Trust criticises BBC Worldwide over acquisition and later sale of travel guide business resulting in £80m deficit
The BBC Trust has published a highly critical report of the corporation's loss-making purchase of Lonely Planet, accusing the corporation's commercial arm of getting carried away with "deal momentum".
The report, published on Thursday, said the acquisition and subsequent sale of the travel guides business, on which the BBC made an £80m loss, was over-ambitious and poorly executed by BBC Worldwide. The trust also criticised 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.
"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," it 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".
Despite being purchased for £130m in 2007, the report said the lack of management accountability was not "properly addressed" until late 2011 and 2012, leading to the sale of the business a year later for £51.5m
Among a catalogue of errors it said the forecasts behind the purchase were "too aggressive" and "highly optimistic" with the deal itself "badly structured".
The report said the task of migrating Lonely Planet's print business on to TV and online were "substantially under-estimated" and said the BBC and its commercial arm were "not sufficiently joined up" to meet the challenge.
"There was not enough scrutiny by the BBC Worldwide board and the executive board [of the BBC] of the financial performance of Lonely Planet," it said.
"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 BBC was guilty of a "lack of accountability for the management and integration" of the new business for four years.
"Integration of Lonely Planet [into the BBC] was too slow. The task of migrating Lonely Planet's business on to other platforms, especially online and TV, was substantially underestimated."
The report was commissioned by the BBC Trust and led by BBC non-executive director, Brian McBride.
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