Getty Images Agrees to $2.1B Buyout

So Getty Images is going to be sold to Hellman & Friedman LLC, a private equity group. This sad move does not come as a surprise as Getty Images was openly up for sale since January. Their core business of selling expensive photographs to newspapers and magazines has been struggling for quite a while, with more and more of their customers turning to other, cheaper sources, most importantly to the many royalty-free stockphoto sites that sell images with unlimited use from as little as $1. Some publishers even turn to free image sources to reduce cost. Certainly this industry-wide move has also affected Getty Images.

Hellman & Friedman seem to be not the worst choice for Getty Images, though. They have transformed other digital businesses as well, among them DoubleClick which was sold to Google last year. Getty Images will remain an excellent source for photos, even if the new owners need to quickly come up with alternative business models and new pricing schemes. This may sound scary and might change the commercial photo landscape ultimately, but I think it is a necessary move as it does not make sense to ignore that the ship has been sinking slowly. Now, there is at least some hope for some of the employees.

Stock owners might be happy about the sale: Hellman & Friedman are paying a hefty 39% premium on Getty Images’ stock price (compared to Friday’s closing price), offering $34 per share.

However, only the new owners can judge whether their vision (which they must have) will actually re-vitalize the company to justify the premium they are going to pay. I guess they can hardly reduce cost as the organization is already running quite lean. So they need to look at ramping-up revenue to increase profit, i.e. to grab a bigger piece of cheaper market segments. If I were to consult Getty Images, I’d suggest turning Getty Images into a “Flickr for top photographers”. Make it easy for anyone to upload and sell stellar photos, offer a nice revenue share for each sale, and quickly lure all the talented semi-pro photographers away from Flickr.

It remains to be seen how the employees will be affected by the change. I think their picture editors should be OK as they really have an eye to judge incoming images. But their staff photographers and stringers might be in for quite a bumpy ride. Should Getty Images indeed open up to cheaper market segments, their photographers will compete directly with those cheaper image sources. And this means “less money” for them.

I wish the colleagues at Getty Images good luck in these increasingly difficult times!

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