The BBC Trust has approved proposals for BBC Worldwide (the commercial arm of the BBC) to acquire a 75% share in the Lonely Planet travel guide business. BBC Worldwide has today announced the deal and further details can be found at www.bbc.co.uk/pressoffice. This statement explains the Trust's role in approving the proposal, and how it reached its decision.
The proposals were subject to Trust approval under the terms of the BBC's Charter and Agreement. The BBC is encouraged to undertake commercial activity with the aim of generating revenue to be reinvested in public service broadcasting. The Trust approves both the overall strategy for the BBC's commercial activities and, in some cases, new service proposals.
The Agreement requires all commercial activities undertaken by the BBC to comply with four criteria. They must:
- fit with the BBC's Public Purpose activities;
- exhibit commercial efficiency;
- not jeopardise the good reputation of the BBC or the value of the BBC brand;
- comply with BBC fair trading guidelines and in particular avoid distorting the market.
BBC Worldwide submitted proposals, approved by the BBC Executive, to the Trust in July. The proposals included a business case and an assessment of the proposition against the four criteria.
The Trust was satisfied that the proposal was likely to comply with the four criteria, but noted that further work was needed to finalise the proposition. It approved the proposed acquisition subject to four conditions being met:
- a further assessment of the proposal against the "four criteria" for commercial activities, including more detail on how the purchase would exploit BBC rights;
- confirmation that the due diligence work being undertaken was completed and was acceptable;
- confirmation that external counsel had given final clearance on merger control issues;
- confirmation that the BBC Executive's Controller of Fair Trading had given final clearance on compliance with the BBC's Fair Trading Guidelines.
In addition, the Trust asked for additional evidence to demonstrate the proposal's fit with the BBC's public purposes – specifically to show how the proposal would help to leverage extra value from the BBC's intellectual property that BBC Worldwide exists to exploit.
Since that time, the Trust has considered further material provided by the BBC Executive, including a final assessment against the four criteria, and is now satisfied that the conditions it set in July have been met. In particular it wanted to be satisfied that BBC Worldwide:
- was clear about the ways in which it could make use of synergies with its existing activities to develop and build the Lonely Planet business, and in the process enrich the experience for audiences for BBC programmes in those genres associated with travel (including natural history and educational genres); and
- could show that the acquisition would enable BBC Worldwide to leverage extra value from its existing assets.
The Trust was satisfied with the further assurance provided on these issues and confirmed its approval to proceed. It has asked for a further report from BBC Worldwide as part of its formal annual reporting to the Trust on the compliance of its activities with the commercial criteria on the extent to which the acquisition of Lonely Planet is fulfilling these expectations in practice.