RRSat

Infobox_Company
company_name = RRSat (NASDAQ:RRST)
company_
company_type = Public (NASDAQ)
foundation = 1981
location = Reem Junction, D.N. Shikmim 79813, Israel
key_people = Rivel David, Founder and CEO. Gilad Ramot,Chairman of directors board. Gil Efron ,Chief Financial Officer. Ziv Mor, Director of Engineering. Lior Rival,Vice President of Sales and Marketing
industry = Uplink, Downlink, Playout, Turnaround services. Management and distribution services to the television and radio industry
homepage = [http://www.rrsat.com/index.php] www.rrsat.com

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RRSat Global Communications Network Ltd is an Israeli based provider of global content management and distribution services to the television and radio broadcasting industries. Their services include Uplink, Downlink, Playout and Turnaround to more than 365 television channels and radio channels, covering more than 150 countries.

Through its proprietary "RRSat Global Network," composed of satellite and terrestrial fibre optic transmission capacity and the public Internet, it offers global distribution services for content providers. RRSat’s content management services involve the digital archiving and compilation of a customer's programming and advertising content into one or more broadcast channels, with the ability to customize broadcast channels by target audience.

The Company’s services can be divided into three main groups:

Teleport Services

This involves the basic transport of television stations including the uplink (transmitting the video), downlink (receiving the video) and basic turnaround (receive and transmit). RRSat provides continuous year-round global distribution services via satellites or terrestrial fiber optic for its customers. Moreover, RRSat provides video broadcast on an occasional basis, with turnaround between any two continents.

Value Added and Playout Services

A portion of the television channels that RRSat distributes also have the Company store the content, create the playlists and edit the content to create the television channel feeds. Valued-added services may include insert advertisings, audio dubbing, inserting subtitles, standard conversion, encrypting, encoding and all other technical requirements.

atellite News Gathering (SNG)

RRSat operates a fleet of satellite broadcast vans, providing mobile uplink systems throughout the Middle East. The Company also uses “Flyaway Systems”, or which are freestanding satellite uplink systems that can be disassembled and transported in packing cases to the scene of an urgent news story.

History

RRSat was founded in 1981 by Mr. David Rivel and has two strategic partners: the Intergama Investment Group. [ [http://www.intergamma.co.il Intergamma | Inter-Gamma is one of Israelis 100 leading holding corporations ] ] and Kardan Group. [ [http://www.kardan.com/Technology] ] Both major public holding companies, traded on the TASE. RRSat operates under license from the Israeli Ministry of Communications . [ [http://www.moc.gov.il Israel Ministry of Communication ] ]

Over the last five years, RRSat has grown revenues by 42% (CAGR) yearly and it expects revenue in 2007 to be between $55.5-56 million. RRSat's adjusted net income in 2006 was $8.1 million, and net margin at 18.7%.

Investment Thesis

Around 90% of RRSat’s revenues come from long-term contracts, and its revenue backlog, currently (as of the end of ) at over $100 million, provides excellent visibility. In addition, RRSat uses long term leases for satellite and fiber optic transmission capacity, allowing the Company maximum visibility while protecting its profit margins, minimizing capital expenditure and adequately aligning operating expenses with revenues.

Digital technology trends, such as the digitization of content, the introduction of high definition television (HDTV) and Internet protocol television (IPTV), as well as the ongoing shift to digital transmission, have led to a rapid growth in the number of broadcast channels with customized content, targeted at ever more finely segmented audiences both at the regional and global level. The number of satellite channels has increased from about 1,000 in 1995 to an estimated 13,000 in 2005 and is projected to grow to 29,000-plus in 2013. In revenue terms the satellite content distribution business grew 18% per year to $13 billion in the 1995-2000 period, and is expected to further expand in line with the increase in number of channels.

Through the unique geographical location of RRSat’s Re'em Teleport in southern Israel, and its independent optimized global network, the Company can reach 95% of the globe with only one satellite ‘hop’. In addition to its unique geographic position, the complexity of RRSat’s global distribution infrastructure, built over many years, provides a high barrier to entry for a new competitors.

Growing Addressable Market

According to a 2005 report by the "World Teleport Association", in 2003 the teleport sector generated revenues of approximately $13 billion per year and was a critical component of the global satellite communications industry, producing over 23% of world satellite services revenue. [ [http://www.worldteleport.org World Teleport Association] ]

Some trends are expected to lead to increased demand for global satellite and terrestrial fiber network distribution are:

Globalization of content

Content providers are increasingly offering their programming on a global scale.

Expanding channel line-ups

Competition between networks for audience and competition between service providers for customers, as well as satellite providers' offering local channels and localized content, are all catalysts for a larger number of channels.

New broadcasting technology

Increased high definition television (HDTV) adoption and digital simulcast are expected to lead to even greater increases in the number of channels available. According to "Informa Telecoms & Media", a market research firm, the number of homes with HDTV services is expected to increase by a compounded annual growth rate of 52% from 2005 to 2010. The wider adoption of these technologies will require increased bandwidth, which will amplify the value of infrastructure providers. [http://www.informatm.com Informa Telecoms & Media] ]

Emergence of Internet protocol television

New service providers offering video over broadband, or Internet protocol television (IPTV), open the door for new content providers to enter the industry. The provisioning of a network such as RRSat Global Network, which integrates satellite-based and terrestrial fiber optic capacity will be required to accommodate the rapid and reliable transmission of the vast amounts of information underlying the growth in traffic and content created by IPTV. According to "Informa Telecoms & Media", the number of homes with IPTV services is expected to increase by a CAGR of 57% from 2005 to 2010.

Digital Platforms

RRSat uses Teleports, Flyaway and Transportable Uplink and Downlink systems with dishes for C-Band, Ku-Band and Ka-Band (2.4m to 12m). Using more than 30 advanced digital MCPC platforms RRSat enables direct to home (DTH) coverage.

Europe, Middle East, North Africa

Hotbird-8 (Hotbird-3), Hotbird-6,Turksat 2A (Eurasiasat-1),Amos 1, Amos 2, Eutelsat W2, Turksat 1C, Eutelsat W1,Intelsat 4 (PAS-4)

USA and Canada

DTH distribution via Galaxy 25 (IA-5) and AMC-4.

USA, Canada and South America

Intelsat 907, AB-1 and Galaxy 23.

Australia, Asia and Africa

Thaicom-5 (Thaicom-3),Intelsat-10 (PAS-10), Yamal-200, Insat 2E (APR 1), Eutelsat W5.

Australia and New Zealand

DTH distribution via Optus-B3 and Intelsat 8 (PAS-8), Asiasat-4

References

* [http://www.rrsat.com] RRSat
* [http://www.kardan.com/Technology] Kardan Group
* [http://www.intergamma.co.il] Intergama Investment Group
* [http://www.moc.gov.il] Israeli Ministry of Communications

External links

* [http://www.freetvnet.com] FreeTVnet Project