During Red Hat Satellite upgrade to 5.6, install.pl fails with "your system is not configured with the @Base package group."

Issue

Satellite upgrade to 5.6 is not working.

[root@testsat Satellite-5.6.0 x86_64 Disc 0]# time ./install.pl --upgrade --disconnected
* Starting the Spacewalk installer.
* Performing pre-install checks.
* Pre-install checks complete.  Beginning installation.
* RHN Registration.
** Registration: Disconnected mode.  Not registering with RHN.
* Upgrade flag passed.  Stopping necessary services.
* Purging conflicting packages.
* Checking for uninstalled prerequisites.
* Installing RHN packages.
Could not install RHN packages.  Most likely your system is not configured with the @Base package group.  See the Red Hat Satellite Server Installation Guide for more information about Software Requirements.  Exit value: 1.
Please examine /var/log/rhn/rhn_installation.log for more information.