This paper describes the analysis of a tethered system during the station-keeping phase. The system is composed of two small satellites connected by a long tether. The satellites are modeled as particles, and the tether is represented by eight rigid, massive rods. The angles between adjacent elements can vary with time. Only measurements at the end bodies are considered, and the angles between the tether segments are estimated by using a reduced-order estimator. The compensator design is based on the linear quadratic regulator algorithm and a steady-state Kalman filter. It is shown that all motion modes are observable with the available measurements and controllable with thrusts on one of the satellites.