Corbis Restructures . . .
Stock Asylum Staff Report
June 29, 2007
Gary Shenk may not be Corbis' CEO yet, but the executive who has moved
rapidly up the ladder at the world's second largest stock photography
distributor is already making his presence felt in a big way.
Several moves late this week made it clear that, from now on, Corbis will concentrate on its core image licensing business, which could be good news for the company's stock photo shooters.
However, the news was less than welcome for 160 employees who were laid off Thursday and for photographers working with the Corbis assignment business, which will be shut down. In addition, Corbis said it will sell its digital asset management business. The Seattle company will keep its stock photo and stock video businesses and its rights clearances division.
"It's a tough moment but a decisive step forward in transforming Corbis into a profitable company," said Shenk. "We are focusing our business where we see the greatest opportunity, and reshaping the company to make it more competitive and efficient."
Interestingly, the move contrasts sharply with the strategy at Getty Images, the largest stock photography company and Corbis' top competitor. Growth in the licensing of commercial stock photography seems to have hit the wall at Getty with revenues mostly flat during the last four quarters. Getty did experience a small up-tick in commercial sales during the first quarter of this year.
As a result of slower growth on the commercial side, Getty has been trying to squeeze more income out of other divisions. Getty has recently spent considerable sums of money building its editorial and celebrity photography divisions.
It recently entered the stock music business with the purchase of Pump Audio for $42 million. The company also repackaged its worldwide assignment business and continues to offer digital asset management to big companies that must control large numbers of digital files, including pictures, video and text. Like Corbis, Getty has a rights clearances division.
But, commercial stock photography remains the workhorse at Getty Images and the decision by Corbis to concentrate on licensing images could be a problem for the bigger competitor.
The quality of the Corbis commercial collection has without question improved dramatically over the last two years.
If Shenk, who officially takes over as CEO Monday, and his new management team do an effective job of marketing the improved collection, it is possible Corbis could take market share away from Getty at a time when Getty investors have already scaled back their expectations. The price of a share of Getty Images stock has dropped from more than $95 in late 2005 to $47.81 at the close of trading on this date.
Corbis spokesperson Dan Perlet said the 160 layoffs at Corbis amount to about 15 percent of the company's workforce. He said the furloughs are spread across almost every level and almost every department. Seventeen of the company's 24 offices worldwide are affected, Perlet noted.
Artist representation projects currently under contract will be completed the company said. Perlet said the company will step back from some existing deals and let the photographers bill clients directly. He said photographers were informed of the changes Thursday of this week.
Corbis will continue to operate the digital asset management business until a buyer can be found, Perlet said. No layoffs are planned for that division. The Corbis spokesperson said it is likely that the company will continue to offer digital asset management as a distributor for the new owners.
Perlet said the changes resulted from a comprehensive review by the new management team. Corbis, which is owned by Microsoft Chairman Bill Gates, has yet to record a profit. Shenk is replacing Steve Davis as CEO.
The Corbis web site can be found at: http://www.corbis.com.
