Getty Images, Inc. has announced that it will acquire Photonica West from the Tokyo-based Amana Group for $51 million in cash. Photonica produces and distributes two of the world's leading collections of cutting edge, high-end rights-managed imagery from some of the most talented and creative photographers in Europe, the United States and Japan.
The acquisition of the non-Japanese interests of Amana is the first phase of a broader global production and reciprocal distribution relationship between
Getty Images and Amana. Amana is considered the leading visual solutions experts in Japan. Getty Images plans to further strengthen its position in the Japanese market by entering into distribution arrangements with Amana to represent Amana's locally relevant content in Japan. Amana will offer some of the major Getty Images collections to its customers in Japan. In addition, Getty Images expects to represent and distribute Amana's imagery to the international market outside of Japan.
Getty Images and Amana also plan to co-produce high quality, wholly owned creative photography both in Japan and elsewhere. This joint production capability will provide more choice and higher quality imagery for visual communicators and greater opportunities for photographers everywhere.
"Getty Images and Photonica represent the global gold standards for contemporary, high-end creative imagery," said Jonathan Klein, Getty Images co-founder and CEO. "Combining Getty Images' creative expertise with that of Photonica and Iconica, and leveraging the distribution power of our e-commerce platform, will provide customers with easy access to the very best imagery in the industry, enabling them to do their best work. Furthermore, our relationship with Amana will significantly accelerate our already successful penetration of Japan, the world's second largest market for imagery, and further strengthen gettyimages.com's global role as the de facto home page for visual communicators."
The acquisition is expected to have no impact on earnings per diluted share
in 2005, and to be accretive to Getty Images earnings per diluted share in
This move was a surprise to many in the industry who heard over a month ago that Corbis was about to acquire Photonica/Iconica, and possibly Amana. It is believed that the Corbis deal fell apart around the end of April over the issue of indemnification against a patent infringement suit that Getty Images had filed against Amana. (See story 716 for more about the patent suit.)
Getty had claimed that Amana America has infringed its patent for a "computer-based method and system for classifying and locating images."
Industry insiders who have examined the patent documents and the Photonica web site cannot explain how what Amana America is doing in any way infringes Getty's patent. Nevertheless, Getty has the resources to tie up the responsible party for years in legal maneuvers as this case is litigated. Consequently, it is understood that as part of their deal Corbis wanted indemnification from Amana against the Getty suit so that Amana would remain responsible for future legal action related to this issue. Amana refused, and this was a deal breaker for Corbis.
Several in the industry believe that the primary motivating factor for Getty was not to acquire more prestige content, but to keep Corbis from having it, particularly if Amana Japan was part of the assets Corbis was seeking to purchase. To a certain extent this was a replay of Getty's acquisition of VCG in 2000 when the driving force seemed to be keeping Corbis from having it.
A few years ago Photonica was a very prestigious brand, but many of the major art directors now appear to believe that Zefa and Stone have done a great job of closing the gap and the current Photonica offering has very little to differentiate it. Sources believe that Photonica West's current annual revenue is in the range of $22 to $25 million and they question whether this division of the company is profitable.
In all of this Mr. Shindo or Amana may come out the big winner. He got a good cash payout for properties in the West that may not have been profitable and were not the real focus of his business anyway. He gets some of his Japanese content on the Getty website which should increase sales, and he gets to sell some of the Getty content to his existing customers which should increase revenue for Amana. In addition he should generate a lot of revenue, either as direct payments or royalties, by using his production facilities and Japanese staff to co-produce Japanese content for the Getty website. And he gets rid of the pesky patent suit. And on top of all this, Amana gets to maintain its very profitable relationship with Corbis and continue to license rights to the Corbis content. When profits are totaled up Amana may end up doing better than Getty on this deal.
From: David Neilson of Photonica/Iconica
After the Getty acquisition of Photonica and Iconica I asked David Neilson of Photonica/Iconica the following questions:
Can you explain to me how sales in Japan of the Photonic and Iconica images will be handled. Since Getty only acquired the "non-Japanese interests of Amana" it sounds like Amana will continue to represent the Photonica and Iconica mages in Japan. Is that the case?
Will both Getty and Amana be sending royalty checks to the photographers?
If all the payments go through Getty will Amana Japan now be treated as a sub-agent and will photographers now be taking a double cut on Japanese sales as compared to one royalty cut previously?
Neilson provided the following answers:
- The plan is for amana Japan to continue representing Photonica and Iconica there.
- Getty Images will acquire the Western amana businesses. This means that any photographer currently contracted to any Western amana business will effectively be contracted to a Getty Images' company and therefore will get paid by Getty Images.
- The terms of the relationship between amana and Getty Images in respect of Japanese sales has yet to be decided. Therefore the share a photographer obtains from such sales has yet to be decided also.
- amana has a large stock production center in Japan and will have no difficulty in getting new imagery.
He also provided the following additional information:
Thanks for your mail. I read your analysis on the sale of Photonica to
In acquiring Photonica, Getty Images have what is now, and always has been, unquestionably THE premier high-end stock brand. Indeed the most recent content is without doubt Photonica's best ever. Not my opinion but that of clients, photographers and industry peers all over the world. I have plenty of evidence to back this up.
The western entities of amana have been very profitable. The past three years alone were our most profitable ever! Furthermore, we have demonstrated excellent revenue growth over the same period, with in particular 2004 up almost 17% on 2003. Very few of our same-level industry peers can boast organic growth anything similar.
The reason Getty Images was chosen as the buyer had nothing to do with the patent litigation.
Keeping Photonica out of Corbis' hands was absolutely not the reason Getty Images acquired Photonica. They have long recognized Photonica's brand values and strong content. Leveraging this through their own large distribution channel makes very powerful commercial sense. That is the real reason.
Getty Images, most of which is untrue. I wouldn't recommend you publish too much more from the 'industry insiders' who provided you with this information. I would like the opportunity of setting the record straight and having the following corrections made: