Book-publishing giant Penguin Random House is trying its hand at television, expanding a media diversification that began a few years ago when Bertelsmann’s Random House started a movie unit to spur sales of its titles

August 18, 2013, 7:51 p.m. ET

Publisher Makes TV Play

JEFFREY A. TRACHTENBERG

Book-publishing giant Penguin Random House is trying its hand at television, expanding a media diversification that began a few years ago when Random House started a movie unit to spur sales of its titles.

Penguin Random House’s first TV co-production, “Heartland Table,” will make its debut Sept. 14 on the Food Network, starring little-known chef Amy Thielen. Ten days later, Ms. Thielen’s first cookbook, “The New Midwestern Table,” will be published by Clarkson Potter, a Penguin Random House imprint.In recent years some of the biggest-selling cookbooks have been those written by TV-cooking-show stars such as Rachael Ray and Emeril Lagasse. With the new show, Penguin Random House is trying something

More broadly, with the TV show, Penguin Random House is expanding a Hollywood diversification effort. In 2005, Random House—which last month merged with Pearson PSON.LN +0.08%PLC’s Penguin Group to form Penguin Random House, majority-owned by Bertelsmann SE & Co.—set up a film unit to develop movie projects from the company’s titles. About a year ago Random House set up a TV unit with the same idea. Both are part of Random House Studio, headed by Peter Gethers, who also serves as an editor at large for Random House.

While books have long served as a source material for films and TV shows, few publishers have tried to get involved directly, even though rivals such as CBS Corp.‘sCBS -0.56% Simon & Schuster are owned by entertainment companies.

“We share our content with CBS continuously,” said Liz Perl, a senior vice president of Simon & Schuster. “If there is interest on the TV side, we’ll make introductions to the agent.”

For Penguin Random House, the world’s biggest book publisher, the film effort has so far had mixed results. Random House lost money on its first movie, “Reservation Road,” a box-office dud, and it might take as long as 10 years for its second movie, “One Day,” to show a profit.

Still, Mr. Gethers credits “One Day” with boosting sales of the book that the movie was based on. The novel, by David Nicholls, has now sold more than one million copies in the U.S. and more than one million copies in Germany, he said.

“It launched David Nicholls as a major commercial novelist—which will, of course, help us now with his future novels,” said Mr. Gethers.

The film venture is still underway—it expects to be shooting two movies in the next 12 months—but Mr. Gethers said the range of films being made is narrowing. But in television, with cable networks and online outlets making more of their own shows, the field is broadening. That offers the book publisher an opportunity, he said.

With “Heartland Table,” Penguin Random House’s financial exposure is minimal. While Random House Studio is working with a production house, Tavola Productions LLC, to make the show, the Food Network is financing production costs up to a designated amount, Mr. Gethers said. Random House Studio is getting a fee based on a percentage of the budget, but it is liable to cover any cost overruns.

“It’s our job to make sure we don’t go over budget, but, yes, that’s the risk,” said Tavola’s Shelly Burgess Nicotra, one of the show’s executive producers. The Food Network didn’t comment on deal terms.

At the same time, Random House’s upside is also limited. The Food Network, which has committed to six episodes so far, owns the show. That means the publisher won’t participate in any ancillary revenue, including any digital licensing revenue. Food Network is majority-owned by Scripps Networks Interactive Inc. SNI +1.31%

“Owning the digital rights in this day and age, and having some equity, wouldn’t be a bad thing,” said Brad Adgate, research director for Horizon Media, a media-services agency. “But the Food Network is one of the country’s most-watched cable networks. Their viewers would logically be interested in the cookbook.”

Mr. Gethers said Random House didn’t expect to “get rich” from the first six episodes of “Heartland Table.” However, if the show is extended into a second and possibly third season, he said, “we’ll be making a nice bit of money.”

The show will also likely drive sales for Clarkson Potter and Ms. Thielen, he added.

Mr. Gethers has ambitions to produce a wide variety of TV programming during coming years.

“Everything we do is meant to subsidize and expand our core business,” said Mr. Gethers. “The real reason for setting this up is to give our books and authors as much of an advantage as we can. But I’m running a 10-person division and it’s intended to make a profit.”

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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