As digital-photography powerhouse Getty Images struggles to keep its grip on a changing market, the Seattle-based company said Friday that co-founder and CEO Jonathan Klein will become chairman and make way for an unnamed new chief executive.
The company remains the global leader in selling photography to the business world for advertising, websites and other marketing applications, and it has a strong hold on sports and news photography for electronic and print media.
But it has been trailing in the burgeoning “midstock” market, meaning less-expensive stock photography that’s often used on the web, where challengers such as Shutterstock and Fotolia have taken increasing market share, analysts said.
Getty, which is private but has corporate debt that is traded, reported 2014 revenue of $869.4 million, down 1.7 percent from the prior year, said Carl Salas, a credit analyst at Moody’s.
The midstock segment is about 30 percent of its business, “but instead of growing, it’s declining because competitors are gaining share,” he said.
Getty has taken steps to reposition its midstock business by cutting prices, creating a subscription service, and improving the search function for customers, but “it’s taken them longer than expected,” said Salas.
The company said in a statement Friday that it’s “forging new opportunities in the consumer and data spaces and continuing to focus on its midstock offering, iStock by Getty Images.”
Reacting to Bloomberg News reports this month that Getty used up one-third of its available cash in the fourth quarter, traders have cut the price of some Getty bonds to 55 cents on the dollar.
Standard and Poor’s lowered its rating on the company last week to B-, citing “poor operating performance … amid increased competitive pressure.”
S&P analyst Elton Cerda, who cut Getty’s ratings, said the company faces “a lot of competition from new players who are spending a significant amount and gaining some traction” at the lower end of the market.
Klein’s move coincides with the company’s unveiling of what it called a “bold new consumer website, which enables seamless sharing of content and introduces hand-curated ‘best of’ galleries.”
Klein and Mark Getty formed the company that became Getty Images in 1993, and began buying up photography archives and similar companies. Getty went public in 1996, then in 2008 went private in a deal with private-equity firm Hellman & Friedman.
A majority stake in Getty was acquired in 2012 by the Carlyle Group, in a deal that valued the company at $3.3 billion but saddled it with $2.6 billion in debt, according to Bloomberg.