From polar bears to the Bomb: historic Getty picture archive is sold for $2.4bn

Getty Images, the world's largest picture archive, has been sold to a private equity firm for $2.4bn (£1.2bn), after shareholders lost faith in its prospects in an era in which readers and advertisers are switching from the print media to the internet.

Where magazines and marketing brochure designers once paid thousands, if not tens of thousands, of dollars to use an image from its historic archive, prices have crashed and Getty's shares have halved in the past 12 months. Faced with low-cost rivals and an explosion of amateur photography, Getty has been forced to sell stock photographs for less than $50 apiece.

Even contemporary photography – such as images from the Oscars – is under price pressure because of competition from snatched amateur footage.

Yesterday, the media-focused buy-out firm Hellman & Friedman said it would pay a 55 per cent premium to the Getty share price to take the business private, in a deal financed in part by Barclays Capital and the Royal Bank of Scotland.

Getty Images was assembled over the past 13 years by Mark Getty, the investment banker grandson of the oil magnate and philanthropist Jean Paul Getty, and the family will continue to own a minority stake in the business. Its 40-plus acquisitions have included the 1996 purchase of the Hulton Archive – based on the vaults of the historic UK news magazine Picture Post – and it also has distribution rights to the Time Life and National Geographic collections.

Its work includes contemporary news and entertainment photography, such as the photographs of Christina Aguilera's new baby, which it sold for $1.4m, to historic pictures from the Second World War and the Vietnam War.

At the same time, it has a giant archive of stock images that it sells to website designers, advertising companies and other publishers for a wide range of prices based on what the image is being used for. For example, a single shot of an iceberg was sold for use by the supermarket chain Iceland for £65,000 on the same day that Getty sold it to a US science textbook publisher for $50.

The management team, led by the co-founder Jonathan Klein, is also staying on under the new owners, expecting that improved website capabilities in coming years will lead to a resurgence in use of high-quality images and video footage from its archive of 70 million pictures and 30,000 hours of film.

Mr Klein said that he was "flattered" to have pulled off a deal at a time when private equity firms were finding it tough to raise debt financing for buy-outs, and pleased that the buyer was a firm with extensive interests in media companies, through its investments in the German publisher Axel Springer, DoubleClick, the internet ad company bought by Google, and Nielsen, the media rating agency.

Hellman & Friedman's purchase of Getty Images is typical of the more modest size of leveraged buy-outs since the credit crisis broke in the summer, and the deal is significantly less highly leveraged than would have been possible a year ago. The buyers are putting in $1bn in equity with only around $1bn in additional bank financing.