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 June 30, 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 [  ]

49,132,000  shares of the Registrant's  common stock were outstanding as of
June 30, 1997.

<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 June 30,   Six Months Ended June 30,
                                                            ----------------------   -------------------------
In thousands, except per share amounts                          1997         1996         1997           1996
--------------------------------------------------------------------------------------------------------------

REVENUES                                                    $141,274     $134,130     $275,100       $264,639
                                                            ---------    ---------    ---------      ---------

Operating expenses:
     Cost of services                                         63,919       61,888      123,837        120,365
     Depreciation and amortization                            44,846       37,863       88,309         73,230
     Research and development                                  2,304        2,633        3,794          4,823
     General and administrative                                6,793        5,529       12,597         12,618
                                                            ---------    ---------    ---------      ---------
     Total operating expenses                                117,862      107,913      228,537        211,036
                                                            ---------    ---------    ---------      ---------

OPERATING INCOME                                              23,412       26,217       46,563         53,603

Interest and other income (expense), net                         798       (4,356)        (210)        (7,320)
Interest expense, net of amounts capitalized                 (10,176)      (8,103)     (19,838)       (15,613)
                                                            ---------    ---------    ---------      ---------
Income from continuing operations before
     taxes, minority interest and extraordinary item          14,034       13,758       26,515         30,670
Income tax expense                                            (5,483)      (6,728)     (10,254)       (13,459)
Minority interest in net losses of consolidated
     subsidiaries                                                547        1,302          936          2,263
                                                            ---------    ---------    ---------      ---------

INCOME FROM CONTINUING OPERATIONS BEFORE
     EXTRAORDINARY ITEM                                        9,098        8,332       17,197         19,474
                                                            ---------    ---------    ---------      ---------
Discontinued operations, net of income tax:
     Loss from operations                                     (5,192)      (2,550)     (17,572)        (4,365)
     Loss on disposal                                        (11,289)           -      (11,289)             -
                                                            ---------    ---------    ---------      ---------
     Total discontinued operations                           (16,481)      (2,550)     (28,861)        (4,365)
Income (loss) before extraordinary item                       (7,383)       5,782      (11,664)        15,109
Extraordinary loss from early extinguishment
     of debt (net of tax)                                     (2,936)           -       (3,946)             -
                                                            ---------    ---------    ---------      ---------
NET INCOME (LOSS)                                           $(10,319)    $  5,782     $(15,610)      $ 15,109
                                                            =========    =========    =========      =========
EARNINGS (LOSS) PER SHARE:
     Income from continuing operations                      $   0.18     $   0.17     $   0.35       $   0.40
     Loss from discontinued operations                         (0.33)       (0.05)       (0.58)         (0.09)
     Extraordinary loss                                        (0.06)           -        (0.08)             -
                                                            ---------    ---------    ---------      ---------
     Net income (loss)                                      $  (0.21)    $   0.12     $  (0.31)      $   0.31
                                                            =========    =========    =========      =========

</TABLE>

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

                                     2

<PAGE>

                    COMSAT CORPORATION AND SUBSIDIARIES
                   Condensed Consolidated Balance Sheets

<TABLE>
<CAPTION>

<S>                                                                      <C>                         <C>    
                                                                           June 30,                December 31,
In thousands                                                                   1997                        1996
----------------------------------------------------------------------------------------------------------------

ASSETS
------

CURRENT ASSETS:
     Cash and cash equivalents                                           $    6,584                  $    7,659
     Receivables                                                            162,266                     132,616
     Other                                                                   18,473                      18,402
     Net assets of discontinued operations                                  176,329                     386,506
                                                                         -----------                 -----------
          Total current assets                                              363,652                     545,183
                                                                         -----------                 -----------

Property and equipment (net of accumulated depreciation
     of $1,067,203 in 1997 and $1,027,437 in 1996)                        1,324,308                   1,322,985
Investments                                                                  87,209                     124,442
Goodwill                                                                     12,801                      13,189
Other assets                                                                112,425                      98,512
                                                                         -----------                 -----------
     Total assets                                                        $1,900,395                  $2,104,311
                                                                         -----------                 -----------

LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
     Current maturities of long-term debt                                $   10,376                  $   13,802
     Commercial paper                                                       161,014                      17,993
     Accounts payable and accrued liabilities                                69,142                      73,314
     Due to related parties                                                  32,554                      42,562
     Other                                                                   18,810                      15,342
                                                                         -----------                 -----------
          Total current liabilities                                         291,896                     163,013
                                                                         -----------                 -----------

Long-term debt                                                              466,630                     578,379
Deferred income taxes and investment tax credits                            124,977                     131,827
Accrued postretirement benefit costs                                         51,350                      50,423
Other long-term liabilities                                                 137,339                     134,523
Minority interest                                                             5,256                       4,329
Preferred Securities issued by subsidiary                                   200,000                     200,000

STOCKHOLDERS' EQUITY:
     Common stock                                                           346,914                     340,691
     Retained earnings                                                      280,595                     502,839
     Treasury stock                                                          (1,377)                     (3,006)
     Other                                                                   (3,185)                      1,293
                                                                         -----------                 -----------
          Total stockholders' equity                                        622,947                     841,817
                                                                         -----------                 -----------
     TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                          $1,900,395                  $2,104,311
                                                                         ===========                 ===========

</TABLE>

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

                                     3
<PAGE>

                    COMSAT CORPORATION AND SUBSIDIARIES
                Condensed Consolidated Cash Flow Statements

<TABLE>
<CAPTION>
<S>                                                              <C><C>
                                                                                     Six Months Ended June 30,
                                                                                  -----------------------------
In thousands                                                                    1997                       1996
---------------------------------------------------------------------------------------------------------------

CASH FLOWS FROM OPERATING ACTIVITIES:
     Net income (loss)                                                                $  (15,610)    $   15,109
     Adjustments  to  reconcile  net  income  (loss) to cash flow of
     continuing operations:
          Depreciation and amortization                                                   88,309         73,230
          Extraordinary loss on extinguishment of debt                                     3,946              -
          Loss from discontinued operations                                               28,861          4,365
     Changes in operating assets and liabilities                                         (19,346)        (1,622)
     Other                                                                                (3,741)         4,023
                                                                                      -----------    -----------
     Net cash provided by continuing operations                                           82,419         95,105
     Net cash used by discontinued operations                                             (5,442)       (22,802)
                                                                                      -----------    -----------
     Net cash provided by operating activities                                            76,977         72,303
                                                                                      -----------    -----------


CASH FLOWS FROM INVESTING ACTIVITIES:
     Purchase of property and equipment                                                 (120,757)      (120,241)
     Investments in unconsolidated businesses                                            (10,092)       (34,170)
     Proceeds from sale of investments                                                     9,060              -
     Proceeds from note on sale of investment                                              6,809              -
     Insurance proceeds from satellite launch failure                                          -         54,443
     Decrease (increase) in INTELSAT ownership                                            20,986         (1,054)
     Decrease in Inmarsat ownership                                                            -          5,746
     Other                                                                                (4,425)         7,072
                                                                                      -----------    -----------
     Net cash used in investing activities                                               (98,419)       (88,204)
                                                                                      -----------    -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
     Common stock issued                                                                   5,792          8,066
     Cash dividends paid                                                                 (12,000)       (18,753)
     Repayment/extinguishment of long-term debt                                         (112,710)        (8,460)
     Net short-term borrowings                                                           143,021              -
     Repayment against company-owned life insurance policies                              (3,736)       (51,443)
     Other                                                                                     -            (16)
                                                                                      -----------    -----------
     Net cash provided by (used for) financing activities                                 20,367        (70,606)
                                                                                      -----------    -----------

Net decrease in cash and cash equivalents                                                 (1,075)       (86,507)
Cash and cash equivalents, beginning of period                                             7,659        109,512
                                                                                      -----------    -----------

Cash and cash equivalents, end of period                                              $    6,584     $   23,005
                                                                                      ===========    ===========

</TABLE>

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

See non-cash dividend discussed in Note 2 to the financial statements.
 
                                     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.   DISCONTINUED OPERATIONS

     The corporation placed Ascent Entertainment Group, Inc. (Ascent),  its
entertainment   subsidiary,   and  substantially  all  of  the  assets  and
operations of COMSAT RSI, Inc. (CRSI), its manufacturing  subsidiary,  into
discontinued  operations  during the second  quarter of 1997. The condensed
consolidated  financial statements have been restated for all prior periods
presented to reflect the results of operations and net assets of Ascent and
CRSI as discontinued operations.

Ascent Entertainment Group
--------------------------

     The corporation  distributed its 80.67%  ownership  interest in Ascent
through  a  tax-free  dividend  to  shareholders  on  June  27,  1997  (the
"Distribution").  COMSAT  shareholders  of record on June 19, 1997 received
0.4888 of a share of Ascent  common  stock for each share of COMSAT  common
stock owned. Ascent was placed in discontinued  operations on May 16, 1997,
the date on which the  corporation's  Board of  Directors  adopted a formal
plan to effect the Distribution. The book value of the net assets of Ascent
totaled  approximately  $195 million at June 27, 1997 and  consisted of the
following:

<TABLE>
<CAPTION>
<S>                                                         <C>
In millions
--------------------------------------------------------------------
Current assets                                              $  89.2
Property and equipment, net                                   308.2
Intangible and other assets                                   343.3
Short-term debt                                               176.0
Other current liabilities                                     151.3
Long-term debt                                                 50.0
Other non-current liabilities                                 168.8
                                                            --------
Net assets                                                  $ 194.6
                                                            ========

</TABLE>

     The  non-cash  dividend  was  recorded  as an  adjustment  to retained
earnings.

                                     5

<PAGE>

     The operating  results of the discontinued  entertainment  operations,
net of  minority  interests,  are  summarized  below.  The loss on disposal
includes  Ascent's  operating loss  subsequent to May 16, 1997 through June
27, 1997 of $7.4 million,  and costs of $4.1 million  incurred by COMSAT to
facilitate the  distribution.  The tax expense  associated with the loss on
disposal  also includes a charge of $4.4 million to recognize an additional
tax provision on deferred  inter-company gains while Ascent was included in
COMSAT's consolidated tax return.

COMSAT RSI, Inc.
----------------

     CRSI was placed in  discontinued  operations  as of June 30, 1997.  As
part of its strategic  plan, the  corporation has announced that it intends
to sell  substantially  all of the  assets  and  operations  of  CRSI.  See
"Management's   Discussion   and   Analysis   --Outlook."   CRSI   designs,
manufacturers  and  integrates  earth  stations  as  well as  wireless  and
advanced antenna systems.

     The operating results of the discontinued operations for the three and
six months ended June 30, 1997 and June 30, 1996 are summarized below.

<TABLE>
<CAPTION>
<S>                                                         <C>     <C>    <C>       <C>       <C>   <C>
                                                                             Three Months Ended June 30,
                                                            ------------------------------------------------------
In millions                                                            1997                      1996
------------------------------------------------------------------------------------------------------------------
                                                             Ascent    CRSI    Total      Ascent    CRSI    Total
                                                            -------  -------  -------    -------  -------  -------

Revenues                                                    $ 87.7   $ 61.1   $148.8     $ 56.0   $ 49.0   $105.0
                                                            =======  =======  =======    =======  =======  =======

Income (loss) from operations before     
     taxes and minority interest                            $ (6.7)  $ (2.7)  $ (9.4)    $ (8.4)  $  2.9   $ (5.5)
Income tax benefit (expense)                                   0.6      1.1      1.7        2.6     (0.9)     1.7
Minority interest                                              2.2      0.3      2.5        1.1      0.1      1.2
                                                            -------  -------  -------    -------  -------  -------
Income (loss) from operations                                 (3.9)    (1.3)    (5.2)      (4.7)     2.1     (2.6)
                                                            -------  -------  -------    -------  -------  -------

Loss on disposal before taxes                                (11.5)            (11.5)
Income tax benefit (expense)                                  (2.0)             (2.0)
Minority interest                                              2.2               2.2
                                                            -------  -------  -------
Loss on disposal                                             (11.3)       -    (11.3)
                                                            -------  -------  -------

Income (loss) on discontinued
     operations                                             $(15.2)  $ (1.3)  $(16.5)    $ (4.7)  $  2.1   $ (2.6)
                                                            =======  =======  =======    =======  =======  =======

</TABLE>

                                     6
<PAGE>

<TABLE>
<CAPTION>
<S>                                                         <C>       <C>     <C>        <C>       <C>     <C>
                                                                             Six Months Ended June 30,
                                                            -------------------------------------------------------
In millions                                                            1997                      1996
-------------------------------------------------------------------------------------------------------------------
                                                             Ascent    CRSI    Total      Ascent    CRSI    Total
                                                            -------  -------  -------    -------  -------  --------

Revenues                                                    $177.5   $121.3   $298.8     $128.4   $ 94.7    $223.1
                                                            =======  =======  =======    =======  =======   =======

Income (loss) from operations before
     taxes and minority interest                            $(34.7)  $(0.4)   $(35.1)    $(13.8)  $  4.9    $ (8.9)
Income tax benefit (expense)                                   6.2     0.2       6.4        4.2     (1.5)      2.7
Minority interest                                             10.7     0.4      11.1        1.7      0.1       1.8
                                                            -------  ------   -------    -------  -------   -------
Income (loss) from operations                                (17.8)    0.2     (17.6)      (7.9)     3.5      (4.4)
                                                            -------  ------   -------    -------  -------   -------


Loss on disposal before taxes                                (11.5)            (11.5)
Income tax benefit (expense)                                  (2.0)             (2.0)
Minority interest                                              2.2               2.2
                                                            -------  ------   -------
Loss on disposal                                             (11.3)     -      (11.3)
                                                            -------  ------   -------


Income (loss) on discontinued
     operations                                             $(29.1)  $ 0.2    $(28.9)    $(7.9)   $  3.5   $ (4.4)
                                                            =======  ======   =======    ======   =======  =======

</TABLE>

     The net assets of the discontinued operations are summarized below:

<TABLE>
<CAPTION>
<S>                   <C><C> <C><C> <C><C> <C><C>  <C><C> <C><C>
                                                            June 30, 1997                December 31, 1996
                                                            -------------       ----------------------------------
In millions                                                     CRSI               Ascent      CRSI      Total
------------------------------------------------------------------------------------------------------------------

Current assets                                                $184.5               $ 83.4      $174.4    $257.8
Fixed assets, net                                               32.0                301.5        32.3     333.8                     
Intangible and other assets                                     14.4                 12.9       351.4     364.3
Short-term debt                                                  0.3                  0.4       145.5     145.9
Other current liabilities                                       44.4                 39.3       143.6     182.9
Long-term debt                                                   6.6                 52.0         5.1      57.1
Other non-current liabilities                                    3.3                  4.6       178.9     183.5
                                                              -------              -------     -------   -------
Net assets discontinued operations                            $176.3               $216.3      $170.2    $386.5
                                                              =======              =======     =======   =======

</TABLE>

3.   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 June 30,  1997.  As a result of the change
in  ownership,  the  corporation  is  expected  to receive a total of $23.0
million, of which $21.0 million was received during the first six months of
1997.

     The  corporation's 23% ownership share of Inmarsat as of June 30, 1997
is unchanged from December 31, 1996.

4.   INVESTMENTS

     In January  1997,  the  corporation  sold its  remaining  interest  in
Philippine Global Communications,  Inc. (PhilCom) at book value in exchange

                                     7
<PAGE>

for cash and a collateralized note receivable totaling $34.3 million, to be
paid  in  installments   with  interest  through  December  31,  1998.  The
corporation  received cash proceeds of $8.5 million in the first quarter of
1997 and $8.8 million in July 1997.

     In the second quarter of 1997, the corporation sold certain marketable
equity securities and recognized a $2.0 million pre-tax gain.

5.   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 the description of the corporation's  "Business" and Notes
10 and 11 to the corporation's 1996 financial  statements  included as part
of the corporation's  1996 Form 10-K and the  "Management's  Discussion and
Analysis -- Outlook" section of the Form 10-Q.

     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 of those matters are discussed in Notes 10 and 11
to  the  corporation's  1996  financial  statements  and  "Item  3 -  Legal
Proceedings" included as part of the corporation's 1996 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 in an anti-trust suit brought
by PanAmSat  Corporation  and  dismissed  the  complaint  in its  entirety.
PanAmSat  subsequently  filed an appeal.  In April 1997,  the U.S. Court of
Appeals for the Second Circuit denied PanAmSat's appeal.

6.   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.  The corporation  repurchased $89.5 million of
the 8.125%  notes and $10.0  million of its 7.7%  medium  term notes  using
proceeds from short-term debt. The debt  extinguishment loss related to the
repurchases  was $4.6  million  ($2.9  million  after tax) and $6.2 million
($3.9  million after tax) for the three and six months ended June 30, 1997,
respectively.

                                     8
<PAGE>

7.   NEW ACCOUNTING PRONOUNCEMENTS

     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 15, 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  is not
expected to have a material effect on the corporation's reported net income
(loss) per common share.

     In  June  1997,  the  Financial   Accounting  Standards  Board  issued
Statement   of  Financial   Accounting   Standards   No.  130,   "Reporting
Comprehensive  Income" (SFAS No. 130) and Statement of Financial Accounting
Standards No. 131, "Disclosures about Segments of an Enterprise and Related
Information"  (SFAS  No.  131).  SFAS  No.130  establishes   standards  for
reporting and display of comprehensive income and its components (revenues,
expenses,  gains and  losses)  in a full set of  general-purpose  financial
statements.  SFAS No. 131 establishes standards for the way public business
enterprises  report  information  about operating  segments and the related
disclosures  about  products  and  services,  geographic  areas,  and major
customers.  Both statements are effective for financial  statements  issued
for fiscal years  beginning  after  December 15, 1997.  The  corporation is
reviewing  what  effect the new  standards  will have on future  reporting;
however,  the new  standards  will  not  have any  material  effect  on the
corporation's financial condition.


                                     9
<PAGE>

ITEM 2.     MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
            RESULTS OF OPERATIONS FOR THE QUARTER ENDED JUNE 30, 1997

                           ANALYSIS OF OPERATIONS

Consolidated Operations
-----------------------

     During the second quarter of 1997, the corporation  placed both Ascent
Entertainment  Group,  Inc.  (Ascent) and  substantially all of COMSAT RSI,
Inc.  (CRSI)  in  discontinued   operations.   The  condensed  consolidated
financial  statements  (unaudited)  have  been  restated  for  all  periods
presented to reflect them as discontinued operations.

Continuing Operations
---------------------

     In the second quarter of 1997, the corporation  realigned its business
segments and for that and subsequent  periods will report operating results
from its  continuing  operations in two segments -- Satellite  Services and
Network Services. The Satellite Services segment includes both COMSAT World
Systems (CWS) and COMSAT Mobile  Communications (CMC). The Network Services
segment  includes  COMSAT   International  (CI),  COMSAT  Laboratories  and
Government  Programs.  COMSAT  Laboratories and Government Programs results
now include certain non-manufacturing business that was previously reported
as part of CRSI.

     Consolidated revenues from continuing operations in the second quarter
were $141.3 million, an increase of $7.2 million over the second quarter of
1996.  The increase came  predominantly  in the Network  Services  segment.
Revenues from  continuing  operations in the six months ended June 30, 1997
were $275.1  million,  $10.5 million higher than the same period last year.
This  improvement  was the result of a 50%  increase  in  Network  Services
revenues,  which was partially  offset by a decrease in Satellite  Services
due to lower revenues in CMC.

     Operating income from continuing operations for the second quarter and
year-to-date were $23.4 million and $46.6 million, respectively,  which was
below the comparable periods of last year by $2.8 million and $7.0 million.
The declines in both periods  resulted from lower  operating  income in CMC
offset,  in part, by improvements in the Network  Services segment and CWS.
Also affecting operating income in the second quarter were expenses of $1.8
million  related to a  potential  proxy  contest  which was  settled in the
second  quarter and litigation  costs of $1.5 million  related to an action
brought  against  certain of the proxy  contestants  and the  corporation's
former  chief  executive  officer  to  enforce  certain  provisions  of the
Communications  Satellite  Act of  1962,  which  action  was  dismissed  in
connection with settlement of the proxy contest. For additional information
concerning  settlement  of the proxy contest and such  litigation,  see the
corporation's Form 8-K dated June 9, 1997.

     Interest  and  other  income  (expense)  for the  second  quarter  and
year-to-date were income of $800,000 and expense of $200,000, respectively,
compared  to net  expense of $4.4  million  and $7.3  million  for the same
periods in 1996. The  improvements in both periods stems primarily from the
impact of sales of equity investments and increased interest income.

                                    10

<PAGE>

     Interest expense, net of amounts  capitalized,  for the second quarter
and  first  six  months  of 1997  was  $10.2  million  and  $19.8  million,
respectively,  which was $2.1  million  and $4.2  million  higher  than the
comparable  periods  last year.  The  increases  reflect  reduced  interest
capitalized due to the completion of several satellite projects.

     The consolidated tax rate on income from continuing  operations before
taxes,  minority  interest  and  extraordinary  item,  for both the  second
quarter and year-to-date,  has improved over the comparable periods of last
year principally because of a net reduction in non-deductible items.

     The  change  in  minority  interest  in  net  losses  of  consolidated
subsidiaries primarily reflects the increased ownership of CI operations in
Russia.

     Income from continuing  operations before  extraordinary  item for the
second  quarter  was $9.1  million  ($0.18 per share),  which was  $800,000
($0.01 per share)  better  than the  second  quarter of 1996.  Year-to-date
income  from  continuing  operations  before  extraordinary  item was $17.2
million  ($0.35 per share),  $2.3 million  ($0.05 per share) below the same
period last year.

     Extraordinary loss from early  extinguishment of debt, net of tax, for
the second quarter and  year-to-date was $2.9 million ($0.06 per share) and
$3.9 million  ($0.08 per share),  respectively.  This  represents the costs
incurred from the  corporation's  repurchase of $89.5 million of its 8.125%
notes  and  $10.0  million  of its  Medium  Term  Notes  (see Note 6 to the
financial statements). Of the 8.125% notes purchased through a fixed-spread
tender offer, $66.5 million was tendered during the second quarter of 1997.

Discontinued Operations
-----------------------

     The loss from  discontinued  operations,  net of tax,  for the  second
quarter  was $16.5  million  ($0.33 per share)  compared  to a loss of $2.6
million ($0.05 per share) for the same period last year. For the six months
ended June 30, 1997,  the loss was $28.9 million ($0.58 per share) versus a
loss  of $4.4  million  ($0.09  per  share)  in the  first  half  of  1996.
Discontinued operations include both Ascent and substantially all of CRSI.

     Ascent  was placed in  discontinued  operations  on May 16,  1997 when
COMSAT's Board of Directors approved a plan to distribute the corporation's
80.67%  interest  in Ascent to  COMSAT's  shareholders.  On June 27,  1997,
COMSAT completed the spin-off of Ascent as a tax-free  dividend to COMSAT's
shareholders.  The loss on  disposal  of Ascent  ($11.3  million)  includes
COMSAT's  share of Ascent's  operating  losses  subsequent  to May 16, 1997
through  June  27,  1997,  costs  incurred  by  COMSAT  to  facilitate  the
distribution   and   additional   tax  provision   recognized  on  deferred
inter-company  gains when COMSAT divested its ownership in Ascent. See Note
2 to the financial statements.

     COMSAT placed substantially all of CRSI in discontinued  operations on
June 30, 1997.  The results  reported  for CRSI for the second  quarter and
first six  months of 1997  include  the  results of their  operations.  See
"Management Discussions and Analysis --Outlook" and Note 2 to the financial
statements.

                                    11

<PAGE>

Consolidated Results
--------------------

     On a consolidated  basis,  including  discontinued  operations and the
extraordinary  item, the net loss for the second quarter was $10.3 million,
or $0.21 per share,  compared with net income of $5.8 million, or $0.12 per
share, in the same period last year.  Through the first six months of 1997,
the consolidated net loss was $15.6 million, or $0.31 per share, versus net
income of $15.1  million,  or $0.31 per share,  in the same  period of last
year.

Segment Operating Results
-------------------------

     As noted  above,  effective  as of the  second  quarter  of 1997,  the
corporation is reporting  operating  results from continuing  operations in
two segments: Satellite Services and Network Services.

RESULTS BY SEGMENT:

<TABLE>
<CAPTION>
<S>                                             <C>       <C>                    <C>        <C>
                                             Quarter Ended June 30,        Six Months Ended June 30,
                                             ----------------------        -------------------------
In millions                                     1997      1996                    1997      1996
----------------------------------------------------------------------------------------------------

REVENUES
--------
Satellite Services:
     World Systems                            $ 66.5    $ 67.5                   $133.3   $133.1
     Mobile Communications                      38.5      39.3                     73.7     81.9
                                              -------   -------                  -------  -------
     Total Satellite Services                  105.0     106.8                    207.0    215.0
                                              -------   -------                  -------  -------

Network Services:
     International                              21.0      12.3                     37.4     24.2
     Laboratories                                9.8       5.0                     17.9     10.1
     Government Programs                        14.9      13.2                     29.6     22.1
                                              -------   -------                  -------  -------
     Total Network Services                     45.7      30.5                     84.9     56.4
                                              -------   -------                  -------  -------

Eliminations and other                          (9.4)     (3.2)                   (16.8)    (6.8)
                                              -------   -------                  -------  -------
     Total revenues                           $141.3    $134.1                   $275.1   $264.6
                                              =======   =======                  =======  =======

OPERATING INCOME (LOSS)
-----------------------
Satellite Services:
     World Systems                            $ 27.2    $ 24.1                   $ 55.3   $ 49.7
     Mobile Communications                      5.4       11.4                     10.9     25.3
                                              -------   -------                  -------  -------
     Total Satellite Services                  32.6       35.5                     66.2     75.0
                                              -------   -------                  -------  -------

Network Services:
     International                             (2.1)      (4.6)                    (6.6)    (8.5)
     Laboratories                              (0.2)      (0.9)                    (0.3)    (1.9)
     Government Programs                        0.5        1.5                      0.8      2.1
                                              -------   -------                  -------  -------
     Total Network Services                    (1.8)      (4.0)                    (6.1)    (8.3)
                                              -------   -------                  -------  -------

     Total segment operating income            30.8       31.5                     60.1     66.7
General and administrative expense             (6.8)      (5.5)                   (12.6)   (12.6)
Other                                          (0.6)       0.2                     (0.9)    (0.5)
                                              -------   -------                  -------  -------
     Total operating income                   $ 23.4    $ 26.2                   $ 46.6   $ 53.6
                                              =======   =======                  =======  =======

</TABLE>

                                    12

<PAGE>

Satellite Services
------------------

     Revenues in the Satellite  Services  segment in the second quarter and
year-to-date  were $105.0 million and $207.0 million,  respectively,  which
was $1.8  million  and $8.0  million  below  the same  periods  last  year.
Operating  income for the second  quarter  and first six months of 1997 was
$32.6 million and $66.2  million,  respectively,  a decline of $2.9 million
and $8.8 million from the same periods of 1996.

     CWS  revenues  for the second  quarter and first six months of 1997 at
$66.5  million  and $133.3  million,  respectively,  which was 1% below the
second  quarter of 1996 and was  essentially  unchanged  from the first six
months of last year.  Increased  revenues from Very Small Aperture Terminal
(VSAT) leases and International  Business Service (IBS) traffic were offset
by declines in full-time voice and fiber-optic cable restoration  revenues.
The  lower  voice  revenues  stemmed  primarily  from  rate  reductions  in
long-term  carrier  contracts.  Operating income for the second quarter was
$27.2 million and for the  year-to-date  was $55.3 million,  up 13% and 11%
from the  comparable  periods last year. The increase in the second quarter
primarily  reflects  the recovery of  litigation  costs.  In addition,  the
year-to-date  increase  reflects  improved  earnings on  carrier-to-carrier
contracts,  offset in part,  by  increased  depreciation  from  placing  in
service two  INTELSAT  satellites  in the second half of 1996 and the first
half of 1997.

     Revenues in CMC were $38.5 million in the second quarter, a decline of
2% compared to the second  quarter of last year. For the  year-to-date  CMC
revenues were $73.7  million,  10% below the same period of last year.  The
lower revenues were  primarily the result of decreases in analog  telephone
transmissions and lower volume in the bulk service contract with IDB Mobile
Communications  (IDB).  CMC's  operating  income for the second quarter was
$5.4 million and $10.9  million  year-to-date,  down $6.0 million and $14.4
million from the respective  periods of 1996. The lower 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.

Network Services
----------------

     Network   Services   segment   revenues  in  the  second  quarter  and
year-to-date were $45.7 million and $84.9 million, respectively,  which was
$15.2 million and $28.5 million  better than the same periods of 1996.  The
operating losses in the second quarter and for the first six months of 1997
were $1.8 million and $6.1 million,  respectively,  an  improvement of $2.2
million for both periods over last year.

     CI's  revenues  in the  second  quarter  and  year-to-date  were $21.0
million and $37.4 million,  respectively,  70% and 54% better than the same
periods of last year.  Revenue  increases were driven primarily by advances
in CI operations in Argentina and Brazil. CI's operating loss in the second
quarter  improved  from $4.6 million in the second  quarter of 1996 to $2.1
million in the same period this year  because of  increases  in revenues in
the Americas  region and improved  operational  performance  in the Russian
company  (BelCom).  For the first six months of 1997, the operating loss of
$6.6 million,  was $1.9 million better than the  comparable  period of last
year. CI's revenue  commitments under long-term contracts were $254 million
at June 30, 1997, compared to $220 million at December 31, 1996.

                                    13

<PAGE>

     In May 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.  In January 1997, CI sold its
remaining interests in Philippine Global Communications,  Inc. (PhilCom) at
book value (see Note 4 to the financial statements).

     COMSAT Laboratories'  revenues for the second quarter and year-to-date
were $9.8  million  and $17.9  million,  up 95% and 78%  compared  with the
respective  periods  of  1996.  The  increases  were  primarily  driven  by
improvements in technical consulting  revenues.  The operating loss for the
second  quarter  and the  first  six  months  was  $200,000  and  $300,000,
respectively,  which was  $700,000  and $1.6  million  better than the same
periods in 1996.  The  improved  operating  performance  was as a result of
increased revenues and lower R&D expenditures. The Laboratories' backlog at
June 30, 1997 was $24  million,  which was 65% higher than at the same time
last year.

     Government  Programs revenues in the second quarter of 1997 were $14.9
million,  which was $1.7 million  better than the same period of last year.
For the year-to-date,  revenues were $29.6 million,  which was $7.5 million
higher  than  last  year.  The  increased  revenues  were  related  to  the
Commercial  Satellite  Communications  Initiative  (CSCI) contract and were
offset by lower revenues from two Marisat  satellites that ceased operating
in the second half of 1996 after 20 years of operations.  Operating  income
for  the  second  quarter  and  year-to-date  was  $500,000  and  $800,000,
respectively, which was $1.0 million and $1.3 million below the comparative
periods in 1996. The lower operating income was primarily the result of the
impact  of  lower  revenues  from the loss of the  Marisat  satellites  and
increased costs associated with the CSCI contract.

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 March 1997,  COMSAT's Board of Directors  approved a strategic plan
to refocus the corporation on international  satellite services and digital
networking  services and technology as discussed in the corporation's  1996
Annual Report on Form 10-K. As a part of the strategic plan the corporation
reaffirmed  its decision to divest its ownership  interest in Ascent,  sell
substantially  all of the assets and operations of CRSI, and other non-core
assets.  On June  27,  1997,  the  corporation  distributed  its  ownership
interest in Ascent to its shareholders by means of a spin-off.  The company
expects to  complete  the sale of  substantially  all of CRSI by the end of
1997. It is anticipated that CRSI will be sold in at least two pieces.  The
timing, estimated sale proceeds and completion of those sales, however, are
subject  to, and could be  affected  adversely  by,  factors  which are not
wholly  within the  control of the  corporation  (e.g.,  completion  of due
diligence  by  the  prospective   purchasers,   negotiation  of  definitive
agreements on mutually acceptable

                                    14

<PAGE>

terms,  receipt of any necessary  third party consents and  satisfaction of
any  conditions  which  may be  agreed  to by the  parities  as part of the
definitive terms).

     The Board of  Directors  declared a  quarterly  dividend  of $0.05 per
share on the  corporation's  common  stock  in the  second  quarter,  which
represents a reduction  from the $0.195 per share paid in recent  quarters.
The Board of Directors  determines the dividend on the corporation's common
stock  quarterly  based  on  the  corporation's  earnings  from  continuing
operations, capital requirements and other factors.

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

Satellite Services
------------------

     Satellite  Services  operating  income is  expected  to continue to be
lower in 1997 than in 1996 due to anticipated decreased earnings at CMC.

     CWS's  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 and the recovery in the second quarter of 1997
of certain  litigation costs,  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  compared to
1996,  because of continuing  competition  among existing  Inmarsat service
providers,  increased  depreciation  associated with Inmarsat-3  satellites
placed in  service  during  1996 and 1997 and costs  related  to Planet 1SM
service, which began commercial operations in January 1997.

Network Services
----------------

     Network   Services   1997   operating   losses  are   expected  to  be
approximately  at the same  level as last  year,  excluding  the  impact to
operating  income  of $7.8  million  in  revenues  at  COMSAT  Laboratories
associated with the resolution of a patent dispute that was recorded in the
third quarter of 1996.

     CI's  operating  loss  in 1997  is  expected  to  improve  over  1996.
Improvements  in CI's more mature  companies  are  expected to be partially
offset by start-up costs in CI's newer companies. The corporation is in the
process of either seeking a strategic  partner or selling the non-strategic
portions  of  BelCom's  operations  in Russia  and in the  Commonwealth  of
Independent  States.  It is anticipated that this process will be completed
before the end of 1997.

     Excluding  the impact to  operating  income  from the patent  revenues
noted above, COMSAT  Laboratories  operating loss in 1997 is expected to be
higher  than  1996.  COMSAT  Laboratories  results  now  include  Satellite
Construction  Monitoring  (SCM) which was previously  reported as a part of
CRSI. SCM's operating income in 1997 is expected to be lower than 1996.


                                    15
<PAGE>

     Government  Programs  operating income is expected to be lower in 1997
than last year  because of the loss of revenues  related to two 20-year old
Marisat  satellites  which ceased operation in the second half of 1996, and
costs associated with the CSCI contract.

                      LIQUIDITY AND CAPITAL RESOURCES

     The primary  sources of cash in the six months of 1997 were operations
and  short-term  borrowings.  Cash was used  primarily  for the purchase of
property and equipment.

     The corporation's  working capital at June 30, 1997 was $71.8 million,
which was $310.4  million lower than at December 31, 1996.  The decrease in
working  capital  during  the first six  months of 1997 was  primarily  the
result of the  reduction  in current  assets of $216.3  million  due to the
spin-off  of Ascent  on June 27,  1997 and the use of  commercial  paper to
repurchase long-term debt (see Note 6 to the financial statements).

     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 $161.0
million in borrowings  outstanding at June 30, 1997. 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.  A $200
million  credit  agreement,  expiring in 1999,  backs up the  corporation's
commercial paper program.

     During the first six months of 1997,  the  corporation  repurchased  a
total of $89.5  million of its 8.125%  notes due 2004 using  proceeds  from
short-term  debt.  This reduced the total  outstanding  of the 8.125% notes
from $160.0 million at December 31, 1996 to $70.5 million June 30, 1997. In
addition,  the corporation in the second quarter  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 to $64.0 million
at June 30, 1997. The  corporation  had $36 million  remaining under a $100
million  medium-term  note program at June 30, 1997. The  medium-term  note
program  is part  of a $200  million  debt  securities  shelf  registration
program initiated in 1994.

     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. In August 1997, the FCC
approved the corporation's 1997 capitalization plan. Under the approved 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.  The  corporation  was in  compliance  with the $200
million short-term debt limit as of June 30, 1997. The corporation  expects
to be in  compliance  with  the  other  guidelines  at  the  year-end  1997
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.

                                    16

<PAGE>

PART II.     OTHER INFORMATION

ITEM 1.   Legal Proceedings
          -----------------
          See Note 5 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 April 21, 1997, reporting certain amendments to
               the Corporation's  By-laws and scheduling the Annual Meeting
               of Shareholders for August 15, 1997.

               Report dated April 30, 1997, reporting the resignation of C.
               J. Silas as chairman  and a member of the Board of Directors
               and the election of Edwin I. Colodny to serve as chairman.

               Report dated May 16, 1997,  reporting the Board of Directors
               approval of a plan to distribute  the  corporation's  80.67%
               ownership  interest in Ascent  Entertainment  Group, Inc. to
               its shareholders through a tax-free dividend.

               Report dated June 9, 1997,  reporting a settlement agreement
               with  Herbert A.  Denton,  Guy P.  Wyser-Pratte  and certain
               other  persons and  entities  (collectively,  the  "Group"),
               pursuant to which existing  disputes  between COMSAT and the
               Group were resolved.


                                    17

<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:  August 14, 1997


                                    18

<PAGE>


                                                            Exhibit 11
                    COMSAT CORPORATION AND SUBSIDIARIES
                     Computation of Earnings Per Share


<TABLE>
<CAPTION>
<S>                                                        <C>         <C>                          <C>      <C>
                                                         Three Months Ended June 30,          Six Months Ended June 30,
                                                       ---------------------------          ---------------------------
In thousands, except per share amounts                      1997      1996                          1997     1996
-----------------------------------------------------------------------------------------------------------------------

PRIMARY
-------
Earnings (loss):
     Income from continuing operations                      $  9,098    $  8,332                 $ 17,197    $ 19,474
     Loss from discontinued operations                       (16,481)     (2,550)                 (28,861)     (4,365)
     Extraordinary loss                                       (2,936)          -                   (3,946)          -
                                                            ---------   ---------                ---------   ---------
     Net income (loss)                                      $(10,319)   $  5,782                 $(15,610)   $ 15,109
                                                            =========   =========                =========   =========
Shares:
     Weighted average number of common
          shares outstanding                                  49,152      48,267                  49,050       48,086
     Add shares issuable from assumed
          exercise of options                                    460       1,078                     584          859
                                                            ---------   ---------                ---------   ---------
Weighted average shares                                       49,612      49,345                  49,634       48,945
                                                            =========   =========                =========   =========

Primary earnings (loss) per share:
     Income from continuing operations                     $    0.18    $   0.40                 $  0.17      $  0.35
     Loss from discontinued operations                         (0.33)      (0.05)                  (0.58)       (0.09)
     Extraordinary loss                                        (0.06)          -                   (0.08)           -
                                                            ---------   ---------                ---------   --------- 
     Net income (loss)                                     $   (0.21)   $   0.12                 $ (0.31)     $  0.31
                                                            =========   =========                =========   =========

ASSUMING FULL DILUTION
----------------------

Earnings (loss):
     Income from continuing operations                     $  9,098     $  8,332                 $ 17,197     $ 19,474
     Loss from discontinued operations                      (16,481)      (2,550)                 (28,861)      (4,365)
     Extraordinary loss                                      (2,936)           -                   (3,946)           -
                                                           ----------   ---------                ---------   ---------
     Net income (loss)                                     $(10,319)    $  5,782                 $(15,610)    $ 15,109
                                                            =========   =========                =========   =========
Shares:
     Weighted average number of common
          shares outstanding                                 49,152       48,267                   49,050       48,086
Add shares issuable from assumed
     exercise of options                                        529        1,085                      609        1,060
                                                            ---------   ---------                ---------   ---------
Weighted average shares                                      49,681       49,352                   49,659       49,146
                                                            =========   =========                =========   =========

Fully diluted earnings (loss) per share:
     Income from continuing operations                     $   0.18     $   0.17                  $  0.35     $  0.40
     Loss from discontinued operations                        (0.33)       (0.05)                   (0.58)      (0.09)
     Extraordinary loss                                       (0.06)           -                    (0.08)          -
                                                            ---------   ---------                ---------   ---------
     Net income (loss)                                     $  (0.21)    $   0.12                   $(0.31)    $  0.31
                                                            =========   =========                =========   =========

</TABLE>

                                     19