TIB & Getty Sales Analysis

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TIB AND GETTY SALES ANALYSIS

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October 22, 1999

The information Getty Images is required to file with the Securities and

Exchange Commission in conjunction with its acquisition of The Image Bank

provides some interesting insights into the two companies.

The surprises after reviewing the figures include:

• Image Bank's 1998 gross sales of still images (photos and illustrations)

  was only $45,997,513. This includes the sales of Archive, Swanstock and

  Artville as well as the TIB division. If we were to separate out just the

  sales of the original TIB (without acquisitions) the gross sales of still

  images would probably have been less than $40 million.

• TIB experienced a decrease in still photo and illustration revenue for the

  first six months of 1999 as compared with the previous year.

• Gross sales for the The Image Bank's film division (including Archive

  Films) was $24,835,272 or 36% of company's total business.

• Getty's sales in Europe represented 51% of their total sales in 1998.

• Getty's sales in the "Rest of the World" (excluding Europe and North

  America) was only 2.6% of their gross sales in 1998.

Getty's Sales broken down by areas of the world.

Year	Europe	Percent	North America	Percent	Rest Of World	Percent	Total
1996	$32,115,000	37.7%	$36,069,000	42.4%	$16,830,000	19.8%	$85,014,000
1997	$37,505,000	37.2%	$48,266,000	48%	$15,026,000	14.9%	$100,497,000
1998	$94,823,000	51%	$85,339,000	46.4%	$4,922,000	2.6%	$185,084,000

The Image Bank sales broken down by areas of the world.

Year	Europe	Percent	North & South America	Percent	Asia/Pacific (ROW)	Percent	Total
1998	$29,932,759	32%	$58,862,836	63.5%	$4,323,163	4.5%	$92,418,758

The Getty figures above are the gross paid to Getty and do not reflect the

total gross sale when a sub-agent was involved. (The sub-agent percentage is

taken off the top before the Getty net is calculated.) On the other hand Getty

has wholly owns offices in most of the major countries and thus only a very small

percentage of their sales are made through sub-agents. As a result, these figures may

closely represent the actual gross sales of the imagery.

The TIB figures represent the total gross sales made to clients. Sub-agents,

not wholly owned by TIB, retained $22,424,538 or 24.26% of the gross fees collected.

This is not counted as part of TIB's gross income. Thus TIB's actual

gross income was $69,994,220. (The difference between the $69,994,220 and

$70,833,000 reported later in the SEC filing are probably the results of a

rounding error.)

The vast majority of TIB's cinematography sales were in the U.S. If we substract

the $24,835,272 from $58,862,836 (sales in North & South America) we come up

with an approximate number for still photo sales in North America of

$34,027,564. The following chart is probably more representative of the breakdown

of still photo sales in various parts of the world.

Year	Europe	Percent	North & South America	Percent	Asia/Pacific (ROW)	Percent	Total
1998	$29,932,759	44%	$34,027,564	50%	$4,323,163	6%	$68,283,486

Still vs. Cine

TIB 1998 revenues were divided between still photography and cinematography with

the still division representing 64% of the income and cinematography

representing 36%.

Still Photography	Percent	Cinematography	Percent	Total
$45,997,513	64%	$24,835,272	36%	$70,832,785

Photographer Royalties

The share of royalties received by creators is illustrated in the following chart.

To make this analysis it was necessary to make a couple assumptions about the information

provided in the SEC filing. I have assumed that all

cinematography sales were made by wholly owned offices and that no

sub-agent percentages were taken from the gross sales of any of this work.

I have also assumed that all sub-agent deductions from the gross sale price

were the result of sales of still images or illustrations, not cinematography.

The percentage figures are based on the total gross sales of still images and

illustrations, including sub-agent fees, not just the amount the parent company receives.

Also note that the $29,624,090 is the total royalties paid to creatives. The

total sales of still images was $68,283,468 and the total of cinematography was

$24,835,272.

Still Photography	Percent Gross Sale	Cinematography	Percent Gross Sale	Total
$20,540,893	30%	$9,083,197	37%	$29,624,090

Dramatic Increaes In European Sales

Getty had a dramatic rise in 1998 in the proportion of sales that

were made in Europe. Anyone looking at the Tony Stone Images catalogs that

have been produced in the past two years might have predicted such a rise.

Certainly, U.S. photographers have been complaining that the type of imagery

that appeals to U.S. buyers has not been accepted for new catalogs or the

files. The Getty results would tend to support that contention.

One of the problems we have in making this analysis is that Getty had not

reported numbers for various brands. We would like to compare Tony Stone

Images with The Image Bank, but we are not sure that the Getty averages are

reflective of the Tony Stone Images brand.

In 1998 Getty acquired PhotoDisc and Allsport. While a large percentage of

Allsport's sales may be outside the U.S. the gross sales of this division would

not seem to be large enough, in comparison with PhotoDisc and Tony Stone Images,

to account for

this major shift in Getty earning. PhotoDisc's sales are entirely digital and

Getty has reported that 85% of all its digital sales are in North America.

Thus, since PhotoDisc is weighted toward North America, we suspect that TSI sales

were probably weighted toward Europe.

Rest Of The World

It is interesting to note Getty's dramatic fall in sales in the Rest Of The World

(everything but Europe and North America). One reading of this could be that

the ROW buyers are much more interested in the type of imagery produced and used in

North America than that used in Europe. If we divide the world into two

categories -- Europe and Everything Else -- the figures and the shift are even

more dramatic. We believe that TIB's results are actually more representative of

the world's overall buying patterns of stock photography.

Part of the reason for the drop in sales was the 1998 financial crisis in Asia. But,

it is questionable as to whether that could be the entire answer. TIB reports

that their 1997 sales in Asia were much higher than 1998, but they did not

provide comparative numbers.

Agency	Year	Europe	Percent	Everything Else	Percent	Total
Getty	1996	$32,115,000	37.7%	$52,899,000	62.3%	$85,014,000
Getty	1997	$37,505	37.2%	$63,292,000	62.8%	$100,497,000
Getty	1998	$94,823,000	51%	$90,261,000	49%	$185,084,000
TIB	1998	$29,932,759	44%	$38,350,727	56%	$68,283,486

TIB's sales in Asia come close to matching Getty's in actual dollar value, even

though overall, TIB is a much smaller agency. This would indicate that there

is a demand in Asia for stock images, but that Getty's editing or their

marketing strategy in this part of the world may leave something to be desired.

TIB seems to be leveraging their advantage in the Asian region by opening an

editing office in Hong Kong in 1999 to edit the work of all Asian producers.

TIB's sales for the first six months of 1999 increased 7.7% to $38.1 million

from 35.4 million for the first six months of 1998. These increases were

primarily attributable to the inclusion in 1999 of revenue from Artville which

was acquired in October 1998, as well as continued growth in film sales. This

increase was partially offset by a decrease in The Image Bank's stock

photography revenues.

At the end of 1998 the fees owed to photographers and cinematographers by TIB

for jobs billed, but not yet collected were $11,654,009. This is a little more

than 1/3 of the monies paid to photographers in 1998 ($29,624,090).

Things To Watch

Will Getty push TIB toward a more European focus, or let it function as an

alternative?

It would seem logical to combine sales offices, particularly in smaller

countries. Will the TIB offices remain, or will Getty give preference to the

TSI offices that don't seem to be generating as much income?

Will Getty allow TIB's editing philosophy to flourish, or will they try to drive

them toward the Tony Stone Images editing philosophy? Interestingly, in the

past year or two, photographers report that TIB has been

loosening up on their editing while TSI's editing has been getting tighter and

more focused on Europe.

There have been suggestions from many TSI photographers that TSI should, at the

very least, have one set of editors pulling images for the U.S. market and

another for Europe. London should not have total veto power over everything.

So far this idea has totally fallen on deaf ears at TSI. Now, that Getty can analyze

the TIB statistics in detail, maybe they will change their approach. It is also

interesting to note that TIB has recently decentralized their editing.

U.S. photographers are now submitting to New York and European photographers are

submitting to Paris as has been the case for a number of years. But, in 1999 an editing

office was set up in Hong Kong for Asian photographers and there are plans to set up

an editing office in Brazil in 2000 that will review the work of South American

photographers.

Will Getty do more to push the work of TIB photographers than those with Tony

Stone Images because Getty will retain a higher percentage of the gross sale from

this work? Such a strategy would be difficult to implement, but there is certainly

an incentive. TSI photographers were receiving an average of about 38% of gross

sales under the old contract and as more and more of the 40% on digital sales kicks in

that average should drop to 35% to 36%. Given their structure TIB's average is 30%.

The extra 5% difference that Getty would gain by selling a TIB image

rather than a TSI image is a strong incentive.

Individuals who would like to examine the 117 page SEC filing in more detail can find

in at: [www.sec.gov/cgi-bin/srch-edgar]. When this screen comes up input "Getty" and then

look at the S-3 filing on 9/29/99.