BBC sells Lonely Planet to U.S. cigarette billionaire
UPDATE: Lonely Planet, the storied travel guidebooks publisher, has been sold by its parent company BBC Worldwide for US$75 million to NC2 Media -- a significant decrease on its original purchase price.
The buyer is a doozy: NC2 Media's primary shareholder is reclusive Kentucky billionaire Brad Kelley. Kelley spent the 1990s selling discount cigarette brands like USA Gold, Bull Durham, and Malibu, then sold the company for almost US$1 billion in 2001, and parlayed that money into becoming the one of the largest land owners and conservationists in United States.
The deal terms are not clear yet, however in an earlier version of this story, according to our sources, Kelley's NC2 media would buy a majority controlling stake in Lonely Planet, and BBC Worldwide, the commercial arm of BBC which bought LP, will retain a small-but-sizable stake to help maintain editorial control through current management, as well as save on inter-country taxes.
The sale price is way below what BBC originally paid for it, which was a total of US$210 million spread over roughly four years starting in 2007.
BBC Worldwide said it had been "exploring strategic options for Lonely Planet over the last year and was keen to find a new owner that could bring greater focus and capital to the business."
"NC2 Media demonstrated a commitment to invest in Lonely Planet and today’s announcement concludes the process to find the right buyer."
NC2 is headquartered in Nashville and is "primarily engaged in the creation, acquisition, and distribution of quality digital content and the development of the technologies to make that possible," its website says.
According to friends of Kelley Skift has spoken to, any acquisitions he makes are always well thought out. He’s incredibly thorough, doesn’t overpay, doesn’t do vanity buys and looks at them long term.
Sources say Kelley -- whose primary residence is now in Boca Grande, Florida -- is more likely the second or third largest landowner in U.S., not fourth as WSJ reported in a rare story on him last year, as he downplays his holdings and a lot of his deals to buy land never surface in media.
What Kelley and his team plans to do with Lonely Planet is confounding insiders -- including the irony that a historically environmentally forward-thinking brand like LP will now be owned by someone who made a fortune with cigarettes and now is a land-buying environmental conservationist.
With Lonely Planet, Kelley’s team is likely thinking of the long-term value of the brand, investing in digital -- especially video -- and possibly going into offline retail channels and using it as a environmental conservation platform.
Kelley is an investor in a small travel startup called OutwildTV, a website using video to document the adventures of travel journalists.
While it is unclear what role OutWild will have with Lonely Planet, its founder/principal Daniel Houghton will be Lonely Planet's new chief operating officer. Houghton has been one of Kelley’s point men in all discussions with the BBC up to this point.
According to a report in the Guardian, NC2 Media, in which Kelley is the primary shareholder, has pledged to invest in the Lonely Planet business.
"With this acquisition comes a global footprint, not only in the travel guide business, but also in magazine publishing and the digital space," Houghton said in the report.
"The challenge and promise before us is to marry the world's greatest travel information and guidebook company with the limitless potential of 21st century digital technology."
The tortured history of Lonely Planet under BBC
This sale finally comes after BBC has sat on a LP sale decision for a few years now, going back and forth on their thinking of what to do with the brand that it bought at an inflated valuation in 2007.
Having bought 75 percent of Lonely Planet at the height of the bubble in 2007 for US$143 million, and the rest in February of 2011 for an additional US$67 million, BBC 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.
The BBC most recently valued LP at about US$135 million, down US$78 million since it bought it.
About a quarter 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.
BBC’s thinking on the future of Lonely Planet has likely changed over the 2012 calendar year, in part spurred by its rethink on the future of its commercial efforts and the limits it has on exploiting a complementary Lonely Planet brand and BBC Travel in the UK.
And there’s also the disappointing reminder of how little its competitor -- and superior in the U.S. -- Frommer’s went for in its sale earlier this year to Google.
This will also mean that Lonely Planet is likely to finally make an exit from Australia, its historical base of operations, and move to United States wholesale, though there may well be an interim base in London, leveraging BBC, to ease in transition.
Tony and Maureen Wheeler found Lonely Planet in 1973
BBC Worldwide acquired a 75 percent stake in Lonely Planet in 2007 for £88.1 million (US$133 million).
BBC upped investment to £130.2 million (US$196 million) in February 2011 when the Wheelers exercised an option to sell their remaining stake.
BBC wrote down investment to £85 milion (US$128 million) in July 2012.
The Guardian says: “The commercial arm of the BBC also revealed that it has been forced to take a £16.1 million (US$24 million) ‘charge to the income statement’ in the year to the end of March, leaving the goodwill value of Lonely Planet at just £22.6 million (US$34 million) on its books.”
Story from Rafat Ali, at Skift, and updated March 19, 2013 by CNN Travel staff to reflect the Lonely Planet sale.
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