Company forecasts that full-year revenue will increase 20 percent to 26.6 percent over 2008.
— Satellite video services provider RRSat Global Communications said Aug. 3 that it sees clear indications that the slowdown in growth of new satellite-television channels appears to be reversing but that clients are still opting for shorter-term contracts than before the global economic crisis struck.
Omer, Israel-based RRSat, which leases capacity on some two-dozen telecommunications satellites worldwide to provide its customers with access to prospective video markets, said it signed more new contracts in July than in the entire three-month period ending June 30.
In an Aug. 3 conference call with investors, RRSat Chief Executive David Rivel said that despite a 4 percent drop in backlog due to shorter-duration contracts, the company is maintaining its forecast that full-year revenue will be between $95 million and $100 million. That would be an increase of 20 percent to 26.6 percent over 2008.
For the three months ending June 30, RRSat reported revenue of $22.5 million, flat from the previous quarter. Operating income was $4.3 million, or 19 percent of revenue. Backlog at June 30 stood at $170 million, down 4 percent from three months earlier.
said the weighted average contract length in the backlog was 33 months, compared to 36 months at March 30. The company signed nine new contracts for video content management and distribution during the three months ending June 30, five with new customers and four with existing customers.
has recently added a third customer for its new so-called HD playout center to provide graphic and sound enhancements to customers’ high-definition television programming. The center was inaugurated in March 2008, which Rivel said established RRSat early enough to position the company for substantial new business.
said RRSat signed 10 new contracts in July alone, suggesting the dip in business reported earlier this year is now reversing. The company said earlier this year that one of the effects of the global economic downturn was that prospective customers were taking longer than usual to move from early discussion to a final binding contract.
Another effect was that RRSat was forced to cancel contracts –
the first three months of 2009 – with customers who fell behind in payments. RRSat has since tightened its contract rules so that customers are allowed to remain in arrears for shorter periods before being cut off.
“Today we are a bit more strict about the debts of our customers,” Rivel said. “We don’t take added [satellite] capacity on our network if we feel we have a weak customer. This is a temporary situation that we think is creating a stronger base for the future.”
policy has been to book satellite capacity only when there are customers already lined up to use it. This policy avoids booking capacity that will remain unused, but it also exposes the company to higher satellite lease prices that are a feature of the spot market. RRSat officials have said they have not had trouble finding capacity even on satellites that are reported as full by their owners.
“We are only one month into the quarter but it gives us a strong, good feeling that we are at the end of a financial situation in which channels did not decide fast” on contracts, Rivel said. He said RRSat counts new contracts only when the terms are signed, a deposit has been received and the service has begun.