After abandoning a $3.7 billion merger with rival Shutterstock in late June due to a regulatory hurdle, Getty Images is now considering filing for Chapter 11 bankruptcy and going private in partnership with Charles Koch’s investment firm.
As the company prepares an overhaul, it says there will be no impact on operations, employees, partners and suppliers. It plans to undergo a pre-packaged Chapter 11 process soon and emerge from restructuring by the end of the year. Getty provides photography and video services to media and corporations around the world, including most red carpet premieres and film festivals.
In June, Getty CEO Craig Peters said his board had decided to abandon the merger deal with Shutterstock after the U.K.’s top regulator, the Competition and Markets Authority, demanded the sale of Shutterstock’s publishing business. Getty, which is focused on growing its core publishing business, considers this a failure.
During his last conference call in August, Peters said the company spent “more than $100 million in professional fees and financing costs in what we believe was a strategic transaction” with Shutterstock that ultimately did not go through.
At the time, Getty hired Guggenheim Securities to pursue strategic financing alternatives as part of its standalone strategy. This allowed the Koch team to provide funding.
The company revealed during an investor presentation Monday that its iStock e-commerce business has experienced “decreased agency demand and disruption,” likely due to the rapid adoption of AI tools and products that have made creating stock images easier.
Still, Getty projects growth in its core editorial image unit, predicting that the division powered by news images (i.e., actual photos of actual events that happened) will grow from $369 million to $400 million by 2029.
Jennifer Leyden, Getty’s chief financial officer, said in August that annual subscribers fell from 321,000 to 241,000 from the previous year due to a “deliberate strategy to downplay lower-value acquisition channels, including the discontinuation of our iStock free trial program.”
From now on, the company will focus even more on its activity focused on archive and news photography. “This transformational transaction builds on the strength of the business and the significant growth potential we see,” 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 make capital structure improvements that will allow us to build on our strong foundation and capture new growth opportunities.”
Koch Equity Development affiliates have pledged up to $533 million in new capital to help the image provider transition from a publicly traded company to a privately held company. CEO Peters said of the deal: “The key pillars of our success are the long-standing commitment of our customers and partners, the deep expertise and creativity of our team and content contributors, and the uniqueness of our archives.
Mike Harris, Senior Managing Director and Co-Head of Koch Equity, added: “We remain confident in the future of the company and fully support this transaction alongside the Getty family. This equity investment will provide Getty Images with a strong financial foundation and greater flexibility to continue to invest in its employees, customers, contributors and future growth.”
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