RRSat Sees Business Returning to Normal

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PARIS — Satellite video-services provider RRSat said it signed 18 new contracts with broadcasters in the three months ending Sept. 30, a clear indication that business was returning to previous levels after nearly a year’s softness due to the economic slowdown in many parts of the world.

In a Nov. 12 conference call with investors, RRSat Chief Executive David Rivel said a dip in profitability was due mainly to the fact that the company anticipated the arrival of new customers by booking space on several satellites and began making lease payments.

RRSat Chief Financial Officer Gil Efron said the slight lag time between the buildup of satellite inventory and the arrival of revenue-paying customers is nothing new for the company. “As our capacity fills, we see gross [profit] margins returning to previous levels,” Efron said.

RRSat leases capacity on several dozen satellites worldwide and resells it to customers that also purchase RRSat’s production and distribution services. The company believes that what started as a service for small broadcasters without their own broadcast production facilities is now appealing to larger networks as well.

During the three months ending Sept. 30, RRSat signed contracts with NBC Universal Group and Fox Sports.

RRSat’s backlog of business was $171 million as of Sept. 30, about the same as it was June 30.

RRSat reported revenue of $24.1 million for the three months ending Sept. 30, a 7 percent increase over the previous quarter and 20 percent over the same period a year ago. Gross profit, at $7.5 million for the quarter, was up 14 percent from a year earlier but represented a gross-profit margin decline, to 31 percent from nearly 33 percent.