Please see important disclosures at the end the story.
BBC Worldwide, the commercial arm of BBC, is considering selling travel guidebook publisher Lonely Planet and is open to arrangements including partial stake sale to a strategic investor. This much was reported as “news” by Guardian earlier today.
Our understanding is that BBC has been open for the last two years to bringing on a strategic investor in the company it bought in 2007, but was not open to a full sale. The potential partner would be someone that would either bring in loads of traffic to the digital efforts of LP or have substantial travel industry expertise that would help LP in product and distribution, while the parent would retain the print book and rights to the brand.
Having bought 75% of Lonely Planet at the height of the bubble in 2007 for an inflated price of about $143 million, and the rest in February of 2011 for an additional $67 million, it has gone though various bouts of buyer’s remorse over the years, but has not acted on it, beyond writing down the value of its investment twice, most recently valuing it at about $135 million, down $78 million since it bought it. About 23 percent of LP’s revenues now come from digital — which includes its various mobile apps as well — and that’s where it sees the future for the iconic travel brand.
With that intent, BBC/LP had casual conversations over the years with everyone including Google, Yahoo, Hearst and others, we understand. But in middle of 2011 it decided to instead focus on incubating a mobile travel startup called Wenzani, which launched in December 2011 and then sunk without a trace for many reasons macro and micro, including lack of dedicated leadership to drive the effort.
Since then, BBC’s thinking on the future of Lonely Planet has likely changed over 2012 calendar year, in part spurred by its rethink on the future of its commercial efforts and more likely because of competitor Frommer’s sale earlier this year to Google.
The other part of the Guardian report, which is new but unverified by us, quotes an unnamed source that a deal is close to being done with an unknown third party. While we have our doubts on the veracity of that exact claim, it is only a matter of time before there is some strategic outcome for LP; it can’t survive as a separate unit within the politically charged environment of BBC for too long.
Among the potential buyers of the company that either bring traffic or travel-industry expertise to the company include:
- TripAdvisor: Though the review giant has publicly said it considers reviews as its user-gen content and would rather work with media partners for professionally produced content.
- Yahoo: Has tons of traffic, though its travel efforts have been in doldrums for almost a decade at this point. Its new CEO Marissa Mayer has been pushing the company towards product focus so a pure media company may not be a priority.
- AOL: A possibility as it has doubled down on content, and its own travel efforts have been up and down, more down lately. Whether it will want to spend a chunk of its post-dividend cash on a content acquisition makes this a long shot.
- CNN: It has tons of traffic and is doubling down on its travel vertical. It has been looking for verticals plays that help deepen its digital expertise, and also has a huge business travel advertising base.
- Apple: Apple? Why not, with the new Maps for iOS, LP can provide global location data rather than the few markets where Yelp is strong. LP has two thing Apple loves, a strong brand and dedicated users. Media watchers will notice that an LP app or its website feature in an Apple iPad, iPhone, or Mac commercial in every product cycle.
- Then there’s always Google and Microsoft around as interested parties, to integrate travel-related content and services within their local and search efforts.
Disclosure: I had been talking to Lonely Planet two years ago about working with them, including options such as buying the company or spinning off their digital assets into a separate company. The talks included potentially bringing in a strategic partner to take a stake and build digital assets separately as part of it. Ultimately, BBC & LP decided to focus on incubating a new mobile startup called Wenzani and I had spoke with them about potentially being the CEO of that spinoff and leading it. None of which came to fruition, of course.