The film was an adaptation of a play "Sir Charles Grandison" that Jane Austen wrote as a fourteen year old teenager circa 1800 and not first published until 1980, the year the film was released. It had been adapted from the book "Sir Charles Grandison" aka "The History of Sir Charles Grandison" aka "Sir Charles Grandison or The happy Man, a Comedy in 6 acts" (1753) by Samuel Richardson.
The picture's storyline involved the discovery of a recently discovered early work by Jane Austen which is sold at auction. In reality, the genesis of the picture was the discovery of a real life early work written by Jane Austen around 1800 which had been recently sold a Sothebys Auction in London, England, and was first published in the same year as this film was released.
Frank Miller at the Turner Classics Movies website states: "Merchant and Ivory had union problems throughout the production of Jane Austen in Manhattan (1980). The British unions objected to LWT [London Weekend Television] making a film in New York with no British crew members involved, while the U.S. unions complained about every short lunch hour or long day [director James] Ivory demanded. The Director's Guild was upset that [Andrei] Serban, who was not a Guild member, was directing actors and tried to stop Ivory from giving him a credit on the final film".
According to the Merchant Ivory Productions official website, "The origins of Jane Austen in Manhattan (1980) . . . go back to the sale of the manuscript of Jane Austen's childhood play, based on Samuel Richardson's novel 'Sir Charles Grandison', at a Sothebys auction in London. The manuscript was acquired by David Astor, owner of 'The Observer' newspaper, who was quickly approached by the London Weekend Television [LWT] arts program The South Bank Show (1978) apparently without actually seeing it, for production rights. Melvyn Bragg, who had co-produced Hullabaloo Over Georgie and Bonnie's Pictures (1978) for the program and was at a party for its screening with Merchant and Ivory, mentioned to them that LWT had just acquired an option on the play. Also without having seen the play, they enthusiastically agreed to do the film version. When [director James] Ivory received a photocopy of the manuscript, however, he discovered that it 'wasn't a complete play, just this childish thing'. Yet [screenwriter Ruth Prawer] Jhabvala felt that it could be used as the 'seed' for a film in which theatrical groups compete to acquire and produce the Austen play. After The Europeans (1979) was made, she prepared the screenplay for Jane Austen in Manhattan (1980), and in January-March 1980 the film was shot on location in New York. Its $450,000 cost was underwritten by a group of investors, including London Weekend Television and Polytel, backers previously of Hullabaloo [Hullabaloo Over Georgie and Bonnie's Pictures (1978)]".
The source material written by Jane Austen was unfinished, amateurish, the early product of a great writer, and in its original form, was actually unusable in its entirety for a screenplay, and so a new concept for the film's story had to be conceived by screenwriter Ruth Prawer Jhabvala.
Of the film's digital restoration, the movie's DVD sleeve notes state: "Jane Austen in Manhattan (1980) is presented in its original aspect ratio of 1.33.1. This new high-definition digital transfer was created on a C-Reality from a 35mm CRI blowup from the 16mm negative. The MTI Digital Restoration System was used to remove dirt, debris, and scratches. The soundtrack was mastered from the 35mm optical track".