Israel’s RR Media acquires Eastern Space Systems in Romania

Marius Costea – Tax Adviser

Mihai Zoescu – Financial Adviser to the Purchaser

RR Media (NASDAQ: RRM), formerly known as RRsat Global, a leading provider of global digital media services to the broadcast industry, has announced the acquisition of Eastern Space Systems (ESS) in Romania, a privately held provider of content management and distribution services and related consulting services. RR Media was founded in 1981 and is headquartered in Airport City, Israel.

The acquisition provides RR Media with added satellite coverage on Intelsat 1°W, offering one of the fastest-growing platforms for digital media delivery, reaching more than 17 million TV households in Central, Eastern and Nordic Europe. In addition, the acquisition further enhances RR Media’s smart global network, providing the company with additional reach into Europe through ESS’ extended European fiber coverage as well as other IP and local fiber optics capabilities.

RR Media will take over the day-to-day operations, providing extensive customer service, engineering, technological expertise and sales support to all existing ESS Romania customers including Eurosport, AXN, Paramount, MTV, VH1 and others. All will be offered extension to their current business with full access to RR Media’s global media services platform with the capability to provide a wide range of digital media solutions including expanded content distribution capabilities, content management and preparations services, online video services and sports and live event solutions.

Avi Cohen, CEO of RR Media comments on the recent acquisition: “This acquisition is part of our continued strategy to accelerate growth, create scale and enhance our geographic presence. It meaningfully adds to our global business of content management and distribution infrastructure and local talent, as well as expands our services, especially in the areas where we’ve extended our satellite and fiber coverage in Central Europe. This growing region is underserved, dominated by small companies, and we view it as a prime opportunity to capture market share by leveraging our scale, global presence, and comprehensive offering. Accordingly, we are confident we can further penetrate Central Europe, gaining new customers and producing increasing revenue opportunities in the coming years. In addition, this acquisition bolsters our already strong customer base, giving us access to several upper tier customers.”

The newly acquired business is profitable and is expected to provide further synergies for RR Media with additional customer and revenue opportunities anticipated from this acquisition. With additional interconnectivity within Europe, RR Media will significantly expand its global content management and distribution capabilities.

Cristinel Popa, CEO and owner of ESS, said: “We have worked extremely hard to create value for our customers in central Europe. I am very happy with the partnership created through this acquisition and strongly believe that it will greatly enhance the value for our customers giving them access to a larger range of global services.”

As a result of this acquisition, RR Media expects to generate approximately $7 million of incremental revenue from the central Europe region during 2016. ESS is expected to be accretive to RR Media’s earnings within six months.

RR Media Ltd. operates as an end-to-end media service partner for broadcasters and content owners in North America, Europe, Asia, Israel, the Middle East, and internationally. It offers digital content acquisition and content distribution services; content preparation services, including multi-language audio or subtitling integration, closed captioning integration, ingestion, and formatting for specific devices or regional formats; and content management services through the RR Media digital-asset-management system that tracks content from the moment it enters its system until it is delivered and archived. The company also provides feeds ranging from a few minutes to several hours for sports, special events, and news coverage; and over the top delivery services comprising linear channels, video on demand, Catch up TV, promos and highlight, content protection, and links to subscriber management and billing systems. In addition, it offers mobile satellite services, such as global telephony, fax, data, Internet, and other value-added services to end-users, Inmarsat users, and service providers.