After abandoning a $3.7 billion merger with rival Shutterstock in late June over a regulatory roadblock, Getty Images now plans to file for Chapter 11 bankruptcy and go private in partnership with Charles Koch’s investment firm.
As the company plots an overhaul, it says that there will be no impact on operations, employees, partners and vendors. It plans to undergo a prepackaged Chapter 11 process shortly and emerge from restructuring by the end of the year. Getty provides wire service photography and video to news outlets and businesses globally, including most red carpets and film festival premieres.
In June, Getty CEO Craig Peters said that its board of directors decided to scrap the deal to merge with Shutterstock after the top regulator in the U.K., the Competition and Markets Authority, required the sale of Shutterstock’s editorial business. Getty, which is focused on growing its core editorial business, viewed that as a non-starter.
During its latest earnings call in August, Peters said the company had spent “more than $100 million across professional fees and financing costs in pursuit of what we believe will be a strategic transaction” with Shutterstock that ultimately didn’t go through.
At the time, Getty had hired Guggenheim Securities to seek strategic financing alternatives in its standalone path. That now has resulted in the Koch team arriving to provide financing.
The company disclosed in an investor presentation on Monday that its iStock eCommerce business has seen “declining agency demand and disruption,” presumably due to the rapid adoption of AI tools and products that have made stock image creation easy.
Yet Getty projects growth in its core editorial image unit, forecasting that the division that’s powered by news images (i.e. real photos of actual events that have occurred), will grow from $369 million to $400 million by 2029.
Getty CFO Jennifer Leyden had said in August that annual subscribers fell from 321,000 to 241,000 over the prior year due to a “deliberate strategy to deemphasize lower-value acquisition channels, including the discontinuation of our iStock free trial program.”
Now it will be leaning even further into its archive and news photography-driven business. “This transformational transaction is underpinned by the strength of the business and the significant growth potential we see ahead,” said Mark Getty, co-founder and chairman of the Board. “I am pleased to continue our strong partnership with Koch Equity Development and the lender groups to provide capital structure improvements that will enable us to build on our solid foundation and seize new growth opportunities.”
Affiliates of Koch Equity Development have pledged up to $533 million of new equity to help the image provider go from a publicly traded firm to setting itself up as a private company. CEO Peters said of the deal, “Core pillars of our success are the longstanding commitment of our customers and partners, the deep expertise and creativity of our team and content contributors, and the uniqueness of our archive.”
Mike Harris, senior managing director and co-head at Koch Equity, added: “We remain confident in the company’s future and fully support this transaction alongside the Getty family. This equity investment will provide Getty Images with a firm financial foundation and greater flexibility to continue investing in its employees, customers, contributors, and future growth.”