The BBC Trust, the group that oversees UK public broadcaster the BBC, has issued a damning report on the Corporation’s ill-fated acquisition of the Lonely Planet travel guide.
In reviewing the deal the Trust said that the financial forecasts used were “too aggressive” and “highly optimistic” and that Worldwide got “carried away with deal momentum”.
The Trust ordered senior BBC management to review lessons from the acquisition and sale of Lonely Planet. BBC Worldwide, the commercial arm of the BBC, sold Lonely Planet NC2 Media for an initial consideration of £41.2 million (US$62.2 million) with £10.2 million to follow having originally paid £130.2 million for the business.
Examining the period during which Worldwide owned Lonely Planet, the Trust said there was a lack of accountability regarding the integration of the business, a lack of scrutiny of its financial performance and an overly positive bias when reporting its performance.
It added that the deal required Worldwide and the core BBC to work in counter-intuitive ways. “The acquisition of Lonely Planet required BBCW and the BBC to work in a way that was counter-intuitive to normal practice,” the Trust noted. “In other words, the BBC normally produces the content and BBCW markets and sells it internationally, whereas the Lonely Planet deal meant that BBCW had to make/create something and get the BBC to use it, which it was reluctant to do, preferring to create its own content.”
Moving to recommendations, it was suggested that the BBC and BBC Worldwide work more closely on any future deals.
“The BBC and BBCW also need to address the apparent skills gap in relation to e-commerce which the ownership of Lonely Planet highlighted, if they are going to work together to grow and successfully digitise and monetise elements of the BBC business in the future.” The Trust said.
Despite the damning report, the Trust said that properly evaluated investment should be encouraged. It noted: “The BBC and BBCW operate in a fast-moving business environment and it is important that the organisation has a culture that supports innovation and investment, is not afraid to take appropriate risks and stands fully behind investment decisions once they are taken.”
BBC vice-chairman Diane Coyle also called for the heavy financial hit Worldwide took from the Lonely Planet deal to be seen in context. “It is important to view the significant financial loss from Lonely Planet against the backdrop of a sustained strong performance from BBC Worldwide as a whole, which brings significant benefits to licence fee payers,” she said.