BBC sells Lonely Planet at huge loss

BBC Worldwide will sell the company, which is the biggest selling brand in the UK travel guide market and hugely popular around the world, to US-based NC2 Media for £51.5 million.

But that figure is a huge 60% down on the £130.2 million it paid in total acquiring the firm in two chunks in 2007 and 2011.

The purchase was long seen as a controversial move because, until it took on Lonely Planet, Worldwide had mainly been involved in exploiting BBC productions, rather than buying up other firms.

Today’s sale, which must be approved by the BBC Trust, comes as a result of refocusing Worldwide’s activities and primarily promote BBC brands and programmes. The continued ownership of Lonely Planet no longer fitted with the strategy and is being seen as closing a chapter in Worldwide’s history.

Paul Dempsey, the interim chief executive of BBC Worldwide, said: “We acquired Lonely Planet in 2007 when both our strategy and the market conditions were quite different.

“Since then, Lonely Planet has increased its presence in digital, magazine publishing and emerging markets whilst also growing its global market share, despite difficult economic conditions.

“However, we have also recognised that it no longer fits with our plans to put BBC brands at the heart of our business and have decided to sell the company to NC2 Media who are better placed to build and invest in the business.”

Worldwide has said no licence fee money was ever used for its purchase of Lonely Planet - taking 75% for £88.1 million, and the remainder four years later for £42.17 million.

The BBC Trust has now commissioned a review to discover the lessons which have been learned as a result of a deal which led to such a “significant financial loss”.

Diane Coyle, vice chairman of the BBC Trust, said: “The Trust’s strategy for Worldwide now is to focus on BBC programme content, and Worldwide would not make this sort of acquisition again.

“Although this did not prove to be a good commercial investment, Worldwide is a very successful business, and at the time of purchase there was a credible rationale for this deal.

“Given the significant financial loss to Worldwide, however, we have asked the BBC Executive to commission a review of lessons learned and report to the Trust with its findings.”

Over the past three years the carrying value of Lonely Planet had been written down by £67 million to allow for the impact of changes in the foreign exchange market, in particular the strength of Australian currency.

A spokesman said: “The financial losses we incurred were the result of external factors beyond our control - primarily the Australian dollar appreciating by 58% against the pound.

“The global recession’s impact on leisure travel and the consolidation of the publishing industry also played a part but we’ve been writing down Lonely Planet’s carrying value for the last few years to reflect this.”

Worldwide also pointed to its successes in boosting the coffers of the BBC. It said it had contributed £875 million to the corporation in the time it has owned Lonely Planet, through its brands and programmes such as Doctor Who, Top Gear and Strictly Come Dancing.

During its ownership, digital revenue for Lonely Planet has grown from 9% to 27%, and it has launched books in Russia, Brazil, India and China.

BBC Worldwide said it has been exploring strategic options for Lonely Planet over the last year and wanted to find a new owner that would bring “greater focus and capital to the business”, which has printed around 120 million books in 11 languages.

However Lonely Planet’s financial performance has been impacted in recent years by the continued strength of the Australian dollar, the rapid consolidation of the publishing industry and a global recession which affected leisure travel.

Daniel Houghton, executive director of NC2 Media, said: “The challenge and promise before us is to marry the world’s greatest travel information and guidebook company with the limitless potential of 21st century digital technology.

“If we can do this, and I believe we can, we can build a business that, while remaining true to the things that made Lonely Planet great in the past, promises to make it even greater in the future.”