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How the Kardashians Made $65 Million Last Year

This story appears in the new issue of The Hollywood Reporter magazine, on sale in NYC and LA on Thursday.

Sitting cross-legged on her black-sheeted bed amid stacks of papers and photos, Kris Jenner -- matriarch of reality TV’s juggernaut family-- is trying to explain the unexplainable: Why the Kardashians? Why are her children’s squabbles and shopping habits and waxing appointments a national fascination? Why was daughter Kim, best known until four years ago for making a sex tape, the fourth-most-Googled person in 2010 (behind Justin Bieber, Katy Perry and Selena Gomez)? And why, despite the eye-rolls of half of America, does the other half worship at the altar of a family that unabashedly embraces, celebrates and monetizes that post-millennium cliché of being famous only for being famous?

"We’re just this big family with a lot of drama and a lot of issues, and there’s someone here for everyone to relate to," says the 55-year-old mother of six (Kourtney, 31, Kim, 30, Khloe, 26, Robert, 23, Kendall, 15, and Kylie, 13), wife to Olympic gold medalist Bruce Jenner, and, most crucial, hands-on manager of them all. "I think if you’ve ever been embarrassed by your family — like your mother’s a kook or your father’s too strict — the show gives you hope. I’ve had so many people come over to me and say, ‘I remember the episode where you were crying over blah, blah, blah, and it helped me so much and I got through my dad’s death because of you.' "

And then there are those who watch the family’s three series on E! (with a fourth going into production this year) for the there-but-for the-grace-of-God voyeurism: Thank God my mom doesn’t want to know the size of my boyfriend’s penis! Hey, at least my dad isn’t walked over by every single member of his family and my mom doesn’t engage me in a postpartum discussion about personal lubricant. When asked about that last particular discussion, Jenner looks genuinely puzzled. "Really? Who hasn’t had to use lube?"

Of course, this is a mother who has hanging in the bedroom of her immense home in Hidden Hills, Calif., a photo of her three eldest girls, over which one of them has scrawled in what looks like hot pink lipstick, "Hookers R Us." But if the Kardashians have no filters, they have no pretenses, either. This is a great part of their charm.


"We got a call from Ryan Seacrest asking if we had met with the Kardashian sisters. I said, 'Honest to God, I’m not sure there’s a show there.'" — Lisa Berger, executive vp original programming at E!

Since their arrival on E! in 2007, thanks to such no-boundaries behavior, the tightknit family has ably defied the laws of 15-minute reality TV fame while building a wildly profitable empire. As the cameras keep rolling on the eight-member clan’s topsy-turvy domestic life, the Kardashians have cashed in, making more money last year than what Angelina Jolie, Sandra Bullock and Tom Cruise are estimated to have earned combined: a staggering $65 million (a source close to the family confirms the figure). As manager, Kris Jenner personally takes 10 percent.

And in perhaps the most Platonic exploitation of the celebrity-industrial complex, they didn’t do it by picking up paychecks from a network or studio alone. Deploying sibling after sibling, the household, led by Kris, has crafted a wholly modern business model for making money. It’s one that emphasizes accesibility over harnesses three commercial components: fan interaction via social media (the family has a collective 13 million Twitter followers); best-selling products and brand endorsements; and, of course, that hyper-successful reality franchise (Season 5 of E!’s Keeping Up With the Kardashians averaged 3.5 million viewers a week).

GALLERY: See Kardashian Inc. in pictures

In a year when men and women in the entertainment industry with business backgrounds couldn’t turn a profit, Kris Jenner could — even if critics ponder what, if any, redeeming value her family brings.

"Look at Bill Gates or Mark Zuckerberg," says Kris’ longtime pal Scott Sassa, president of Hearst Entertainment and Syndication. “Two guys that didn’t finish college ended up billionaires. Sometimes just raw energy and intelligence wins out.”

What’s game-changing in the Hollywood ecosystem is that it’s their brand extensions that comprise the heart of the family’s enterprise. The television shows might provide high-rated entertainment and a steady paycheck (the family splits a six-figure payment for each episode), but their larger purpose is to serve as a marketing platform for Kardashian Inc. "These shows are a 30-minute commercial," admits Khloe, co-star of the first spinoff, Khloe & Kourtney Take Miami, which focused on the opening of a Florida outpost of their clothing store, Dash.

Not that E! is exactly being taken advantage of. The Kardashian enterprise is the cable network’s most lucrative franchise ever. Before the 2007 launch of Keeping Up With the Kardashians, E! was the 13th-highest-rated cable network with women 18-49 on Sundays (all three shows now rotate on the same night). Now, it is No. 1 on the night. The Season 4 finale drew 4.8 million viewers, making it the most-watched broadcast in E!’s history.

"It has changed the face of E!" says Lisa Berger, the network’s executive vp original programming. "We were a place to report on celebrity; we weren’t a place to break and make celebrity, which is now the whole idea of the E! brand."

These days, the Kardashians are ubiquitous. Their book, Kardashian Konfidential, has been on the New York Times best-seller list since December (275,000 copies have shipped). Kim’s eponymous fragrance was Sephora’s top seller last year, and a new fragrance, Unbreakable by Khloe and Lamar, launched Feb. 12. In the summer, the sisters will unveil a new lifestyle collection with in-store shops at Sears. (The Sears deal is one of their most lucrative projects to date, along with QuickTrim diet supplements and Kim’s eponymous fragrance.)

Says Berger: "Kris has been smart about aligning herself with businesses that are successful, and we haven’t said no. There’s no reason to. Growing her business grows our business."

Then there are the skin care and clothing lines, sneakers, swimwear, liquor, lipstick, three Dash clothing stores. In January, Silly Bandz introduced the Kardashian Glam Pack: rubber band bracelets of the girls’ silhouettes, lips and stilettos (leading Matt Lauer to awkwardly ask about the curvy shapes on Today: “They’re shaped like your bodies, right? Is this your … those are your arms, I assume.")

This year, Kardashian Khaos, the first "celebrity destination” store at the Mirage in Las Vegas, will debut, housing every product the family endorses, including some new ones created specifically for the resort. “We’ll take Kim in a bikini and put her on a beach towel,” Kris says. “So you would be laying on a Kardashian at the pool.” The hotel itself will be a Kardashian shrine: The room keys will bear their image, the minibars in each of the 4,338 rooms will house Kardashian-branded water and Kim’s fragrance; and oh, Kim and the girls will be vamping on a dozen of the new slot machines.

All this despite having no exceptional talent -- other than looks, exhibitionism and an inability to self-censor. (Only two Kardashian kids received college degrees: Kourtney from the University of Arizona and Robert from USC.) Perhaps, like so many other reality stars, that is their appeal. When fame looks this easy, the line between the public and the person on TV doesn’t seem so daunting.

“We’re in 300 countries worldwide. Three hundred!” Kris exclaims. At press time, only 194 countries were recognized by the U.S. government.

The branding mastermind behind this success is Kris, a former airline stewardess and self-proclaimed “momager” who pushed her kids into the national limelight. She grew up in a middle-class home in La Jolla, Calif., with a single mom (who ran a children’s clothing store) and, for most of her life, has played the role of wife to two public figures: first husband Robert Kardashian, the late lawyer best known for representing O.J. Simpson, and current spouse Jenner, 61. She was also, according to a former pal, socially ambitious and would strategically trail the footsteps of such types as the Hilton clan — with whom she was friends and certainly has leapfrogged in terms of power.

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Kardashian spotted Kris Houghton at a golf tournament in La Costa, Calif., when she was 23 and was immediately smitten — he was a lawyer in his 30s whose family, says Robert’s first cousin Cici Bussey, “was like the Armenian version of the Rockefellers.” His father had the largest meat-packing company in Southern California; they had a mansion, Rolls-Royces, a tennis court. Kris was not a party girl, and in no way a Bohemian, says Bussey; she and Kardashian shared the desire to start a large family. They were married in 1978, and Kourtney was born 9 months and 23 days after the wedding.

“Kris was close to Robert’s mother, Helen, who was the matriarch of the family,” Bussey adds. “In those days, Armenian women were there to run the household, and that’s what the mother did. But she was a very smart woman, and she and Robert’s father were savvy business people, and Kris always listened to them closely. “

But by 1990, she and Kardashian divorced. It was mostly amicable, but the 1994 Nicole Brown Simpson killing and O.J. Simpson’s murder trial the following year caused a rift between the couple: Kris was one of Nicole’s best friends, and Kardashian had famously renewed his lawyer’s license so he could join O.J.’s defense team. (“Robert believed O.J. was innocent … at first,” Bussey says.)

In 1991, Kris married Bruce Jenner, whom she met on a blind date. He was doing a few public appearances, a little motivational speaking and playing a whole lot of golf. Early in her second marriage, Kris — who never attended college — recognized the potential in her husband and began overseeing his speaking engagements and management deals.

 

"My mother has just always been this ‘Let’s make water into wine’ person," Khloe says. "She knows how to take one small talent or ability and grow it into something huge. That’s what she did with Bruce. He would have been happy to spend the rest of his life golfing, and that’s what she did with us."

By 1994, she and Bruce launched a line of stair-climbing fitness equipment via a self-produced infomercial, “Super Fit With Bruce Jenner,” in which they both appeared. The ad campaign was a success, running 2,000 times a month in 17 countries. “I started doing television and really enjoyed it,” Kris says. “And as my girlfriend Kathie Lee’s dad use to say, ‘Find out what you love to do in your life and then figure out a way to get paid for it.’ That became my motto.” Eventually, the never-camera-shy Kris parlayed her on-air talents into a short-lived correspondent gig for ABC’s daytime talk show Mike & Maty during the mid-’90s.

Longtime business associate Jack Kirby, who produced the couple’s informercial, says Kris had a sharp business sense from the beginning, knowing when to draw the line and walk away from deals. “I lovingly refer to her as the Velvet Hammer,” he says. “A lot of time women in this business are unfairly categorized as bitchy. Kris was a smart woman and recognized that, so she would go on a charm offensive and make you love her.”

While Kris might have discovered her passion for show business, the birth of her two daughters with Bruce — Kendall, in 1995, and Kylie, in 1997 — put her newfound career on hold.

But a decade later, she was ready to get back into the business. "She was divorced from Robert Kardashian, so there was some money," Bussey says. “But she had four children, and Bruce had four and then together they had two more. That’s a lot of people to support — and to support well.”

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Now, in Kris’ bedroom —after a tour of the “1940s glam” house that she’s renovating, complete with a staircase seemingly modeled after the one in Gone With the Wind --  she addresses the moment that changed everything.

It was February 2007 when Kris’ second oldest, Kim — then best known as socialite Paris Hilton’s perpetual sidekick — sat her mom down for a confession: She had made a sex tape with her then-boyfriend, musician Ray J. brother of singer Brandy. The kicker? A third party had sold the tape to adult video distributor Vivid Entertainment, and it would be going on sale at the end of the month. The celebrity press soon exploded with every last graphic detail of what the tape contained.

The timing could not have been worse. Inspired by the success of Ozzy and Sharon Osbourne’s family, Kris independently produced a presentation tape of a reality show following her family and had recently begun shopping it to different production companies.

 “I thought, ‘Oh well, there goes the reality show,’ ” she say. But you can either be a problem maker or a problem solver. And I’m a problem solver. My job as her mom and manager is to take care of the problem — whatever it is. I had to cry and get upset in the privacy of my own room and then come out and help her, because she’s my daughter. What good is it for me to berate her?”

Claiming to have never seen the tape, Kris hired a crisis communications expert to help navigate the scandal. “I was way out of my league,” she says. “I would never think I knew enough to care for a situation like that. What’s that Kenny Rogers line? ‘You got to know when to hold ’em and know when to fold ’em.’ All I knew was that I had to make some lemonade out of these lemons fast. Real fast.”           

The fact that Vivid had to pay Kim a figure that’s been reported at $5 million is almost beside the point. The sex tape — one of Vivid’s best-selling DVDs in 10 years — put the Kardashians on the map.

“My job was trying to take my kids’ 15 minutes and turn it into 30,” Kris recalls. Shortly afterward, her entire family would have to get comfortable in front of the camera.

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The genesis of Keeping Up With the Kardashians was a casual meal at the Jenner home in 2006. Kris recalls the evening: “My girlfriend Deena Katz, casting director for Dancing With the Stars, was having dinner and watching the craziness swirl around and said, ‘You guys have to have your own show.’ My friend Kathie Lee was saying that for 35 years!’ ”

It wasn’t just idle talk on Katz’s part. She had been at Ryan Seacrest Productions earlier that day and heard the multihyphenate was looking for the next family reality series and suggested Kris book a meeting. While the dishes were practically still on the table, she had already scheduled a sit-down with Seacrest. “I went and pitched the idea to Ryan, and he loved it,” Kris recalls. “Right out of the gate, he said: ‘We’re in! We’re doing this!’ He took it to E!, and they signed on.”

Seacrest and Berger, however, recall the chain of events slightly differently. Seacrest, an exec producer on the show, maintains he was the one who called Kris in for a meeting. “The first time I met Kris was on a home video tape we shot of a barbecue when we were looking to cast a family for a reality series,” he says. “We saw the magic.”

But Berger was hesitant. “The family had been around town with the sister idea [for a series],” Berger says. “When we got a call from Ryan Seacrest Productions asking if we had met with the Kardashian sisters, I said, ‘Honest to God, I’m not sure if there’s a show there.’ ”

Eventually, Seacrest persuaded Berger to sit down not just with the sisters but also their mother and stepfather. After she witnessed the family’s “ball of energy” dynamic in person, Berger decided to greenlight a pilot. “The addition of Kris and Bruce made the show what it is,” Berger says. “What was most noticeable was Kris’ sense of business. She wasn’t a typical overbearing showbiz mom, but she knows how far she can push her kids and how far she can push the show.”

Before cameras could roll, Kris called a family meeting to make sure her troupe was up for the challenge and the long hours a show would entail. “They could have all said, ‘Are you crazy?’ ” Kris says. “But every single one of them was like: ‘We’re down. Whatever you think, mom.’ ”

Having lived a fairly public life in the 1970s, Bruce was the only one hesitant about cameras 24/7. (His four children from his previous marriages rarely appear on the show, including son Brody Jenner, who appeared on five seasons of MTV’s The Hills.)

“If you know anything about Bruce Jenner, he really doesn’t have a say in very much around here,” Kris jokes. “We said: ‘Honey, we’re doing a show. Are you in or out? If you’re out, then you need to move to the garage because we’re filming a reality show.’ "

As a newly appointed executive producer, Kris admits she didn’t know the first thing about working in reality television. She quickly made an important decision: The family was going to let it all hang out. It’s a credo she has stuck to. Kris and Berger credit the family’s unabashed openness — take Kourtney’s attempt to give Khloe an at-home Brazilian wax — with the success of the series.

“Not only do we not have filters running through our brains, we don’t edit ourselves,” Kris notes, saying that even as a show EP she is hands-off during editing and postproduction. “The scene where [Kourtney’s boyfriend] Scott [Disick] is shoving money down the waiter’s throat, that was hard to watch. But I said: ‘Leave it alone. Just show it. It’ll be fine.’ I’ve said that every single time. And it’s served me well from a business point of view.”

On Oct. 14, 2007, Keeping Up With the Kardashians premiered on E! to immediate success. Averaging more than 1 million viewers per episode in its freshman season, the show, together with repeats, drew an audience of more than 13 million during its first four weeks.

“We had no idea they would connect in the way they did with American pop culture,” Berger recalls. Less than a month after the premiere, the family began shooting a second season.

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The Kardashians, however, could never have catapulted beyond the bounds of reality TV without the rise of social networking.

After seeing the success Kim was having with social media, Kris encouraged all the Kardashian/Jenner kids to tirelessly tweet, blog and update Facebook, “building fans one by one, and talking directly to the consumers,” says Leonardo Armato, CMO and president of Skechers, which recently signed an endorsement deal with the Kardashians (Kim’s ad aired during the Super Bowl).

 There are testimonials and photo shoots and diet and makeup tips for everything they’re shilling — appropriate to who they are and what they’re up to. (To wit, after Kourtney and Scott had son Mason Dash Disick, now 1, she became the spokeswoman for Belly Bandit, a postpartum stomach cincher.)

Kim has led the way in incorporating her massive fan base (she has more than 6 million Twitter followers) into the decision-making process surrounding their endorsements, empowering them with a sense of ownership. Says Kim: “I have a blog that has 40 million hits a month. People leave comments: What shoes do you wear, and what lip gloss do you use? My mom told us, ‘So why not be a brand for our fans and give them what they want?’ Many of our ideas [about what to endorse] come from our fans and then our mother makes it happen.”

Apparently, what fans wanted most was to smell like a Kardashian. In August 2009, Kris and Kim signed with Lighthouse Beauty to develop the Kim Kardashian fragrance. “She utilized her fans by asking them questions,” says Kecia Coby, brand president of the perfume line. “Her fans picked the package color, the bottle and the gifting program.” It worked. The fragrance launched in February 2010 and instantly became one of Sephora’s top-selling products. (Kris has since broadened its reach to Macy’s, Target and other mass retailers.)

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Kim now charges as much as $25,000 to simply mention and link to a brand or company in a tweet. It’s so effective a tool that businesses have begun including Twitter clauses in their contracts with the family, committing the girls to a set number of tweets about their product.

“I see a Twitter clause in almost every contract,” says APA’s Brian Dow, who works with the family on the majority of their commercial interests (WME represents the Kardashians as their talent agents). “It’s like having a photo run in a magazine. It’s another impression for a brand and another medium.”

So how is business, Kris Jenner-style, done? Two years ago, she met Keith Frankel, the CEO of nutritional product manufacturer Vitaquest. The pair soon entered into discussions with QuickTrim about a line of diet supplements and shakes. Before going any further, Kris had Kim and Khloe test the product. Khloe lost 25 pounds. “Khloe needed to go on a diet, and Kim wanted to lose a few pounds. Kourtney was pregnant, so she couldn’t participate,” Kris says.

Frankel brought his distribution contacts at GNC, Walmart and Walgreens. Kris brought her girls. QuickTrim launched in October 2009 and has since spawned $45 million in sales.

Kris recently also signed on with Kim in the new deal with Skechers. The campaign, Skechers’ biggest and most expensive to date, features both. The multimillion-dollar deal was ironed out in about a week. Says Skechers’ Armato: “Kris gets to the point and says, ‘This is what I need for this to work for me.’ She’s no-nonsense, direct and honest.”           

Kris has similarly taken charge of her daughters’ public face time. “The first year, my goal was making more of their personal appearances, which can be very lucrative. I can book those girls every day of the week somewhere. So the goal was to raise the bar financially and have fewer of them.”

According to a high-profile talent wrangler, Kim commands a personal appearance fee of $100,000 to $250,000 per event, and can even demand up to $1 million internationally. It’s been rumored that Kim signed a seven-figure deal with a Las Vegas club owner for a handful of 2011 appearances. (Kris will not confirm.) “Kim sells,” a nightlife source says. “You can have every celebrity under the sun at a venue across town, but if you have Kim Kardashian at your event, those are the pictures that are going to be everywhere.”

Kris also has a more-is-more policy when it comes to magazine coverage. The sisters are ubiquitous, supplanting “real” stars on the cover of the glossy monthlies (Kim’s controversial November cover of W tied for the second-best seller of 2010, her September Allure cover was the glossy’s third-most popular, and her June cover of Shape marked the magazine’s best-selling issue of the year). For the weeklies, where they will discuss anything from their weight and love lives to baby-daddy issues and breakups, the family often demands a fee. Certain paparazzi agencies have agreements with the family to stage photos, sell them and split the profits. Kourtney and boyfriend Disick can — and recently did — turn an afternoon laying poolside in Cancun into a $7,500 payday.

The sisters get in the six-figure range —negotiated by Kris — for a cover story, photo op and interview, depending on the significance of the topic. News of Kourtney’s 2009 pregnancy was sold in a package deal for $300,000 to Life & Style magazine. That included multiple stories: the pregnancy announcement, sex of the baby, birth announcement, first baby photos and body-after-baby reveal. (Life & Style declined comment.)

When it came to Khloe’s marriage to Los Angeles Lakers forward Odom, she did even better. OK! Magazine received the official photos and announcement for just shy of $300,000. Kris also had everything from the Lehr & Black custom invitations to Khloe’s 9-carat engagement ring “donated” for the lavish affair; sources say she promised vendors massive product promotion that would come from the media circus surrounding the wedding. In the event that an item wasn’t gifted, E!, it is believed, picked up the tab (E! declined comment).

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A DAY IN THE LIFE OF KRIS: She Shares Her Calendar From One Day: Feb. 9

  • 3:30 a.m.  Satellite media tour with Khloe for T-Mobile.
  • 7-8 a.m.  Workout with Gunnar Peterson.
  • 8-8:30 a.m.  Return East Coast business phone calls from the car.
  • 8:30-9 a.m.  Shower and dress.
  • 9-9:30 a.m.  E-mail correspondence from office.
  • 10 a.m.  Meeting with Leonard Armato about filming an upcoming Skechers commercial with Kim.
  • 10:30 a.m.  Phoner with Seventeen magazine about Kendall and Kylie.
  • 10:45 a.m.  Phone interview with writer for Redbook magazine article.
  • 11 a.m.  Meeting with QVC about new Kris Jenner clothing line.
  • Noon  Lunch with Lighthouse Beauty regarding fragrance launch for Khloe and Lamar’s Unbreakable for Valentine’s Day at the Beverly Hills Hotel.
  • 1 p.m.  Phoner with Keith Frankel to review spring ads for QuickTrim line.
  • 1:30 p.m.  Meeting with Jupi and Sears for creative approvals for new Kardashian Collection.
  • 3 p.m.  Creative meeting with Ryan Seacrest Productions at E! about new series.
  • 5 p.m.  Drop by Khloe and Kourtney’s Kardashian Konfidential book signing at Barnes and Noble in Santa Monica.
  • 6 p.m.  Finalize and approve photos for Robert’s new OP campaign.
  • 7 p.m.  Dinner at home with Bruce, Kendall and Kylie, Scott, Kourtney and Mason.
  • 8 p.m.  Watch American Idol.

So what does Kris ever say no to? Recently, a sex toy company hoped to sign Khloe and Odom. “The company wanted to know why I was turning them down,” Kris laugh says with a laugh. “I said, ‘It’s just not the look we’re going for at this moment, but thank you.’ They said, ‘It’s not hardcore, just vibrating panties, nipple rings and vibrators.’ I was like, ‘Hell to the no!’”

To outsiders, Kris is both brilliant and walking a fine line. “If I fault her for anything, it’s doing too much too soon,” says Darren Bettencourt, a manager for reality stars including The Real Housewives of New York’s Jill Zarin. “If you saturate the market, you confuse the consumer. What do the Kardashians stand for? You can’t be an expert in everything.”

Indeed, Bettencourt cites the litigation surrounding the Kardashian Kard, a prepaid credit card the sisters launched in November with financial service company Mobile Research Card. Under the contract, the Kardashians would have received $3 for every card activated or sold, 25 percent of fees, a $75,000 advance on royalties and a $37,000 signing bonus. But when then-Connecticut Attorney General Richard Blumenthal castigated the card for its predatory hidden fees (of which the family, as stated by the contract, would receive a percentage), Kris attempted to quietly terminate the agreement. The card’s issuer is suing the family for $75 million.

“It’s the sort of thing which shows how careful you have to be,” Bettencourt says. “It’s easy to lose the fans’ goodwill.”

So far, though, America continues to line up for the Kardashian buffet. The most recent spinoff, Kourtney & Kim Take New York, attrached more than 3 million total viewers.

As the brood gears up for Season 6 of Keeping Up With the Kardashians, Kris sees no end for the series, even teasing the possibility of a reality series starring the little ones, Kendall and Kylie.

“My fantasy is to have Keeping Up With Kardashians, Season 26,” Kris says. “Who knew it would be this profitable? I should have had more kids.”

Still, she knows that this moment — no matter how long it’s already been extended — might not be forever. “We definitely worry about overexposure. We never want to get to a place where people are thinking, ‘Enough is enough.’ ”

-- Additional reporting by Bryan Alexander and Marisa Guthrie

Andrew Southam
Andrew Southam
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Courtesy of Subject