Security is an important concern in today's information age and particularly so in satellite systems, where eavesdropping can be easily performed. This paper addresses efficient key management for encrypted multicast traffic transmitted via satellite. We consider the topic of encrypting traffic in large multicast groups, where the group size and dynamics have a significant impact on the network load. We consider life cycle key management costs of a multicast connection, and show for a logical key hierarchy (LKH) how member preregistration and periodic admission reduces the initialization cost, and how the optimum outdegree of a hierarchical tree varies with the expected member volatility and rekey factor. This improves network utilization, but encryption at the network layer can pose problems on satellite links. We, therefore, propose and analyze an interworking solution between multilayer Internet protocol security (IPSEC) and LKH that also reduces key management traffic while enabling interworking with performance enhancing modules used on satellite links.