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Author Topic: Getty revenue declining: Shutterstock and Fotolia to blame  (Read 30996 times)

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wds

« Reply #25 on: September 05, 2013, 14:36 »
+4
Nice to get some real info about what's actually happening for once.


« Reply #26 on: September 05, 2013, 15:10 »
0
Does that mean that the indebtedness went from 6x earnings to 7x earnings in six months? Was that the result of additional debt being taken on, or a result of the earnings declining so that the ratio between earnings and debt changed? If it is the latter, then the ratio will continue to increase until (or unless) they can start to grow their income.

And if you have borrowed 7x your earnings and you are paying, say 4% interest, then wouldn't more than 20% of what you earn will be going into interest repayments?

It does mean that they took money from a bank to pay dividend (simply words - to cash % the acquisition of GI business). This is very simple operation, in East Europe - companies like GI hire a person from bank industry with good connections to bypass this shameful valuation; more often the person responsible for granting a 'sum' lands in the company as a new financial director or similar position. Who cares, 7x, 12x? It's nothing more than money.
« Last Edit: September 05, 2013, 15:32 by a1bercik »

« Reply #27 on: September 05, 2013, 15:14 »
+15
I find it really hard to grasp: They take 83% of all my sales... where do they put that money???

« Reply #28 on: September 05, 2013, 15:55 »
+8
I find it really hard to grasp: They take 83% of all my sales... where do they put that money???

It's all in the links that Jsnover has quoted above.
The money went to Hellmann & Friedmann. They took up a loan to pay themselves a dividend. Now Getty has to use your money to pay interest on that loan (and to pay it back eventually).


Babbalouie

« Reply #29 on: September 05, 2013, 16:06 »
+1
I only hope IS demanded a long term contract with Yuri before inking the deal with signatures.

KB

« Reply #30 on: September 05, 2013, 16:20 »
+2
They say that the price of Getty debt fell to 95c on the dollar. Doesn't that mean that the market is pricing in a default?

I may have misunderstood, as I am not a money-man, perhaps someone who understands the arcane byways of high finance could clarify that.


It means that you can buy Getty debt, from those who currently hold it, at a discounted rate (reflecting the risk it entails). I think when you buy the debt you are also buying any income from interest on the debt.

It basically means the lender has already accepted that it will likely lose money on the debt and is willing to accept a small loss now to avoid risking a bigger loss in the future.

You can currently buy Greek debt for about 40c on the Euro ... but you might get a 'haircut' instead!

http://online.wsj.com/article/SB10001424127887323297504578579111798293062.html

No, it may not mean that at all.

There are several factors that determine the pricing of fixed income instruments. Two of the main ones are credit (default) risk and interest rates.

Here in the US, intermediate term interest rates have risen very sharply over the last few months. The 10-year Treasury bond yield closed today near 3%, up from below 2% only 3 or so months back. That's a 50% increase in yield, which is huge. The yield on corporate debt has also risen, though not as much since the yield wasn't as artificially low as Treasuries.

When yields rise, prices fall: It's a direct and immutable correlation (since one determines the other).

That doesn't mean that the price drop doesn't also include some component of an increase in Getty default risk. But I suspect the bigger part of it is the general rise in interest rates, not a rise in default risk.

ETA: Upon re-reading the article, I see that price quote is referring to the term loan, not their longer term note. I assume the term note is very short duration / low interest, so I have to revise my conclusion and say, yes, most of the price drop is almost certainly due to an increase in default risk. Though the risk can't be too high, since their 7-year, 7% note is still priced only about 10% below par, which doesn't seem too far from other similar, lower quality debt.
« Last Edit: September 05, 2013, 16:27 by KB »

ShadySue

« Reply #31 on: September 05, 2013, 16:22 »
0
I only hope IS demanded a long term contract with Yuri before inking the deal with signatures.

I'm sure both of their lawyers had a field day with that contract negotiation.

« Reply #32 on: September 05, 2013, 16:26 »
+2
Meanwhile Shutterstock has millions in the bank........

« Reply #33 on: September 05, 2013, 17:01 »
-2
Meanwhile Shutterstock has millions in the bank........

It's not inconceivable that when Carlyle Group eventually lose patience with their irksome 'investment' ... that SS might become the next owner.

I reckon that the SS management team are probably the only people with the detailed knowledge of the industry to make Getty work. The only problem is that their valuation of Getty's true worth is likely to be a lot lower than those with less knowledge of the industry.

« Reply #34 on: September 05, 2013, 17:08 »
0
Meanwhile Shutterstock has millions in the bank........

It's not inconceivable that when Carlyle Group eventually lose patience with their irksome 'investment' ... that SS might become the next owner.

I reckon that the SS management team are probably the only people with the detailed knowledge of the industry to make Getty work. The only problem is that their valuation of Getty's true worth is likely to be a lot lower than those with less knowledge of the industry.

show is about to begin ;D

« Reply #35 on: September 05, 2013, 17:24 »
+2
Meanwhile Shutterstock has millions in the bank........

It's not inconceivable that when Carlyle Group eventually lose patience with their irksome 'investment' ... that SS might become the next owner.

I reckon that the SS management team are probably the only people with the detailed knowledge of the industry to make Getty work. The only problem is that their valuation of Getty's true worth is likely to be a lot lower than those with less knowledge of the industry.

SS might indeed have the money to buy getty, especially in two or three years when they have grown even more and also have a flourishing high end creative business. But to make those business cultures compatible would take a lot of work. Much easier for them to slowly win over customers and artists and just do their own thing.

The advantage with online customers and digital assets is that they can move around very fast.

Which also leaves Getty the chance to achieve a turnaround and head back for growth if they really want to. 

« Reply #36 on: September 05, 2013, 17:43 »
+2
iStock website looks fine, what they offer customers is good how they treat artist is bad, they have made so many short term gain moves and now it is catching up. I will be thrilled for a turn around but I have to plan as if it won't happen

« Reply #37 on: September 05, 2013, 17:50 »
+6
SS might indeed have the money to buy getty, especially in two or three years when they have grown even more and also have a flourishing high end creative business. But to make those business cultures compatible would take a lot of work. Much easier for them to slowly win over customers and artists and just do their own thing.

The advantage with online customers and digital assets is that they can move around very fast.

Which also leaves Getty the chance to achieve a turnaround and head back for growth if they really want to.

Hopefully, I've finished my rocket ship by then, so I can escape.  ;D

« Reply #38 on: September 05, 2013, 17:54 »
+4
SS might indeed have the money to buy getty, especially in two or three years when they have grown even more and also have a flourishing high end creative business. But to make those business cultures compatible would take a lot of work. Much easier for them to slowly win over customers and artists and just do their own thing.

The advantage with online customers and digital assets is that they can move around very fast.

Which also leaves Getty the chance to achieve a turnaround and head back for growth if they really want to.

Fair comments Jasmine. It has to be said that the recent changes at IS are indeed bold and extremely painful financially, both for them and for us, so maybe Getty does have what it takes to turn their ship around. I doubt it though. As bold as the move might have been, it was largely reactionary in that they were most likely forced into it by the sales patterns. It was a move to stem the losses rather than one to grow the business.

Of course the financial assessments by Moody's don't actually take into account the last couple of months since IS introduced the changes. The 3rd quarter results from IS, and therefore the impact on Getty's bottom-line, might be much worse than Moody's realises right now.

« Reply #39 on: September 05, 2013, 19:58 »
+3
My concern that Getty will make istock commissions 20% (fixed) for exclusives to reduce expenses. You KNOW this has to be on their minds. But they must also know the fallout and backlash would be significant and possibly drive away MORE of their "valued" content base.

They  have to stop bleeding money from their greedy stupid debt load they created.

« Last Edit: September 06, 2013, 00:07 by oxman »

« Reply #40 on: September 05, 2013, 20:19 »
+4
;
« Last Edit: September 06, 2013, 04:26 by gostwyck »

« Reply #41 on: September 06, 2013, 00:57 »
+7
The advantage with online customers and digital assets is that they can move around very fast.

Which also leaves Getty the chance to achieve a turnaround and head back for growth if they really want to.

Internet companies can change quickly but persuading customers to come back if they have not been happy with their experience is another matter.  Rapid customer growth belongs to the exciting new kid on the block, not to an old established company whose only way of innovating is through juggling product prices.

« Reply #42 on: September 06, 2013, 01:46 »
+15
The elephant in the room has taken an almighty dump in the corner and their only solution is to spray it with Febreze.

« Reply #43 on: September 06, 2013, 02:41 »
+8
You have to love this part :

Randall Whitestone, a Carlyle spokesman, declined to comment and referred questions to the company. Jodi Einhorn, a Getty spokeswoman, didnt return a telephone call seeking comment on the Moodys action.

:)

« Reply #44 on: September 06, 2013, 03:39 »
+1
Meanwhile the SS and FT sales are very good in September  ;D.....

« Reply #45 on: September 06, 2013, 04:09 »
+1
I agree that winning back customers and trust will be very expensive and need at least two years. But if they really want to, they can do it. Is the current strategy the right one? I don't know and we will see how long the new manager lasts under pressure from investors. But at least some visible attention is being brought to istock after years of neglect.

Of course SS and Fotolia and all the others will continue to press forward.

So I will continue to upload where I expect the money to be in the forseeable future....and I certainly feel safer working with several agencies than just one. It helps me to focus on my work and just enjoy what I am doing without having to worry whatever disaster might strike next.

It's also great to see new uploads sell. Looks like the customers that like my work have moved on as well.

« Reply #46 on: September 06, 2013, 10:41 »
+5
Here's a quote from Bloomberg's report;

"Randall Whitestone, a Carlyle spokesman, declined to comment and referred questions to the company. Jodi Einhorn, a Getty spokeswoman, didnt return a telephone call seeking comment on the Moodys action."

I can't help thinking that Getty would do better by fessing up to what's gone wrong and stating what they are going to be doing about it. By staying schtum they are allowing the story to keep rearing it's ugly head. It's a racing certainty that the next quarter's results will be even worse (as it will include Istock's price reductions) so it is surely to Getty's advantage to go public now and let the story die a natural death before then.

ShadySue

« Reply #47 on: September 06, 2013, 11:15 »
+6
Here's a quote from Bloomberg's report;

"Randall Whitestone, a Carlyle spokesman, declined to comment and referred questions to the company. Jodi Einhorn, a Getty spokeswoman, didnt return a telephone call seeking comment on the Moodys action."

I can't help thinking that Getty would do better by fessing up to what's gone wrong and stating what they are going to be doing about it.

I see no evidence that they know what's gone wrong, or have any plan to reverse the decline, particularly on the iStock side of things.

« Reply #48 on: September 06, 2013, 11:43 »
+1
Plan B in the works

« Reply #49 on: September 06, 2013, 11:47 »
0
It's not inconceivable that when Carlyle Group eventually lose patience with their irksome 'investment' ... that SS might become the next owner.

Lol. And in a universe of infinite possibilities, it's not inconceivable that a consortium from the Microstock Group might one day own it. Or maybe the people who run the mini-mart along the road from here. But this is certainly also equally as unlikely :) Shutterstock and Getty are completely different businesses on completely different scales. Also - Getty is the same business no matter who owns or operates it.

I see no evidence that they know what's gone wrong, or have any plan to reverse the decline, particularly on the iStock side of things.

Naturally optimistic as I am, and wanting to see Getty do well (because they matter to the industry IMO) I disagree. Drastically reducing prices on microstock content which is available everywhere is potentially a very good strategy as follows:

Many of the microstock companies are potentially extremely under-diversified and therefore exposed to the risk of quickly losing their perceived value in a prolonged price war on microstock priced content. By under-diversified, I mean that budget is their only business. How long could they survive if Getty decide to be the cheapest for basic entry level content ? Suppose they go nuclear and decide to offer some really good extended deals on new Thinkstock accounts. Say - free for the first 3 months, or something. The point being that a price war may very well be the best way of maintaining higher prices longer term.

Higher prices and lower volume is a more sustainable model for most photographers.


 

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