Random House: How to Make It in Hollywood Without Really Trying
Here's one reason why Random House hasn't struck a deal yet with Apple (APPL) to sell its e-books on the iBookshelf: it's too busy trying to boost profits by making films. Random House Films (RHF) and partner Focus Features are ready to shoot a film version of the just-released Vintage paperback One Day by David Nicholls. The film will star box office darlings Anne Hathaway (The Devil Wears Prada) and Jim Sturgess (Across the Universe).
Ah, the power of deep pockets.
Random House got into the movie business in partnership with Focus Features five years ago, well before the e-book wars between publishers and retailers started raging. Now as the chaos to determine pricing, royalties, rights, etc. of digital content continues unabated, Random House is gliding serenely above the fray, touting an overall digital strategy that's recently included video games (a challenging gambit in any economy).
Like its toe-in-the-water dip into sci-fi/fantasy games, this deal with Focus Features is a carefully calculated gamble. Focus has a solid pedigree and success with literary adaptations (think Brokeback Mountain from Annie Proulx's short story). The Bertelsmann AG-owned RH has been cautious in its approach, no doubt in part because the first film it trotted out -- Reservation Road -- wasn't a smash, or even a sleeper. No matter.
The RH/Focus hybrid production entity shares financial, creative and production responsibilities meaning neither have to shoulder the full burden of a failure. Furthermore, RH went into the agreement with "modest" expectations: max two films a year, cap the development spend at $20 million, and only buy if the movie rights were reasonably priced. ''We're not going to buy the [film] rights that are selling for millions of dollars,'' says RHF president Peter Gethers. ''They can go right to Scott Rudin for that.''
Critics have pointed out that agents often retain film rights after a manuscript is sold to a publisher. This would leave RH to scour its backlist for potential film adaptations, or worse, pinch an unsigned work from an assistant or an intern and legally "steal" the concept without lifting a word from the original writing.
So far that hasn't had to happen. Gether's got solid ties to Hollywood from both his time as a screenwriter and as the editor who doctored a Roman Polanski script). And following One Day will be an even more high-profile project with Brad Pitt's Plan B Entertainment. Based on the upcoming non-fiction release from Knopf, The Tiger will be made into an adventure thriller. But let's not forget one very important detail: Focus Features holds worldwide rights to The Tiger. Random House's investment therefore, is hardly risky.
In fact, RH's whole endeavor to diversify is nothing more than business as usual. The company was built on the concept that it would publish books "at random," and in doing so has sold hundreds of thousands of titles across multiple categories and genres. The digital strategy is no different. Have your hands in as many pies as possible because you never know what will be a winner in any given year.
But the objective remains the same. As RH chairman Peter Osnos noted back in 2005 when the Focus partnership was forged, "Random House Films will enable us to sell many more copies of the books we make as films as well as help us bring new authors to our imprints."
And if last year's flat sales are any indication (2009 revenue came in at €1.7 billions, or $2.3 billion, while operating profit reached 137 million euros, or $185 million), RH is going to need to play any angle it can as margins on books continue to dwindle.
Image via Playbill
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