Getty Q2 2007 Results Disappointing

Posted on 8/3/2007 by Jim Pickerell | Printable Version | Comments (0)

Getty Images reported revenue for Q2 2007 of $218 million, up from $204.8 million in Q2 2006 and $212.6 million in Q1 2007. Net income for the quarter was $33.7 million, with earnings per diluted share of $0.56. This compared to $23.2 million or $0.37 per share in the second quarter of 2006, but was down from $38 million or $0.63 per share in Q1 2007.

As a result of the WireImage acquisition, editorial was the major growth segment of the business. Revenue for editorial was about $36 million, up from $25 million in Q2 2006 and $26.56 million in the previous quarter. Based on these figures, WireImage can probably be expected to contribute around $30 million to the bottom line for all of 2007. Creative stills revenue represents 74.1% of total revenue and was flat. Footage revenue was also flat. When compared to the previous quarter, the only segment of the business that showed an increase in revenue was editorial.

The amount of money Getty is paying out in royalties has risen from $48.67 million in Q2 2006 to $55.65 million in this quarter. This is an increase from 24.8% of total revenue to 27.6%. The increase results from the decline in the creative stills portion of the business, where average royalties paid to suppliers is lower than that paid in other lines of business, particularly editorial and microstock. The acquisition of WireImage had a big impact on this number, due to its photographers receiving a higher royalty share of sales than Getty's other editorial suppliers.

Cash balances as of June 30, 2007 were $288.6 million. During the quarter, the company spent $248 million for acquired businesses, of which $120 million was financed through the company's senior credit facility and the remaining $128 million was paid from existing cash.



Business Outlook

The company has announced a restructuring and related reduction in workforce of about 100 employees, including a number of very senior people, particularly in Europe. This will result in a charge of approximately $4.0 million in the third quarter of 2007 and is expected to result in annualized savings of approximately $20 million in staff and staff related costs. Klein also indicated that by the end of 2007, the total head count for the company will be about the same as it was in 2006, due to the recent acquisitions and increased staffing in certain areas. Some have speculated that this may also be a move to transfer certain positions from the high-cost pound and Euro economies in Europe to the U.S., where salaries are lower.

In the third quarter, the company expects revenue to drop to about $210 million, with earnings per diluted share of $0.43.  At the end of the first quarter, the company said it expected revenue for the full year to be $880 million.  It has now dropped its expectations to $855 million.

Getty's gross revenue in 2006 was $807.3 million. If we assume that WireImage will contribute $30 million to that $855 million, and the other acquisition will contribute something, the total growth in revenue from businesses owned at the beginning of 2007 will be in the range of $15 to $20 million. A good part of that figure will come from iStockphoto.


Copyright © 2007 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