BUSINESS WEEK ONLINE NEWS FLASH
September 17, 1997


Edited by Douglas Harbrecht


THE GETTY-PHOTODISC DEAL: IMAGE IS EVERYTHING

Getty Communications thinks content is the sparkling diamond of the Internet -- visual content to be exact. On Sept. 16, London-based Getty announced that it will merge with PhotoDisc, a Seattle company making strong inroads with stock digital photography.

The two companies will form Getty Images, a publicly traded venture based in the U.S. In total, Getty has a library of 25 million photos and close to 10,000 hours of film. Also thrown into the deal: Hulton Getty, an archive of fine art photography, the Gamma Liaison Network photojournalism agency, and Energy Film Library, a stock film library. The deal could be worth $160 million, analysts estimate. "With Getty, we have access to wonderful content," says PhotoDisc CEO Mark Torrance, who now becomes co-chairman of Getty Images.

PhotoDisc's library of images amounts to a mere 50,000 images -- but all those images are online. Now, PhotoDisc intends to offer Getty's extensive visual libraries online as well. "What PhotoDisc has is fantastic expertise on the Web," says Mark H. Getty, co-founder of Getty Communications and a member of the Getty family that made its fortune in oil. Anyone who wants an illustration can go to the PhotoDisc site, find the appropriate photo with the help of a search engine, and download the image for $19 to $180. The entire transaction takes just minutes.

Co-Chairman Getty says he talked to a number of companies before settling on PhotoDisc. Getty and partner Jonathan Klein founded Getty Communications in 1994 with the strategy of first building up content libraries and then transforming the images to digital format.

PhotoDisc's digital business has been exploding lately. In the first six months of the year, PhotoDisc reported sales of $20 million, compared with total 1996 revenues of $28 million. Most sales came from images on CD-ROMs averaging $225. But PhotoDisc's fastest-growing segment was the online business, where the company brought in $2.4 million in the first half of 1997. PhotoDisc's Web business is now averaging $500,000 in sales a month. Before opting to merge with Getty, the company was considering an IPO. Howver, "it would have taken us four to five years to reach this level if we went the IPO route," Torrance says.

With the combined companies, Getty Images will employ close to 1,000 people around the world. PhotoDisc will retain its brand name and presence in Seattle. And its employees and investors have something to smile about with this deal. PhotoDisc stockholders will receive 9.6 million shares, or 31%, of the new company plus approximately $30 million in cash when the deal closes sometime around the end of the year. The stock rose almost 2 points, to $16, on the news. And with the combination of its visual library and PhotoDisc's digital capabilities, Getty Images could challenge Corbis, the digital art company owned by Microsoft founder Bill Gates.

By Seanna Browder in Seattle

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