International Datacasting Corporation Update

I had a chance to sit down with Fred Godard the President and CEO and Christine Rozak, the Director of Marketing at International Datacasting Corporation (IDC) to learn more about the company’s activity in the satellite and related markets. Based in Ontario, Canada the company provides end-to-end solutions for the point-to-multipoint distribution of broadband multimedia content over satellite. IDC is a major player in digital radio, syndicated television, IPTV, news/financial information distribution, interactive distance learning, digital cinema and others.

As the name implies, IDC has installations in networks in over 100 countries around the world, and has a list of customers that includes Thomson Reuters, Westwood One, National Public Radio, Cinedigm, SES Americom, Echostar, Arquiva and PBS. I must say it is refreshing to be able to list so many customers when I talk about the satellite market – most of the time I am sworn to secrecy when I learn about customers – it seems so many people using satellite think it is a competitive advantage that they want to keep very private!

Last month on TMCnet, Carolyn Dawson wrote about how Arqiva and IDC formed a partnership which will enable IDC to support and supply Arqiva with its digital cinema-specific content distribution applications, as well as remote site equipment. IDC in the past provided Arqiva with an initial network, which allowed IDC to enter the European market and digital cinema distribution service. Now, Arqiva will proceed to phase two of the operation and expand the deployment of its network to cinemas. IDC’s digital cinema solutions offer a powerful integration of electronic delivery.

With International Datacasting’s digital cinema satellite system, Arqiva can now provide feature-length films, movie trailers, and live alternative content including sporting events, theatrical exhibitions, and concerts to the cinemas. Arqiva’s primary customers are broadcasters and mobile phone network operators around the U.K. and Ireland, and it has a solid network of more than 1,000 radio and television transmission sites, providing service to the broadcast, satellite and mobile communications markets.

According to Godard, satellite was the medium of choice for distribution but hybrid networks are gaining in popularity. As you may have noticed from my other SATCON posts, they also mentioned how HD and 3D are becoming a larger part of their business.

A big badge of honor – IDC was also an enabler in the FIFA World Cup allowing it to be broadcast into theatres in 3D Live.

Another area of differentiation is in the store and forward market where the company allows a massive amount of content to be stored in a receiver and the content can subsequently be pushed with a button on the head end. Godard exclaimed, “This is a compelling value prop for content owners,” as he went on to describe the company’s enterprise set-top box solution.

In terms of future trends they see, 3D (I know – a common theme), security and the developing world ranking high on the list.

The company released quarterly earnings last month and revenue was $8.6 million, up 55% from $5.5 million in the prior year. Sales increased by 74% excluding exchange rate fluctuations and gross margins ticked a few percentage points higher to 45% which is an improvement from the prior quarter at 43%. EBITDA was also positive at $900,000 vs. a loss of $200,000 a year earlier.

A smart move and trend I have noticed for many companies in the satellite space is to expand into other areas such as terrestrial broadband and moreover the entertainment and sports spaces are good places to be as they are generally resistant to slow economies. Then again, the last few years have seen interesting times for capital investments and it is unclear if we are living in a perpetual new investment normal or if wallets will open up more widely soon. IDC has a market capitalization in the $17M range and this is about a quarter of what it was before the financial markets turned south. The good news is it seems the share price has stabilized around 25 cents and perhaps with more consistent EBITDA increases we can expect them to get back to their highs of a few short years ago.

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