Kodak Sells Its Film and Imaging Businesses

Deal with close to $3 Billion

By James DeRuvo (doddleNEWS)

You’ve heard the old joke about if a tree falls in the woods and nobody hears it, does it make a noise? Well, here’s a philosophical question… if Kodak sells its film business, can it really call itself Kodak anymore? Well, we’re about to find out because Kodak has sold it’s film and imaging business in a deal with nearly $650 million in cash and “other non-cash considerations.”

“In one comprehensive transaction, Kodak will realize its previously announced intention to divest its personalized imaging and document imaging businesses and settle its largest legacy liability,” Antonio M. Perez, Kodak’s chairman and CEO

The new owners of Kodak’s film business is its largest creditor, the Kodak Pension Plan, which is settling with Kodak over its $2.8 billion in pension obligations. That gives KPP control over over 100,000 Kodak kiosks all over the world, its photo paper, film and souvenir photo business, and its document imaging division which deals in scanners and software services.

In addition, Kodak has begun the transfer of a quiver of patents to Apple, including those relating to digital photography, especially those related to using a zoom camera, displaying and sharing digital images, and wireless sharing of digital images via a network. There are also 11 other licensees (including Facebook, Samsung, Adobe, Amazon, LG, and HTC) who seek to divide up patents worth over a half billion dollars in Kodak’s portfolio.  Each licensee will get rights to use Kodak’s digital imaging patents and other property, and Kodak has retained the right to use any patents in a future endeavor.

Unable to evolve with the lightning fast shift towards digital photography in still imaging and mobile phones, Kodak fought a valiant battle to keep its head above water. But last year, the company finally filed for Chapter 11 bankruptcy protection, and began a series of moves that would culminate in a patent fire sale to the Apple and Google led consortium. And now, Kodak will close out nearly a century of providing film assets to photographers all over the world.

With Kodak free from that major obligation, and having walked away from its charter business model, Kodak CEO Antonio Perez says that Kodak will be able to emerge from bankruptcy with a new direction… as a commercial printing company. Perez also says that the deal with be “beneficial to those businesses’ employees, customers and partners” who rely on Kodak products such as photographic film and paper.

The goal of the Kodak Pension Plan will be to generate enough income from its new imaging and film business to be able to service the retirement pensions of over 15,000 employees in the United Kingdom.   However, it isn’t clear if KPP will try and run that business to profitability, or sell it off piecemeal to raise the required capital to settle pension obligations.  The later is far more likely as if it didn’t work for Kodak, it’s unlikely it’ll work for KPP.

But according to Time Magazine, KPP is only the recent Pension plan to accept assets in favor of cash for outstanding pension obligations.  In fact, Time says that Pensions are starting to look and act like private equity firms looking to turn a quick buck on a troubled acquisition, or part out a acquisition in favor of liquid asset payouts.  And really does spell doom for the Film division remaining as anything even remotely resembling the Kodak film we all know and love. And it also leaves the Pensioners wondering if they’re left holding the proverbial bag.

About James DeRuvo

James has a multi-faceted career that spans radio, film and publishing. A writer about the technology in the video industry for nearly 20 years, James is also an award winning film director, having garnered a Telly Award for his short film Searching for Inspiration. He's also worked as a producer of many talk radio programs in Los Angeles with topics ranging from entertainment to travel to technology.