Getty Images, Inc. has announced that it has entered into an agreement to purchase
WireImage, a leading creator of entertainment and event imagery, for approximately $200 million in cash. The deal also will include MediaVast, Inc. the owner of WireImage, and sub-brands FilmMagic and Contour Photos. The acquisition is subject to regulatory review and other customary closing conditions.
Yesterday, we learned that Getty is also in final talks to acquire Jupitermedia for approximately $450 million (See story 932). Getty finished 2006 with $339 million in cash balances.
Information on the gross revenue of MediaVast has been closely held and is hard to estimate, but MediaVast was ranked 133 on Deloitte's 2006 Fast Technology 500 list of the fastest growing companies over a five year period. The period examined was 2001 through 2005 and Deloitte said they had grown 1,441 percent. Wireimage was founded in 2001 and it is hard to imagine that their gross revenue in that year exceeded $1,000,000. A 1,441 percent growth would have turned that into $14.4 million for 2005.
In addition, Getty will still face strong competition from the likes of AP, Reuters, AFP and other specialist providers for such images.
In making this acquisition Getty points out that the world is fascinated with images of celebrities, entertainers and athletes, and that images of such individuals have become one of the fastest growing categories in the visual content business. Such images have made up a major portion of editorial stock sales for more than a decade. While there has been some growth in demand, Getty's growth in this sector may have more to do with their increased concentration on the sector, rather than actual expanding interest in using celebrity images. In addition, "fastest growing" is a relative term since the rest of the industry doesn't seem to be growing much at all.
The business of entertainment imagery has grown significantly in recent years, and like the many other players in the space, Getty Images has benefited. The company has targeted this category for continued growth, especially in non-English speaking countries, and the acquisition of WireImage is expected to help the company expand the entertainment and celebrity imagery segment.
Getty's editorial revenue grew 24% in 2005 over 2004 and 16% in 2006 over 2005 for a total 2006 editorial revenue of $99.1 million. To maintain that percentage growth Getty acquired some agencies specializing in celebrities during this two year period. Despite the relatively high rate of growth it seems that the growth rate might have been headed downhill. Nevertheless, editorial growth was still above the 14.3% growth in 2006 for RF and 3.2% for RM. A large part of the RF growth can be attributed to the acquisition of Stockbyte.
The company estimates, on a preliminary basis, that the acquisition will be neutral to earnings per share, excluding amortization, in 2007 and accretive to earnings per share on a GAAP basis in 2008. WireImage's portfolio includes an online archive of over 8.5 million images. The company has about 230 employees and offices in New York, Los Angeles, Miami, Atlanta, Las Vegas, London, Hamburg, Tokyo, Shanghai, Sydney, Madrid, and Amsterdam.
Jonathan Klein, co-founder and CEO of Getty Images said, "The demand for entertainment, event and celebrity imagery is growing exponentially, and Getty Images has determined that there are great growth opportunities in the category. A key focus for us in the last several years has been to grow our editorial imagery business, particularly in international markets. The proposed acquisition of WireImage will enable us to develop new products and services, including podcasts, editorial video, multimedia, mobile, consumer offerings and exclusive imagery. We are confident that the proposed acquisition will help us expand our global entertainment and celebrity imagery business, allowing us to satisfy growing customer demand in the U.S. and abroad."
Under the agreement, WireImage's founding photographers and key executives have signed long term agreements to remain with WireImage and Getty Images following the acquisition.
The acquisition will bring together two leading innovators within the entertainment imagery category. Getty Images has made entertainment and celebrity imagery accessible to a growing global entertainment marketplace through its industry-leading Web site, featuring search in local languages and purchase in local currencies, and leads the industry in delivery speed, service and international distribution. WireImage has built a reputation for depth and breadth of entertainment coverage and has an innovative and customer-friendly Web site.
Several of the companies' product offerings complement each other. For example, Getty Images' Exclusive by Getty Images offering, launched in 2006, and MediaVast's Contour Photos will combine to give customers unprecedented access to celebrity portraiture and compelling editorial features.
Getty plans to maintain MediaVast's three brands: WireImage, FilmMagic, and Contour Photos, and its Web sites. WireImage's team and Getty Images will continue to generate new imagery for their respective collections and make it available for online distribution, both in the U.S. and globally.
"We are very excited to be joining Getty Images," said Jason Nevader, co-founder and CEO of MediaVast. "Under the Getty Images umbrella our customers will be able to take advantage of Getty Images' global, localized e-commerce platform. Getty Images' breadth of products and services, including their vast archival collections, will give our customers more choice and richer, more accessible content."