SERRAVAL, France — In 2007, when the British Broadcasting Corporation bought the Lonely Planet travel guidebooks, it drew criticism from rival media organizations in the private sector, which argued that a public television company had no business expanding into areas like book publishing.
On Tuesday, when the BBC confirmed plans to sell Lonely Planet to a reclusive American billionaire, it drew internal scrutiny — this time for losing money on the sale.
BBC Worldwide, an arm of the public broadcaster that runs many of its international and profit-making operations, said on Tuesday that it had agreed to sell the series to NC2 Media, a company controlled by Brad M. Kelley, a businessman from Kentucky who made a fortune in tobacco and later turned his attention to real estate and other interests.
The price, £51.5 million, or $77.8 million, was nearly £80 million below the £130 million that the BBC paid for Lonely Planet, in two stages.
The BBC insisted that no public money was lost because BBC Worldwide used its own money rather than the main BBC budget, derived largely from a license fee on British television-owning households, to pay for Lonely Planet. Still, because BBC Worldwide returns any profit it earns to the BBC, any shortfall affects the BBC’s overall funding.
The scale of the loss on the sale of Lonely Planet prompted the BBC Trust, a panel that oversees the broadcaster, to call on the executive arm of the BBC to begin a review of the investment and report its conclusions.
“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,” Diane Coyle, vice chairwoman of the trust, said in a statement.
At the time of the purchase, the BBC — headed then by Mark Thompson, who is now chief executive of The New York Times Company — talked about extending the Lonely Planet brand into new areas, including digital outlets. But publishers of traditional travel guidebooks have struggled to compete with travel sites on the Web, like TripAdvisor.
And rivals of the BBC complained that the broadcaster had no business moving into new areas at a time when some commercial media companies had struggled with the challenge of the Internet.
In 2009, James Murdoch, then the head of the European and Asian operations of News Corporation, described the BBC’s purchase as a “particularly egregious example of the expansion of the state.” In addition to its other media holdings, News Corporation is the largest shareholder in British Sky Broadcasting, a pay-TV company that competes with the BBC.
The BBC has been scaling back since it agreed to a reduction in its public financing in 2010.
“Lonely Planet has increased its presence in digital, magazine publishing and emerging markets whilst also growing its global market share, despite difficult economic conditions,” said Paul Dempsey, interim chief executive of BBC Worldwide, in a statement. “However, we have also recognized 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.”
Despite the challenges facing travel publishers, the BBC said Lonely Planet was the biggest travel guidebook series in the United States, Britain and Australia, where the guides were founded in 1973 as a bible for backpackers. It said 120 million books had been published in 11 languages, and 120 million people visited its Web sites annually.
“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,” Daniel Houghton, executive director of NC2 Media, said in a statement. “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.”
The purchase is a big expansion of Mr. Kelley’s media holdings; he also has an investment in OutWild TV, a Web site that shows travel videos. Mr. Kelley is said to be one of the largest private landowners in the United States, with millions of acres of land in Texas and other states.
Article source: http://www.nytimes.com/2013/03/20/business/media/bbc-to-sell-lonely-planet-travel-guidebooks.html?partner=rss&emc=rss
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