease in other assets                                                 15,127               2,415
 Early buyout of sale-leaseback                                         (155,530)                  -
 Proceeds from insurance claim                                            29,121                   -
                                                                     -----------        ------------
    NET CASH USED IN INVESTING ACTIVITIES                               (326,499)         (1,855,893)
                                                                     -----------        ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
 New borrowings                                                          975,000           1,725,000
 Repayments of long-term debt                                           (770,164)               (517)
 Parent company contributions prior to the Merger                              -             370,424
 Stock issuance                                                            1,914                   - 
                                                                     -----------        ------------
  NET CASH PROVIDED BY FINANCING ACTIVITIES                              206,750           2,094,907
                                                                     -----------        ------------

NET INCREASE IN CASH AND CASH EQUIVALENTS                                 10,916             335,382
CASH AND EQUIVALENTS, beginning of period                                 91,739                  29
                                                                     -----------        ------------
CASH AND EQUIVALENTS, end of period                                  $   102,655         $   335,411
                                                                     -----------        ------------

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
 Cash received for interest                                          $     8,464         $     5,801      
                                                                     -----------        ------------
 Cash paid for interest                                              $    60,067         $    15,616      
                                                                     -----------        ------------
 Cash paid for taxes                                                 $     1,919         $    32,898 
                                                                     -----------        ------------

</TABLE>
                   The accompanying notes are an integral part
                   of these consolidated financial statements

<PAGE>


                              PanAmSat Corporation

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


       (1) General.

              These  unaudited   consolidated  financial  statements  have  been
              prepared  in  accordance   with  generally   accepted   accounting
              principles  for  interim   financial   information  and  with  the
              instructions to Rule 10-01 of Regulation S-X. Accordingly, they do
              not  include  all of the  information  and  footnotes  required by
              generally  accepted  accounting  principles for complete financial
              statements.  In the opinion of management,  all adjustments  which
              are of a normal  recurring  nature necessary to present fairly the
              financial position, results of operations and cash flows as of and
              for the three and six month  periods  ended June 30, 1998 and 1997
              have been made.  Operating  results  for the three  months and six
              months ended June 30, 1998 and 1997 are not necessarily indicative
              of  the  operating   results  for  the  full  year.   For  further
              information,  refer  to the  financial  statements  and  footnotes
              thereto included in PanAmSat's  Annual Report on Form 10-K for the
              fiscal year ended December 31, 1997.

       (2) Business Combination.

              PanAmSat  Corporation  ("PanAmSat"  or  the  "Company")  commenced
              operations   on  May  16,   1997  upon  the  merger  of   PanAmSat
              International  Systems,  Inc. (then  operating  under its previous
              name,  PanAmSat  Corporation  ("PanAmSat  International")  and the
              Galaxy Satellite Services division of Hughes Communications,  Inc.
              (the  "Galaxy  Business")  (the  "Combination").  Pursuant  to the
              Combination,   the  aggregate   consideration   paid  to  PanAmSat
              International shareholders consisted of approximately $1.5 billion
              in cash and  approximately  42.5 million shares of PanAmSat Common
              Stock having an estimated  value of $1.3 billion.  Concurrent with
              the Combination and as an integral part thereof,  the Company sold
              its  direct-to-home  ("DTH")  television rights in certain foreign
              markets to an affiliate for $225 million (the "DTH Options").

              The Company has applied the purchase  method of  accounting to the
              transaction with the Galaxy Business as the acquiror. The purchase
              price was allocated to the assets acquired and liabilities assumed
              based  on  estimates  of  their  respective  fair  values.  Assets
              acquired  totaled  $2.0  billion,  liabilities  assumed  were $3.2
              billion  (including  a term loan (the  "Hughes  Term Loan") in the
              amount of  $1.725  billion  from  Hughes  Electronics  Corporation
              ("Hughes  Electronics"),  an  affiliate of the Company) and shares
              valued at $1.3 billion were issued in the transaction.  A total of
              $2.5 billion,  representing  the excess of acquisition  value over
              the fair value of PanAmSat  International's  net tangible  assets,
              was allocated to intangible  assets and is being amortized over 40
              years.

              
              

<PAGE>


                              PanAmSat Corporation

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)

              The  Company's  consolidated  results  of  operations  incorporate
              PanAmSat  International's  activity  commencing upon the effective
              date of the Combination. The unaudited pro forma information shown
              below for the three and six month  periods  ended  June 30,  1997,
              presents  combined results of operations as if the Combination had
              occurred at the  beginning  of 1997  (excluding  the impact of the
              $225  million  gain  on the  sale of the  DTH  Options  as well as
              certain professional and advisory fees incurred in connection with
              the  Combination  totaling  $31.6  million,   both  of  which  are
              non-recurring  items  that  are not  indicative  of the  Company's
              ordinary course of business).  The unaudited pro forma information
              shown  below for the three and six month  periods  ended  June 30,
              1997 is not necessarily indicative of the results of operations of
              the combined company had the Combination occurred at the beginning
              of 1997, nor is the information shown below necessarily indicative
              of future results.

<TABLE>
<CAPTION>
                      (unaudited; in thousands, except per share data)

                                      Three Months Ended                  Six Months Ended
                                           June 30,                           June 30,    
                                      ------------------                  ----------------
                                      1998          1997                 1998        1997
                                                 (Pro forma)                     (Pro forma)
                                      ----          ----                 ----        ----
              <S>                 <C>           <C>                  <C>         <C>
              Revenues            $  191,080    $  184,977           $  384,105  $  387,786
              Net income              27,757        24,291               63,105      50,603
              Net income per share                   
                -basic and diluted      0.19          0.16                 0.42        0.34

</TABLE>

       (3) New Accounting Pronouncements.

              In February of 1998,  the  Financial  Accounting  Standards  Board
              (FASB) issued Statement of Financial  Accounting  Standards (SFAS)
              No.  132,   "Employers'   Disclosures  About  Pensions  and  Other
              Postretirement  Benefits."  SFAS No.  132  requires  an  entity to
              disclose   certain    information   about   pensions   and   other
              postretirement  benefits.  SFAS No.  132,  which is  required  for
              adoption  in the  current  fiscal  year,  will  have no  impact on
              PanAmSat's consolidated financial statements.

              In June of 1998,  the FASB issued SFAS No.  133,  "Accounting  for
              Derivative  Instruments  and  Hedging  Activities."  SFAS No.  133
              requires an entity to recognize all  derivatives  as either assets
              or liabilities in the statement of financial  position and measure
              those  instruments at fair value.  Gains or losses  resulting from
              changes in the  values of those  derivatives  would be  recognized
              immediately or deferred depending on the use of the derivative and
              if the derivative is a qualifying  hedge.  PanAmSat plans to adopt
              SFAS  No.  133 by  January  1,  2000,  as  required.  PanAmSat  is
              currently  assessing  the impact of this  statement on  PanAmSat's
              consolidated financial statements.

       
<PAGE>


                              PanAmSat Corporation

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)

        (4) Financing Activities.

              On  January  16,  1998,  PanAmSat  completed  a private  placement
              pursuant  to Rule 144A under the  Securities  Act of 1933 for $750
              million  aggregate  principal  amount of new debt  securities (the
              "Offering"). The net proceeds from the Offering were used to repay
              bank loans  incurred to finance the tender  offer for certain debt
              securities  of  PanAmSat's  subsidiaries,  as well as for  general
              corporate purposes.

              In  connection  with the Offering,  the Company  executed a Credit
              Agreement  (the  "Credit  Agreement")  with  certain  lenders  and
              Citicorp USA, Inc. as  administrative  agent. The Credit Agreement
              amended and restated the credit  agreement among the parties dated
              December 24, 1997 (the "Original Credit Agreement").  The Original
              Credit  Agreement  provided the Company with up to $500 million of
              revolving  credit loans (the  "Revolving  Credit  Loans") for five
              years,  and up to $300  million in  short-term  loans  maturing on
              April 30, 1998 (the "Term Loans").  The Credit  Agreement  amended
              the Original Credit Agreement to terminate the Term Loan facility.
              The Company  currently has $500 million of Revolving  Credit Loans
              available  to it under  the  Credit  Agreement,  less any  amounts
              outstanding under the Commercial Paper Program as described below.

              Also in  connection  with the Offering,  the Company  entered into
              certain U.S.  Treasury rate lock  contracts to reduce its exposure
              to fluctuations in interest rates. The aggregate  nominal value of
              these   contracts  was  $375  million  and  these  contracts  were
              accounted  for as hedges  because  they were applied to a specific
              refinancing  plan that was consummated  shortly after December 31,
              1997.  The cost to  unwind  these  instruments  during  the  first
              quarter of 1998 was approximately $9 million and will be amortized
              to expense over the term of the  newly-placed  debt  securities to
              which such hedges were applied.

              On July 27, 1998, the Company  launched a $500 million  commercial
              paper program (the "Commercial  Paper Program").  Borrowings under
              the Credit  Agreement and the Commercial Paper Program are limited
              to $500  million in the  aggregate  and are expected to be used to
              fund the Company's satellite construction program. The Company has
              established the necessary  credit  facilities,  through the Credit
              Agreement,  to refinance  future  commercial paper borrowings on a
              long-term basis and, accordingly, will classify such borrowings as
              long-term  liabilities.  As of August 13,  1998,  the  Company had
              approximately   $145  million  of  notes   outstanding  under  the
              Commercial Paper Program,  with $100 million of the proceeds being
              used to repay amounts borrowed under the Credit Agreement.

              The  Hughes  Term  Loan is  subordinate  to the  notes  issued  in
              connection with the Offering,  the Revolving  Credit Loans and the
              notes issued under the Commercial Paper Program.

<PAGE>


                              PanAmSat Corporation

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)

        (5) Hughes Electronics Purchase of PanAmSat Common Stock.

              On  May 1,  1998,  Hughes  Electronics  increased  its  beneficial
              ownership of the Company from approximately 71.5% to approximately
              81%   through  the   purchase   for  $60  per  share  in  cash  of
              approximately  11.2  million  shares  (or 7.5% of the  outstanding
              shares of PanAmSat  Common  Stock) from  Televisa  and 2.9 million
              shares (or 2% of the outstanding  shares of PanAmSat Common Stock)
              from a group of founding stockholders of PanAmSat,  which includes
              several  members of the family of  PanAmSat's  late  founder  Rene
              Anselmo  and  related  trusts  as well as  Frederick  A.  Landman,
              PanAmSat's  President  and Chief  Executive  Officer,  and Lourdes
              Saralegui, an Executive Vice President of PanAmSat.     

        (6) Satellite Developments.

              On  May  19,  1998,  all  customer  services  on  Galaxy  IV  were
              permanently   lost  when  an  anomaly  occurred  in  the  on-board
              spacecraft  control processor which caused the satellite to rotate
              and  lose  its  fixed  orientation.   Galaxy  IV's  spare  control
              processor was unavailable due to earlier unrelated damage that had
              not previously been detected. The Company restored service to most
              of its Galaxy IV customers through the use of alternative capacity
              on the Company's other  satellites,  principally  Galaxy III-R and
              Galaxy VI.  Galaxy VI was the  designated  back-up  satellite  for
              certain customers on the Company's domestic U.S. satellites.
              
              As a result of the loss of Galaxy IV, the Company expects that its
              originally   anticipated   1998   revenues   may  be   reduced  by
              approximately  $10  million,   due  principally  to  the  loss  of
              available  capacity  on the  satellites  used to backup  Galaxy IV
              capacity.  During the second quarter of 1998, the Company recorded
              a $6.3 million  provision for loss in connection  with the loss of
              Galaxy IV which  represents the  difference  between the satellite
              insurance claim of  approximately  $162 million and the underlying
              net assets that were written off, which  consisted of the net book
              value of the Galaxy IV satellite, the net investment in sales-type
              leases on the satellite and the payment of warranty  costs related
              to Galaxy IV transponders  that were sold outright in prior years.
              The  Company  intends to  procure a  replacement  satellite  on an
              accelerated basis.

              On June 13, 1998,  there was a brief shut-down of a portion of the
              C-band  capacity on the Company's  Galaxy VII  satellite  that was
              accompanied  by the  failure of the  primary  on-board  spacecraft
              control  processor.  Control of the  satellite  was  automatically
              switched to the spare  control  processor  and the  spacecraft  is
            
<PAGE>


                              PanAmSat Corporation

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)

              currently  operating  normally.  The  satellite  manufacturer  has
              concluded an  investigation  into the SCP  anomalies on Galaxy IV,
              Galaxy VII and other HS 601  satellites  not owned by the Company.
              The   investigation   identified   electrical   shorts   involving
              tin-plated relay switches on HS 601 satellites manufactured in the
              early 1990's, as the most probable cause of the SCP anomalies. The
              shorts  can only  occur  when  several  factors  are  concurrently
              present.  Of PanAmSat's 16 satellites,  14 were constructed by the
              same manufacturer,  and five are HS 601 spacecraft with tin-plated
              relay  switches that were built in the early 1990's.  Specifically
              Galaxy-IIIR,   PAS-2,  PAS-3,  PAS-4  and  Galaxy  VII  fit  these
              criteria. Based on the investigation's findings, PanAmSat believes
              the  probability of future SCP anomalies of this type resulting in
              the  total  failure  or risk of loss of any of  these  five HS 601
              satellites is low.  Electrical shorts are believed to be the cause
              of the backup SCP anomaly on the Galaxy IV  satellite in June 1997
              and the  primary  SCP  anomaly  on Galaxy  VII in June  1998.  The
              Company has been advised by the manufacturer  that the primary SCP
              anomaly on Galaxy IV in May 1998, which resulted in the failure of
              the satellite,  was a different,  isolated  incident that is being
              investigated  further.  The  Company  is  working  with all of its
              Galaxy  VII  customers  to provide  for  back-up  capacity  and to
              develop  solutions  to provide for their needs in the event a loss
              of Galaxy VII were to occur.

              An anomaly has been  detected in the  batteries  on the  Company's
              PAS-5 satellite. During periods of peak solar eclipse, which occur
              twice  each  year,  the  Company  will be  required  to shut off a
              portion of the satellite's  payload for an insignificant  time. At
              the  present  time,  this  condition  is not  expected to have any
              adverse  impact on the Company's  existing  full-time  transponder
              customers or its ability to utilize the  affected  capacity on the
              satellite.  PanAmSat  is  investigating  this  condition  with the
              satellite  manufacturer.  Any  additional  battery  failures would
              require the Company to shut off additional  transponders  for some
              period of time  during the  periods of peak solar  eclipse,  which
              could affect full-time transponder customers on the satellite.  No
              assurance can be given that additional  failures on PAS-5 will not
              occur.
     
        


<PAGE>


                              PanAmSat Corporation

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS


              Results  of  Operations.   The  Company's  results  of  operations
              incorporate  PanAmSat  International's  activity commencing on May
              16, 1997, the effective date of the Combination. Since the results
              of  operations  for the three and six month periods ended June 30,
              1997 include only 45 days of activity for PanAmSat  International,
              management has determined that for comparative  purposes, it would
              be more  meaningful  to present the  information  shown below on a
              "pro forma"  basis  reflecting  the  Combination  as though it had
              occurred at the  beginning  of 1997  (excluding  the impact of the
              $225  million  gain  on the  sale of the  DTH  Options  as well as
              certain professional and advisory fees incurred in connection with
              the  Combination  totaling  $31.6  million,   both  of  which  are
              non-recurring  items  that  are not  indicative  of the  Company's
              ordinary course of business.) The unaudited pro forma  information
              shown  below for the three and six month  periods  ended  June 30,
              1997 is not necessarily indicative of the results of operations of
              the combined company had the Combination occurred at the beginning
              of fiscal 1997,  nor is the  information  shown below  necessarily
              indicative of future results.
<TABLE>
<CAPTION>
                                                                        (unaudited; in thousands,
                                                                          except per share data) 

                                                          Three Months Ended                  Six Months Ended
                                                               June 30,                           June 30,
                                                          -------------------                 ----------------
  
                                                          1998            1997               1998            1997
                                                                      (Pro forma)                        (Pro forma)
                                                          ----            ----               ----            ----
<S>                                                  <C>              <C>               <C>           <C>          

Revenues
  Operating leases, satellite services and other      $  185,277      $  173,819         $  367,065     $  335,602
  Outright sales and sale-type leases                      5,803          11,158             17,040         52,184
                                                      ----------      ----------         ----------     ----------
Total revenues                                           191,080         184,977            384,105        387,786
                                                      ----------      ----------         ----------     ----------
Costs and expenses
  Cost of outright sales and sales-
   type leases                                                -            4,054                  -         20,476
  Leaseback expense, net of deferred
   gain                                                  11,822           15,466             25,584         30,883
  Direct operating and SG&A costs                        38,460           29,309             74,845         61,890
  Depreciation and amortization                          60,915           46,848            118,917         93,103
  Provision for loss on Galaxy IV                         6,314                -              6,314              -
                                                     ----------       ----------         ----------     ----------
Total                                                   117,511           95,677            225,660        206,352
                                                     ----------       ----------         ----------     ----------

Income from operations                                   73,569           89,300            158,445        181,434

Interest expense, net                                    24,432           28,902             46,640         59,896
Other (income) expense                                        -              847                  -          (385)
                                                     ----------       ----------         ----------     ----------
Income before income taxes and                                  
  minority interest                                      49,137           59,551            111,805        121,923

Income tax expense                                       21,380           26,965             48,700         55,134
Minority interest                                             -            8,295                  -         16,186
                                                     ----------       ----------         ----------     ----------

Net income                                           $   27,757       $   24,291        $   63,105      $   50,603
                                                     ----------       ----------        ----------      ----------
Net income per share - basic and diluted             $     0.19       $     0.16        $     0.42      $     0.34

</TABLE>

<PAGE>


                              PanAmSat Corporation

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

          Revenues.  Revenues  increased $6.1 million,  or 3%, to $191.1 million
for the three  months  ended June 30, 1998 from $185.0  million for the same pro
forma  period in 1997.  Revenues  for the six months  ended  June 30,  1998 were
$384.1  million,  a decrease of $3.7  million or 1% from $387.8  million for the
same pro forma period in 1997.  Video services  revenues were $138.8 million for
the three  months  ended June 30, 1998, a decrease of 2% from the same pro forma
period in 1997.  Video services  revenues were $281.9 million for the six months
ended June 30,  1998,  a decrease of 10% from the same pro forma period in 1997.
The  decrease in video  services  revenues was  primarily  due to less sales and
sales-type  lease activity as compared to the first and second quarters of 1997.
Telecommunications  services  revenues  were $39.8  million for the three months
ended June 30, 1998,  an increase of 19% from the same pro forma period in 1997.
Telecommunications services revenues were $77.3 million for the six months ended
June 30, 1998,  an increase of 18% from the same pro forma  period in 1997.  The
increase  in  telecommunications  services  revenues  was due  primarily  to the
commencement  of several  new carrier and  Internet-related  service  agreements
during 1998.

          The  revenue  results  can  also  be  analyzed  based  on the  type of
agreement.  Revenues from sales and sales-type  leases decreased to $5.8 million
for the three  months  ended June 30,  1998 from $11.2  million for the same pro
forma period in 1997.  Revenues from sales and  sales-type  leases  decreased to
$17.0  million for the six months ended June 30, 1998 from $52.2 million for the
same pro forma period in 1997. The decrease is attributable to a lower volume in
1998 relative to 1997 of outright sales and sales-type  leases as well as to the
loss of the Galaxy IV satellite. Revenues from operating leases of transponders,
satellite  services and other increased $11.5 million,  or 7%, to $185.3 million
for the three  months  ended June 30, 1998 from $173.8  million for the same pro
forma period in 1997. Revenues from operating leases of transponders,  satellite
services and other increased $31.5 million,  or 9% to $367.1 million for the six
months ended June 30, 1998 from $335.6  million for the same pro forma period in
1997. The increase in revenues from operating leases of transponders,  satellite
services  and other for the three and six  month  periods  is due  primarily  to
increased service agreements  associated with available transponder capacity and
the provision of  short-term,  special events  services,  most notably World Cup
1998.

          Cost of Outright  Sales and  Sales-Type  Leases of  Transponders.  The
Company recorded no cost of outright sales and sales-type leases of transponders
for the three and six month  periods  ended June 30,  1998,  as compared to $4.1
million and $20.5 million for the same pro forma periods in 1997,  respectively.
The pro forma cost of outright sales and sales-type  leases of transponders  for
the three and six month  periods  ended  June 30,  1997 are  related  to several
outright  sales and  sales-type  lease  transactions  entered  into during those
periods.

<PAGE>


                              PanAmSat Corporation

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

          Leaseback Expense,  Net of Deferred Gain.  Leaseback  expense,  net of
deferred gain,  decreased  $3.7 million,  or 24%, to $11.8 million for the three
months  ended June 30, 1998 from $15.5  million for the same pro forma period in
1997.  Leaseback expense,  net of deferred gain, decreased $5.3 million, or 17%,
to $25.6  million for the six months ended June 30, 1998 from $30.9  million for
the same pro forma period in 1997. The decrease is primarily attributable to the
exercises by the Company of  sale-leaseback  early  buy-out  options  during the
first and second quarters of 1998.

          Direct Operating and Selling, General and Administrative Costs. Direct
operating and selling,  general and administrative costs increased $9.2 million,
or 31%,  to $38.5  million for the three  months  ended June 30, 1998 from $29.3
million for the same pro forma  period in 1997.  Direct  operating  and selling,
general and  administrative  costs  increased  $12.9  million,  or 21%, to $74.8
million for the six months  ended June 30, 1998 from $61.9  million for the same
pro forma  period in 1997.  The increase is due  primarily to costs  incurred in
connection  with the Company's  expansion and additional  costs  associated with
satellites launched since the first and second quarter of 1997.

          Depreciation and Amortization. Depreciation and amortization increased
$14.1 million, or 30%, to $60.9 million for the three months ended June 30, 1998
from  $46.8  million  for the same pro forma  period in 1997.  Depreciation  and
amortization  for the six months ended June 30, 1998 increased  $25.8 million or
28% to $118.9  million from $93.1 million for the same pro forma period in 1997.
The  increase  in  depreciation  and  amortization  for the  three and six month
periods is due primarily to  depreciation  expense  associated  with  additional
satellites placed in service.

          Provision   for  Loss  on  Galaxy  IV.  As  discussed  in   "Satellite
Developments"  below, the Company recorded a $6.3 million  provision for loss in
connection with the loss of Galaxy IV during the second quarter of 1998.

          Income  from  Operations.   Income  from  operations  decreased  $15.7
million,  or 18%, to $73.6 million for the three months ended June 30, 1998 from
$89.3  million for the same pro forma  period in 1997.  Income  from  operations
decreased  $23.0 million or 13% to $158.4  million for the six months ended June
30, 1998 from $181.4 million for the same pro forma period in 1997. The decrease
in income from  operations  for the three and six month periods is due primarily
to  increased  depreciation  and  direct  operating  costs  associated  with the
Company's expanded satellite fleet, as well as to the $6.3 million provision for
loss on Galaxy IV.

          Interest Expense,  Net. Interest expense,  net decreased $4.5 million,
or 15%,  to $24.4  million for the three  months  ended June 30, 1998 from $28.9
million for the same pro forma period in 1997.  Interest expense,  net decreased
$13.3  million,  or 22%, to $46.6 million for the six months ended June 30, 1998
from $59.9  million for the same pro forma period in 1997.  The decrease was due
primarily to the reduction in the Company's  overall blended  interest rate as a
result of the debt tender  offer and  restructuring  program  for  certain  debt
securities of PanAmSat's subsidiaries which was completed in January 1998.

<PAGE>


                              PanAmSat Corporation

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

          Income Tax Expense. Income tax expense decreased $5.6 million, or 21%,
to $21.4 million for the three months ended June 30, 1998 from $27.0 million for
the same pro forma period in 1997. Income tax expense decreased $6.4 million, or
12%, to $48.7  million for the six months ended June 30, 1998 from $55.1 million
for the same pro forma  period in 1997.  The decrease was due to the decrease in
income  before  income  taxes as well as to a lower  effective  tax rate in 1998
principally  as a  result  of  utilization  of  foreign  sales  corporation  tax
benefits.

          Minority  Interest.  Minority interest,  representing  preferred stock
dividends of PanAmSat International, were $0 for the three and six month periods
ended June 30, 1998 as compared to $8.3  million and $16.2  million for the same
pro forma periods in 1997, respectively.  The decrease was due to the conversion
of PanAmSat  International's 12 3/4% Mandatorily  Exchangeable Senior Redeemable
Preferred  Stock due 2005 into 12 3/4% Senior  Subordinated  Notes due 2005 (the
"Exchange  Notes") in the third quarter of 1997 and the related  termination  of
dividend  payment  obligations.  Approximately  99% of the  Exchange  Notes were
subsequently  retired in connection with the debt tender offer and restructuring
program described above.

          Satellite  Developments.  On May 19, 1998,  all  customer  services on
Galaxy  IV were  permanently  lost  when an  anomaly  occurred  in the  on-board
spacecraft  control  processor which caused the satellite to rotate and lose its
fixed  orientation.  Galaxy IV's spare control  processor was unavailable due to
earlier  unrelated  damage that had not previously  been  detected.  The Company
restored  service  to  most  of its  Galaxy  IV  customers  through  the  use of
alternative capacity on the Company's other satellites, principally Galaxy III-R
and  Galaxy VI.  Galaxy VI was the  designated  back-up  satellite  for  certain
customers on the Company's domestic U.S. satellites.
              
          As a result of the loss of Galaxy IV,  the  Company  expects  that its
originally  anticipated  1998  revenues  may be  reduced  by  approximately  $10
million,  due  principally  to the loss of available  capacity on the satellites
used to backup  Galaxy IV  capacity.  During  the second  quarter  of 1998,  the
Company  recorded a $6.3 million  provision for loss in connection with the loss
of Galaxy IV which  represents  the difference  between the satellite  insurance
claim of  approximately  $162  million and the  underlying  net assets that were
written off,  which  consisted of the net book value of the Galaxy IV satellite,
the net  investment  in  sales-type  leases on the  satellite and the payment of
warranty  costs  related to Galaxy IV  transponders  that were sold  outright in
prior  years.  The  Company  intends to procure a  replacement  satellite  on an
accelerated basis.

<PAGE>


                              PanAmSat Corporation

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

          On June 13,  1998,  there was a brief  shut-down  of a portion  of the
C-band  capacity on the Company's  Galaxy VII satellite that was  accompanied by
the failure of the primary on-board spacecraft control processor. Control of the
satellite  was  automatically  switched to the spare  control  processor and the
spacecraft  is currently  operating  normally.  The satellite  manufacturer  has
concluded an  investigation  into the SCP anomalies on Galaxy IV, Galaxy VII and
other HS 601 satellites not owned by the Company.  The investigation  identified
electrical  shorts  involving  tin-plated  relay  switches on HS 601  satellites
manufactured  in the  early  1990's,  as the  most  probable  cause  of the  SCP
anomalies.  The  shorts can only occur when  several  factors  are  concurrently
present.  Of  PanAmSat's  16  satellites,   14  were  constructed  by  the  same
manufacturer, and five are HS 601 spacecraft with tin-plated relay switches that
were built in the early 1990's.  Specifically  Galaxy-IIIR,  PAS-2, PAS-3, PAS-4
and  Galaxy  VII fit  these  criteria.  Based on the  investigation's  findings,
PanAmSat believes the probability of future SCP anomalies of this type resulting
in the total  failure or risk of loss of any of these five HS 601  satellites is
low. Electrical shorts are believed to be the cause of the backup SCP anomaly on
the Galaxy IV  satellite  in June 1997 and the primary SCP anomaly on Galaxy VII
in June 1998. The Company has been advised by the manufacturer  that the primary
SCP  anomaly  on Galaxy IV in May 1998,  which  resulted  in the  failure of the
satellite,  was a  different,  isolated  incident  that  is  being  investigated
further.  The Company is working with all of its Galaxy VII customers to provide
for back-up capacity and to develop  solutions to provide for their needs in the
event a loss of Galaxy VII were to occur.
                            
          An anomaly has been detected in the  batteries on the Company's  PAS-5
satellite.  During periods of peak solar  eclipse,  which occur twice each year,
the Company  will be required to shut off a portion of the  satellite's  payload
for an  insignificant  time. At the present time, this condition is not expected
to have any  adverse  impact on the  Company's  existing  full-time  transponder
customers  or its ability to utilize  the  affected  capacity on the  satellite.
PanAmSat is investigating  this condition with the satellite  manufacturer.  Any
additional  battery  failures  would require the Company to shut off  additional
transponders  for some period of time during the periods of peak solar  eclipse,
which  could  affect  full-time  transponder  customers  on  the  satellite.  No
assurance can be given that additional failures on PAS-5 will not occur.

          Subsequent Event. On July 13, 1998, PanAmSat announced a comprehensive
satellite plan to construct up to four  additional  satellites and to modify the
design of two satellites  currently under construction (the "Plan"). The Plan is
subject to the approval of the Company's board of directors and other regulatory
approvals.  The Plan is  intended  to enable the  Company  to  provide  expanded
satellite  services  and backup  capacity  on an  expedited  basis in the United
States and worldwide.

          As part of the first phase of the Plan,  Galaxy XI will be modified to
allow it to operate  in several of the  Company's  orbital  slots  covering  the
United States.  Upon its revised launch date in early 1999, the modified  Galaxy
XI will initially be located at 99 W.L., enabling the Company to restore Galaxy
VI to its status as an in-orbit spare satellite.

<PAGE>


                              PanAmSat Corporation

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

          Also in the  first  phase,  PanAmSat  will  modify  PAS-9  to  provide
coverage of the United  States and Latin  America.  Upon its launch in mid-1999,
the  modified  PAS-9 will be located at 95 W.L.,  enabling the Company to offer
its  customers  expanded  service from this location and also to move the Galaxy
III-R  satellite  to another  orbital  location  over the United  States.  PAS-9
originally was one of three new satellites under construction to provide service
in Asia.  The other two Asia  satellites,  PAS-7 and PAS-8,  are scheduled to be
launched later this year.

          In the  second  phase of the  Plan,  PanAmSat  will  proceed  with the
procurement  of two new satellites for launch during the fourth quarter of 1999,
as well as two  ground  spare  satellites.  The two new  satellites  will be the
Galaxy  IV  replacement  and an  international  satellite  designed  to  reflect
specific market requirements. The Company anticipates that the two ground spares
would provide the Company with the ability to launch  satellites on an expedited
basis to meet  market  demand for backup or  expanded  services.  The Company is
currently  reviewing  proposals  from  satellite  suppliers and  completing  the
financial  analysis of the Plan, after which management will present the Plan to
PanAmSat's board of directors and the U.S. Federal Communications Commission for
approval.

          If the  Plan is  implemented,  the  Company  expects  to  launch  nine
additional satellites over the next 18 months,  consisting of two new satellites
for Latin America,  two for Asia,  four for the United States and one additional
international  satellite.  There  can be no  assurance  that  the  Plan  will be
successfully implemented.

             Financial Condition.

          Pursuant to the Combination,  aggregate consideration paid to PanAmSat
International  shareholders  consisted of approximately $1.5 billion in cash and
approximately  42.5 million shares of PanAmSat  Common Stock. In connection with
the  Combination,  the Company  obtained a term loan (the "Hughes Term Loan") in
the amount of $1.725  billion  from  Hughes  Electronics,  an  affiliate  of the
Company.  In addition to the Hughes Term Loan, at June 30, 1998 the Company also
had  long-term  indebtedness  of $934.4  million  (comprised  primarily  of $750
million  of bonds  under the  Offering  (as  defined  below),  $100  million  of
Revolving Credit Loans (as defined below) and $75.2 million due to affiliates).

          The  significant  cash  outlays  for the Company  will  continue to be
primarily  capital  expenditures  related  to the  construction  and  launch  of
satellites and debt service costs.  The Company now has seven  satellites  under
various  stages of  development  for  which the  Company  has  budgeted  capital
expenditures.  The Company will require  approximately  $800 million to complete
the construction, insurance and launch of PAS-6B, PAS-7, PAS-8, Galaxy X, Galaxy
XI, PAS-9, and PAS-1R, together with related equipment.  This amount is expected
to be  funded  from cash flow from  operations,  satellite  insurance  proceeds,
vendor financing and borrowings under the Commercial Paper Program and/or Credit
Agreement (each as defined below).  In addition to funding the  construction and
launch of new satellites, the Company may choose to exercise certain remaining

<PAGE>


                              PanAmSat Corporation

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

early  buy-out  options  under  certain  satellite  sale-leaseback  transactions
entered into in prior years.  During 1998,  the Company funded outlays of $155.5
million in  connection  with the exercise of early buy-out  options  relating to
transponders on SBS-6. In addition, if the Company were to elect to exercise its
remaining early buy-out options under certain  sale-leaseback  transactions,  it
would be required to fund outlays of  approximately  $366 million in 1999.  Such
additional  outlays are expected to be funded from cash flow from operations and
borrowings under the Commercial Paper Program and/or Credit Agreement.
              
          On January 16, 1998,  PanAmSat  completed a private placement pursuant
to Rule  144A  under  the  Securities  Act of 1933  for $750  million  aggregate
principal amount of new debt securities (the "Offering").  The net proceeds from
the Offering were used to repay bank loans  incurred to finance the tender offer
for certain debt securities of PanAmSat's  subsidiaries,  as well as for general
corporate purposes.

          In  connection  with  the  Offering,  the  Company  executed  a Credit
Agreement (the "Credit  Agreement")  with certain lenders and Citicorp USA, Inc.
as  administrative  agent.  The Credit  Agreement amends and restates the credit
agreement  among the  parties  dated  December  24, 1997 (the  "Original  Credit
Agreement").  The Original Credit Agreement provided the Company with up to $500
million of revolving credit loans (the "Revolving Credit Loans") for five years,
and up to $300 million in short-term loans maturing on April 30, 1998 (the "Term
Loans").  The Credit Agreement amends the Original Credit Agreement to terminate
the Term Loan  facility.  The Company  currently  has $500  million of Revolving
Credit  Loans  available  to it under the  Credit  Agreement,  less any  amounts
outstanding under the Commercial Paper Program as described below.

          Also in connection with the Offering, the Company entered into certain
U.S.  Treasury  rate lock  contracts to reduce its exposure to  fluctuations  in
interest rates. The aggregate  nominal value of these contracts was $375 million
and these  contracts were accounted for as hedges because they were applied to a
specific  refinancing plan that was consummated shortly after December 31, 1997.
The cost to  unwind  these  instruments  during  the first  quarter  of 1998 was
approximately  $9 million and will be  amortized to expense over the term of the
newly-placed debt securities to which such hedges were applied.

          On July 27, 1998 the Company launched a $500 million  commercial paper
program (the "Commercial Paper Program").  Borrowings under the Credit Agreement
and the  Commercial  Paper  Program are limited to $500 million in the aggregate
and  are  expected  to be  used to fund  the  Company's  satellite  construction
program.  The Company has established the necessary credit  facilities,  through
the Credit  Agreement,  to refinance  future  commercial  paper  borrowings on a
long-term  basis and,  accordingly,  will classify such  borrowings as long-term
liabilities.  As of August 13, 1998, the Company had approximately  $145 million
of notes  outstanding  under the Commercial Paper Program,  with $100 million of
the proceeds being used to repay amounts borrowed under the Credit Agreement.

          The Hughes Term Loan is  subordinate to the notes issued in connection
with the  Offering,  the  Revolving  Credit Loans and the notes issued under the
Commercial Paper Program.

          PanAmSat believes that the Commercial Paper Program, Credit Agreement,
satellite insurance proceeds, vendor financing, future cash flow from operations
(assuming  satellites  in  development  are  successfully  launched and commence
service  on the  schedule  currently  contemplated)  and  cash on  hand  will be
sufficient to fund PanAmSat's operations,  anticipated exercise of certain early
buy-out  options  on  certain  satellite  sale-leaseback  transactions  and  its
remaining costs for the  construction  and launch of satellites  currently under
development  for the next twelve months.  If the Company  consummates  corporate
acquisitions, it may be required to seek additional financing. There can be no


<PAGE>


                              PanAmSat Corporation

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS


assurance,   however,  that  PanAmSat's   assumptions  with  respect  to  future
construction  and  launch  costs  will be  correct,  or that  additional  vendor
financing,  satellite  insurance  proceeds,  PanAmSat's  future  cash  flow from
operations  and  borrowings  under the  Commercial  Paper Program  and/or Credit
Agreement  will be  sufficient  to cover any  shortfall  in  funding  for future
launches caused by launch failures, cost overruns, delays or other unanticipated
expenses.  If  circumstances  were  to  require  PanAmSat  to  incur  additional
indebtedness,  the ability of PanAmSat to incur any such additional indebtedness
would be  subject  to the  terms of  PanAmSat's  outstanding  indebtedness.  The
failure  to obtain  such  financing  could  have a  material  adverse  effect on
PanAmSat's operations and its ability to accomplish its business plan.

          In addition, the Company is implementing the Plan, which could include
the procurement of up to four additional  satellites and related launch services
and insurance,  as well as the modification of PAS-9 and Galaxy XI. PanAmSat may
be required to seek additional financing as a result of the Plan.

          Net cash provided by operating  activities increased to $130.7 million
for the six months  ended June 30,  1998 from $96.4  million  for the six months
ended June 30, 1997. The increase in 1998 was primarily  attributable  to larger
adjustments  related to amounts of depreciation  and  amortization  and deferred
income taxes as a result of the Combination.

          Net cash used in investing  activities decreased to $326.5 million for
the six months ended June 30,  1998,  from  $1,855.9  million for the six months
ended June 30, 1997.  The  decrease in 1998 was  primarily  attributable  to the
acquisition of PanAmSat  International  during the same period in 1997,  coupled
with fewer capital  expenditures  for satellite  systems  under  development  as
compared to the same period in 1997 and proceeds from the PAS-6  insurance claim
received during 1998.

          Net cash provided by financing  activities decreased to $206.8 million
for the six months ended June 30, 1998 from $2,094.9  million for the six months
ended June 30, 1997.  The decrease in 1998 was  primarily  due to obtaining  the
Hughes Term Loan during the same period in 1997.

<PAGE>

                              PanAmSat Corporation
             

                          PART II - OTHER INFORMATION


ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

          (a)  The Annual Meeting of Stockholders was held on May 4, 1998.

          (c)  (i)  Registrant's  Certificate  of  Incorporation  provides  that
nominees to the  Registrant's  Board of  Directors  shall be elected to serve as
directors  until  the  next  annual  meeting  of  stockholders  or  until  their
successors are elected and have qualified.  The nine nominees for director,  Mr.
Michael T. Smith, Ms. Roxanne S. Austin, Mr. Patrick J. Costello,  Mr. Steven D.
Dorfman,  Mr. Dennis F. Hightower,  Mr. James M. Hoak, Mr. Frederick A. Landman,
Mr. Charles H. Noski and Mr. Joseph R. Wright,  Jr., were elected by a plurality
of the votes cast by the holders of Registrant's Common Stock voting theron:

          (A)  Mr. Smith:     116,589,950 votes for and 101,971 votes withheld;

          (B)  Ms. Austin:    116,588,600 votes for and 103,321 votes withheld;

          (C)  Mr. Costello:  116,600,100 votes for and 91,821 votes withheld;

          (D)  Mr. Dorfman:   116,600,050 votes for and 91,871 votes withheld;

          (E)  Mr. Hightower: 116,599,600 votes for and 92,321 votes withheld;

          (F)  Mr. Hoak:      116,600,100 votes for and 91,821 votes withheld;

          (G)  Mr. Landman:   116,590,100 votes for and 101,821 votes withheld;

          (H)  Mr. Noski:     116,600,000 votes for and 91,921 votes withheld;

          (I)  Mr. Wright:    116,600,100 votes for and 91,821 votes withheld.


          (c)  (ii)  A  proposal   (designated  Proposal  2  and  set  forth  in
Registrant's  Proxy  Statement),  approved by the Board of  Directors,  to elect
Deloitte & Touche LLP  independent  accountants  for the Registrant for the year
1998,  was  approved  by a  majority  of  the  votes  cast  by  the  holders  of
Registrant's Common Stock voting thereon:  116,686,123  affirmative votes; 1,123
negative votes; and 4,475 votes abstained.

          (c)  (iii)  A  proposal  (designated  Proposal  3  and  set  forth  in
Registrant's  Proxy Statement),  approved by the Board of Directors,  to approve
the PanAmSat Corporation Long-Term Incentive Plan, was approved by a majority of
the votes cast by the  holders of  Registrant's  Common  Stock  voting  thereon:
116,199,284 affirmative votes; 479,088 negative votes; 13,549 votes abstained.

          (c)  (iv)  A  proposal   (designated  Proposal  4  and  set  forth  in
Registrant's  Proxy Statement),  approved by the Board of Directors,  to approve
the PanAmSat  Corporation  Annual  Incentive Plan, was approved by a majority of
the votes cast by the  holders of  Registrant's  Common  Stock  voting  thereon:
116,650,607 affirmative votes; 24,065 negative votes; 17,249 votes abstained.

<PAGE>


                              PanAmSat Corporation
             

          (c)  (v)  A  proposal   (designated  Proposal  5  and  set  forth  in
Registrant's  Proxy Statement),  approved by the Board of Directors,  to approve
the  PanAmSat  Corporation  Restoration  and  Deferred  Compensation  Plan,  was
approved by a majority of the votes cast by the holders of  Registrant's  Common
Stock voting thereon:  116,529,947  affirmative  votes;  144,028 negative votes;
17,946 votes abstained.


ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K

     (a)       EXHIBITS

Exhibit No.

4.1  Agreement,  dated as of May 1, 1998,  by and among  PanAmSat and the former
     holders of Class A Common  Stock of PanAmSat  International  Systems,  Inc.
     ("PanAmSat  International") is incorporated  herein by reference to Exhibit
     4.2.2 to PanAmSat's  Registration  Statement on Form S-4  (Registration No.
     333-56227) (the "Registration Statement").

4.2  Registration  Rights  Agreement,  dated  as  of  January  16,  1998,  among
     PanAmSat, Morgan Stanley & Co. Incorporated,  Donaldson,  Lufkin & Jenrette
     Securities  Corporation,  Salomon Brothers Inc, Citicorp Securities,  Inc.,
     BancAmerica   Robertson   Stephens  and  J.P.  Morgan  Securities  Inc.  is
     incorporated  herein by  reference  to Exhibit  4.5 to  PanAmSat's  Current
     Report on Form 8-K dated July 21, 1998.

4.3  Letter  Agreement,   dated  July  22,  1998,   between  Hughes  Electronics
     Corporation and PanAmSat.

10.1 Amendment  to  Letter  Agreement,  dated  March  5,  1998,  among  The News
     Corporation Limited, Globo Participacoes,  Ltd., Grupo Televisa,  S.A., and
     PanAmSat   International,   constituting   Exhibit   10.7.2   to   PanAmSat
     International's  Annual  Report  on Form  10-K for the  fiscal  year  ended
     December 31, 1996, is  incorporated  herein by reference to Exhibit 10.18.3
     to the Registration Statement. (1)

10.2 Second Amended and Restated Contract for PanAmSat  Program,  dated April 1,
     1998,  between  PanAmSat  International  and Space  Systems/Loral,  Inc. is
     incorporated  herein by  reference to Exhibit  10.19.2 to the  Registration
     Statement. (1)

10.3 Amendment to Full-Time  Transponder  Service Agreement From PAS-3 (European
     Beam),  dated as of March  5,  1998,  between  PanAmSat  International  and
     Televisa,  S.A.,  constituting  Exhibit  10.16 to PanAmSat  International's
     Quarterly  Report on Form 10-Q for the period ended  September 30, 1996, is
     incorporated  herein by  reference to Exhibit  10.25.2 to the  Registration
     Statement. (1)

<PAGE>


                              PanAmSat Corporation
             
                         
10.4 Second Amended and Restated Transponder Purchase and Sale Agreement,  dated
     as of March 5, 1998,  between  PanAmSat  International  and NetSat Servicos
     Ltda.  is  incorporated  herein  by  reference  to  Exhibit  10.28  to  the
     Registration Statement. (1)

10.5 First  Amendment  to  Amended  and  Restated   Collateral  Trust  Agreement
     constituting  Exhibit 10.31 to PanAmSat's Quarterly Report on Form 10-Q for
     the period ended June 30, 1997, dated April 30, 1998 by and among PanAmSat,
     Hughes Communications,  Inc., Satellite Company, LLC, Grupo Televisa,  S.A.
     and IBJ Schroder Bank & Trust Company is  incorporated  herein by reference
     to  Exhibit  3 to  Amendment  No. 1 to the  Schedule  13D  filed by  Hughes
     Communications, Inc. on May 1, 1998.

10.6 Agreement,  dated as of July 10,  1998,  between  PanAmSat  and  Robert  A.
     Bednarek  is  incorporated  herein by  reference  to  Exhibit  10.46 to the
     Registration Statement.

10.7 Agreement,  dated  as of July  10,  1998,  between  PanAmSat  and  James W.
     Cuminale  is  incorporated  herein by  reference  to  Exhibit  10.47 to the
     Registration Statement.

10.8 Transponder Service Agreement,  dated as of March 5, 1998, between PanAmSat
     and Sky  Multi-Country  Partners,  is  incorporated  herein by reference to
     Exhibit 10.51 to the Registration Statement. (1)

10.9 Transponder Service Agreement, dated as of April 30, 1998, between PanAmSat
     International  and  Corporacion  de Radio y Television del Norte de Mexico,
     S.A. de C.V., is  incorporated  herein by reference to Exhibit 10.52 to the
     Registration Statement. (1)

27   Financial Data Schedule.

(1)  Portions  of this  Exhibit  have been  omitted  pursuant to an order of the
     Securities and Exchange  Commission  granting  confidential  treatment with
     respect thereto.

(b)  Reports on Form 8-K.

     Registrant  filed a Current  Report on Form 8-K,  dated July 21,  1998,  in
     respect of the Registration Rights Agreement, dated as of January 16, 1998,
     among Registrant,  Morgan Stanley & Co. Incorporated,  Donaldson,  Lufkin &
     Jenrette Securities Corporation, Salomon Brothers Inc, Citicorp Securities,
     Inc.,  BancAmerica  Robertson  Stephens  and J.P.  Morgan  Securities  Inc.
     relating to certain debt securities of Registrant (Items 5 and 7(c)).

<PAGE>


                                    SIGNATURE


Pursuant to the  requirements  of the  Securities  and Exchange Act of 1934, the
Registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.

                                                   PanAmSat Corporation



Date:  August 14, 1998                                /s/ Kenneth N. Heintz
                                                   ----------------------------
                                                   Kenneth N. Heintz
                                                   Executive Vice President and
                                                   Chief Financial Officer
                                                   and a Duly Authorized
                                                   Officer of the Company



<PAGE>

                                 EXHIBIT INDEX
           
                                                             Sequentially 
Exhibit No.                                                  Numbered Page
----------                                                   -------------

4.1  Agreement,  dated as of May 1, 1998,  by and among
     PanAmSat and the former  holders of Class A Common
     Stock  of  PanAmSat  International  Systems,  Inc.
     ("PanAmSat  International") is incorporated herein
     by  reference  to  Exhibit   4.2.2  to  PanAmSat's
     Registration  Statement on Form S-4  (Registration
     No. 333-56227) (the "Registration Statement").

4.2  Registration Rights Agreement, dated as of January
     16, 1998,  among  PanAmSat,  Morgan  Stanley & Co.
     Incorporated,   Donaldson,   Lufkin   &   Jenrette
     Securities  Corporation,   Salomon  Brothers  Inc,
     Citicorp Securities,  Inc.,  BancAmerica Robertson
     Stephens  and  J.P.  Morgan   Securities  Inc.  is
     incorporated herein by reference to Exhibit 4.5 to
     PanAmSat's  Current  Report on Form 8-K dated July
     21, 1998.

4.3  Letter  Agreement  dated  July 22,  1998,  between
     Hughes Electronics Corporation and PanAmSat.

10.1 Amendment  to  Letter  Agreement,  dated  March 5,
     1998,  among The News Corporation  Limited,  Globo
     Participacoes,  Ltd.,  Grupo  Televisa,  S.A., and
     PanAmSat   International,   constituting   Exhibit
     10.7.2 to PanAmSat  International's  Annual Report
     on Form 10-K for the fiscal  year  ended  December
     31, 1996, is  incorporated  herein by reference to
     Exhibit 10.18.3 to the Registration Statement. (1)

10.2 Second Amended and Restated  Contract for PanAmSat
     Program,  dated  April 1, 1998,  between  PanAmSat
     International  and Space  Systems/Loral,  Inc.  is
     incorporated   herein  by   reference  to  Exhibit
     10.19.2 to the Registration Statement. (1)

10.3 Amendment   to   Full-Time   Transponder   Service
     Agreement From PAS-3 (European Beam),  dated as of
     March 5, 1998, between PanAmSat  International and
     Televisa,  S.A.,  constituting  Exhibit  10.16  to
     PanAmSat International's  Quarterly Report on Form
     10-Q for the period ended  September  30, 1996, is
     incorporated   herein  by   reference  to  Exhibit
     10.25.2 to the Registration Statement. (1)

10.4 Second Amended and Restated  Transponder  Purchase
     and Sale  Agreement,  dated  as of March 5,  1998,
     between PanAmSat International and NetSat Servicos
     Ltda.  is  incorporated  herein  by  reference  to
     Exhibit 10.28 to the Registration Statement. (1)

10.5 First Amendment to Amended and Restated Collateral
     Trust  Agreement  constituting  Exhibit  10.31  to
     PanAmSat's  Quarterly  Report on Form 10-Q for the
     period ended June 30,  1997,  dated April 30, 1998
     by  and  among  PanAmSat,  Hughes  Communications,
     Inc., Satellite Company, LLC, Grupo Televisa, S.A.
     and  IBJ   Schroder   Bank  &  Trust   Company  is
     incorporated  herein by  reference to Exhibit 3 to
     Amendment  No.  1 to the  Schedule  13D  filed  by
     Hughes Communications, Inc. on May 1, 1998.

10.6 Agreement,  dated  as of July  10,  1998,  between
     PanAmSat  and Robert A.  Bednarek is  incorporated
     herein  by  reference  to  Exhibit  10.46  to  the
     Registration Statement.

10.7 Agreement,  dated  as of July  10,  1998,  between
     PanAmSat  and James W.  Cuminale  is  incorporated
     herein  by  reference  to  Exhibit  10.47  to  the
     Registration Statement.

10.8 Transponder  Service Agreement,  dated as of March
     5, 1998,  between  PanAmSat and Sky  Multi-Country
     Partners,  is incorporated  herein by reference to
     Exhibit 10.51 to the Registration Statement. (1)

10.9 Transponder  Service Agreement,  dated as of April
     30,  1998,  between  PanAmSat   International  and
     Corporacion  de Radio y  Television  del  Norte de
     Mexico,  S.A. de C.V., is  incorporated  herein by
     reference  to  Exhibit  10.52 to the  Registration
     Statement. (1)

27   Financial Data Schedule.

(1)  Portions  of  this   Exhibit   have  been  omitted
     pursuant  to  an  order  of  the   Securities  and
     Exchange    Commission    granting    confidential
     treatment with respect thereto.