Features
Jupiter confirms sale talks with Getty Images and potential sale price of $350 million
JupiterMedia has broken the silence about a potential sale to Getty images by issuing an official press release responding to the flurry of articles published yesterday by the business press. The press release states "Jupitermedia confirms that it is currently in discussions with Getty Images, Inc. regarding a potential sale of the company to Getty Images in a cash transaction that would be valued at $9.60 per share [approx $350 million]." In addition Jupiter confirms that a proposed acquisition would be conditioned on the Jupiter Web business would be sold to a third party, and would likely be purchased by Alan M. Meckler, Chairman and Chief Executive Officer of Jupitermedia.As news of the potential acquisition of Jupiterimages by Getty continues to ricochet around the industry, we thought we'd put together a handy list of angles for our readers' consideration:
Meckler going back to his roots: Alan Meckler has found the image business more difficult than he imagined. It is no secret that the consolidation of the many companies and brands he has acquired has not gone smoothly. He has openly chafed at the shackles imposed on him as the CEO of a publicly traded company. Recent acquisitions and initiatives indicate he longs to return to the scene of his greatest successes; the conference industry. Some have speculated he will retain or buy back the Jupitermedia part of the company, which includes the conference business, and in which Getty likely has no interest.
Getty gets RF distribution channel market share: While Jupiter can claim only about 5% of the stock photo market overall, its acquisitions of many high-profile RF brands, including BrandX, Bananastock and Comstock, have made it an industry leader as an RF supplier, second only to Getty itself and well ahead of Corbis. The prospective deal would further solidify Getty's dominance of the RF business and give them even more leverage with their channel distributors.
Getty gets 7 million wholly-owned images: Getty CEO, Jonathan Klein, has said he wants his company to have every kind of licensing model for every kind of client. If there is any part of the stock image industry Getty does not currently dominate, it's the subscription business, which Jupiter has developed. In order to efficiently run a subscription business, one needs wholly owned assets.
Getty eliminates a low-priced competitor: Some have suggested Getty wants to clear Jupiter out of the market and thereby eliminate a low-price competitor. We question whether this makes a compelling motive. Jupiter had a tough year in 2006 (as did Getty) and has yet to prove it represents a serious enough threat to Getty’s supremacy to make Getty want to buy them.
Where's Corbis?: Might Getty have made this move in part as a pre-emptive strike in the face of the reportedly improving fortunes of Corbis? If the Getty/Jupiter deal goes through, not a lot changes for Corbis. It maintains its position as a distant second, just a bit more distant than before. Could Corbis enter the picture as a spoiler? As a publicly traded company, Jupiter must at least consider all offers. Corbis certainly has access to the resources needed to buy Jupiter at higher than the $350MM supposedly offered by Getty. One wonders, however, whether Bill Gates has the inclination to make such a heavy (even for Gates) investment in a venture to which he has already dedicated millions over the last decade and a half, with no positive result.
Fallout for Jupiter employees: Getty recently laid off 10% of its work force. One has to assume Getty would simply take on the assets, but not the operations of Jupiter leaving a lot of stock photo industry employees out on the street. Getty’s announcement that they have purchased WireImage reduces options for employees looking to stay in the industry.
What if the deal falls through?: If Getty and Jupiter can not come to an agreement, we predict the consequences will be dire for Jupiter and a bump in the road for Getty. Prior to the news of this possible take-over, many on Jupiter’s staff were known to suffer disenchantment in light of the difficulties the company faced integrating its numerous acquisitions. The news of this deal, which would have to result in a massive lay-off of employees (probably from both companies but mostly from Jupiter) must have a negative if not almost crippling effect on the morale of the team. If the deal falls through, Jupiter managers will have a tough time recovering and instilling as positive attitude among the troops. We should also note that many of the troops came to Jupiter from Getty. (This might put Jupiter in a weaker bargaining position for the remainder of the negotiations.)
Anti-trust ramifications?: Immediately upon hearing the news of Getty’s possible purchase of Jupiter, and especially now that Getty has completed the purchase of WireImage, many ask whether Getty might be at risk of violating anti-trust regulations, i.e., creating a monopoly. The current regulatory climate (look at what has happened with McGraw Hill and the publishing industry) and the existence of Corbis, Masterfile, Amana, photolibrary and countless other stock photo businesses make an anti-trust case unlikely.
Click here to view the original press release from Jupiter.
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Related Stories:
Getty Images acquiring WireImage for $200 million in cash (February 22, 2007)
Getty Images in talks to acquire rival JupiterImages (February 21, 2007)
Getty consolidates its own royalty free brands (February 20, 2007)
Getty releases 4Q and Full Year 2006 financial results (January 30, 2007)
Klein outlines plan for growth after disappointing 3rd quarter; Getty’s stock hits new low (October 26, 2006)
Getty acquires Italian distributor Laura Ronchi (May 3, 2006)
Getty Images acquires Stockbyte for $135 million (April 6, 2006)
Getty acquires iStockphoto for $50 million (February 9, 2006)
Posted in: Features, Stock Photo Companies
