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 September 30, 1996
                       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 [ ]

48,586,000  shares of the Registrant's  common stock were outstanding as of
September 30, 1996.







<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>              <C>              <C>

                                                        Quarter Ended September 30,    Nine Months Ended September 30,
                                                        ----------------------------   --------------------------------
In thousands, except per share amounts                      1996            1995               1996             1995
-----------------------------------------------------------------------------------------------------------------------

REVENUES                                             $    229,804      $    203,894      $    707,776     $    622,586
                                                     -------------     -------------     -------------    -------------

Operating expenses:
     Cost of services                                     133,056           121,195           431,051          347,628
     Depreciation and amortization                         58,616            51,868           166,702          148,099
     Research and development                               6,049             4,342            16,883           14,978
     General and administrative                             5,835             5,817            18,453           16,513
     Provision for restructuring                                -            20,044                 -           20,044
                                                     -------------     -------------     -------------    -------------
     Total operating expenses                             203,556           203,266           633,089          547,262
                                                     -------------     -------------     -------------    -------------

OPERATING INCOME                                           26,248               628            74,687           75,324

Interest and other income (expense), net                      223            (6,082)           (2,266)          (3,310)

Interest expense, net of amounts capitalized              (12,616)          (10,377)          (31,932)         (29,626)
                                                     -------------     -------------     -------------    -------------

Income (loss) before taxes                                 13,855           (15,831)           40,489           42,388

Income tax benefit (expense)                               (8,818)              208           (20,343)         (21,426)
                                                     -------------     -------------     -------------    -------------

NET INCOME (LOSS)                                    $      5,037      $    (15,623)     $     20,146     $     20,962
                                                     =============     =============     =============    =============

EARNINGS (LOSS) PER SHARE                            $       0.10      $      (0.33)     $       0.41     $       0.44
                                                     =============     =============     =============    =============


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>

                                                                                    September 30,     December 31,
In thousands                                                                                1996              1995
------------------------------------------------------------------------------------------------------------------
ASSETS
CURRENT ASSETS:
     Cash and cash equivalents                                                     $     20,385      $    124,156
     Receivables                                                                        278,019           234,465
     Inventories                                                                         38,761            26,851
     Other                                                                               40,373            40,353
                                                                                   -------------     -------------
          Total current assets                                                          377,538           425,825
                                                                                   -------------     -------------

Property and equipment (net of accumulated depreciation
     of $1,260,423 in 1996 and $1,156,518 in 1995)                                    1,560,248         1,528,053
Investments                                                                             120,395            88,378
Goodwill                                                                                 69,670            67,569
Franchise rights                                                                        103,283           107,962
Other assets                                                                            181,575            96,479
                                                                                   -------------     -------------
     TOTAL ASSETS                                                                  $  2,412,709      $  2,314,266
                                                                                   =============     =============

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
     Current notes payable                                                         $     81,637      $     11,688
     Accounts payable and accrued liabilities                                           165,376           164,801
     Due to related parties                                                              18,717            22,825
     Other                                                                               14,253             5,155
                                                                                   -------------     -------------
          Total current liabilities                                                     279,983           204,469
                                                                                   -------------     -------------

Long-term debt                                                                          660,068           664,601
Deferred income taxes and investment tax credits                                        152,040           134,208
Accrued postretirement benefit costs                                                     50,552            49,497
Other long-term liabilities                                                             132,037           129,911
                                                                                   -------------    -------------
     Total liabilities                                                                1,274,680         1,182,686
                                                                                   -------------     -------------

Minority interest                                                                        91,643            92,147
                                                                                   -------------     -------------
Preferred securities issued by subsidiary                                               200,000           200,000
                                                                                   -------------     -------------

STOCKHOLDERS' EQUITY:
     Common stock                                                                       330,703           324,074
     Retained earnings                                                                  525,172           533,238
     Treasury stock                                                                      (4,233)           (9,020)
     Other                                                                               (5,256)           (8,859)
                                                                                   -------------     -------------  
          Total stockholders' equity                                                    846,386           839,433
                                                                                   -------------     -------------
     TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                    $  2,412,709      $  2,314,266
                                                                                   =============     =============

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>
                                                                                       Nine Months Ended September 30,
                                                                                       -------------------------------
In thousands                                                                                 1996             1995
----------------------------------------------------------------------------------------------------------------------

CASH FLOWS FROM OPERATING ACTIVITIES:
     Net income                                                                       $     20,146     $     20,962
     Adjustments for noncash expenses:
          Depreciation and amortization                                                    166,702          148,099
          Provision for restructuring                                                            -           20,044
     Changes in operating assets and liabilities                                           (20,079)         (10,471)
     Other                                                                                  (1,542)          26,668
                                                                                      -------------    -------------
     Net cash provided by operating activities                                             165,227          205,302
                                                                                      -------------    -------------

CASH FLOWS FROM INVESTING ACTIVITIES:
     Purchase of property and equipment                                                   (254,096)        (226,759)
     Expenditures for film production cost                                                 (33,432)         (11,719)
     Decrease (increase) in INTELSAT ownership                                              (1,238)          17,564
     Decrease (increase) in Inmarsat ownership                                               5,746           (8,754)
     Investments in unconsolidated businesses                                              (35,858)         (23,367)
     Purchase of subsidiaries, net of cash acquired
          of $3,029 in 1996 and $2,988 in 1995                                                 314          (77,601)
     Insurance proceeds from satellite launch failure                                       54,443                -
     Other                                                                                   5,311           (4,404)
                                                                                      -------------    -------------
     Net cash used in investing activities                                                (258,810)        (335,040)
                                                                                      -------------    -------------

CASH FLOWS FROM FINANCING ACTIVITIES:
     Common stock issued                                                                     9,505            7,623
     Proceeds from issuance of preferred securities of subsidiary                                -          200,000
     Cash dividends paid                                                                   (28,212)         (27,614)
     Proceeds from issuance of long-term debt                                                    -           81,986
     Repayment of long-term debt                                                            (8,809)          (9,906)
     Net short-term borrowings (repayments)                                                 68,000         (115,357)
     Company-owned life insurance policies borrowings
          (repayments)                                                                     (51,443)           2,270
     Other                                                                                     771          (11,400)
                                                                                      -------------     -------------
     Net cash provided by (used for) financing activities                                  (10,188)         127,602
                                                                                      -------------     -------------

Net decrease in cash and cash equivalents                                                 (103,771)          (2,136)
Cash and cash equivalents, beginning of period                                             124,156           18,658
                                                                                      -------------     -------------
Cash and cash equivalents, end of period                                              $     20,385      $    16,522
                                                                                      =============     =============


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 1995 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 has increased  slightly
since December 31, 1995.

     The corporation received cash proceeds of $5.7 million for a reduction
in its ownership share in Inmarsat from 24.0% at December 31, 1995 to 23.0%
as of September 30, 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>

                                                                  September 30,    December 31,
In thousands                                                               1996            1995
-----------------------------------------------------------------------------------------------
Finished goods                                                     $     15,369     $     8,137
Work in progress                                                         13,820          10,260
Raw materials                                                             9,572           8,454
                                                                   ------------     -----------
Total                                                              $     38,761     $    26,851
                                                                   ============     ===========
</TABLE>

4.     INVESTMENTS

     As discussed in Notes 7 and 10 to the 1995 financial  statements,  the
corporation   and  Inmarsat  have   committed  to  invest  in  I-CO  Global
Communications  (Holdings)  Limited  (ICO).  As of September 30, 1996,  the
corporation has made capital  contributions  to ICO totaling $40.6 million,
and the corporation's  share of Inmarsat's  investment in ICO totaled $13.6
million.  The  corporation  has  committed  to invest an  additional  $73.3
million in two  installments  due in December 1996 and December  1997.  The
corporation's  share of Inmarsat's future  commitments to ICO totaled $22.2
million  as of  September  1996.  See Note 7 of this Form 10-Q and  Outlook
below for a further discussion of ICO matters.

                                     5

<PAGE>



5.   SATELLITE LAUNCH FAILURE

     On February 14, 1996, the launch of the INTELSAT 708 satellite failed.
The corporation's share of the construction and capitalized  interest costs
was fully insured.  Insurance proceeds totaling $54.4 million were received
in the second quarter of 1996.

6.   DENVER ARENA DEVELOPMENT PROJECT

     On March 28, 1996, Ascent Entertainment Group Inc. (Ascent), an 80.67%
owned  subsidiary  of COMSAT,  entered into an agreement  with The Anschutz
Corporation (TAC), with which Ascent had been jointly developing a proposed
arena project in Denver,  Colorado,  to purchase TAC's interests and assets
related to the project.  Ascent paid TAC $6.6 million in cash.  Ascent also
agreed to pay an  additional  $5.0  million  and  granted  a paid-up  suite
license,  both contingent on the construction and occupancy of the proposed
arena.  As part of the agreement,  TAC agreed to use reasonable  efforts to
facilitate the  development of the proposed  arena. In connection with this
agreement,  Ascent also purchased TAC's limited partnership interest in New
Elitch  Gardens,  Ltd.  (Elitch  Gardens),  which owns an amusement park in
downtown  Denver,  for  $4.1  million.  This  purchase  increased  Ascent's
ownership  interest in Elitch  Gardens from 13% to 26%. In September  1996,
Ascent  recorded  a  $1.8  million  reserve  on  its  limited   partnership
investment in Elitch Gardens,  based on the announced sale of the amusement
park to Premier Parks,  Inc. The company's share of proceeds from the sale,
which  closed on October 30, 1996,  may be subject to certain  adjustments,
including future contingencies.

     On March 28, 1996,  Ascent  entered into an  agreement  with  Southern
Pacific  Transportation  Company (SPT) to purchase land in downtown  Denver
for $20.0 million for the proposed  arena site.  Pursuant to the agreement,
the  closing  was to have  occurred  on or before June 28, 1996 but did not
take place, and the agreement terminated.  The corporation has been advised
by  Ascent  that the  agreement  may be  reinstated.  If the  agreement  is
reinstated,   consummation   of  the  transaction  is  subject  to  several
conditions  including obtaining reasonable  financing,  reaching agreements
with the city and  county  of  Denver  regarding  the  construction  of the
proposed arena and the release of the Denver Nuggets and Colorado Avalanche
from their current leases at McNichols  Arena.  The agreement also provides
for SPT to effect a state- approved environmental clean-up plan and provide
continuing indemnification for certain environmental liabilities.

7.   REGULATORY MATTERS AND CONTINGENCIES

     INVESTMENT  IN ICO.  As  discussed  in Note 10 to the  1995  financial
statements,  the  corporation  has  applied  to the  FCC for  authority  to
participate as a direct and indirect  (through  Inmarsat)  investor in ICO.
The application does not request authority to be a service  provider;  that
application  will be filed at a later date.  In acting on the  application,
which is opposed by ICO's  competitors,  the FCC will determine whether the
corporation   satisfies  the  requisite   legal  and  policy   criteria  to
participate in ICO. The corporation  believes that all necessary  operating
authorizations  with respect to ICO will be obtained,  although the FCC may
condition the use of ICO  telephones  in the U.S. on  reciprocal  access by
ICO's U.S.  competitors to foreign markets.  In addition,  the provision of
ICO  service in the U.S.  may be subject to the  availability  of  adequate
spectrum on an economic basis.

                                     6

<PAGE>



     INMARSAT  SATELLITES.  As discussed  in Note 11 to the 1995  financial
statements,  the corporation has received FCC  authorization to participate
in the procurement of five third- generation Inmarsat satellites. The first
two Inmarsat-3 satellites were successfully launched in April and September
1996 and have been placed in service. In May 1996, the corporation received
authorization to provide communications services,  including its Planet 1SM
and  other  land  mobile  services  outside  of  North  America,  over  the
Inmarsat-3  satellites.   The  corporation  has  applied  to  the  FCC  for
authorization  to offer  Planet 1SM and other land  mobile  services in the
U.S.

     LITIGATION.  As discussed in Note 11 to the 1995 financial statements,
the  corporation  is defending an  antitrust  suit brought by PanAmSat.  In
September  1996, the U.S.  District Court for the Southern  District of New
York  granted  COMSAT's  motion for  summary  judgment  and  dismissed  the
complaint in its entirety.  In October 1996,  PanAmSat filed an appeal with
the U.S. Court of Appeals for the Second  Circuit,  which is pending before
the court.

     In May  1996,  TRW,  Inc.  filed a  lawsuit  against  ICO in the  U.S.
District Court for the Central  District of California  seeking  injunctive
relief and unspecified  monetary damages. The lawsuit, as recently amended,
alleges that the proposed ICO satellite  system would  infringe two certain
patents  held by TRW.  The  corporation  has  been  advised  by ICO that it
intends to vigorously defend the lawsuit.

8.   BUSINESS COMBINATION AND RELATED DEBT FINANCINGS

     As of October 8, 1996, Ascent, through its newly formed subsidiary, On
Command  Corporation (OCC),  consummated the acquisition of the assets, and
assumed certain liabilities of SpectraVision,  Inc. (SpectraVision),  which
was operating under Chapter 11 bankruptcy  protection.  OCC acquired all of
the outstanding  capital stock of SpectraDyne,  Inc., the primary operating
subsidiary  of  SpectraVision,   together  with  certain  other  assets  of
SpectraVision and its affiliates.  On Command Video  Corporation  (OCV), an
approximately  79% owned indirect  subsidiary of Ascent,  was merged into a
subsidiary  of  OCC  and  became  a  wholly-owned  subsidiary  of  OCC.  In
connection with the merger,  Ascent received  approximately 57.2% of the 30
million  initial  outstanding  shares of OCC  common  stock.  OCV  minority
shareholders  received  approximately  15.3% of OCC's  initial  outstanding
shares. In exchange for the SpectraVision  assets,  approximately  26.8% of
the  initial  outstanding  OCC common  stock was issued to  SpectraVision's
bankruptcy   estate   for   distribution   to   creditors.    Additionally,
approximately  0.7% of the initial  outstanding  OCC common  stock is being
held in reserve  for  potential  adjustments  pursuant  to the  acquisition
agreement.  The reserved stock will either be distributed to Ascent and the
former OCV minority stockholders or to the SpectraVision bankruptcy estate.

     In connection with the merger and SpectraVision asset acquisition, OCC
also issued  seven-year  warrants to  purchase  an  additional  7.5 million
shares (20% of the  outstanding  OCC common  stock,  after  exercise of the
warrants) at $15.27 per share. Ascent, former minority OCV shareholders and
the SpectraVision  estate received  warrants to purchase  approximately 3%,
0.8% and 7% of OCC's  common  stock,  respectively  (after  exercise of the
warrants).  In addition,  warrants to purchase  approximately 9.2% of OCC's
common  stock  (after  exercise  of the  warrants)  were  issued  to  OCC's
investment  advisors in  consideration  of certain  investment  banking and
advisory services provided in connection with the transactions.


                                     7

<PAGE>



     In conjunction with the SpectraVision acquisition, OCC obtained a $125
million bank credit  facility.  The OCC credit  facility  consists of (i) a
one-year  revolving  credit  and  competitive  advance  facility,  which is
renewable for up to four  additional  one-year  periods  subject to certain
conditions,  and (ii) a five-year  revolving credit and competitive advance
facility. Revolving loans extended under the credit facility generally will
bear interest at the London  Interbank  Offering Rate (LIBOR) plus a spread
that may range from 0.50% to 0.75% depending on certain operating ratios of
OCC. The OCC credit facility  requires OCC to comply with certain financial
covenants,  which,  among  other  matters,  limit  OCC's  ability  to incur
indebtedness  or pay  dividends  (other than cash  dividends  on its common
stock).  Upon consummation of the SpectraVision  acquisition,  OCC borrowed
$92 million  under the credit  facility to payoff  certain  obligations  of
SpectraVision's  estate  pursuant  to  the  bankruptcy  plan,  intercompany
obligations to Ascent and other expenses.

     In addition,  Ascent entered into a new credit agreement that provides
for  borrowings  of up to $200 million under a one-year  secured  revolving
credit  facility,  which is  renewable  for up to two  additional  one-year
periods (subject to certain  conditions).  Revolving loans under the Ascent
facility generally will bear interest at LIBOR plus a spread that may range
from 2.0% to 2.5%  depending  on certain  operating  ratios at Ascent.  The
Ascent  facility  requires  Ascent  to  maintain  compliance  with  certain
financial  covenants,  limits Ascent's ability to incur other  indebtedness
and precludes  Ascent from paying cash dividends on its common stock.  Upon
consummation of the SpectraVision acquisition, Ascent borrowed $110 million
under its new  credit  facility  to repay  outstanding  borrowings  of $145
million under its previous $175 million credit facility. Ascent will record
an  extraordinary   charge  of   approximately   $0.5  million  related  to
termination of its previous credit facilities in the fourth quarter.

9.   NEW ACCOUNTING PRONOUNCEMENT

     As discussed in Note 1 to the corporation's 1995 financial statements,
Statement of Financial Accounting Standards (SFAS) No. 123, "Accounting for
Stock-Based Compensation" was issued in 1995 and became effective beginning
January 1, 1996. SFAS No. 123 requires expanded  disclosures of stock-based
compensation  arrangements  with  employees  and  encourages  (but does not
require)  compensation  cost to be measured  based on the fair value of the
equity instrument awarded. Companies are permitted, however, to continue to
apply APB Opinion No. 25, "Accounting for Stock Issued to Employees," which
recognizes  compensation  based  on  the  intrinsic  value  of  the  equity
instrument awarded.  The corporation has elected to continue to account for
its stock-based  compensation  awards to employees under APB Opinion No. 25
and will  disclose the required pro forma effect on net income and earnings
per share in the corporation's 1996 annual financial statements.

                                     8

<PAGE>



ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND 
         RESULTS OF OPERATIONS FOR THE QUARTER ENDED SEPTEMBER 30, 1996

                           ANALYSIS OF OPERATIONS

CONSOLIDATED OPERATIONS

     Consolidated  revenues  for the  third  quarter  of 1996  were  $229.8
million,  an increase of $25.9 million over the third quarter of 1995.  The
majority of the increase  came from growth within the  Technology  Services
segment.  All business units reported  increases in third quarter  revenues
over the same  period of last year,  except  COMSAT  Mobile  Communications
(CMC) and Ascent  Entertainment  Group  Inc.  (Ascent).  Included  in third
quarter  revenues  were  royalties of $7.8  million  related to a licensing
agreement  that  resolved   patent   infringement   disputes  with  certain
manufacturers   of  television   encryption   and   decryption   equipment.
Year-to-date  revenues  were $707.8  million,  an increase of $85.2 million
over the same period last year, which reflects improvements in all business
units except CMC.

     Operating  income in the third quarter was $26.2 million,  an increase
of $25.6 million over the prior year. During the third quarter of 1995, the
corporation  took  actions  to  restructure  elements  of all its  business
segments and recorded a pre-tax $20.1 million provision for  restructuring.
Excluding  the  provision  for  restructuring,  the increase over the third
quarter  of 1995 was $5.5  million.  For the  first  nine  months  of 1996,
operating  income was $74.7  million or $0.6 million  below the  comparable
period in 1995. Excluding the provision for restructuring, operating income
decreased  $20.7  million for the first nine months of the year as compared
to last  year.  The  primary  causes of the  decline in  operating  income,
excluding the provision for restructuring,  were increased operating losses
at Ascent and lower operating  results in both CMC and COMSAT World Systems
(CWS).

     Interest and other income  (expense)  for the third  quarter  improved
$6.3 million over the same period last year principally due to the minority
interest  in  Ascent's  losses  and a gain on the sale of a  portion  of an
investment  at Ascent.  Year-to-date  interest and other  income  (expense)
improved by $1.0 million primarily for the same reasons, offset by dividend
payments in the first half of 1996 on Monthly Income  Preferred  Securities
(MIPS), which were issued in the third quarter of 1995.

     Interest expense, net of amounts capitalized for the third quarter and
first nine months of 1996, was $2.2 million and $2.3 million worse than the
comparable periods of last year,  respectively,  primarily as a result of a
reduction in the amount of interest  capitalized  due to the  completion of
several satellite construction projects.

     The tax  provision  for the third quarter of 1996 reflects an increase
in the corporation's  effective tax rate due to non-deductible  losses. The
year-to-date accrual rate is approximately the same as last year.

     Net income for the third  quarter  was $5.0  million,  which was $20.7
million higher than the same period last year.  Year-to-date net income was
$20.1  million,  $0.8 million below last year.  Excluding the provision for
restructuring  recorded in the third quarter of 1995,  income for the third
quarter  improved $7.5 million and income for the first nine months of 1996
declined

                                     9

<PAGE>



$14.0 million.  Earnings per share for the third quarter were $0.10,  which
was $0.43 better than the same period last year.  Year-to-date earnings per
share were $0.41 versus $0.44 for the first nine months of 1995.  Excluding
the provision for  restructuring,  earnings per share for the third quarter
were $0.15 better than last year and  year-to-date  earnings per share were
$0.30 below the comparable period of last year.

SEGMENT OPERATING RESULTS

     The  corporation   reports   operating   results  in  three  segments:
International  Communications,  Technology Services and Entertainment.  The
International   Communications   segment   includes  CWS,  CMC  and  COMSAT
International Ventures (CIV).
<TABLE>
<CAPTION>
<S>                                                           <C>                 <C>                <C>                  <C>

RESULTS BY SEGMENT:


                                                                   Quarter Ended                        Nine Months Ended
                                                                   September 30,                          September 30,
                                                          ------------------------------       ---------------------------------
In millions                                                    1996                1995               1996                1995
--------------------------------------------------------------------------------------------------------------------------------

REVENUES
International Communications:
     World Systems                                        $    67.1           $    62.9          $   200.2           $   188.6
     Mobile Communications                                     38.4                47.5              120.3               140.7
     International Ventures                                    15.5                 9.7               39.8                25.8
                                                          ----------          ----------         ----------          ----------
     Total International Communications                       121.0               120.1              360.3               355.1
Technology Services                                            83.0                50.9              215.0               145.8
Entertainment                                                  33.9                37.6              152.6               134.3
Eliminations and other                                         (8.1)               (4.7)             (20.1)              (12.6)
                                                          ----------          ----------         ----------          ----------
     Total revenues                                       $   229.8           $   203.9          $   707.8           $   622.6
                                                          ==========          ==========         ==========          ==========

OPERATING INCOME (LOSS)
International Communications:
     World Systems                                        $    24.2           $    26.8          $    73.6           $    81.1
     Mobile Communications                                      7.2                13.3               32.1                43.5
     International Ventures                                    (3.7)               (7.0)             (12.1)              (15.0)
                                                          ----------          ----------         ----------          ----------
     Total International Communications                        27.7                33.1               93.6               109.6
Technology Services                                            13.5                 0.6               22.0                 9.7
Entertainment                                                  (7.1)               (6.4)             (18.2)               (3.3)
                                                          ----------          ----------         ----------          ----------
     Total segment operating income                            34.1                27.3               97.4               116.0
General and administrative expenses                            (5.8)               (5.8)             (18.4)              (16.5)
Provision for restructuring                                       -               (20.1)                 -               (20.1)
Other                                                          (2.1)               (0.8)              (4.3)               (4.1)
                                                          ----------          ----------         ----------          ----------
     Total operating income                               $    26.2           $     0.6          $    74.7           $    75.3
                                                          ==========          ==========         ==========          ==========


</TABLE>

                                     10

<PAGE>


INTERNATIONAL COMMUNICATIONS

     Revenues  in the  International  Communications  segment  in the third
quarter  were  $121.0  million  and for the first nine  months  were $360.3
million,  slightly  improved over the same periods of last year.  Operating
income for the third quarter was $27.7 million and for the year-to-date was
$93.6 million, approximately 15% lower than the same periods of 1995.

     CWS's third quarter and  year-to-date  revenues were $67.1 million and
$200.2 million,  respectively, 7% and 6% increases over the same periods of
last year. The  improvement in revenues was the result of increases in VSAT
leases,   INTELSAT  system  revenues,  IBS  traffic  and  Wide-band  Mobile
revenues.  Operating income for the third quarter was $24.2 million and for
the first  nine  months of 1996 was  $73.6  million,  which was 10% and 9%,
respectively,  below the  comparable  periods  last year.  The  decrease in
operating  income was a result of the lower rate base in CWS, which was due
to the insurance proceeds received from the February 1996 launch failure of
the INTELSAT 708 satellite.

     Revenues  in CMC were $38.4  million in the third  quarter,  19% lower
than the third  quarter of last year.  Year-to-date  revenues  were  $120.3
million,  14% lower than the same period last year. The lower revenues were
primarily the result of decreases in analog  telephone and telex  revenues,
expiration  of the AMSC  service  contract in 1995 and lower  volume in the
bulk service contract with IDB. The decline in analog revenues was a result
of  continued  competitive  pressures.   Digital  telephone  revenues  have
improved  33% over last year.  Operating  income for the first  quarter and
year-to-date was $7.2 million and $32.1 million,  respectively, 46% and 26%
less than the comparable  periods of 1995. This was primarily the result of
the  decline  in  revenues  offset in part by cost  savings  from the third
quarter 1995 restructuring.

     CIV reported revenues of $15.5 million for the third quarter and $39.8
million  year-to-date,  61% and 54% higher than the same periods last year,
respectively. The growth was driven by improvements in CIV's Latin American
companies,  which have  exhibited  strong  growth  this year.  Year-to-date
revenues in Argentina were 49% higher than last year, and in Brazil were up
over 260% over the same  period in 1995.  The  operating  losses  for CIV's
first quarter and year-to-date  were $3.7 million and $12.1 million or $3.4
million and $2.9  million  better than the  comparative  periods last year,
respectively.

TECHNOLOGY SERVICES

     This segment includes COMSAT RSI, Inc. (CRSI) and COMSAT Laboratories.
Technology  Services  revenues for the third quarter were $83.0 million,  a
63% improvement over last year.  Year-to-date revenues were $215.0 million,
a 47% improvement over the same period last year. Included in third quarter
revenues were  royalties of $7.8 million  related to a licensing  agreement
that resolved patent  infringement  disputes with certain  manufacturers of
television encryption and decryption equipment.  The primary causes for the
balance  of the  increase  were the  consolidation  of  revenues  from JEFA
Wireless  Systems,  a  wireless  and  intelligent   transportation  systems
integrator  purchased in September 1995,  improvements  from the Commercial
Satellite   Communications   Initiative   (CSCI)  contract  with  the  U.S.
Department  of Defense and  shipments  of wireless  antennas  and  cellular
switch  products  mostly for the U.S. PCS and cellular  markets.  Operating
income for the third quarter and  year-to-date  was $13.5 million and $22.0
million, respectively, or $12.9 million and $12.3 million higher than the

                                     11

<PAGE>



comparative 1995 periods.  This was a result of the revenues related to the
license agreement as well as other improvements in revenue.

ENTERTAINMENT

     The  Entertainment  segment is comprised of COMSAT's 80.67%  ownership
interest in Ascent.  Revenues  for the third  quarter  were $33.9  million,
which was $3.6 million below the third quarter of last year.  Third quarter
1995 revenues  included $6.4 million of revenues from the Satellite  Cinema
business,  which ceased  operations in December 1995.  Excluding this item,
Ascent reported a $2.8 million increase in revenues which was primarily the
result of improvements at OCV. Year-to-date revenues of $152.6 million were
$18.3  million  above the same period of 1995.  This increase was primarily
attributable  to  improved  revenues  at OCV.  Year-to-date  1996  revenues
include  $24.2  million  related to the Colorado  Avalanche  which were not
included in Ascent's results until the second half of 1995. Included in the
year-to-date  1995 revenues was $20.2 million in revenues  associated  with
the discontinued Satellite Cinema business.

     Operating losses in the Entertainment segment during the third quarter
were $7.1  million  as  compared  to a loss of $6.4  million  for the third
quarter of 1995.  Year-to-date the operating loss was $18.2 million,  $14.9
million   greater  than  last  year.   The  increase  in  the   comparative
year-to-date  operating losses is primarily attributable to losses incurred
by the sports  teams and Beacon  Communication  Corp.,  offset in part,  by
improvements  resulting  from the  discontinuance  in December  1995 of the
unprofitable Satellite Cinema business.

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.

     In the first quarter of 1996, the  corporation  retained an investment
banker to assess strategic alternatives for enhancing shareholder value and
to analyze the capital needs of its  businesses  for  continued  expansion,
while permitting COMSAT as a parent organization to reduce debt, strengthen
its balance sheet and improve liquidity.  The corporation has been actively
considering the  alternatives  encompassed by this study with the objective
of prioritizing those options in light of strategic, operational and market
conditions.  As part of that process, the corporation  announced in October
1996 that it  intends  to divest  its 80.7%  ownership  interest  in Ascent
through a sale,  spin-off  or other  transaction,  and that it has  engaged
Morgan Stanley & Co.,  Incorporated to act as its financial advisor for the
divestiture.  In October 1996,  the  corporation  also confirmed that it is
considering a reduction of its direct  investment  in ICO while  pursuing a
national  wholesaler  role in the  development of the U.S. Market for ICO's
planned hand held global satellite communication service.


                                     12

<PAGE>



     CWS's  operating  results  are  expected  to  remain  steady  for  the
remainder of 1996. CWS is expected to face increasing  competition over the
longer term from competitors with substantially greater financial resources
than the corporation.  Several recently announced planned acquisitions,  if
consummated,  are expected to  significantly  increase the  competition for
international  satellite  telecommunications  services,  including  (i) the
planned   acquisition  of  PanAmSat   Corporation  by  Hughes   Electronics
Corporation,  a unit of General  Motors  Corporation;  (ii)  Loral  Space &
Communications   Ltd.'s  planned  purchase  of  AT&T  Corporation's  Skynet
satellite  system;  and  (iii)  British  Telecommunications  PLC's  planned
acquisition of MCI Communications Corp.

     Operating  income in CMC for the fourth quarter of 1996 is expected to
be lower as CMC seeks to respond to competition by lowering several service
prices.  In addition,  the introduction of Planet 1SM in the fourth quarter
will result in increased start-up costs.

     Despite  anticipated  continued  revenue growth,  CIV expects to incur
another loss in the fourth quarter of 1996.  Projected losses at BelCom and
CIV's newer  ventures are expected to offset  anticipated  improvements  in
operating  income in CIV's  ventures in Argentina and Brazil.  In the third
quarter of 1996, the corporation increased its ownership interest in BelCom
from 72% to 99.4% of BelCom's outstanding voting stock due primarily to the
conversion of certain BelCom  indebtedness  into equity.  Accordingly,  the
corporation will recognize a larger portion of BelCom's projected losses in
the fourth quarter.

     Revenues and operating  income in Technology  Services are expected to
continue at approximately  the same level,  exclusive of royalties from the
license  agreement  booked in the third quarter.  Backlog in the Technology
Services  segment at September  30, 1996 was $265  million,  as compared to
$217 million at September 30, 1995.  Future  earnings  growth in Technology
Services,  however,  will continue to depend upon this segment's ability to
contain costs and complete projects with favorable margins.

     Operating  losses at Ascent are  projected  to be higher in the fourth
quarter of 1996.  This is primarily the result of the acquisition by OCC of
the assets of SpectraVision, Inc. (See Note 8 to the financial statements),
as well as increased  costs in the sports  franchises.  In  addition,  as a
result of the SpectraVision  transaction,  Ascent will no longer be able to
consolidate  the results of OCC for tax  purposes,  which will increase the
effective consolidated tax rate for COMSAT. A number of factors could cause
Ascent's  actual  results  to  differ   materially  from  those  projected,
including,  but not limited to,  unanticipated  costs  associated  with the
SpectraVision  acquisition  or  integration  of  SpectraVision's  and OCV's
businesses,  the level of  ticket  sales and  other  revenues  by  Ascent's
professional sports franchises, and market conditions.

     As a result  of  anticipated  increased  losses at  Ascent,  primarily
caused  by the  deconsolidation  for tax  purposes  of OCC and  anticipated
increased  losses  associated with the  SpectraVision  acquisition,  COMSAT
expects to report a net loss in the fourth quarter.  The Board of Directors
plans to continue to evaluate the corporation's  dividend payment policy on
a quarterly  basis in light of the  corporation's  then  current  operating
performance, market conditions and other relevant factors.


                                     13

<PAGE>



                      LIQUIDITY AND CAPITAL RESOURCES

     The  primary  sources  of cash in the first  nine  months of 1996 were
operations,  short-term  borrowings and insurance  proceeds  related to the
February  1996  launch  failure of the  INTELSAT  708  satellite.  Cash was
expended primarily for property and equipment,  repayment of life insurance
loans,  investment in ICO and dividends.  The corporation's working capital
decreased  from  $221.4  million at December  31, 1995 to $97.6  million at
September 30, 1996.

     The corporation has $26 million  remaining at September 30, 1996 under
a $100 million  medium-term note program,  which is unchanged from year-end
1995.  The  medium-term  note  program  is  part  of a  $200  million  debt
securities shelf registration program initiated in 1994.

     The  corporation  has  access to short-  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 capital structure and debt-financing  activities are
regulated  by the FCC.  The  corporation  is required to submit a financial
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 to filed by the end of
April 1997. The  corporation  was in compliance  with the  short-term  debt
limit as of September  30, 1996 and expects to be in  compliance  with that
guideline  and the other  guidelines,  as modified,  at the  year-end  1996
measurement date.

     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.

                                     14

<PAGE>


PART II.     OTHER INFORMATION

ITEM 1.      LEGAL PROCEEDINGS
             In March 1996, the  corporation  filed a lawsuit  against News
             Corporation,  PanAmSat  Corp.  and  Grupo  Televisa,  S.A.  to
             recover damages arising out of News Corporation's breach of an
             agreement   with  COMSAT  for  satellite   services  (see  the
             corporation's  1995 Form 10-K).  On October 15, 1996, the U.S.
             District  Court  for  Maryland   dismissed  the  corporation's
             complaint  for lack of personal  jurisdiction.  On October 25,
             1996, the corporation  filed a lawsuit alleging  substantially
             the same claims,  including  breach of contract,  violation of
             tariff,  intentional  interference with contractual  relations
             and civil  conspiracy,  against News Corporation and the other
             parties  named  in  the  prior  lawsuit.  In  addition,   News
             Corporation has filed a complaint with the FCC challenging the
             tariff under which the services to News Corporation would have
             been  provided  and upon  which  certain  of the claims in the
             lawsuit are based. The corporation has filed a motion with the
             FCC to hold the FCC action in abeyance  pending the outcome of
             the lawsuit. The FCC has not yet ruled on that motion.

             In  the  third  quarter,   the  corporation  entered  into  an
             agreement with certain  manufacturers of television encryption
             and  decryption  equipment that resolved  patent  infringement
             disputes with those  manufacturers  under a lawsuit previously
             filed by the  corporation  in the U.S.  District Court for the
             Northern  District  of  California.  Revenues  for  the  third
             quarter include  nonrecurring royalty payments of $7.8 million
             related to that agreement.

             See Notes 7 and 8 of this Form  10-Q,  incorporated  herein by
             reference, for a discussion of other litigation.

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. 10 - Material  Contracts -  Agreement,  dated as of
                    July 19,  1996,  between  the  Registrant  and Bruce L.
                    Crockett

                    No. 11 - Computation of Earnings per Share

                    No. 27 - Financial Data Schedule

                                    15
<PAGE>

             (b)    REPORTS ON FORM 8-K

                    Report dated July 19, 1996  announcing  resignation  of
                    the corporation's President and Chief Executive Officer
                    and the election of a successor,  and announcing second
                    quarter  operating  results,  and  the  status  of  the
                    corporation's assessment of strategic alternatives.

                    Report dated September 5, 1996 announcing the dismissal
                    of all counts of an antitrust  lawsuit  brought against
                    the corporation by PanAmSat Corporation in 1989.

                                     16


<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:  November 14, 1996

                                     17


<PAGE>



                                                                 Exhibit 11

                    COMSAT CORPORATION AND SUBSIDIARIES
                     Computation of Earnings Per Share


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

                                                             Quarter Ended                  Nine Months Ended
                                                             September 30,                    September 30,
                                                     -----------------------------     ----------------------------
In thousands, except per share amounts                   1996             1995            1996             1995
-------------------------------------------------------------------------------------------------------------------

PRIMARY
Earnings (loss)                                      $     5,037       $  (15,623)     $   20,146       $    20,962
                                                     ============      ===========     ===========      ===========

Shares:
     Weighted average number of common
          shares outstanding                              48,511           47,457          48,227           47,208
     Add shares issuable from assumed exercise
          of options                                         611                -             777              732
                                                     ------------      -----------     -----------      -----------
     Weighted average shares                              49,122           47,457          49,004           47,940
                                                     ============      ===========     ===========      ===========

Primary earnings (loss) per share                    $      0.10       $    (0.33)     $     0.41       $     0.44
                                                     ============      ===========     ===========      ===========

ASSUMING FULL DILUTION
Earnings (loss)                                      $     5,037       $  (15,623)     $   20,146      $    20,962
                                                     ============      ===========     ===========      ===========

Shares:
     Weighted average number of common
          shares outstanding                              48,511           47,457          48,227           47,208
     Add shares issuable from assumed exercise
          of options                                         612                -             875              855
                                                     ------------      -----------     -----------      -----------
     Weighted average shares                              49,123           47,457          49,102           48,063
                                                     ============      ===========     ===========      ===========

Fully diluted earnings (loss) per share              $      0.10       $    (0.33)     $     0.41       $     0.44
                                                     ============      ===========     ===========      ===========


</TABLE>

                                     18

<PAGE>