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How the Kardashians made $65 million last year

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-mo
/ Source: Hollywood Reporter

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.

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).

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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.)

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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.

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.

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"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.”

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.

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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 says. 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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