Getty Images Loan Falls as Variety Drops It for Shutterstock

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Getty Images Inc.’s term loan plunged to its lowest level after Hollywood trade publication Variety said it would end a content-distribution agreement with the company.

The stock image provider’s $1.9 billion term loan dropped 3.4 cents to about 75.4 cents on the dollar, data compiled by Bloomberg show. The decline comes after Penske Media Corp., which owns Variety, and other brands, announced Monday it was ending its deal to provide entertainment and fashion photos and other content to Getty.

The company’s “focus remains unchanged” after the agreement was terminated, Getty said in a statement. Getty found an “extension of the relationship to be unreasonable,” according to the statement.

Penske is entering a deal with Shutterstock Inc., which will market and license the company’s images. The pact goes into effect in 2016 and will generate $50 million for Penske, Chief Executive Officer Jay Penske told the Financial Times on Monday.

Getty is struggling because of high leverage, strained free cash flow and more meaningful competition than ever from Shutterstock and others, Carl Salas, an analyst at Moody’s Investors Service, said by telephone. Moody’s reduced its outlook on the company’s B3 debt rating to negative from stable in December.

Buyout Debt

Getty Images took on almost $2.6 billion in debt to finance Carlyle Group’s $3.3 billion buyout of the business from Hellman & Friedman LLC in October 2012.

Randy Whitestone, a spokesman for Carlyle, didn’t immediately comment.

Getty’s debt plunged after it drained a third of its cash during the last three months of 2014, people with knowledge of the matter told Bloomberg in February. That left the company, which doesn’t publish its financials, with $27 million, compared with almost $41 million three months earlier.

Getty’s $550 million 7 percent notes due October 2020 fell the most since March 17, declining 2.25 cents to 53 cents on the dollar at 4:40 p.m. in New York, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. The debt yields 22.7 percent at that price.

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