March 20 (Bloomberg) -- The British Broadcasting Corp.’s overseer is investigating why the company is selling the Lonely Planet travel-guide publishing division at a loss of almost 80 million pounds ($120.7 million) to a U.S. billionaire.
BBC Worldwide, the public broadcaster’s commercial arm, said yesterday that it agreed to sell Lonely Planet to Nashville, Tennessee-based NC2 Media for 51.5 million pounds, after a year of reviewing strategic options for the Melbourne-based publisher. The BBC paid 130.2 million pounds for Lonely Planet over two investments in 2007 and 2011. NC2 Media, whose primary shareholder is billionaire Brad Kelley, will take over Lonely Planet on March 31, it said.
The BBC Trust, the London-based broadcaster’s governing body, called the disposal a “significant financial loss” and ordered a review of the investment, which in 2007 drew criticism over whether the publicly-funded broadcaster should be spending money on acquiring private book publishing.
“The trust’s strategy for Worldwide now is to focus on BBC program content, and Worldwide would not make this sort of acquisition again,” Diane Coyle, the trust’s vice chairman, said in a statement.
Coyle defended the Lonely Planet purchase, saying that at the time, there was a “credible rationale for the deal.” The review is intended to determine “lessons learnt,” she said.
Lonely Planet is the world’s most successful travel publisher and has printed about 120 million books in 11 languages, according to the BBC. The company is the No. 1 travel-guide book brand in the U.S., Australia and the U.K.
The BBC said Lonely Planet’s financial performance was hurt in recent years by a rising Australian dollar, consolidation of the publishing industry and the worldwide recession.
“We acquired Lonely Planet in 2007 when both our strategy and the market conditions were quite different,” Paul Dempsey, interim chief executive officer at BBC Worldwide, said in a statement, adding the company no longer fits with the BBC’s strategy.
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