Media Chiefs Form Venture in E-Publishing

Two powerful entertainment moguls, , the film and theater producer, and , the chairman of IAC/InterActiveCorp, are joining together to enter the turbulent world of book publishing.

Mr. Rudin and Frances Coady, a longtime publishing executive, have formed a partnership with Mr. Diller in a new venture called Brightline. It will publish e-books and eventually physical books in a partnership with Atavist, a publisher based in Brooklyn with expertise in producing electronic books and articles.

The alliance creates a new competitor in the rapidly changing digital book market, one that is dominated by Amazon, the online retailer, which has roughly 65 percent of e-book sales. Though fledgling, the new venture will enjoy the support of two influential executives who control a wide array of resources in media and entertainment.

Atavist and Brightline will exchange an undetermined amount of minority equity interests in each other's ventures, and IAC will provide $20 million in capital to build out Brightline as a publisher in addition to making investments in Atavist.

Atavist, a start-up conceived by three friends in Brooklyn - Evan Ratliff, Jefferson Rabb and Nicholas Thompson - received attention for its content management system, which the group used to produce multimedia storytelling for various electronic devices. In May, Eric E. Schmidt, executive chairman of Google, was among a group of high-level technology executives who invested in an early round of financing for Atavist.

There were informal discussions this summer in which Mr. Diller and Mr. Rudin discussed paying as much as $10 million for a controlling interest in Atavist. A partnership grew out of those discussions.

“The book business has a concentrated number of players and is unquestionably in transition,” said Mr. Diller, sitting at a conference table at IAC's Manhattan headquarters on Monday with Ms. Coady, Mr. Rudin and Mr. Ratliff. “There is a possibility here that if we start with a blank piece of paper that you could hit the opportunity that exists in the book business now.”

Mr. Rudin, who frequently works with authors like Michael Chabon, Jonathan Safran Foer and Jonathan Franzen to turn their books into films, said he had heard a steady stream of complaints about the opaqueness and resistance to change in the publishing business.

While traditional publishers are now releasing books in both paper and digital formats, e-book sales have surged in the last several years. E-books now account for more than 15 percent of publishers' revenue, posing a challenge to the dominance of print in the long run and leaving the future of brick-and-mortar bookstores in doubt. Fiction has been an especially rich market for digital books: major publishers say new novels often sell more e-book copies than print copies in their initial weeks of sale.

Mr. Rudin worked for Mr. Diller as head of production at 20th Century Fox during the 1980s, and the two men have remained friends. For this venture, they decided to work with Ms. Coady because she was an early innovator in trade paperbacks at Random House and went on to work with authors like Augusten Burroughs at Macmillan's Picador imprint.

They are hoping that a brand new enterprise, without the legacy costs and practices of traditional publishing, can find traction.

“Evan and the Atavist started this with nothing,” Mr. Diller said. “We are going to lead this with a lot of marketing money and investment. They want to do bigger things without losing control.”

It has been a remarkable run for Atavist, which was conceived over a series of beers in Brooklyn and began publishing in 2011 with articles built for tablet reading.

Mr. Ratliff said the offer from Mr. Diller and Mr. Rudin got Atavist's attention because it was not just about the software.

“Other people came to us with various ideas, but this allows us to do what we did before, except bigger,” he said. “We have a partner with the same vision that we have.”

Brightline and Atavist will remain separate for the time being and the books will be published under the Atavist name. No author has yet been signed by Brightline, and Mr. Rudin asserted that the new enterprise was not an attempt to get an early look at books he might make into films.

“I already have access to all the books I need,” he said. “I am doing this for the same reason I do theater, which is that I love the work and this seemed like a good way to get involved.”

Instead of beginning from scratch, Ms. Coady said, the partnership will give Brightline access to the software, a place to market books in all forms and the design expertise of Mr. Rabb and others at Atavist. And Atavist will have access to big-name authors whom Ms. Coady and Mr. Rudin could bring to the table.

“The Atavist has put together a beautiful reading experience,” Ms. Coady said. “They've done so much so quickly.”

Unlike Atavist, Brightline will pay big advances to compete for big-name authors, but many questions remain, including how the new company will share revenue with its authors and how it will get printed books into stores.