Moody’s Downgrades Getty Debt From Stable To Negative

Posted on 12/16/2014 by Jim Pickerell | Printable Version | Comments (0)

Moody's Investors Service ("Moody's") changed the rating outlook of Getty Images, Inc. to negative from stable due to continuing declines in Midstock revenue. Moody's also revised its forecast indicating very high leverage over the next 12 months with reduced free cash flow. Moody's affirmed the B3 Corporate Family Rating, B3-PD Probability of Default Rating.  

Getty has $2.5 billion in outstanding debt including an approximate $1.8 billion term loan due 2019. They also have $550 million of 7% Senior Unsecured Notes due October 2020 and a $150 million 1st Lien Senior Secured Revolver due 2017.

Getty’s revenue for the 12 months ended September 30, 2014 totaled $879 million. It is worth noting that Getty’s revenue in 2011 was $945 million and back in 2007 it was $857.6 million.

The revenue breakdown for Q3 2014 compared to the previous quarter was approximately:

  Percent Change Millions
Premium 3.7% down $70
MidStock 9.8% down $63
Editorial 21% up $65
Video 25% up $17

Moody’s is particularly concerned about the “persistent revenue declines in the Midstock segment since the second half of 2012.” This has been “compounded by increased operating expenses from stepped up investments in personnel, marketing and technology largely aimed at positioning the Midstock segment to be more competitive.”

Despite all that effort Midstock has continued to decline due to the heavy competition from a variety of sources including Shutterstock and Fotolia that offer images at significantly lower prices. These lower priced images have more than satisfied the needs of most customers. In September, Getty finally brought iStock prices more in line with those of Shutterstock, but so far there is no indication of a reversal in Getty’s declining Midstock revenue.

“Moody’s believes the company will need more time to improve leverage to the levels we forecasted at the end of 2013.” In Selling-Stock’s view more time is unlikely to help.

Moody’s points out that Getty, “will be challenged to show progress in restoring growth in the next 12 months, but it has some time to execute its strategies given no significant maturities until 2017 when the undrawn revolver matures and the term loan due 2019 is covenant-lite.”

For more details on the Moody analysis see here.

Copyright © 2014 Jim Pickerell. The above article may not be copied, reproduced, excerpted or distributed in any manner without written permission from the author. All requests should be submitted to Selling Stock at 10319 Westlake Drive, Suite 162, Bethesda, MD 20817, phone 301-461-7627, e-mail: wvz@fpcubgbf.pbz

Jim Pickerell is founder of, an online newsletter that publishes daily. He is also available for personal telephone consultations on pricing and other matters related to stock photography. He occasionally acts as an expert witness on matters related to stock photography. For his current curriculum vitae go to:  


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