and RCA, which together have 550,000, something like that, the rest are very small holdings. The total is less than 100,000 shares divided among more than 100 carriers. It, really, wouldn't affect the implementation of this bill if they were all sold, and certainly we have no indication at all from these three major carriers left in with large holdings that they have any sales in mind. Mr. WATSON. Thank you, sir. The CHAIRMAN. Are there any further questions? Mr. Moss. I would like to make one further comment on this matter raised very briefly by Mr. Watson. The I.T. & T. sale was, in part, was it not, aimed at a proposed acquisition of ABC and was done because of a need for ABC; am I correct? Mr. McCORMACK. I have no knowledge on that. As I recall, the I.T. & T. announcement at the time related more to other developments. Mr. Moss. This was the other development. I think we should bear in mind the conditions which appeared to have dictated the actions taken by I.T. & T. Well, the company has been engaged in quite a number of very expensive acquisitions of various sorts. The CHAIRMAN. Thank you very much. Mr. McCORMACK. Thank you, sir. The CHAIRMAN. Our next witness will be Mr. James D. O'Connell. I understand you have a prepared statement which you wish to put in the record. Do you have a short statement to make, sir? We are glad to have you with us. Mr. O'Connell is the Director of the Telecommunications Management of the Office of Emergency Planning. Identify yourself if you would and the man you have with you. STATEMENT OF JAMES D. O'CONNELL, DIRECTOR, TELECOMMUNICATIONS MANAGEMENT, EXECUTIVE OFFICE OF THE PRESIDENT; ACCOMPANIED BY JOHN J. O'MALLEY, JR., LEGAL COUNSEL Mr. O'CONNELL. I would like to introduce Mr. John O'Malley, my counsel. In view of the very complete statement which you made, Mr. Chairman, and of the discussion made by Mr. McCormack, I think it would be redundant for me to read this statement, and I request that it simply be put in the record. The CHAIRMAN. That will be done. (Mr. O'Connell's prepared statement follows:) STATEMENT OF JAMES D. O'CONNELL, DIRECTOR OF TELECOMMUNICATIONS MANAGEMENT, EXECUTIVE OFFICE OF THE PRESIDENT Mr. Chairman and members of the committee, it is a pleasure to appear before this Committee and testify in favor of H.R. 4214. The proposed legislation should be enacted as soon as possible to correct an imbalance in the membership of the Comsat Board of Directors which was primarily created by recent sales of large blocks of Comsat stock by one of the carrier shareholders, ITT. In view of the fact that the changes proposed in H.R. 4214 are clearly necessary and do not involve any major policy issue which might be inconsistent with the basic purposes of the Communications Satellite Act, these comments will be as brief as possible. H.R. 4214 would amend the Communications Satellite Act of 1962 so that shareholder representation on the Comsat Board of Directors would be more closely correlated to the actual ownership of stock by the common carriers and the public shareholders. H.R. 4214 does not involve any change of a policy nature, but simply corrects an inequity which was not contemplated in the Communications Satellite Act. Passage of this bill would not preclude any future action regarding Comsat which Congress might wish to take. At present, as the Comsat Chairman has pointed out, the Board of Directors is composed of 15 members, of which three are appointed for 3-year terms by the President, with the advice and consent of the Senate. The remaining 12 members are elected by the Comsat shareholders. Six are elected by the public shareholders, and six are eligible for election by the carrier shareholders. It is emphasized that six directors are eligible for election by the carriers, because at present there are two vacancies on the Board. These vacancies exist because, after the sale of Comsat stock by ITT, the two directors representing ITT on the Board chose to resign. It would seem only fair, not only to the Comsat Corporation but to the public shareholders, that a suitable formula be developed so that when the carrier holdings in Comsat drop below certain specified points their representation on the Board of Directors should be commensurately reduced. The table established in the bill would provide for an equal number of carrrie and "public" directors when carrier holdings would be no less than 45% of the outstanding Comsat common stock. A proportionate reduction in carrier representation on the Board of Directors would be made when the percentage of stock owned by the carriers should decrease below certain points. There is one additional provision in H.R. 4214 which is important and deserving of comment. This involves the last sentence of Section 1 of the bill. That sentence authorizes Comsat to adopt such by-laws as may be necessary for the Comsat Board of Directors to transact business in a national emergency. It is understood that under the present District of Columbia Business Corporation Act, eight of the fifteen members of the Board of Directors must be present in order to constitute a quorum for doing business. This bill would permit the Board to transact business even if eight members were not present. It would seem wise to provide in the Act for flexibility of decisionmaking in times of emergency. The remainder of the bill involves the manner in which the details of the basic provisions will be worked out. In summary, the provisions of H.R. 4214 seem reasonable and fair to all concerned. Passage of this bill is therefore recommended. Mr. O'CONNELL. I can make my remarks very brief, indeed, by simply saying that it is the coordinated view of the executive branch that this bill is needed and should be supported and request it be expedited in view of the circumstances. The CHAIRMAN. All right, sir. Are there any questions of Mr. O'Connell? You are in complete agreement with the bill and have no objection? Mr. O'CONNELL. Yes, Mr. Chairman. The CHAIRMAN. If there are no questions, we want to thank you for coming and being with us. Our next witness is not here for the purpose of testifying. He is Mr. Kenneth Cox, Commissioner of the Federal Communications Commission, who is here if there are any questions. I understand the rest of the Commission is testifying this morning before the Appropriations Committee and that you are representing them here this morning. 139 STATEMENT OF HON. KENNETH A. COX, COMMISSIONER, FED- Mr. Cox. That is right, Mr. Chairman, Chairman Hyde asked me to express his regrets. The CHAIRMAN. Would you identify yourself for the record and identify the gentleman you have with you? Mr. Cox. I am Kenneth A. Cox, Commissioner, Federal Communications Commission, and with me is Mr. Asher Ende, the Deputy Chief of our Common Carrier Bureau. The CHAIRMAN. You are in complete accord with the legislation as proposed? Mr. Cox. That is true. The CHAIRMAN. You have no objection? Mr. Cox. No; we know of none. The CHAIRMAN. Are there any questions to ask of Mr. Cox? This completes our hearings on this matter, and the committee will go into executive session at this time. (Whereupon, at 10:30 a.m., the committee adjourned.) 542 THIS LIBRARY OF CONGRESS, SS THE LIBRARY Эн G ONG. > THE LIBRARY OF CONGRESS THE LIBRARY OF CONGRES. 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