After weeks of speculation and five years in BBC Worldwide’s care, Lonely Planet has been sold to NC2 Media, based in Tennessee.
NC2 is paying £51.5 for 100% of the travel guide specialist with £41.2m to be paid on completion of the deal and the remaining £10.3m in a year’s time.
The deal represents a loss to BBC Worldwide which paid a total of £130.2m for Lonely Planet, when it acquired a 75% stake in 2007 for £88.1 followed by the remaining 25% in 2011 for £42.17m.
Reports say the BBC Trust, the governing body of BBC Worldwide, is calling for a review and has criticised the deal saying it was not “a good commercial investment” and lessons needed to be learned.
A statement from BBC Worldwide says Lonely Planet was acquired when its:
“strategy and market conditions were quite different. Since then Lonely Planet has increased its presesnce in digital, magazine publishing and emerging markets whilst also growing its global market share, despite difficult economic conditions. However we have also recognised it no longer fits with our plans.”
A strategy focused on digital and mobile content, as well as integrating its Thorn Tree forum, was laid out shortly after the BBC acquisition and while the brand has made some progress it has also faced pressure from the masses of online travel content startups on the internet.
Google acquired Frommers last summer in a deal believed to be worth between $20m and $27m. In recent weeks it began winding down the B2B division leaving travel websites looking for new content suppliers.
NC2 Media specialises in the creation, acquisition and distribution of digital content and the development of technology to facilitate this.
It’s been a rough few months for Lonely Planet as it was negotiating the sale of the company to NC2.
The BBC closed the site’s popular Thorn Tree forum in December last year after a complaint about content in many of its threads. It later turned out that the acting director general of the BBC was the original recipient of the complaint and a decision was made to overhaul the moderation strategy for the site.
Officials later defended the decision to shut Thorn Tree despite evidence which emerged confirming that the complaint from a writer claiming to be working with the New York Times was actually false.
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This deal had ‘bad idea’ written all over it from the word go – for acquiror, acquiree and users. Not convinced a sale to a Tennessee-based media company is what is needed to save the LP brand, but us travellers who grew up with absolute trust in those chunky blue guidebooks can only keep our fingers crossed that the path ahead is a brighter one.
This all just smacks of panic and the continuing pressure on the BBC to divest itself of anything but TV and Radio, minimising risk and innovation of any sort. Will the BBC web go the same way?
I wonder what will happen to LP content embedded on BBC.com, the Beeb’s advertising-based, non-UK publishing play.
The LP crisis is about more than people preferring digital to print and the difficulty of chasing after CPC advertising. It’s also about a mass-market product being squeezed in the middle by competition from new types of cut-rate product and new types of high-end, high-margin product.
The market for travel advice seems to have divided into dirt cheap, unvetted user-generated advice on free digital platforms and high-end custom itineraries for connoisseurs willing to pay services like Jetsetter, Fortnighter or lushly produced print guidebooks by publishers like Taschen.
A similar split has happened in the music markets. The mass market has moved to stolen or streaming Spotify subscriptions while high-end moves to vinyl or high-bitrate downloads.
The camera market has also split this way: cheapo mobile phone cameras and high-end DSLRs have devoured a market once held by ordinary digital cameras.
It seems to be a broader economic phenomenon of our time.
If so, LP could adjust. LP made £155m profit last year, if I’m not mistaken.
LP might somehow leverage its brand equity by developing new income streams with dirt-cheap content and with high-production quality content for connoisseurs. A tough trick to pull off. But experimenting with a truly high-end product might be worthwhile.
The brand equity of LP is huge, and I think the billionaire just scooped up a bargain brand value, he knows what to do with it.
The £155m profit was BBC Worldwide, I think. FT reports that ‘its revenue has risen from £810m in 2007, when it acquired the first chunk of Lonely Planet, to £1.1bn in 2012, pushing profit up from £111m to £155m over the period’. http://www.ft.com/cms/s/0/b5c197f6-9080-11e2-a456-00144feabdc0.html#axzz2NujXG7Hw
James,
Thanks for the correction. I misread the “its” in this sentence;
ah, i misread the sentence on BBC:
“during the time BBC Worldwide has owned Lonely Planet its annual revenue has grown from £810m in 2007 to £1.08bn in 2012 – with profit increasing from £111m in 2007 to £155m in 2012.”
“its” is BBCW
http://www.bbc.co.uk/mediacentre/worldwide/190313lonelyplanet.html
That said, LP is still a strong brand. Per BBC:
“Despite a challenging book retail market, in 2012 Lonely Planet became the number one brand in travel publishing in the USA, up from number three at the time of our first investment, taking us to leadership positions in all main markets.”
Roughly a million people are now registered to lonelyplanet.com. It’s number one in Facebook likes and Twitter followers among the guidebook brands. Downloads of Lonely Planet iPhone apps have long since surpassed 10m.
Agree. Seems strange that such a commercially astute and aggressive company as BBC Worldwide couldn’t turn those LP numbers above into $. Can only assume politics got in the way.
Too early yet to scoff at the deal and the new owner. Being a NY or other ‘sexy’ city-based media company is no guarantee of success either (hello..Melbourne is hardly on the global media map, and yet….)
Razor thin margins in print whose revenues may well have subsidized the cost of content production on the digital side of the house is hardly a sustainable business model. Competitive and platform pressures combined with the evolving tastes of the traveler surely contributed to an LP that weeble-wobbled on how to adapt the brand and maintain its relevance. A pendulum swing that fully grasps the digital may just be what frees LP from being the catnip toy of a large global old school media company and allows it to really sing with the times.
I think the opportunity N2C has seen here is in the broad licencing and distribution of LP content.
Fire sale much?
A lot of the language behind this latest sale is eerily similar to that which did the rounds when BBC bought them — especially regarding the “leveraging of LP’s assets into the digital world”. Perhaps this time around the new owner will make this happen.
Under the BBC’s ownership we saw what would have traditionally been LP content used to push the BBC’s travel brand and one wonders how that will all now be unravelled — if at all. The Magazine appears to have been a success but many pundits (yes, what do they know?) view it overall as a dying platform. The apps improved considerably while the bread & butter deadtree guidebooks in some cases have moved to even slower update cycles. Last but not least, Thorntree had a bag full of copper nails hammered into it over Christmas. Really a very mixed bag from the traveller’s perspective.
Things can only improve.
Given the new owner’s digital focus and deep pockets, I don’t think some form of digital re-invention to some form of a subscription system — think Spotify for Travel Info — is that far out of left field. LP really is the sole remaining traditional publisher with the name recognition to pull this off … but then, who’d ever heard of Spotify before they hit the scene?
What I’d love to read is that the owner plans to reinvest in and expand the research base — ie improve the quality of the content that is currently being produced. There hasn’t been much talk about that, which is a bit of a shame.
Interesting times.
I bet the new owner plans to merely clean the balance sheet and flip it within a few years. Why else put kids in charge, not move HQ?
If they’re serious, they’ll have to move the HQ to either Oakland or Nashville, or a split between the two, I would think.
Nah I don’t buy that. Never be dismissive of age or lack thereof. Perhaps the complete lack of (at least stated) serious publishing experience is exactly what is needed — fresh eyes with no baggage and all that.
Thanks, Stuart. You’re right. One shouldn’t be dismissive about people because of whatever their age is.
I fervently hope the new LP team is up to the challenge. The work produced by its staff is best-in-class.