SECURITIES AND EXCHANGE COMMISSION
                           Washington, D.C. 20549


                                 FORM 10-Q


                 Quarterly Report Under Section 13 or 15(d)
                   of the Securities Exchange Act of 1934


                      For Quarter Ended March 31, 1997
                       Commission File Number 1-4929




                             COMSAT CORPORATION
                           6560 Rock Spring Drive
                             Bethesda, MD 20817
                               (301) 214-3000



            District of Columbia                   52-0781863
            (State or other jurisdiction of        (I.R.S. Employer
            incorporation or organization)         Identification No.)





     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  twelve (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 ninety (90)
days. Yes [X] No [ ]

49,074,000  shares of the Registrant's  common stock were outstanding as of
March 31, 1997.





                                     1

<PAGE>



PART I. FINANCIAL INFORMATION

ITEM 1. INTERIM FINANCIAL STATEMENTS FOR THE CORPORATION (UNAUDITED)

                    COMSAT CORPORATION AND SUBSIDIARIES
                  Condensed Consolidated Income Statements


<TABLE>
<CAPTION>
<S>                                                                                      <C>               <C>

                                                                                         Quarter Ended March 31,
                                                                                       ----------------------------
In thousands, except per share amounts                                                    1997             1996
-------------------------------------------------------------------------------------------------------------------

REVENUES                                                                                $  281,680      $   248,555
                                                                                        -----------     ------------

Operating expenses:
      Cost of services                                                                     199,290          157,856
      Depreciation and amortization                                                         70,504           52,704
      Research and development                                                               3,697            5,142
      General and administrative                                                             5,849            7,089
                                                                                        -----------     ------------
      Total operating expenses                                                             279,340          222,791
                                                                                        -----------     ------------

OPERATING INCOME                                                                             2,340           25,764

Interest and other income (expense), net                                                    (1,005)          (3,181)
Interest expense, net of amounts capitalized                                               (14,474)          (9,101)
                                                                                        -----------     ------------

Income (loss) before taxes, minority interest,
      and extraordinary item                                                               (13,139)          13,482

Income tax expense                                                                            (109)          (5,710)

Minority interest in net losses of consolidated
      subsidiaries                                                                           8,967            1,555
                                                                                        -----------     ------------

INCOME (LOSS) BEFORE EXTRAORDINARY ITEM                                                     (4,281)           9,327

Extraordinary loss from early extinguishment
      of debt (net of $585 tax)                                                             (1,010)               -
                                                                                        -----------     ------------

NET INCOME (LOSS)                                                                       $   (5,291)     $     9,327
                                                                                        ===========     ============

EARNINGS (LOSS) PER SHARE:
      Before extraordinary item                                                         $    (0.09)     $      0.19
      Extraordinary loss                                                                     (0.02)               -
                                                                                        -----------     ------------
      Net income (loss)                                                                 $    (0.11)     $      0.19
                                                                                        ===========     ============

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

</TABLE>

                                     2

<PAGE>



                    COMSAT CORPORATION AND SUBSIDIARIES
                   Condensed Consolidated Balance Sheets

<TABLE>
<CAPTION>
<S>                                                                                 <C>           <C>

                                                                                     March 31,     December 31,
In thousands                                                                              1997             1996
---------------------------------------------------------------------------------------------------------------
ASSETS
CURRENT ASSETS:
      Cash and cash equivalents                                                  $      22,359     $     12,721
      Receivables                                                                      329,563          314,766
      Inventories                                                                       39,308           39,635
      Other                                                                             38,922           42,717
                                                                                 -------------     ------------ 
         Total current assets                                                         430,152          409,839
                                                                                 -------------     ------------

Property and equipment (net of accumulated depreciation
      of $1,306,257 in 1997 and $1,266,560 in 1996)                                  1,643,904        1,656,763
Investments                                                                             93,038          133,592
Goodwill                                                                               151,979          155,250
Franchise rights                                                                       100,984          102,189
Other assets                                                                           221,100          208,170
                                                                                 -------------     ------------
      TOTAL ASSETS                                                               $   2,641,157     $  2,665,803
                                                                                 =============     ============

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
      Current notes payable                                                      $     170,755     $    159,719
      Commercial paper                                                                  63,487           17,993
      Accounts payable and accrued liabilities                                         163,602          168,039
      Deferred income                                                                   75,493           81,942
      Due to related parties                                                            13,770           34,602
      Other                                                                             26,971           22,788
                                                                                 -------------     ------------
         Total current liabilities                                                     514,078          485,083
                                                                                 -------------     ------------

Long-term debt                                                                         603,745          635,474
Deferred income taxes and investment tax credits                                       133,665          136,322
Accrued postretirement benefit costs                                                    50,979           50,423
Other long-term liabilities                                                            153,058          147,818
Minority interest                                                                      158,717          167,472
Preferred securities issued by subsidiary                                              200,000          200,000

STOCKHOLDERS' EQUITY:
      Common stock                                                                     344,442          340,691
      Retained earnings                                                                488,006          502,839
      Treasury stock                                                                   (2,228)          (3,006)
      Other                                                                            (3,305)            2,687
         Total stockholders' equity                                                    826,915          843,211
                                                                                 -------------     ------------
      TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                 $   2,641,157     $  2,665,803
                                                                                 =============     ============

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

</TABLE>

                                     3

<PAGE>



                    COMSAT CORPORATION AND SUBSIDIARIES
                Condensed Consolidated Cash Flow Statements

<TABLE>
<CAPTION>
<S>                                                                                     <C>                <C>

                                                                                         Quarter Ended March 31,
                                                                                       ----------------------------
In thousands                                                                              1997             1996
-------------------------------------------------------------------------------------------------------------------

CASH FLOWS FROM OPERATING ACTIVITIES:
      Net income (loss)                                                                 $   (5,291)     $     9,327
      Adjustments for noncash depreciation and amortization                                 70,504           52,704
      Changes in operating assets and liabilities                                           (4,890)         (42,866)
      Other                                                                                    707            8,784
                                                                                        -----------     ------------
      Net cash provided by operating activities                                             61,030           27,949
                                                                                        -----------     ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
      Purchase of property and equipment                                                   (85,571)         (91,713)
      Expenditures for film production cost                                                 (2,297)            (687)
      Investments in unconsolidated businesses                                              (9,395)         (34,783)
      Proceeds from sale of investments                                                      9,060                -
      Proceeds from note on sale of investment                                               6,809                -
      Decrease in INTELSAT ownership                                                           191                -
      Decrease in Inmarsat ownership                                                             -            5,739
      Other                                                                                  2,282           (4,198)
                                                                                        -----------     ------------
      Net cash used in investing activities                                                (78,921)        (125,642)
                                                                                        -----------     ------------

CASH FLOWS FROM FINANCING ACTIVITIES:
      Common stock issued                                                                    3,314            2,234
      Cash dividends paid                                                                   (9,542)          (9,328)
      Proceeds from issuance of long-term debt                                                 912                -
      Repayment/extinguishment of long-term debt                                           (29,649)          (5,830)
      Net short-term borrowings                                                             62,494           47,998
      Repayment against company-owned life insurance policies                                    -          (51,175)
      Other                                                                                      -               (6)
                                                                                        -----------     ------------
      Net cash provided by (used for) financing activities                                  27,529          (16,107)
                                                                                        -----------     ------------

Net increase (decrease) in cash and cash equivalents                                         9,638         (113,800)
Cash and cash equivalents, beginning of period                                              12,721          124,156
                                                                                        -----------     ------------
Cash and cash equivalents, end of period                                                $   22,359      $    10,356
                                                                                        ===========     ============


THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

</TABLE>


                                     4

<PAGE>



                    COMSAT CORPORATION AND SUBSIDIARIES
      Notes to Condensed Consolidated Financial Statements (Unaudited)


1.   FINANCIAL STATEMENT PRESENTATION

     The    accompanying   unaudited   condensed   consolidated   financial
statements  have  been  prepared  by  COMSAT  Corporation  (COMSAT  or  the
corporation)  pursuant to the rules and  regulations  of the Securities and
Exchange Commission (the SEC). These financial statements should be read in
the context of the  financial  statements  and notes thereto filed with the
SEC  in  the  corporation's  1996  Annual  Report  on  Form  10-K.  Certain
information  and  footnote   disclosures  normally  included  in  financial
statements  prepared  in  accordance  with  generally  accepted  accounting
principles have been condensed or omitted pursuant to such regulations. The
accompanying   condensed  consolidated  financial  statements  reflect  all
adjustments  and  disclosures  which,  in the  opinion of  management,  are
necessary for a fair  presentation.  All such  adjustments  are of a normal
recurring nature. The results of operations for the interim periods are not
necessarily  indicative  of the results of the entire  year.  

2.   INTELSAT AND INMARSAT SHARE CHANGES


     The corporation's  ownership share of INTELSAT decreased from 19.1% at
December 31, 1996 to 18.0% as of March 31, 1997.  As a result of the change
in ownership,  the corporation will receive $22.5 million,  the majority of
which is expected to be received during the second quarter of 1997.

     The corporation's 23% ownership share of Inmarsat as of March 31, 1997
is unchanged from December 31, 1996.

3.   INVENTORIES

     Inventories,  stated at  the lower of cost  (first-in,  first-out)  or
market, consist of the following:

<TABLE>
<CAPTION>
<S>                                                                            <C>           <C>

                                                                                March 31,     December 31,
In thousands                                                                         1997             1996
----------------------------------------------------------------------------------------------------------
Finished goods                                                                $    18,484     $     18,015
Work in progress                                                                   10,809           11,811
Raw materials                                                                      10,015            9,809
                                                                              -----------     ------------
Total                                                                         $    39,308     $     39,635
                                                                              ===========     ============
</TABLE>

4.   INVESTMENTS

     In January  1997,  the  corporation  sold  its  remaining  interest in
Philippine Global Communications,  Inc. (PhilCom) at book value in exchange
for cash and a collateralized note receivable  totaling $34.3 million.  The
corporation  received  cash  proceeds of $8.5 million in the first  quarter
with the balance to be paid in installments  with interest through December
31, 1998.

                                     5

<PAGE>



5.   ASCENT ENTERTAINMENT GROUP, INC.

     ASCENT CREDIT FACILITIES.  In March 1997, On Command Corporation (OCC)
amended its credit  facility to increase  the amount that OCC may borrow to
$150.0  million from $125.0  million.  Concurrently,  Ascent  Entertainment
Group,  Inc. (Ascent) amended its credit facility to reduce the amount that
Ascent can borrow to $140.0  million from $200.0  million and  committed to
raise not less than $50.0 million in subordinated  debt before October 1997
as a condition to further renewal of its credit facility. Additionally, the
amendment  (i)  eliminated  the  $125.0  million  limit  on  the  available
borrowings  under the  facility  prior to receipt of NBA and NHL  consents;
(ii) provided that those financial  covenants in the Ascent Credit Facility
related to the financial results of OCC will not be measured until year-end
1997;  (iii) provided for the $140.0 million of  availability to be divided
into a term  loan of  $50.0  million  and a  revolving  facility  of  $90.0
million;  and (iv) modified  certain other  financial  covenants.  Ascent's
management believes it will successfully raise the subordinated debt.

     DENVER  ARENA  PROJECT.  On May 7, 1997,  Ascent  entered  into a Land
Purchase  Agreement (the "Agreement") with Southern Pacific  Transportation
Company ("SPT")  pursuant to which Ascent would purchase  approximately  49
acres in Denver as the site for the proposed arena for $20.0  million.  The
Agreement is similar to the previously  expired  agreement  between SPT and
Ascent.  Pursuant to the Agreement,  the closing of the land purchase needs
to occur on or before August 31, 1997.  Consummation  of the transaction is
subject to several conditions,  including obtaining  satisfactory financing
and reaching  agreements  with the City and County of Denver  regarding the
construction  of the proposed  arena and the release of the Nuggets and the
Avalanche from their existing leases at McNichols Arena. The Agreement also
provides for SPT to effect a state-approved  environmental clean-up plan on
the site, and to provide continuing partial  indemnification with regard to
certain   environmental   liabilities.   Management   believes  that  these
negotiations will be successfully concluded,  but there can be no assurance
that Ascent will be able to reach  acceptable terms for the construction of
the new arena.

6.   REGULATORY MATTERS AND CONTINGENCIES

     GOVERNMENT REGULATION.  Under the Communications Satellite Act of 1962
(the Satellite Act), the International  Maritime Satellite Act of 1978 (the
Inmarsat  Act)  and  the  Communications  Act  of  1934,  as  amended  (the
Communications  Act),  COMSAT  is  subject  to  regulation  by the  Federal
Communications   Commission   (FCC)  with   respect  to  its   capital  and
organizational  structure,  as  well as CWS and  CMC's  plant,  operations,
services and rates.  FCC  decisions and policies have had and will continue
to have a significant impact on the corporation.  For a discussion of these
matters  refer to  Management's  Discussion  and Analysis of  Operations of
Financial  Condition  - Outlook,  and Notes 10 and 11 to the  corporation's
1996 financial statements (Form 10-K).

     LITIGATION.  COMSAT  and  its  subsidiaries  are a  party  to  various
lawsuits and arbitration  proceedings and are subject to various claims and
inquiries,  which  generally are  incidental to the ordinary  course of its
business.  The  outcome  of legal  proceedings  cannot  be  predicted  with
certainty.  Based on currently available information,  however,  management
does not  believe  that the  outcome  of any  matter  which is  pending  or
threatened, either individually or in the aggregate, will have a materially
adverse effect on the consolidated  financial  condition of the corporation
but could materially effect  consolidated  results of operations in a given
year or quarter. Certain

                                     6

<PAGE>



of those matters are discussed in Notes 10 and 11 to the corporation's 1996
financial statements (Form 10-K).

     As discussed in Note 11 to the 1996 financial statements, in September
1996, the U.S. District Court for the Southern District of New York granted
the  corporation's  motion for summary  judgment against an anti-trust suit
brought  by  PanAmSat  Corporation  and  dismissed  the  complaint  in  its
entirety.  PanAmSat filed an appeal, which was argued before the U.S. Court
of Appeals for the Second  Circuit in April 1997, and a decision is pending
before the court.

7.   EXTRAORDINARY LOSS FROM EARLY RETIREMENT OF DEBT

     During  the  period  March  25,  1997  through  April  9,  1997,   the
corporation offered to purchase for cash its 8.125% notes due April 1, 2004
in a  fixed-spread  offering.  As of March 31, 1997,  $23.0  million of the
notes had been  repurchased,  and the  corporation  incurred a loss on debt
extinguishment  of $1.6  million  ($1.0  million  after  tax) in the  first
quarter of 1997. In April 1997, the  corporation  repurchased an additional
$66.5 million of the 8.125% notes and $10.0 million of its 7.7% medium term
notes. The debt  extinguishment  loss related to the April 1997 repurchases
was $4.3 million ($2.7 million after tax).

8.   NEW ACCOUNTING PRONOUNCEMENT

     In February  1997,  the Financial  Accounting  Standards  Board issued
Statement of Financial  Accounting Standards No. 128, "Earnings Per Share."
This statement  establishes standards for computing and presenting earnings
per share. This statement is effective for financial  statements issued for
periods ending after December 31, 1997,  including  interim periods;  early
application is not permitted.  The corporation  will adopt this standard in
the fourth  quarter of 1997 and will restate all prior period  earnings per
share data presented as required.  Adoption of this statement will not have
a material  impact on the  corporation's  reported  net  income  (loss) per
common share.

ITEM 2.  MANAGEMENT'S  DISCUSSION  AND ANALYSIS OF FINANCIAL  CONDITION AND
         RESULTS OF OPERATIONS FOR THE QUARTER ENDED MARCH 31, 1997

                           ANALYSIS OF OPERATIONS

CONSOLIDATED OPERATIONS
-----------------------

     Consolidated  revenues  for the  first  quarter  of 1997  were  $281.7
million,  an increase of $33.1 million over the first quarter of 1996.  The
majority  of the  increase  came  from  both the  Technology  Services  and
Entertainment  segments.  All business  units  reported  increases in first
quarter  revenues  over the same period of last year,  except COMSAT Mobile
Communications  (CMC).  First  quarter 1997  revenues in the  Entertainment
segment include $18.1 million  related to  SpectraVision,  Inc.,  which was
acquired  in  October  1996  by  On  Command  Corporation  (OCC),  a  57.2%
subsidiary of Ascent Entertainment Group, Inc. (Ascent).

     Operating  income in the first  quarter was $2.3  million,  down $23.4
million  from the same quarter last year.  The decline  resulted  primarily
from increased operating losses at Ascent associated with OCC's acquisition
of SpectraVision and a lower operating income in CMC.


                                     7

<PAGE>



     Interest and other income  (expense)  for the first  quarter was a net
expense of $1.0 million,  which improved from a net expense of $3.2 million
in the same  period  last  year  primarily  due to  interest  income  and a
currency gain on the sale of an equity investment.

     Interest expense,  net of amounts  capitalized,  for the first quarter
was $14.5  million as  compared to $9.1  million  for the first  quarter of
1996.  The  increase  stems  from  increased  borrowings  at Ascent and the
reduction  of  interest  capitalized  due  to  the  completion  of  several
satellite projects.

     Income tax expense for the first quarter of 1997 totaled  $100,000 due
to non-deductible losses incurred at Ascent's OCC subsidiary. Since October
1996, OCC is no longer  included in COMSAT's  consolidated  tax group,  and
COMSAT is not able to  recognize  a benefit  from  OCC's  losses in its tax
return.

     Minority interest in net losses of consolidated subsidiaries primarily
reflects the minority interest in the losses of Ascent, net of taxes, which
have increased from the same quarter last year due principally to increased
losses at OCC after its SpectraVision acquisition in October 1996.

     Extraordinary loss from early  extinguishment of debt ($1.0 million or
$0.02 per share), net of tax,  represents first quarter costs incurred from
the corporation's purchase of its 8.125% notes (see Note 7 to the financial
statements).  Of the notes purchased through a tender offer,  $23.0 million
was tendered during the first quarter of 1997.

     The  consolidated  net loss for the first  quarter  was $5.3  million,
compared with net income of $9.3 million for the first quarter of 1996. The
loss per share for the first  quarter was $0.11,  which was $0.30 per share
below the same period last year.

SEGMENT OPERATING RESULTS
-------------------------

     The  corporation   reports   operating   results  in  three  segments:
International  Communications,  Technology Services and Entertainment.  The
International  Communications  segment includes COMSAT World Systems (CWS),
COMSAT  Mobile  Communications  (CMC) and COMSAT  International  (CI).  The
Technology  Services  sebment  includes  COMSAT RSI, Inc. (CRSI) and COMSAT
Laboratories. The Entertainment segment represents the corporation's 80.67%
ownership interest in Ascent. The method of allocating certain research and
development costs was changed in 1997, and 1996's segment operating results
have been restated for this change.


                                     8

<PAGE>

<TABLE>
<CAPTION>
<S>                                                                                               <C>               <C>    


RESULTS BY SEGMENT:

                                                                                                  Quarter Ended March 31,
In millions                                                                                       1997               1996
--------------------------------------------------------------------------------------------------------------------------

REVENUES
International Communications:
      World Systems                                                                           $    66.8        $    65.6
      Mobile Communications                                                                        35.2             42.6
      International                                                                                16.4             11.9
                                                                                              ----------       ----------
      Total International Communications                                                          118.4            120.1
Technology Services                                                                                82.9             61.6
Entertainment                                                                                      89.9             72.4
Eliminations and other                                                                             (9.5)            (5.5)
                                                                                              ----------       ----------
      Total revenues                                                                          $   281.7        $   248.6
                                                                                              ==========       ==========

OPERATING INCOME (LOSS)
International Communications:
      World Systems                                                                           $    28.1        $    25.6
      Mobile Communications                                                                         5.5             13.8
      International                                                                                (4.5)            (3.8)
                                                                                              ----------       ----------
      Total International Communications                                                           29.1             35.6
Technology Services                                                                                 2.9              1.6
Entertainment                                                                                     (23.5)            (4.2)
                                                                                              ----------       ----------
      Total segment operating income                                                                8.5             33.0
General and administrative expenses                                                                (5.9)            (7.1)
Other                                                                                              (0.3)            (0.1)
                                                                                              ----------       ----------
      Total operating income                                                                  $     2.3        $    25.8
                                                                                              ==========       ==========
</TABLE>

INTERNATIONAL COMMUNICATIONS
----------------------------

     Revenues  in the  International  Communications  segment  in the first
quarter were $118.4 million,  which was slightly below the same period last
year.  Operating income for the first quarter was $29.1 million,  a decline
of 18% compared to the first quarter of 1996.

     CWS's revenues for the first  quarter  increased 2% to $66.8  million,
primarily due to increased Very Small Aperture  Terminal  (VSAT) leases and
International  Business  Service (IBS)  traffic.  Operating  income for the
first quarter was $28.1  million,  up 10% from the  comparable  period last
year. The increase in operating income was a result of improved earnings on
carrier-to-carrier contracts,  offset  in  part, by increased  depreciation
from placing in service two INTELSAT satellites during 1996.

     Revenues in CMC were $35.2 million in the first quarter,  a decline of
17% compared to the first  quarter of last year.  The lower  revenues  were
primarily the result of decreases in analog  telephone  and telex  revenues
and  lower   volume  in  the  bulk   service   contract   with  IDB  Mobile
Communications (IDB). CMC's operating income for the first quarter was $5.5
million,  compared  with $13.8  million in the same quarter last year.  The
decrease in operating  income is attributable to lower revenues,  increased
depreciation  associated with three Inmarsat-3 satellites placed in service
during  1996 and early  1997,  and  increased  costs  related to Planet 1SM
service, which began commercial operation in January 1997.


                                     9

<PAGE>



     CI's  revenues in the first  quarter  increased  38% to $16.4  million
compared to the first quarter of 1996.  Revenues increased in nearly all of
the international  companies of CI, with the largest improvement  occurring
in Brazil where revenues  increased by 132% over the  comparable  period of
1996.  Increased  start-up costs at new companies drove CI's operating loss
in the first quarter to $4.5 million compared to $3.8 million for the first
quarter last year.  In January  1997,  CI sold its  remaining  interests in
Philippine Global Communications,  Inc. (PhilCom) at book value (see Note 4
to the financial statements).

TECHNOLOGY SERVICES
-------------------

     Revenues from the  Technology  Services  segment for the first quarter
were $82.9 million, a 35% increase over the first quarter of last year. The
improvement  was  primarily  the  result  of  increases  in  revenues  from
transponder leases under the Commercial Satellite Communications Initiative
(CSCI)  contract,  sales of wireless  antennas for  personal  communication
systems  (PCS),  gateway  earth  stations for the Asia  Cellular  Satellite
system (ACeS) and ORBCOMM Global,  L.P. (ORBCOMM) mobile satellite systems,
and revenues  related to intelligent  transportation  system  projects.  In
addition,  COMSAT  Laboratories  revenues in the first quarter of 1997 more
than  doubled  compared to the first  quarter of 1996  because of increased
technical consulting. Operating income in Technology Services for the first
quarter of 1997 was $2.9 million,  which was 81% higher than the comparable
period  of  1996,   due   primarily  to  the  higher   revenues  at  COMSAT
Laboratories.

ENTERTAINMENT
-------------

     The  Entertainment  segment is comprised of COMSAT's 80.67%  ownership
interest in Ascent.  Revenues  for the first  quarter  were $89.9  million,
which was 24%  higher  than the first  quarter  of 1996.  The  increase  in
revenues  was due to a  larger  room  installation  base  at OCC  resulting
primarily from the acquisition of SpectraVision.  The operating loss in the
Entertainment  segment during the first quarter was $23.5 million  compared
to a loss of $4.2 million for the first quarter of last year. The increased
operating loss was primarily attributable to increased depreciation expense
and other  costs at OCC, a  satellite  failure in  January  1997  affecting
certain  SpectraVision  rooms,  lower  revenues  at the Denver  Nuggets and
higher costs at the Colorado Avalanche and the Denver Nuggets.

OUTLOOK
-------

     MANY OF THE STATEMENTS THAT FOLLOW ARE  FORWARD-LOOKING  AND RELATE TO
ANTICIPATED FUTURE OPERATING RESULTS.  STATEMENTS THAT LOOK FORWARD IN TIME
ARE BASED ON MANAGEMENT'S CURRENT  EXPECTATIONS AND ASSUMPTIONS,  WHICH MAY
BE  AFFECTED  BY  SUBSEQUENT  DEVELOPMENTS  AND  BUSINESS  CONDITIONS,  AND
NECESSARILY  INVOLVE RISKS AND  UNCERTAINTIES.  THEREFORE,  THERE CAN BE NO
ASSURANCE  THAT  ACTUAL  FUTURE  RESULTS  WILL NOT DIFFER  MATERIALLY  FROM
ANTICIPATED  RESULTS.  ALTHOUGH THE  CORPORATION  HAS ATTEMPTED TO IDENTIFY
SOME OF THE  IMPORTANT  FACTORS  THAT MAY CAUSE  ACTUAL  RESULTS  TO DIFFER
MATERIALLY  FROM THOSE  ANTICIPATED,  THOSE FACTORS SHOULD NOT BE VIEWED AS
THE ONLY FACTORS WHICH MAY AFFECT FUTURE OPERATING RESULTS.

                                    10

<PAGE>

     As discussed  in the  corporation's  1996 Annual  Report on Form 10-K,
COMSAT's  Board of Directors  approved,  in March 1997, a strategic plan to
refocus the  corporation on  international  satellite  services and digital
networking  services and  technology.  As a part of the strategic plan, the
corporation  reaffirmed  its  commitment  to divest its 80.67%  interest in
Ascent through a spin-off or sale. In response to the corporation's January
1997 request the Internal  Revenue Service issued a ruling letter dated May
12, 1997. The ruling confirms that, if the corporation were to spin-off its
ownership interest in Ascent to its shareholders, the spin-off would not be
taxable to the  corporation  and its  shareholders.  The  corporation  also
announced  that it  intends  to sell  substantially  all of the  assets and
operations of CRSI, as well as other non-core assets.

     At its April  1997  meeting,  the Board of  Directors  authorized  the
corporation's  quarterly  dividend at $0.05 per share.  This is a reduction
from the $0.195 per share paid for the previous eleven quarters.

     In April 1997, the corporation  petitioned the Federal  Communications
Commission  (FCC) for  classification  as a  non-dominant  carrier  and for
forbearance  from certain  regulation.  The petition  requests  that CWS be
allowed to change its tariff  rates and  introduce  new  services  over the
INTELSAT  satellite system on one-day notice.  It also requests that limits
on the company's rate-of-return and structural separation  requirements be
removed.

     CWS operating  results in 1997 are expected to be at approximately the
same  level  as  last  year  as  a  result  of  increased   earnings   from
carrier-to-carrier  contracts,  offset by higher depreciation from INTELSAT
satellites  placed in service during 1996 and 1997. The  carrier-to-carrier
contracts  are  not  subject  to  tariff   requirements  or  to  regulatory
requirements associated with tariffs.

     Operating income in CMC is expected to be lower in 1997 as compared to
last year,  because  of  continuing  competition  among  existing  Inmarsat
service providers and increased depreciation associated with the Inmarsat-3
satellites placed in service during 1996 and 1997.

     CI's operating loss in 1997 is expected to be improved over last year.
Improvements  at CI's more mature  companies  are  expected to be partially
offset by  start-up  costs in CI's newer  companies.  The  corporation  has
initiated  efforts  to  either  seek  an  operating  partner  or  sell  its
non-strategic  operations in Russia and in the  Commonwealth of Independent
States before the end of 1997.

     On May 1, 1997, CI acquired full ownership of the Mexican  corporation
IntelCom Red S.A. de C.V. (IntelCom Mexico),  which was previously a wholly
owned-subsidiary  of ICG  Satellite  Services,  Inc.,  and named it COMSAT
Mexico S.A. de C.V.  (COMSAT  Mexico).  COMSAT  Mexico will offer  business
customers  digital,  domestic and  international  private-line  services to
support voice, data and image applications.

                                    11

<PAGE>

     Technology  Services' 1997 revenues and operating  income are expected
to improve over 1996,  exclusive of  royalties  from the license  agreement
recognized  in the  third  quarter  of 1996 and the  reserves  taken in the
fourth quarter of 1996 on certain long-term,  fixed-price contracts. Future
earnings  growth in  Technology  Services will continue to depend upon this
segment's  ability to contain costs and complete  projects  with  favorable
margins.

     Backlog in the Technology  Services segment at March 31, 1997 was $256
million,  compared to $244 million at December  31, 1996.  Included in this
segment's  March  31,  1997  backlog  is $145  million  of U.S.  Government
contracts and $29 million of contracts that are unfunded.  As is customary,
these contracts  include  provisions for cancellation at the convenience of
the U.S.  Government  or the prime  contractor.  If such a  provision  were
exercised, the corporation would likely assert a claim for reimbursement of
costs and a reasonable allowance for profit thereon.

     Operating  losses at Ascent are  projected to be higher during 1997 as
compared to last year,  primarily as a result of the  acquisition by OCC of
SpectraVision  in October  1996,  as well as increased  costs in the sports
franchises. In addition,  Ascent's ownership of OCC declined at the time of
the acquisition of SpectraVision  to less than 80%. As a result,  OCC is no
longer a part of the COMSAT consolidated tax group, and COMSAT is no longer
able to recognize tax benefits on OCC losses in its tax returns.

     As a result of anticipated  continued losses at Ascent, COMSAT expects
to report net losses in 1997 until  Ascent is no longer a part of  COMSAT's
consolidated results.

                      LIQUIDITY AND CAPITAL RESOURCES

     The  primary  sources of cash in the first  three  months of 1997 were
operations and short-term borrowings. Cash was used primarily for property,
equipment and dividends. The corporation's working capital deficit at March
31, 1997 was $83.9  million,  an increase of $8.7 million from December 31,
1996.  The increased  deficit was primarily the result of purchasing  $23.0
million of long-term debt using proceeds from short-term debt.

     The  corporation  has access to short-term and long-term  financing at
favorable rates. The  corporation's  current  long-term debt ratings are A-
from Standard and Poor's and A3 from  Moody's.  The  corporation's  current
commercial  paper  ratings  are A2 from  Standard  and  Poor's  and P2 from
Moody's.  The corporation's $200 million commercial paper program had $63.5
million in  borrowings  outstanding  at March 31,  1997.  Ascent had $160.0
million  in  short-term  debt at March  31,  1997.  A $200  million  credit
agreement,  expiring in 1999, backs up the  corporation's  commercial paper
program.

     In March and April 1997,  the  corporation  purchased a total of $89.5
million of its 8.125% notes due 2004 using proceeds from  short-term  debt.
Of the total,  $23.0  million was tendered in March 1997.  This reduced the
total  outstanding  of the 8.125% notes from $160.0 million at December 31,
1996 to $70.5 million at April 30, 1997. In addition,  the  corporation  in
April 1997 repurchased $10.0 million of its medium-term notes. This reduced
the corporation's total outstanding medium-term notes from $74.0 million at
December  31, 1996 and March 31, 1997 to $64.0  million at April 30,  1997.

                                    12

<PAGE>

The corporation had $36 million remaining under a $100 million  medium-term
note program at April 30, 1997. The  medium-term  note program is part of a
$200 million debt securities shelf registration  program initiated in 1994.
The corporation plans to reduce short-term debt with proceeds from the sale
of  substantially  all of the  assets  and  operations  of CRSI  and  other
non-core assets.

     The corporation's capital structure and debt-financing  activities are
regulated   by  the  FCC.   The   corporation   is  required  to  submit  a
capitalization  plan to the FCC for review  annually.  Under  existing  FCC
guidelines,  the  corporation  is  subject  to a limit of $200  million  in
short-term debt, a maximum long-term debt to total capital ratio of 45% and
an  interest  coverage  ratio of 2.3 to 1. The  latter two  guidelines  are
measured  at year end.  In  October  1996,  the FCC  approved  a  temporary
decrease in the  interest  coverage  ratio to a minimum of 1.9 to 1, and an
increase  in the  short-term  debt limit to $325  million for the 1996 plan
year and until the FCC acts on the  corporation's  1997 capital  plan.  The
corporation was in compliance  with the $325 million  short-term debt limit
as of March 31, 1997.  The  corporation  submitted its 1997  capitalization
plan on  April  30,  1997.  As a  result  of  restructuring  actions  being
undertaken, the corporation expects to be in compliance with the unmodified
guidelines at the applicable measurement dates.

     If the  corporation  were to fail  to  satisfy  one or more of the FCC
guidelines as of an applicable  measurement  date, the corporation would be
required to seek advance FCC approval of future  financing  activities on a
case-by-case  basis.  If such  approval were not granted,  the  corporation
could be  required to reduce or  reschedule  planned  capital  investments,
reduce cash outlays, reduce debt or sell assets.

                                     13

<PAGE>



PART II.  OTHER INFORMATION

ITEM 1.   Legal Proceedings
          See Note 6 of this Form 10-Q and Item 3 of the Corporation's 1996
          Form 10-K, which are incorporated herein by reference.

ITEM 2.   Change in Securities
          None

ITEM 3.   Defaults Upon Senior Securities
          None

ITEM 4.   Submission of Matters to a Vote of Security Holders
          None

ITEM 5.   Other Information
          None

ITEM 6.   (a)     Exhibits
          
          No. 11 - Computation of Earnings per Share

          No. 27 - Financial Data Schedule

         (b)      Reports on Form 8-K
                  Report   dated   February   11,   1997,   reporting   the
                  Corporation's   comments  on  the  final  report  of  the
                  INTELSAT 2000 Working Party.



                                     14

<PAGE>



                                 SIGNATURES

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


                                          COMSAT Corporation


                                           By /s/ Alan G. Korobov
                                              -------------------
                                                  Alan G. Korobov
                                                     Controller


Date: May 15, 1997

                                     15

<PAGE>


<TABLE>
<CAPTION>
<S>                                                                                      <C>               <C>

                                                                                                         Exhibit 11
                    COMSAT CORPORATION AND SUBSIDIARIES
                     Computation of Earnings Per Share



                                                                                       Three Months Ended March 31,
                                                                                       ----------------------------
In thousands, except per share amounts                                                    1997             1996
-------------------------------------------------------------------------------------------------------------------

PRIMARY
Earnings (loss):
      Before extraordinary item                                                         $   (4,281)      $     9,327
      Extraordinary loss                                                                    (1,010)                -
                                                                                        -----------      -----------
      Net income (loss)                                                                 $   (5,291)      $     9,327
                                                                                        ===========      ===========

Shares:
      Weighted average number of common
         shares outstanding                                                                 48,948           47,904
      Add shares issuable from assumed
         exercise of options                                                                     -              643
                                                                                        -----------      -----------
      Weighted average shares                                                               48,948           48,547
                                                                                        ===========      ===========

Primary earnings (loss) per share:
      Before extraordinary item                                                         $    (0.09)      $     0.19
      Extraordinary loss                                                                     (0.02)               -
                                                                                        -----------      -----------
      Net income (loss)                                                                 $    (0.11)      $     0.19
                                                                                        ===========      ===========

ASSUMING FULL DILUTION
Earnings (loss):
      Before extraordinary item                                                         $   (4,281)      $    9,327
      Extraordinary loss                                                                    (1,010)               -
                                                                                        -----------      -----------
      Net income (loss)                                                                 $   (5,291)      $    9,327
                                                                                        ===========      ===========

Shares:
      Weighted average number of common
         shares outstanding                                                                 48,948           47,904
      Add shares issuable from assumed
         exercise of options                                                                     -              846
                                                                                        -----------      -----------
      Weighted average shares                                                               48,948           48,750
                                                                                        ===========      ===========

Fully diluted earnings (loss) per share:
      Before extraordinary item                                                         $    (0.09)      $     0.19
      Extraordinary loss                                                                     (0.02)               -
                                                                                        -----------      -----------
      Net income (loss)                                                                 $    (0.11)      $     0.19
                                                                                        ===========      ===========
</TABLE>




                                     16
<PAGE>