Getty Images, Inc. (NYSE: GYI) has had a class action lawsuit filed against certain officers and directors by the Law Offices of Brian M. Felgoise, P.C. The goal of the lawsuit is to seek the highest possible offer for the public shares in connection with the buyout from Hellman & Friedman, LLC for $34.00 per share.
On the surface you might agree that "the highest price" wasn't obtained or wasn't well negotiated. After all, Getty Images shares traded north of $50.00 last year and traded north of $80 in much of 2005 and part of 2006. There's just a problem that is too hard to blame on Getty, its management, and its employees: its business dominance peaked and its relative strength to hundreds or thousands of start-ups and emerging companies has come and gone. And the sad part is that there is nothing it can do about that.
The virtual industry de-merger of Getty was something we predicted quite well in our subscriber newsletter posted last May, and the only thing we didn't get right was not being negative enough in a fast enough period of time. Our exit came in August, 2007 rather than in early to mid-2008.Shortly after that, we noted that Getty looked like a value stock that may just be a value trap.
Getty has made numerous acquisitions to try to win more in the digital rights space, but there are just too many small competitors that can operate for nearly free. Frankly it did what it could and was aggressive to be able to compete in royalty free images and then in other media acquisitions. Management isn't to blame so much here. Some businesses can easily be ruined by crowdsourcing and that's the case here. In fact, and school with a large exchange program could "wiki" the entire model.
Here's the good news, Getty will always survive as long as its exclusive photo and video rights are in tact for live events such as concerts and sporting events. But its days of charging $200.00 to newspapers and web media outlets for a digital photos of a broken fire hydrant or a bear waiting for fish in a river are gone. It cannot acquire everyone.
Sure, this seems like a "thanks for nothing" private equity buyout on the cheap. But there was a time that it looked like no one was going to offer anything above $30.00. Sometimes the news isn't good no matter what you try. And sometimes the less-bad news is better than nothing. As a public company, Getty would have had more than a very tough road ahead of it.
Hellman & Friedman got a steal on the Doubleclick acquisition which the firm sold to Google (NASDAQ: GOOG). But this deal is harder to see a grand end game in, or at least anywhere along the same lines. This class action may do more harm than good.
Those suing Getty Images: Be thankful a buyout came at all (GYI)
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Reader Comments (Page 1 of 1)
3-20-2008 @ 1:30PM
Unfair Getty said...
Getty has been unfairly targeting charities and small start ups in the last few years to pay huge sums of money for using their images that have not been bought from them. In the place of some $100 which costs the images really, the recipients received invoice for amount like $4000. Getty initially contacts you with an invoice claiming the image is theirs and the recipient has to pay. If the recipient contacts Getty, he or she will be threatened with legal action. At the end, if the recipient does not pay the amount, they will transfer the invoice to a collection agency in Florida. Getty did this in the UK, and the law firms in the UK have stopped Getty's extortion efforts, and they claimed it is a scam.
The most unfair thing is this. Getty has thousands of pictures taken from many countries. Those properties belong to those countries rather than Getty. For example, the pictures of temples, monks, and people in traditional dress are selling on Getty. The temples or anything I have said above do not get any royalty out of the amount that Getty collects in the US. The picture of a poor man selling some vegetables in Mexico is sold for thousands of dollars on Getty. Does he know what is happening?
A class action against Getty's copyright violation is on the way.
3-31-2008 @ 4:14AM
Paul Ellis said...
To the previous poster: please check up on copyright law before posting misinformed comments such as the above, and certainly before initiating any "class-action lawsuit" for breach of copyright. The original copyright in a picture subsist with the author, i.e. the photographer. The subject of the picture has nothing to do with this, except if the image is to be used for any advertising purpose, in which case signed model and property releases will have been obtained. Getty may be guilty of many things, but exploiting a non-existent "subject's copyright" in this way is not one of them.
3-31-2008 @ 6:31AM
halftone said...
There is a lot to dislike about Getty (for basically wrecking the image stock market in pursuit of hegemony - which has now turned sour), but Unfair Getty's axegrinding is deranged. No wonder you're in trouble if you have such a clueless understanding of copyright.
First off, you don't know what the eventual outcome of UK or other cases may be, nobody does. There is at least one report of US summary judgement against one UK infringer. There may be more. It is not a scam. US law permits punitive damages against registered work (up to 70x lost revenue), where UK law does not. All those people who have licenses obtained elsewhere should be fine, but those who just lifted them may yet end up in court.
Second, Getty, like any stock agency, like any photographer, is perfectly entitled to take action against infringers. It's entitled under US law to claim large sums. Unfair? A fair person would have paid the $100 rather than steal, so don't you think that's just a tad hypocritical?
$4000 now is just tough, you lost the $100 opportunity by trying to use and not pay. Just like shoplifters can't simply pay for the goods if they get caught. Don't steal, is the moral here.
Third, the images do not 'belong to countries', they belong to the people who did the work to create the images, the photographers, or their employer. With few exceptions, if you can see it in public places, you can photograph it without copyright being an issue.
Nor is there copyright in poor men selling vegetables, only in photos of poor men selling vegetables. If there are property or model releases, they will have been paid for by the photographer. The only person trampling anyone's rights here are the illicit users of the images.
To try and excuse copyright thieves as the champions of social justice toward poor farmers is just pure slime. How much did you send him out of the $100 you so nobly didn't pay, exactly?
Class action against Getty for copyright violation? Great idea, lacking only any understanding of the law, the facts and common sense.
4-14-2008 @ 1:23PM
Fairplay said...
Getty Images deserves every piece of bad news that it gets ... and more.
Thanks to this blog we can see why Getty is so desperately seeking revenue from anywhere it can - in the hope of shoring up it's share price.
To accuse ( some of ) the people that Getty Images is sending invoices out to of stealing is to completely misunderstand what Getty Images are trying to do.
Most " accused " business's have outsourced the production of thier websites to " website designers " and have relied apon them to use legitimate, paid for,licensed images.
It is news to them that the images may not have been licensed and these companies do not have the resources to check that all the images used have been properly licensed.
If Getty Images was really protecting the rights of it's photographers it would have gone about this in a completely different way - highlighting to users that it was the owner/licensor of these images and giving them a reasonably opportunity to resolve the matter.
It sounds to me like the above commentator is an interested party in Getty Images or is somehow gaining from what is indeed a scam and will hopefully ruin Getty Images.