Bangkok--30 Sep--Standard & Poor's
On Sept. 29, 2015, Standard & Poor's Ratings Services lowered its corporatecredit rating on Seattle-based Getty Images Inc. to 'CCC+' from 'B-'. Therating outlook is negative.
At the same time, we lowered our issue-level rating on the company'sfirst-lien credit facilities to 'CCC+' from 'B-'. The '3' recovery rating isunchanged, indicating our expectation for meaningful recovery (50%-70%; lowerhalf of the range) of principal in the event of a payment default.
We also lowered our issue-level rating on the company's unsecured notes to'CCC-' from 'CCC' (two notches below the corporate credit rating). The '6'recovery rating is unchanged, indicating our expectation for negligiblerecovery (0%-10%) of principal in the event of a payment default.
"The downgrade reflects Getty Images' lower free cash flow due to continuedweak operating performance in the company's midstock segment amid intensecompetitive pressure," said Standard & Poor's credit analyst Elton Cerda. "Weexpect that Getty Images' adjusted debt leverage will likely rise in thesecond half of 2015 due to competitive pressure. "In addition, the companywill likely maintain or possibly increase its marketing spending to maintainits market presence. These factors, combined, suggest that Getty Images'financial risk profile will likely weaken from current level. Absent asignificant turnaround with solid positive revenue and EBITDA growth, thecompany's capital structure may become unsustainable," added Mr. Cerda.
Getty Images is a provider of pre-shot still and moving visual content.Despite the prolonged impact of competition at the midstock segment, we stillview the company's business profile as "fair," given the depth and breadth ofits still image collection, its unique relationships with photographers and
associations, and its stable gross margin. This is tempered by our expectationthat unfavorable secular trends related to print advertising will continue topressure the company's traditional premium "stills" business and thatcompetition will continue to pressure Getty Images' midstock segment.