Getty Images to file for chapter 11 bankruptcy in restructuring deal to go private

Getty Images plans to go private through a Chapter 11 bankruptcy restructuring backed by Charles Koch’s investment firm, following the collapse of its proposed $3.7 billion merger with rival Shutterstock in June. As the company streamlines its plans for the future, it has clarified that there will be no impact on its operations, employees, partners or vendors.

Getty Images plans to undergo a pre-packaged Chapter 11 process shortly and emerge from restructuring by the end of the year. Getty has been a prominent name in the photography and video wire services industry. Reports suggest that CEO Craig Peters said the company’s board of directors decided to scrap the deal to merge with Shutterstock.

The deal fell through after the UK’s Competition and Markets Authority required the sale of Shutterstock’s editorial business. Getty, which is focused on growing its core editorial business, stepped away from the arrangement.

An earnings call revealed that the company had spent more than $100 million on professional fees and financing costs in pursuit of what it believed could have been a strategic transaction, but the deal ultimately failed.

Once a mainstay among publications, the company disclosed in an investor presentation on Monday that its iStock e-commerce business has been facing “declining agency demand and disruption”. It further noted that the sudden decline was the result of the adoption of AI for image creation.

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Getty CFO Jennifer Lyden said in August that annual subscribers had fallen from 321,000 to 241,000 over the previous year. She attributed the decline to a deliberate strategy to de-emphasize lower-value acquisition channels, including the discontinuation of the iStock free trial programme.

The Koch equity development deal

Getty had hired Guggenheim Securities to explore strategic financing options for its standalone business, leading to Koch Equity Development stepping in to provide new financing.

Koch Equity Development has pledged up to $533 million in new equity to Getty Images to help it transition from a publicly traded company to a privately held one. A Hollywood Reporter report further stated that layoffs would not be part of the restructuring plans.