The founders of Lonely Planet have a brilliant, globally recognised brand and great content. But since 1994 they have been grappling with a question that has challenged a generation: how do you make money from the web? And now they finally think they have the answer. Sell to a company that can do it better.
Yesterday Tony Wheeler, 60, and Maureen Wheeler, 57, announced they had reached the end of their journey. More than 35 years ago, the pair arrived from London as a pair of penniless backpackers and started their first travel guide. Now they have sold their business, which has about $100 million revenue, to the BBC.
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Their stake will be reduced from 70% to 25% while John Singleton and Mark Carnegie have sold all their 30% stake to the BBC.
It is believed the sale price was more than $250 million, which would reap the Wheelers more than $100 million and will probably catapult them on to the BRW Rich 200 with more than $180 million if they eventually sell the rest of their stake. (They have children who have worked at Lonely Planet.)
So as yet another great Australian icon disappear overseas, why the BBC? “They have lots of websites and a worldwide spread. We can’t match that,” Tony Wheeler told SmartCompany this morning. “It’s a combination of money, expertise, and global spread.”
The digital world has been the big stumbling block for the Wheelers. “Publishing books is so much easier. You write them, print them and distribute them. It is very straightforward,” he says. “But the web is a different ball game and it’s hard to make money but that’s the story of the web. Everyone in the digital world is still not sure what’s going to work.”
As travellers increasingly went to the web and expected travel information for free, the Wheelers sunk millions of dollars into developing their online strategy and their websites.
But they shunned the world of advertising until too late in the game. It was the wrong strategy given their target audience, which is travellers who are not going to pay for information online. This would have stunted the development of their websites and stopped them exploring different strategies. “We had a holier-than-thou attitude to advertising and were slow getting around to it,” Wheeler says. They finally got the advertising strategy right a year ago. “It is going very well and (revenue) has exceeded what we expected.”
He expects to sell a lot more things online. “We already sell a lot of things including our books. For example you can now download a chapter of one of our books as a PDF. But there are other opportunities; for example, people could be put through to an airline agency and we could get a commission.”
Put chasing the myriad opportunities that bring in the bucks on the web was never going to appeal to the visionary Wheelers, although Tony Wheeler does spark up when mentioning new opportunities for Lonely Planet. ‘We are talking about magazines and TV. The BBC is one of the biggest magazine publishers in the world.”
He says he and Maureen have been backseat drivers for a while but when asked how many hours a day he worked on the business he replied “25”. He says he is not sure how much he will be involved. “It is up to the BBC.” The business will remain based in Footscray under current management, which includes chief executive Judy Slatyer.