Bond traders are asking “If Getty Images changed its name, but had all the same content and pictures, would this have a significant impact on sales/marketing?”
The reason for this question is that revenue has been declining for Getty for at least eight quarter and it is becoming increasing apparent that there is likely no way to turn the business around.
Getty has $2.46 billion in debt according to Bloomberg, some of it coming due in 2017. It is looking increasingly likely that Getty Images will at some point be unable to pay off the debt holders and will go into “technical default.” Some bonds are already trading at $0.50 for every $1.00 worth of bonds and Getty Images may be forced into some type of bankruptcy proceeding to settle the claims of bond holders.
The thinking of some is that the Getty family won’t want its name and reputation associated with bankruptcy proceedings and regularly mentioned in connection with bankruptcy in the Financial Times, the Wall Street Journal, Forbes and Bloombergs. A name change might solve some of this problem.
My Thoughts
First the MPEVImages is my creation, not anything that Getty or anyone else has actually proposed. The biggest problem they will have is finding a name that has any association with photos or imagery that isn’t already being used by someone. (My MPEV stands for Microstock, Premium, Editorial, Video. Not all that creative, I know.)
In general, I think a name change would have no negative effects as long as the new entity has access to Getty’s one-million plus customer list and can make sure that every one of them knows that when they are looking for images they need to go to the new name. Anyone who does an online search for Gettyimages will be automatically directed to the new site. In no time at all, everyone will have forgotten that Gettyimages ever existed.
No one is going to Gettyimages.com because of the Getty name, or because it provides some type of credibility. They simply know that it’s a site where they can find a lot of images.
In fact, depending on how a new name were implemented it might benefit the company. In the past few years many customers, and certainly image suppliers, have become disenchanted and dissatisfied with the services offered by Gettyimages. New leadership, stability and a carefully though out plan for moving forward could be a plus. Some who have walked away might give the new company another look.
Of course, just putting a new name on the existing problems is not going to do anything to improve sales.
What Will Happen Next?
The big question is who will be the new CEO? Will he/she have any power, or will Jonathan Klein still be running things? What will be the initiatives for change?
Given where they are at, and the things they have tried in the last few years, it seems highly unlikely that they will be able to take market share from anyone. Thus, a continued slow decline in revenue from photo and illustration sales can be expected.
Expenses can probably be cut somewhere (although a lot of that has already been done in the last couple of years). That could improve profits, if not revenue. Several seem to think that is the likely strategy of a new CEO, but such cuts are likely to result in short term, not long term, benefits.
A look at the
new website homepage and some of the recent comments seems to indicate that new management will focus more on embedding images rather than licensing them, and try to get more people to just look at pictures, not buy them. The logic behind this is if they can get enough data about who is looking at what they can sell that data to advertisers, or hopefully sell the company to Google, Yahoo or someone like that who is more interested in consumer data than licensing imagery.
Time will tell, but the changes will be worth watching.
Useful Data
According to Moody’s when Carlyle purchased Gettyimages in 2012 $2.6 billion was secured debt.
....$150 million 1st Lien Sr Secured Revolver due 2017: Affirmed B2, LGD3
....$1.9 billion 1st Lien Sr Secured Term Loan due 2019: Affirmed B2, LGD3
....$550 million of 7.0% Senior Unsecured Notes due 2020: Affirmed Caa2, LGD6
In February Bloomberg said the debt was down to $2.46 billion. Of the $150 million (Getty’s working cash position) the company had almost $41 million at the end of Q3. It depleted one-third of that in Q4 2014 leaving it with $27 million at the end of the year.
Bloomberg said, “Falling bond and loan prices have cost investors nearly US$565 million - or 23 per cent - of what their holdings were worth when Getty borrowed money in October 2012 to help Carlyle Group finance its US$3.3 billion takeover of the company.” In March 2015 it was reported that traders have cut the price of some Getty bonds by nearly 30 percent in 30 days.
The following chart shows Getty's gross annual sales trends since 2005.
| Year |
Gross Revenue |
| |
(Millions) |
| 2005 |
$733.7 |
| 2006 |
$807 |
| 2007 |
$857 |
| 2011 |
$945 |
| 2013 |
$884 |
| 2014 |
$869.4 |