Would Acquiring Jupiter Help Getty?

The New York Post reported today that Getty Images, Inc. is in advanced talks to acquire Jupitermedia Corporation. It’s unclear how much Getty is willing to pay for Jupitermedia, but sources close to the deal said the image company could fetch more than $11 a share, or nearly $450 million including debt. Jupitermedia has been generating about $135 million annually.

Some see this move by Getty as solely an effort to remove industry competition; others sources say Getty is looking to expand its suite of offerings to Web site designers and online marketers. Jupiter has tried to take customers away from Getty by offering better discounts, so removing this downward pressure will help Getty’s situation. Owning Jupiter would certainly increase Getty’s revenue because it puts the company strongly into the subscription market where it has had little penetration up to now.

Jupiter’s 2006 subscription revenue will probably be a little over $25 million (we still haven’t seen Q4). Getty can also move a significant portion of the subscription content to micropayment, but making the micropayment and subscription offerings stronger doesn’t necessarily help Getty’s overall revenue situation long term. Getty needs to find more, higher paying customers, rather than lower paying that are likely to cannibalize some of the higher paying sales.

Jupiter has developed a customer base that has been looking for one of three things –- a different image, a choice in suppliers, or a better price. If Getty takes over Jupiter it seems likely to remove the choice of suppliers and the better price option. If what brought these customers to Jupiter was that Jupiter was the only place they could find the right image, then chances are Getty won’t lose many of the existing Jupiter sales. But, if these customers are looking for a choice in suppliers or a better price they will likely go to Corbis, or some other distributor as their option to Getty. Only time will tell how much of a factor this will be.

[tags]Jim Pickerell, Getty Images, Jupitermedia[/tags]

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