Will BBC Sell Lonely Planet?

As we all know, BBC Worldwide purchased most of Lonely Planet two years ago for a record sum. But things haven't gone smoothly given the economic collapse of the travel industry and hence the travel guidebook industry. The BBC pumped tons of money into the online LP venture, but that hasn't worked out, and LP has posted record losses of the last two years. And many people question whether BBC should be in the business of travel publishing.

Today it was announced that the sale option given to the Wheelers would be extended beyond the Oct. 31 deadline. Will LP be sold back to the Wheelers or put on the open market, where it would surely sell for far less than the BBC purchase price? The Times Online weighs in on the controversy.

It was bought amid a flurry of raised eyebrows and has sat uneasily in a global broadcasting and media stable ever since — and yesterday Lonely Planet was once again the subject of speculation, uncertainty and possibly even a little controversy.

The backpackers’ essential guides to, well, pretty much everywhere may, it seems, be heading back into the uncharted territory of the marketplace, barely two years after BBC Worldwide paid £90 million for the company.

As part of Lonely Planet takeover in October 2007, its founders Tony and Maureen Wheeler, who published their first guide — South East Asia on a Shoestring — 34 years ago, were left with a 25 per cent stake, valued at A$67.3 million before the credit crunch, which they could have sold to the BBC at any time before Saturday.

However, BBC insiders said yesterday that the Wheelers’ put option had been extended, triggering speculation that the broadcaster is preparing to offload the travel publisher, whose original purchase has so damaged its reputation.

Put options normally expire at a fixed date — in this case, October 31 — but the decision to extend its maturity reflects the fact that, according to insiders, the Wheelers want to remain involved in the business and that the situation was not clear-cut. The date of the new deadline was not revealed.

John Whittingdale, MP, who chairs the Commons Culture, Media and Sport Select Committee, said that he was surprised by the decision to let the Wheelers have more time. “If the Wheelers are not interested in selling, then the BBC should just say: ‘Right, we won’t extend it.’ ”

Mr and Mrs Wheeler began writing the Lonely Planet guides in the 1970s, owning the majority of the company that sprung up over the years. But with retirement looming, the Britons, now based in Australia, chose to sell 75 per cent to Worldwide, the BBC’s commercial division, because they believed that the corporation shared their alternative values. The acquisition rapidly proved controversial for the BBC amid complaints that the licence-fee-backed broadcaster was over-expanding by buying into travel publishing. The Conservative Party has said that it believes the corporation should never have bought Lonely Planet in the first place.

Tony Elliott, the chairman of Time Out, the rival travel publisher, said that he believed the BBC was gearing up to sell the business when it completes a strategy review next year. “I have been told by reliable sources that the BBC will sell Lonely Planet, which is what we have been calling for from day one.”

A BBC spokesman declined to comment on the extension of the £37.7 million option, but indicated that there were no plans to sell the travel publisher. One of the principal objections to any sale is that it would inevitably attract a far lower price, given the collapse in valuations after the credit crunch.

Any sale would also be affected by the publisher’s worsening financial situation. Lonely Planet lost £3.3 million in the first full year of its ownership by BBC Worldwide, significantly worse than the £100,000 loss recorded in the previous year. Investment in the Lonely Planet website partly explained the descent deeper into the red, but the core books division saw its operating income tumble to £300,000 compared with £4.4 million for the six months in the previous year as the recession hit the global travel market.