Quotes like this from Getty really upset me

"Getty also runs a site called iStockPhoto, where amateurs contribute photos that the company markets at lower rates. The photos on Flickr are of sufficient quality to demand higher prices," Mr. Jonathon Klein, CEO of Getty Images, said in a New York Time's article.

What a way to market one of your companies assets while at the same time pumping up a potential partnership. That is a pretty big insult to any contributor there and will go down as one of the bigger foot in mouth incidents I think I have seen. I hope others are fed up with that type of attitude as well.

Getty Images gets bought by Hellman & Friedman

2.4 BILLION. That's B for billion and 2.4 as in 2.4 billion. That is a hefty sum to pay for this woolley, slow moving mamouth, rich in content though. Getty Images Inc got snapped up today by private equity shop Hellman & Friedman affiliates for $34 per share in cash, in a deal it said was worth $2.4 billion, including the assumption of debt. That is a nice premium to the $1.5 billion everyone thought was the asking price only a month or so back and a premium of 55 percent over their closing price in January. Seems like H&F might have overpaid a bit and I'd love to know how they came up with that valuation but I know that Getty wasn't going to sell themselves for the 1.5 or 1.6 billion, which was the amount dangled in front of their eyes a month back. They have until the second quarter of this year to close the deal which I expect will.

What does this mean for the industry? Well there are going to be some big changes over at Getty which has been in a sink hole the last few years. Everything will still run through the giant image and footage company but I wonder if Jonathan Klein's job will be safe. I doubt it. How much of their workforce will be cut? Probably more than should be but they always have a place at Cutcaster ;-) What changes will be made in strategy and how will the company now report those changes to the people under contract with them? Will H&F be able to turn Getty around and alleviate the uproar photographers under contract with them have been creating?

More to come later ;-) but a fun way to start off the week. If you have any thoughts on the deal lets start a discussion below.

Getty Drops After New York Times Says Auction Is in Jeopardy

Saw this one coming.

By Sarah Rabil and Joseph Galante
Feb. 11 (Bloomberg) -- Getty Images Inc., the media company
exploring financial options, fell as much as 7.1 percent on the
New York Stock Exchange after the New York Times reported that
its efforts to sell itself may be unsuccessful.
Getty hasn't received any offers significantly above its
market value of $1.6 billion, the newspaper said, citing
unidentified people briefed on the matter. Kohlberg Kravis
Roberts & Co., Bain Capital LLC and Providence Equity Partners
Inc. expressed interest in Getty last month, the Times said.
The company, the world's largest supplier of photographs to
newspapers and advertising agencies, hired Goldman Sachs Group
Inc. last month to explore financial options, after its shares
lost almost half their value in 12 months. Getty spokeswoman
Bridget Russel didn't immediately return a phone call and an e-
mail seeking comment on the report.
Getty, based in Seattle, dropped $1.70, or 6.4 percent, to
$24.92 at 10:08 a.m. in New York Stock Exchange composite
trading, after falling as low as $24.72.


It's interesting that Private Equity buyers are moving in around it. Not sure the synergies there and probably why they aren't willing to pay that much of a premium for the sagging company.

Tech / Media Peeps CEO Brunch

I had a nice brunch yesterday with plenty of interesting people who work in Tech, Media and the investment community at Gemma in the Bowery Hotel set up by Hilary Rowland of New Faces. It's fascinating to hear how each side views the other and how each other can work together to fill gaps in experience or knowledge the other side may be lacking. I was really impressed with some of the accomplishments and I was excited to see other people venturing out on their own and making a living doing what they love.

Some of the guest were from the Gathering, Right Media (sold to Yahoo), Getty Images, Conde Nast, Matrix Partners, Editor of an Aviation Magazine/Corbis rep'ed Fashion photographer, SocialDiva CEO, New Faces CEO, IACI Private Equity, and Paltalk. That just hit on the list of people who were sitting next to me ;-)

Getty's Stock Breaking out Today

My eye's are not deceiving me but Getty Images stock (GYI) is up over 31.50. It's at a 3 month high.

Disclaimer- This is not financial advice to buy or sell the stock.

Getty Revenues below Expectations

Getty Images, the stock image provide, had revenues of $209mm in the third quarter which came in again below expectations. Mike you were right and I was wrong about it being a short on bad news. The market obviously didn't find too much wrong with it as the stock is up 9%. Can you say short squeeze?

Here are some notes from the conference call which were paraphrased from Seeking Alpha.

Micropayment is good and "the use of and demand for visual content primarily in online usage is exploding.": Thank you very much. Getty CEO Jonathan Klein has just finished his opening remarks, and said nothing about Getty we didn't already know. He twice stressed that Getty's new $49 web-resolution images are a "super low resolution" product. (Fact check: Resolutions of the $49 images are typically 338 by 506 pixels, which is pretty low.) Sure that doesn't make the photographers happy to hear this. Klein also said, "Micropayment is very good for the visual content industry," and noted that it is disproportionally good for Getty, since it owns market leader iStockphoto. "The key difference is iStockphoto's highly profitable e-commerce based business model. Revenues generated here are from the licensing of images through e-commerce not by advertising." And he again mentioned plans for Getty's as-yet-unlaunched consumer Web site. Anyone know what this is going to be called? Is it called Greenfield?

In the Q&A, Klein says the company is considering web-res pricing for its video products. Klein earlier acknowledged that footage was in a "transition" period" and under "a two year investment program into ad content." "Footage will become much bigger, bigger business for us in the future. Our overall cost familiar with the increasing demand for digital video, as bandwidth constrains disappear and video finds its way from big screens to smaller screen, and the web and mobile devices." Klein did water down his excitement by saying that, "You will notice on the numbers that it has not been a great year for footage and 2007 has been very much a transition year for our footage business. We do expect double-digit growth in 2008 and beyond." Good news for Cutcaster.

The $49 question: Klein answered a question about the critical reaction from photographers that greeted his company's $49 web licensing price. "The communication with the photographers didn't clearly enough outline what we had in mind," Klein says. The $49 images, he says, can only be used online. "It's a super, super low resolution image. It cannot be used in any other way." He noted that once Getty explained why it was offering this product (to attract web users who were shopping elsewhere, resulting in declines in RF sales at low resolutions), photographers were "much more comfortable." I don't know if I believe that. From our conversations with photographers they still seem pretty upset and i sense a defection of sorts from Getty because of this and other reasons. "We created a new product for a new market and they're feeling much more comfortable and confident about it." As evidence, Klein noted that blogs and forums had been quiet for several weeks about this topic. Shout out to the Cutcaster blog here. He said low-resolution RF volumes have recovered to the levels they were at in the last quarter of 2006. Many of those buyers are lapsed customers or completely new customers. He added: "Frankly, we had very little pushback from the photographers we work very closely with. Some of the pushback was from people we had very little relationship with who felt it was an opportunity to make a point, and we respect that." Ouch.


The shares whipped around a bit after the news. They are up now in a down tape. I was amazed at how much they talked about microstock and recognize this growing trend, whether good or bad for the overall market space. I think they are happy as clams that they bought and got Bruce L. to come in and help them with their technology. It had been 5 years since the Getty website was relaunched with new changes last August.

John Mckay, Getty's In house Counsel and former Fired Fed Prosecutor, leaves Getty after 3 months

In an story that caught my attention as a bit of a blast from the recent past. John McKay, the top lawyer at Getty, who just got hired by Getty, has left his position as the top lawyer at Getty Images after less than four months. If you remember, John McKay was the former U.S. attorney ousted in the Justice Department's firings of federal prosecutors. The same firing that led to Justice Department Head Alberto Gonzales resigning who was accused of political bias in the firings.

Not entirely sure why he left but he looks to be going back to teaching in Seattle. Still trying to figure this out though. BUUTTTTT something telling may be that McKay declined to comment further on his experience at Getty, saying it would not be appropriate to talk about matters that could be ongoing legal issues. Yikes or just a smoke screen.

During an Getty interview in May, Jonathon Klein, Getty's CEO, said he offered McKay a job because he wanted "somebody who had broader experience than working as a lawyer in a law firm or working as a general counsel at another company."

If you check out the Wikipedia entry you can see: "On September 17 Jonathan Klein, CEO, Getty Images, announced that John McKay would be stepping down as General Counsel for Getty Images to return to the law faculty at Seattle University where he will pursue a full-time teaching position". This looks like his next plan.

I think Ray Charles said it best.




For more info- Kristi Heim: 206-464-2718 or kheim@seattletimes.com.

Getty Images getting Clobbered

Getty Images, the world's biggiest supplier of pictures used in advertising and the guy who has been buying everyone up recently, reported second quarter profit and sales that rose less than analyst estimated.

They still made a hearty $218 million.

Getty announced that it was going to lay off as many as 100 employees. Cutcaster is sorry to hear that people are losing thir jobs but Cutcaster is ramping up and we welcome all resumes.

Getty's stock is currently down 15%. I guess the days of a $90 stock price are over for Getty no matter how hard they try to buy up the industry and control it.

UPDATE

Getty's stock is now down over 21%. Jonathon Klein put out a simple strategy for dealing with the disaster by saying, "My advice is simple - ignore it." I don't know if you can tell the people that lost their job or the investors who are losing money to just ignore it but the message he sent is definitely "simple." For a complete rundown of his letter which highlights the Getty business and where it currently stands, check out StockPhotoTalks write up.