A newly formed investor group led by David Steinberger has acquired Open Road Integrated Media (OR/M) for what the Wall Street Journal reported was a purchase price between $60 million and $80 million. Founded in fall 2009 by former HarperCollins CEO Jane Friedman, Open Road began life as an e-book publisher and marketing company that in recent years has focused on using its proprietary platform to promote e-books for about 70 publishers.
Steinberger told PW that after leaving Perseus Books Group following its sale to Hachette Book Group and before he formed a group that acquired Arcadia Publishing, he had consulted for Open Road. During that time he saw how Open Road's proprietary search engine optimization had potential to double the sale of backlist books.. Open Road’s data scientists analyze “thousands of data elements to determine the most appropriate marketing campaign,” Steinberger said. The company is currently working with 35,000 titles (including about 11,000 titles to which it owns the rights) through its Ignition program and executes tens of thousands of individual marketing campaigns each month. Steinberger said in November alone Open Road launched about 52,000 campaigns.
Operationally, Ignition involves the use of powerful consumer outreach vehicles, direct demand stimulation, strategic and tactical pricing, consumer segmentation and personalization, content syndication, metadata and copy optimization. Partner publishers pay nothing to Open Road until marketing services generate revenue that exceeds the publisher's baseline sales (a mutually agreed upon sales number for the titles prior to inclusion), and then a revenue split kicks in on the uplift for those titles. Open Road absorbs all costs of marketing.
Since it has honed its marketing strategy, Open Road’s sales have doubled over the last three years and, according to the WSJ, revenue will approach $50 million this year and the company is profitable. It's most recent earnings statement, Open Road said profits were up significantly in 2020 and are on the rise in 2021, with second quarter results showing and increase of 22% in revenue and EBITDA improvement of over 292% in 2021.
Among the newly formed investor group’s backers are two Open Road clients, Grove Atlantic, which has its full catalog of titles with Open Road, and MEP Capital, a media and entertainment-focused private equity fund that is part owner of Rosetta Books. The private equity firm Abry Partners, which specializes in investments in media and technology, is also part of the group as well as what was described as “a number of prominent individual investors from the worlds of publishing and finance.”
Steinberger will take over as company CEO January 1 from Paul Slavin, who joined Open Road in late 2015 and helped the company focus on its marketing efforts, which led to consistent profitability. Slavin will continue to work with Open Road as a consultant. Steinberger said he is looking forward to working with Slavin and added that he was "thrilled with the work the Open Road team has done."
As for company founder Jane Friedman, she told the WSJ she was “very happy that the company has gotten to the point where it was viable for sale.”