BBC Worldwide raised eyebrows last week when it bought a majority stake in Lonely Planet.
While the surprise acquisition of the Melbourne-based travel guide business has been welcomed by the Australian press and Lonely Planet founders Maureen and Tony Wheeler, questions are being asked here in Britain as to whether the deal is a legitimate extension of the BBC brand or if the buyout is an exercise in empire-building that flouts the BBC's charter.
The deal itself gives the BBC's commercial arm 75% ownership of the company, while the Wheelers will retain a 25% stake. The share was bought for an undisclosed price, thought to be in the region of about £100m, funded from Worldwide's £350m borrowing facility.
Some observers have questioned whether BBC Worldwide has strayed from its mandate in acquiring a commercial operation not tied to any existing BBC programming strand.
However, Dan Linstead, editor of niche travel magazine Wanderlust, said expansion plans could hinder or perhaps help other titles. "Anything that could stimulate the market for travel magazines would be welcome, but we, like others, will be scrutinising anything new in the market place and its impact," he added.
The BBC charter's four criteria for commercial activity are that all involvements must: fit in with the BBC's public purpose; not jeopardise the corporation's reputation; be commercially efficient; and comply with Fair Trading guidelines and not distort the market.
Revenue issue
The man responsible for brokering the deal, BBC Worldwide financial director David King, denies that the acquisition breached the BBC's principles. "We have been told by Mark Thompson to dramatically increase revenue for the BBC through Worldwide, to make up for the cuts in the licence fee settlement. Yet when we do this, we come under criticism," he says.
"I visited the board trustees several times before this acquisition went ahead and, after vigorous testing, they concluded that it adheres to all four of BBC Worldwide's commercial criteria. We feel that the Lonely Planet brand fits well with our other products.
"This is not about empire- building, but about complementing our existing brands with a well-known and respected travel title."
Lonely Planet's push into travel TV tallies nicely with some of the BBC's own programming, such as Michael Palin's New Europe and Himalaya, and the two share similar status as trusted sources of information. King says the Lonely Planet brand already conformed to BBC standards of impartiality, providing informative, trustworthy and entertaining content, while also making a sensible return and drawing young adventurers towards the BBC brand.
"There are no ads in the guidebooks and authors publish without fear or favour," he says. "This is not going to change."
King adds that Lonely Planet's 2006 profits of just under £7m were small fry compared with Worldwide's other commercial ventures.
"Last year BBC Worldwide made £111m profit, so when you put it in that context, you can see this move is definitely not about becoming a global monopoly," he maintains.
For the moment, Lonely Planet will remain governed from afar, although the BBC has already sent two digital experts to Australia to make improvements to the website, which will help drive revenue through a combination of advertising and paid-for content. King says rapidly expanding online content, including downloadable chapters and additional material that doesn't make it into guides, would be the first priority, followed by the roll-out of Lonely Planet-branded magazines across the globe.
Brand potential
"In the UK, this may take time to find the right time, right market and the right product," he says. "We have to be very wary of our charter obligations. But yes, in time I think there could be a Lonely Planet magazine in the UK and potential for many more extensions of the brand in future."
MediaCom director Sanjay Shabi believes that the prospect of online and magazine advertising would be appealing to buyers, but warns that the product and placement would have to be right. He also advises against putting any form of advertising in the guidebooks.
"I very much doubt that if you were stranded in South America off the beaten track that you would be interested," he says. "But, essentially, the BBC has authority in its sector and is revered for being the most comprehensive source of information available to its audience.
Shabi adds: "That is Lonely Planet through and through. This acquisition will sit comfortably in the BBC portfolio, alongside speciality brands in food, motoring and lifestyle."
LONELY PLANET
- Comprises 500 staff based in Melbourne, Oakland and London
- Publishes more than 500 titles in eight languages
- Sells 6.5 million books a year in 200 countries
- www.lonelyplanet.com draws 4.3 million unique visitors every month
- Has launched new travel video website, www.lonelyplanet.tv
- Lonely Planet Television produces travel and factual programming for broadcasters including the Discovery Channel, SBS, Eurosport and Current TV
- Series include Lonely Planet Six Degrees and Going Bush
- Lonely Planet Images online stock library has more than 300,000 downloadable images
BBC WORLDWIDE
- Owns or part-owns 18 TV channels, including BBC Prime, BBC America, BBC Food, BBC Entertainment, BBC Knowledge, BBC Lifestyle, CBeebies and BBC HD
- Accounts for half of the UK's TV exports, selling 40,000 hours of programming in the past year
- Content and production arm produces and co-produces new television content
- Incorporates BBC Magazines, the UK's third-largest consumer magazine publisher, selling 100 million magazines per year. Titles include Radio Times, Top Gear and Good Food
- Home Entertainment business comprises BBC Audiobooks, music licensing through BBC Music, minority share in BBC Books, and Children's business
- Digital Media arm includes BBC Motion Gallery online picture library
- Has 25% stake in Australian production company Freehand
- Publishes Hello! and Grazia in India.