BBC Worldwide Dealmaking Criticized Over Lonely Planet Acquisition
A report by the public broadcaster's governing body says mistakes were made and criticized a lack of scrutiny of the travel guide's financial performance.
LONDON – The BBC Trust published a report Thursday saying "mistakes were made" in the loss-making purchase and subsequent sale of the Lonely Planet travel guide business.
The Trust, the public broadcaster's governing body, noted that BBC Worldwide had been guilty of getting "carried away with deal momentum."
BBC vice-chairman Diane Coyle said: "Mistakes were made in the acquisition and handling of Lonely Planet. The important thing now is that the lessons highlighted by this review are implemented, alongside broader improvements to the strategy and oversight of the BBC's commercial operations."
Coyle noted it was "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."
The acquisition and subsequent sale of the travel guides business saw the BBC post a $130 million (£80 million) loss, with the Trust describing the initial purchase as overly ambitious and poorly executed by BBC Worldwide.
The review, led by BBC non-executive director Brian McBride and assisted by an external consultant, also criticized a lack of scrutiny of Lonely Planet's financial performance by the BBC's executive board, headed at the time by former director general Mark Thompson, who left his role to head up The New York Times.
"Throughout its ownership of Lonely Planet, there was a bias to positive in the reporting on performance, despite evident signs that all was not well," the BBC Trust report said.
It said there was a "lack of accountability for the management and integration of Lonely Planet immediately following the acquisition and for some considerable time after that."
BBC Worldwide bought Lonely Planet for $210 million (£130 million) in 2007 and sold it earlier this year for $80 million (£51.5 million).
The report said the task of taking Lonely Planet's print business to TV and online were "substantially underestimated" and said the BBC and its commercial arm were "not sufficiently joined up" to meet the challenge.
"BBC Worldwide seemed to get carried away with deal momentum, and there should have been an effective mechanism in place to ensure that it did not end up over-paying," said the report.
The report said the BBC executive should take a greater role in the commercial arm's investment decisions in the future.
"BBC Worldwide needs better and more informed scrutiny/oversight by the [executive board]. There also needs to be clarity about what/when/how BBC Worldwide matters should be referred to the trust," said the report.
It added, "The BBC and BBC Worldwide also need to address the apparent skills gap in relation to e-commerce, which the ownership of Lonely Planet highlighted."
The report concluded, "Mistakes were made and we will learn from them."