Getty Debt

Posted on 9/18/2018 by Jim Pickerell | Printable Version | Comments (0)

Many in the industry are concerned about the level of Getty Images debt and what that might mean for the future of the company. The following is some general information about the financial status of the company. It is not clear how the debt might affect the future.

Getty Images has about $2.367 billion in debt. About $1.8 billion of that is in Term Loans at 4.37%. Back in 2012 they had about $2 billion in Term Loans so in the past six years it appears they have paid down about $200 million of the principal in addition to the annual interest. The terms of these loans is unclear and may vary.

The money was probably borrowed at various times between mid-1995 and roughly 2011. Some may have been used to cover the cost of physical properties, but most was used to buy out the owners of various stock agencies, the combined total of which have become Getty Images. Below, I have listed 39 of the companies they have acquired along with the date and and reported selling prices for about half the acquisitions. The reported selling prices total about $1.499.5 billion.



In addition, Getty has $567.5 million of corporate bond outstanding. The principal on these bonds is due in October 2020. There are two categories of these bonds.
    1. - Outstanding are $252 million of first lean bonds rated CCC (junk quality) at a 10.5% interest rate. The latest trade for these bonds was at 103.5, a premium. This indicates buyers of the bonds are not fearful of imminent bankruptcy.

    2. - In addition there are $315 million of 7% notes rated CC (one notch lower).  The $315 million outstanding, is more than the initial issue.  The old bonds were tendered and replaced with these new bonds.  Holders received $640 of principal amount of new notes for every $1,000 of the old.  These bonds traded recently, at a price of 98, a slight discount.  Though at a discount, it’s not even close to the discount level that implies fear of repayment.
CCC bonds are normally considered “Extremely Speculative” and CC bonds are considered “Default imminent with little prospect of recovery.”



Based on the interest rates a rough estimate of the annual costs of servicing these loans are:

Term Loans  
      Interest $78,660,000
      Principal $35,000,000
$252 million $26,450,000
$315 million $22,050,000
   
Total $162,160,000

Company Revenue In Last Decade




In late 2007 Goldman Sacks examined Getty’s books prior to the company’s sale to Hellman & Friedman. They found that Getty’s revenue in 2007 was $857.6 million, and projected that it would be $901 million in 2008 and $1,187 million in 2012.

In fact, based on their July 2012 report when Carlyle was about to take over, Getty’s 2011 revenues were about $945 million. In October 2012 Carlyle purchased Getty for about $3.3 billion. They used a leveraged buyout scheme to acquire Getty Images and saddled Getty with $2.8 billion of that debt, making Carlyle's actual disbursement about $500 million at most.

For the year ending June 30, 2013 revenue was $897 million. For much of the last 5 years income has declined slowly quarter-to-quarter. In the last year of so it seems to have stabilized at around $830 million.   

The $830 million probably breaks down to around $280 million for Creative Stills, $220 million for iStock and Thinkstock combined, $250 million for the Editorial division and $80 million for video/footage.

It is important to note that probably $200 million of the $830 is paid out in royalties to contributors who own the images that Getty represents and licenses to customers. If we add the $162.16 million in annual debt payments to this that leaves Getty with about $468 million to cover their annual operating expenses and profits for investors.

For comparison purposes it is worth noting that Shutterstock’s annual income in 2017 was $557.1 million and it is believed they paid out about 25%, or $140 million is royalties leaving them about $417 million in operating revenue. Shutterstock has no significant debt.

In 2017 Shutterstock had 172 million downloads from its collection. It is believed, based on my analysis of sales of some of Getty’s major suppliers that Getty had about 4.5 million downloads from its creative collection in 2017. It is unclear how many downloads there might have had from iStock and their Editorial collection.

In 2006 Getty’s average price per RM image licensed was $536 and the average for RF images was $243. In 2017, based on the analysis of sales reports of the sales reports of a few major Getty contributors, the average license fee for all images, both RM and RF was between $50 and $60. About one-third of the images were licensed for gross fees of less than $5.00. Due to Premium Access agreements a high percentage of all RM images licensed are now licensed at the same price as RF.

According to the Financial Times Getty “has more than 300 million ‘assets’, which include photographs, videos and music.” I question that figure since most of the “photographs, videos and music” are the property of the contributors who created the works. While Getty does “wholly own” some of the material, to a large extent the material they own is out of date and will not be a major generator of income in the future.

Getty does own some property that could be sold to settle debts, but nothing near the $300 million value in my estimation. The real value of the company lies in the ability to continue to operate as a licensor of images, but at some point operating the business may not generate enough free cash to cover the payment of interest and principle on the debt.

Getty Acquisitions Date Millions
     
Tony Stone Image 1995 $50
Hulton Deutsch April 1996 $13
PhotoDisc September 1997 $150
Allsport    
Art.com    
American Royal Arts    
EyeWire August 1999 $33
Liaison   $8.5
Newsmakers November 1999  
Online USA    
The Image Bank September 1999 $183
Visual Communications Group February 2000 $220
ImageDirect    
Imagenet Limited    
Mission Studios Ltd.    
Retrofile    
Digital Vision April 2005 $165
Photonica/Iconica May 2005 $51
Medio Images   $15
Rubberball   $10
E-Lance Media GmbH    
Bongarts Sportsfotographie    
Energy Film Library    
Stockbyte April 2006 $135
iStockphoto October 2006 $50
Michael Ochs Archives    
Laura Ronchi, SpA    
Scoopt    
WireImage February 2007
$200
Media Vast    
HAAP Media    
Punchstock    
JupiterImages October 2008 $96
Redferns Library    
Image.net    
PicScout April 2011 $20
Photolibrary May 2011 $100
Lonely Planet April 2012  
     
Through a deal with VCG in April 2016    
they got access to all Corbis content    
   
Total   $1499.5

Several of the companies that Getty acquired purchased smaller agencies before they sold out to Getty Images. To get an idea of some of the other brands that are now a part of Getty Images you might want to check out these links here and here.


Copyright © 2018 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 www.selling-stock.com, 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: http://www.jimpickerell.com/Curriculum-Vitae.aspx.  

Comments

Be the first to comment below.

Post Comment

You must log in to post comments.

Stay Connected

Sign up to receive email notification when new stories are posted.

Follow Us

Free Stuff

Stock Photo Pricing: The Future
In the last two years I have written a lot about stock photo pricing and its downward slide. If you have time over the holidays you may want to review some of these stories as you plan your strategy ...
Read More
Future Of Stock Photography
If you’re a photographer that counts on the licensing of stock images to provide a portion of your annual income the following are a few stories you should read. In the past decade stock photography ...
Read More
Blockchain Stories
The opening session at this year’s CEPIC Congress in Berlin on May 30, 2018 is entitled “Can Blockchain be applied to the Photo Industry?” For those who would like to know more about the existing blo...
Read More
2017 Stories Worth Reviewing
The following are links to some 2017 and early 2018 stories that might be worth reviewing as we move into the new year.
Read More
Stories Related To Stock Photo Pricing
The following are links to stories that deal with stock photo pricing trends. Probably the biggest problem the industry has faced in recent years has been the steady decline in prices for the use of ...
Read More
Stock Photo Prices: The Future
This story is FREE. Feel free to pass it along to anyone interested in licensing their work as stock photography. On October 23rd at the DMLA 2017 Conference in New York there will be a panel discuss...
Read More
Important Stock Photo Industry Issues
Here are links to recent stories that deal with three major issues for the stock photo industry – Revenue Growth Potential, Setting Bottom Line On Pricing and Future Production Sources.
Read More
Recent Stories – Summer 2016
If you’ve been shooting all summer and haven’t had time to keep up with your reading here are links to a few stories you might want to check out as we move into the fall. To begin, be sure to complet...
Read More
Corbis Acquisition by VCG/Getty Images
This story provides links to several stories that relate to the Visual China Group (VCG) acquisition of Corbis and the role Getty Images has been assigned in the transfer of Corbis assets to the Gett...
Read More
Finding The Right Image
Many think search will be solved with better Metadata. While metadata is important, there are limits to how far it can take the customer toward finding the right piece of content. This story provides...
Read More

More from Free Stuff