By Donald R. Winslow
AUSTIN, TX (January 21, 2008) - On a day when the top headlines in The New York Times say "Stocks Plunge Worldwide On Fears Of A U.S. Recession," and "Hundreds Of Layoffs Expected At Yahoo," Silicon Valley's Cinderella story whose latest chapter now has it looking for a way to prop up its sagging stock price, the bulletin that has the photography world chattering tonight is less prominent in the news line-up but is no less a serious economic indicator for the imaging industry.
"Getty Images Up For Sale, Could Fetch $1.5 Billion."
Yes that's "billion," with a capital "B."
Getty Images, which bills itself as the "world's leading creator and distributor of visual content," is a publicly traded company that Friday closed at $21.94, their lowest price since 2002. The stock has been on a steady downslide for the last 24 months, trading as high as $95 a share only two years ago and $57.28 a year ago. At closing on Friday the company had a 10.27 P/E (profits to earnings ratio) and a market cap of $1.31 billion.
While executives at Yahoo seem to be turning to layoffs to appease Wall Street pressure, Getty Images appears to be taking an even bigger step - stepping off Wall Street and the stock market entirely and into private hands, where there will be less daily public scrutiny by investors and second-guessing by industry and investment voices.
Low-cost online competitors have made the last 12 months a bumpy Wall Street ride for Getty, industry sources say.
Times reporters Andrew Ross Sorkin and Michael J. de la Merced report in Monday's newspaper that the Seattle-based Getty Images has hired the firm Goldman Sachs to advise it on a potential sale, and that several private equity firms have already expressed an interest with final bids due by the end of January.
A public relations staff member for Getty told reporters the company would not comment. Regulatory filings were not available on Monday because the markets were closed for the Dr. Martin Luther King Jr. holiday.
Getty Images was founded in 1995 by CEO Jonathan Klein and Mark Getty, and they grew by purchasing Seattle-based PhotoDisc and then buying Eastman Kodak's Image Bank. Getty recently reported $208.9 million in revenue for the three-month period ending September 30, 2007, a 5.5 percent increase according to Getty. Fourth quarter and year-end financials are due out on January 31.
Getty says they serve customers in more than 100 countries including newspapers, magazines, advertising campaigns, films, television programs, books, and Web sites. But recently they've found it tough to compete with online photo sales from companies offering low-priced licensing of stock images. In June 2007 their annual report revealed that the company had reduced their global workforce by 4 percent, mostly in Europe, despite several acquisitions.
The chief competitor for Getty is the privately-held company Corbis, owned and controlled by Microsoft's Bill Gates. Of less competition is Jupiter Media, who were at one time in talks with Getty about Getty buying Jupiter at $9.60 per share, according to Reuters. Jupiter closed at $2.98 a share on Friday.
According to The New York Times, Getty's largest shareholder is still the Getty family itself, with a 14 percent stake as of last report.
In August 2007 stock analyst Jon Ogg wrote in 24/7 Wall Street that Getty Images has a weak spot where they can be attacked by online competition, and that's in the area of non-copyright (royalty-free) images, which are growing in availability on the Internet.
"A high resolution picture of a bear eating a salmon just isn't worth what it was even in 2005," Ogg wrote. "As media conglomerates merge it creates fewer clients, and any new media start-up out there knows it can get stock photos and digital audio or video media for free or very close to free."
Ogg advised investors, "It [Getty's stock price] has continued to slide, even worse than we thought it would. At some point we feel that this could become an incredible value stock as long as it can stay profitable, but we aren't about to go out with any call like that this soon."
