I spent a good portion of yesterday, the day that the Getty Images (NYSE: GYI) sale to Hellman & Friedman was announced, contemplating the ramifications. In between assignments, I fielded (and made) a number of calls about the aquisition.
My first inclination was "oh, they'll break up the company", and then, I started doing some serious thinking. Daryl Lang disclosed/revealed (PDNOnline: Getty Images Board OKs Private Equity Sale, 2/25/08) H&F are part owners of their parent company, AND, several respected advertising agencies and media properties. Thus, these people know the value of visual assets.
Prior to reading this revelation, I reached a similar conclusion to Daryl's - taking the company private would diminish the bean counters' grip on it's quarterly performance. I can only surmise that some degree of the decisions that were made about pricing models and so forth were done to prop up ailing bottom lines to hit Wall Street expectations. It has long been known that the bean counters are a poison pill for the creative community, looking to squeeze in places that are detrimental. While surely H&F will want quality performance and revenues (more on that in a minute), there will be much less pressure to perform like a circus monkey to make the traders happy and entertained.
I expect that JDK will remain on board for the short term, and then leave when H&F feels they have taken the reins, in a smooth transition. He's surely made more than his fair share of bad decisions, highlighted by the bright light that is required of publicly traded companies, and I was (and where applicable, will continue to be) highly critical whenever they are bad for the long term good of the creative community.
So, what changes might we see? More than one person I spoke with concurred that the Getty "wire service" is ripe for the chopping block, which was my thinking as well. One need only look at the history of United Press International, the once famed photo wire, and compare it to where it is today. The Associated Press' photo wire service, over the years, has had it's struggles, and, as a standalone entity not been viable, but, bolstered by the combination of text and photos, has survived, in large part, because it is a co-operative, owned essentially by it's member papers. Last May Reuters reported on it's own sale to Thomson (Thomson, Reuters to forge global info leader) for 17.2B.
Getty's "always gotta be there" mentality may be stretching this underperforming department thin. With WireImage's acquisition, they have made covering celebrity events profitable (to a degree), where the $100 an event schmucks that turn up with their consumer-level equipment with pop-up flashes and 24-300mm f4.5-f8 zooms have had a detrimental effect on celebrity coverage. When WireImage can charge, say, a perfume company $5,000+ to cover an event in NYC, pay the photographer $250, own all the rights, sell the images worldwide, and reap the profits from what used to be images that were handed out freely, that's a profitable paradigm. If only those photographers would take the $250 as a guarantee against future sales, and be a party to that income stream, or, get more of the $5k that WireImage is charging (and make no mistake about that, that IS a real figure) for these types of events, that would be fair. Getty has also secured profitable arrangements with sports leagues, and while not wholly journalistic in nature (i.e. looking for images that put a league in a dim/bad light, like fights, and you find slim pickings), they (the new buyers, who own a few ad agencies) also know that providing services to advertising clients with discriminating tastes and demands (read: profitable) is where the money is. So, I'd look at their wire-service like coverage and staffing to be under a serious microscope in the coming year.
As an interesting anecdote, taking the 70 million image that Getty reportedly has in it's collections, and doing some simple math, you arrive at $34.29 per image for a $2.4B acquisition, valued at $34 a share. Coincidence? Yes, but an interesting observation none-the-less.
They jury is still out on this, and I look with a questionable eye at many of the decisions that Getty has made over the past few years. However, this may well be a new beginning. I'm not holding my breath, but I am holding out hope that it could be a good thing.
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