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Studio-based Units and In-house Independents - CASE STUDY : DORE SCHARY AT MGM , VANGUARD, AND RKO

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The studios had little choice but to accommodate filmmakers who expressed independent inclinations, given the wartime demand for top talent and for a steady flow of highend product. Thus, by early 1944, according to Variety , “Hollywood’s most important independent producers [were] setting virtually their own terms with distributors.” 43 At that time, 71 units were scheduled to deliver 196 features over the coming year at a total projected cost of $180 million—a figure equal to the combined production budgets of several major studios. 44 UA, a company designed solely to release major independent pictures, accounted for half of these. But UA’s declining wartime fortunes due to management and marketing difficulties encouraged other studios to compete with it—invariably adapting the “UA model” to their own production needs. Thus, by 1944—1945, many independents were finding better terms elsewhere, particularly at Universal and RKO.

Universal signed deals with many in-house independents during the war, including Charles K. Feldman, Gregory La Cava, Frank Lloyd, Jack Skirball, and Walter Wanger. The most significant of these was Wanger, who entered a quasi-permanent relationship with Universal after producing EAGLE SQUADRON in 1942. Wanger then signed to produce ARABIAN NIGHTS (1942), a costume romance with Jon Hall and Maria Montez, and Universal’s first Technicolor feature. The picture was a success, and it set the pattern for a series of limited contracts between Wanger and the studio. The deals called for Wanger to supply the story idea for each picture; once it was approved, he received $50,000 for script development. Wanger and the studio boss Cliff Work worked out the cast, crew, and budget, and Wanger then had complete control until the preview stage. He was paid a weekly salary during production and then split any net profits with Universal after release. Most of Wanger’s films were scripted by Norman Reilly Raine and directed by Jack Rawlins, both freelancers; otherwise, he relied on Universal’s contract talent.

Thus, Wanger, even without the production facilities and contract personnel of filmmakers like Goldwyn and Selznick, became a major independent producer through his connection with Universal. He maintained creative and supervisory control of his pictures, while providing Universal with a prestige-level unit and a steady string of commercial hits, including GUNG HO ! (1943), LADIES COURAGEOUS (1944), and SALOME , WHERE SHE DANCED (1945). Wanger’s commercial success at Universal enabled him to pursue a more ambitious venture with the studio in 1945. After signing another five-picture deal with the studio to deliver more standard A-class fare, Wanger entered a very different kind of arrangement in the form of Diana Productions. Wanger set up the company as a partnership with his wife, the actress Joan Bennett, and the director Fritz Lang, with Universal to supply one-half the finances and to distribute Diana’s output of one or two pictures per year—beginning with SCARLET STREET in 1945.

Universal entered several other new independent arrangements in 1945, signing Mark Hellinger Productions as well as Leo Spitz and William Goetz’s International Pictures. Those deals, along with already established ones, gave Universal as strong a lineup of independent unit producers as any of the Hollywood majors except RKO. 47 At that point, RKO’s outside-producer ranks included Walt Disney, Sam Goldwyn, Arthur Rank, Liberty Pictures (Frank Capra, George Stevens, and William Wyler), Jesse Lasky, Alfred Hitchcock, and Dore Schary. Several of these producers, however, were signed in 1945 as the boom reached its peak, although Goldwyn, Disney, and Hitchcock (via Selznick) had played a crucial role in RKO’s wartime success.

While RKO and Universal successfully exploited the in-house independent trend during the war, both studios also were shifting to a unit-production system for top contract talent. In fact, both developed a clear three-tier system during the war, with in-house independents supplying most of the A-class product, contract talent in studio-based units turning out a few A’s but mainly near-A’s, and the factory assembly line cranking out routine B’s. The most significant of Universal’s studio-based units was overseen by the writer John Grant, who graduated to writer-producer status in 1944 and produced the Abbott and Costello vehicles. Another important studio-based setup was the Sherlock Holmes unit under the producer-director Roy William Neill. Just before the war, Universal bought the rights to Arthur Conan Doyle’s detective stories along with the contracts of Basil Rathbone and Nigel Bruce from Fox. Neill put Holmes and Watson through their paces in a dozen pictures during the war, developing a unit that was as consistent and dependable—if not quite as profitable—as Grant’s Abbott and Costello unit.

RKO, meanwhile, enjoyed considerable success with a series of near-A horror films produced by Val Lewton, who left Selznick in early 1942 and signed with RKO as writerproducer. The first of these was CAT PEOPLE , a late-1942 release which was a modest commercial and critical hit and established what Lewton described (in a letter to Selznick) as “our little horror unit.” 48 The Lewton unit continued to turn out modest horror films—notably I WALKED WITH A ZOMBIE and THE LEOPARD MAN in 1943, THE CURSE OF THE CAT PEOPLE in 1944, and THE BODY SNATCHER and ISLE OF THE DEAD in 1945—which were consistent moneymakers for RKO. These were scarcely on a par with RKO’s A-class projects, however, nor was Lewton, because of his contractual status with RKO, in the same league with the in-house independents.

This distinction is crucial, particularly with regard to the other integrated major studios. Simply stated, the rest of the Big Five had both the production resources and the economic leverage to resist the in-house independent trend, and they went on record publicly—and often quite vocally—as being utterly at odds with the trend. Variety in July 1943, for instance, in one of the many trade press stories about the majors’ resistance to “indie units,” noted that “Paramount, Warners and 20th Century-Fox have no outside producers.” 49 But in actuality, the majors were, in various ways, modifying the trend toward independent units to accommodate their top talent, usually through the relative autonomy of unit status and, in rare cases, profit-participation deals.

MGM and Fox remained most resistant to the in-house independent trend during the war, with MGM granting unit status to contract producers like Arthur Freed and Dore Schary, while Zanuck eschewed unit designation even for his top producers and directors. Interestingly enough, Fox had begun to develop unit production under Bill Goetz in the early war years while Zanuck was away with the Signal Corps, and Goetz actually signed a few outside deals—including a two-picture deal with Selznick for Hitchcock’s services. Zanuck’s return in 1943 effectively stifled that effort, however, and it ended Goetz’s tenure with Fox as well. Goetz left in late 1943 to form International Pictures in partnership with Leo Spitz. The longtime Fox writer-producer Nunnally Johnson also left upon Zanuck’s return, because Zanuck refused to let him have his own unit and a profit participation deal. 50 Johnson went on to form a successful independent company with Gary Cooper.

The situation was more varied and complex at Warners, which developed a range of strategies to accommodate the independent urge of top talent. Ample evidence of these varied strategies is provided by three early-1942 deals between Warners and Hal Wallis, Howard Hawks, and Mark Hellinger. The Wallis contract of January 1942, as mentioned earlier, signaled the end of Warners’ central-producer setup. Because neither Wallis nor Warners wished to produce “as large a number” of pictures as in previous years, Wallis became responsible for only four pictures per annum. The contract was to run four years, starting at $4,000 per week, with Wallis to receive an additional 10 percent of the gross receipts once his pictures returned 125 percent of their costs. The participation angle marked a radical departure for Warners, as did the degree of Wallis’s authority over his pictures: he had first choice of story properties, directors, performers, and other contract talent. He was to supervise the scripting and editing, although Jack Warner had the last word in any disputes. Each of Wallis’s pictures was to be billed as “A Hal B. Wallis Production,” in type at least 50 percent the size of the title.

The Hawks and Hellinger deals of February 1942 differed considerably from the Wallis deal in that neither was granted the same degree of authority or a cut of the profits. But the two deals did further indicate Warners’ shift to an in-house unit setup. Warners signed Hawks to a five-year, five-picture deal at a salary of $100,000 per picture, with his duties described as those of “Director and/or Supervisor.” This designation gave Hawks authority over both scripting and editing, and his pictures were to be billed as “A Howard Hawks Production” in a type size 25 percent that of the title. Hawks was sufficiently comfortable with Warners to sign an exclusive deal, which meant he could work for no other company while the contract was in effect. 52 The writer-producer Mark Hellinger had left Warners in 1941 rather than submit to Wallis’s authority. But with Wallis’s shift to unit producer, Hellinger now was willing to return. On 26 February, he signed a five-year deal at $3,000 per week “as producer and/or executive and/or director and/or writer,” and his contract stipulated a separate producer credit on all his pictures with his name at 25 percent the size of the title.

Also of note in this context is an arrangement made with Bette Davis. In June 1943, Warners created B.D. Inc., an in-house independent setup for Bette Davis giving her 35 percent of the net profits on her pictures. That company folded, however, after a single picture; Davis ultimately had little interest in becoming her own producer.

As mentioned earlier, Paramount had maintained a special arrangement with Cecil B. DeMille since the late 1930s but otherwise avoided in-house independent deals. This policy began to change during the war. In 1944, Hal Wallis left Warners and signed a deal with Paramount giving him an independent unit on basically the same terms that DeMille had been operating under for years. Shortly thereafter, the longtime Paramount production executive Buddy De Sylva demanded, and received, a similar deal from the studio.

The easing of Paramount’s resistance to the independent unit trend was further underscored by a 1944 deal with Leo McCarey. During the war, McCarey was virtually the only established freelance producer-director to maintain that status, relying on one-picture deals with various studios. After a modest 1942 hit for RKO, ONCE UPON A HONEYMOON , McCarey approached Paramount with an original story (his own) about two priests struggling to make ends meet in a New York City parish. McCarey convinced Paramount that it might make an ideal Bing Crosby vehicle, and the studio agreed to finance and distribute the picture. But Paramount also was sufficiently leery of the project to oblige McCarey’s request to waive his salary in lieu of a share of the profits. The result, of course, was GOING MY WAY , the single biggest hit of 1944; McCarey’s share was reportedly in excess of $1 million.

McCarey then reasserted his independence and market value by spurning Paramount and striking a deal with RKO for THE BELLS OF ST.MARY’S , the sequel to GOING MY WAY . This, too, would star Crosby, whom Paramount had granted quasi-independent status, opposite Ingrid Bergman (on loan from Selznick). That 1945 production gave McCarey another huge hit, confirming his stature as Hollywood’s leading freelance producer-director.

It confirmed, too, the validity of RKO’s wartime courtship—which by 1945 had become remarkably aggressive—of outside independents. One of the more significant deals was with Dore Schary, a producer loaned to RKO in 1945 by another leading independent, David Selznick, as part of a multifilm package. The deal marked another stage in Schary’s remarkable wartime ascent from contract writer at MGM to prestige-level independent—an ascent worth tracing in some detail.


The career of Dore Schary during World War II demonstrates the range of independent and unit production strategies at the time, and several other wartime trends as well—particularly the emergence of the writer-producer as a significant industry force and the hyperactivity of A-class (and near-A) feature production. Schary’s career in 1944-1945 also was directly related to two other significant developments in Hollywood’s independent filmmaking arena: the return of David O. Selznick to active production, and Selznick’s increasingly elaborate packaging of movie projects.

In late 1941, Dore Schary was a 36-year-old contract writer at MGM earning $1,000 per week; his more significant screen credits included BOYS TOWN (1938) and YOUNG TOM EDISON (1940). Schary wanted to produce, and he impressed Louis Mayer with his ideas about improving Metro’s low-budget output. So in November 1941, Mayer signed Schary to a new one-year contract, at $1,750 per week, as executive producer and put him to work with Harry Rapf on MGM’s mid-range product—its near-A pictures.

Harry Rapf was a Metro executive (and corporate vice president) who not only lacked experience as a “creative” producer but did not even read the story properties or scripts that his unit developed. 58 MGM’s near-A operations quickly changed under Schary’s supervision, and in fact the Rapf-Schary unit (as it was termed in interoffice memoranda) soon became known on the lot—and well beyond it—as the Schary unit. Schary chaired weekly meetings with the unit’s producers, going over story material, making cast and crew assignments, and monitoring production. He also played an active role in story and script development, serving as story editor and closely supervising postproduction. The Rapf-Schary unit included about a dozen producers; the total varied as some producers graduated to the A ranks while others were let go. Schary also joined Rapf on MGM’s elite executive committee, not only to tap into the available studio talent and personnel but also to pass along promising projects deemed too ambitious for the B unit. Schary used top talent in some of his near-A productions—Robert Taylor in BATAAN , for instance—and also developed new talent that could work in both A and B pictures, such as Margaret O’Brien and Elizabeth Taylor.

The Schary unit started strong with JOE SMITH , AMERICAN , a home-front drama released in early 1942 and starring Robert Young as a munitions plant worker who faces problems at home and on the job. He eventually is kidnapped by enemy agents trying to discover the workings of a new bomb sight, and he is able to endure by fixing his mind on the values of home and family. The film avoided the jingoism and spy-thriller mechanics of so many early war films, however, and in fact critics were impressed by both its unassuming story and its modest production values. “In its own simple and unassuming way,” stated the New York Times , ‘“Joe Smith, American’ does more to underscore the deep and indelible reasons why this country is at war than most of the million-dollar epics with all their bravura and patriotism." It was “not a ‘big’ film as Hollywood productions go,” noted the Times , “but it pulls a good deal more than its own weight.”

JOE SMITH , AMERICAN was budgeted at $280,000 and came in $44,000 under budget; it turned a profit of $240,000. 60 Although the film was invariably held up as a working model for the Schary unit, few others were produced as efficiently or did as well. The unit turned out thirteen films in 1942 at an average cost of $275,000. Most of these were crime thrillers, home-front dramas, Westerns, and combat films—all standard B-grade wartime fare—with the war-related pictures by far the more successful.

In 1943, the Schary unit’s average cost per film rose to nearly $400,000, owing both to inflation and to Schary’s growing ambition. Its two biggest pictures at that time were JOURNEY FOR MARGARET (1942), a rehash of MRS.MINIVER (1942) that cost $463,000, and LASSIE COME HOME (1943), which cost $564,000. Both were hits, although the real payoff was the introduction of 5-year-old Margaret O’Brien in the former and 11-year-old Elizabeth Taylor in the latter. (Their weekly salaries in 1943 were $150 and $75, respectively). 61 The unit’s biggest project was BATAAN in late 1943, which cost $789,000 and costarred Robert Taylor, Thomas Mitchell, and Robert Walker; it was directed by Tay Garnett while he waited to start a big-budget Greer Garson vehicle. Clearly Schary’s near-A productions were edging closer to A-class status, although the unit was operating only at about a break-even level. Still, Mayer was satisfied. He raised Schary’s salary to $2,000 per week in November 1942 and then offered him another raise in late 1943.

By then, Schary had other plans. He wanted to personally produce A-class pictures, and despite Mayer’s assurances, he was not optimistic about that possibility at MGM. There were other offers in late 1943, including one from Selznick, who finally was returning to active production. Selznick had two prestige-level projects in the works, SINCE YOU WENT AWAY and SPELLBOUND , he wanted Schary to produce more modest A-class pictures through his Vanguard Films to complement Selznick’s own prestige productions. Schary agreed, signing on in November 1943 at $2,500 per week plus 15 percent of the net profits on all his Vanguard releases. 62 A few weeks later, he purchased the screen rights to an original radio drama, Double Furlough by Charles Martin, for $2,500. 63 The story centered on a shell-shock victim who, while home for Christmas, falls in love with a woman on holiday furlough from prison. Schary convinced Selznick to bring in the freelancer Ginger Rogers for the lead, while costarring roles went to two Selznick contract players, Joseph Cotten and Shirley Temple, who also were appearing in SINCE YOU WENT AWAY .

Schary managed to keep his initial Selznick project on target at $1.3 million, proving that he was ready to handle A-class productions. He also displayed a canny feel for the marketplace by convincing Selznick to change the title to “I’ll Be Seeing You,” which Schary suggested in early 1944 after first hearing the Tommy Dorsey-Bing Crosby song. 64 Although Selznick was wary of the war-related title “Double Furlough,” he balked at the suggestion. But when “I’ll Be Seeing You” became the number-one coinmachine hit in the United States in July 1944, Selznick assigned Gallup’s ARI to market-test the title. 65 ARI’s research supported the change, and so the film was released just before the Christmas holidays under the title I’LL BE SEEING YOU . By then, the song had fallen from its extended run atop the charts but had become a wartime standard, and its use as both a title and a musical theme undoubtedly enhanced the film’s popularity. Total earnings on I’LL BE SEEING YOU reached $3.8 million—giving Schary a profit share of $97,000 (beyond his salary of $105,000 on the picture) and securing his role with Vanguard.

By early 1945, Selznick was preparing another Hitchcock picture, NOTORIOUS (1946), and a big-budget Western, DUEL IN THE SUN (1946). Schary had two comedies in the works: THE BACHELOR AND THE BOBBY-SOXER (1947), with Cary Grant and Shirley Temple, and THE FARMER’S DAUGHTER (1947), with Joseph Cotten and Loretta Young. Selznick’s operations were plagued by various problems in 1945, however, principally cost overruns on D UEL and the decorators’ strike, which completely closed down production in April while Selznick continued to run up huge overhead costs. 67 Selznick decided to unload all of his current projects except DUEL , making a series of immensely profitable deals in the summer of 1945 with RKO. These involved the outright sale of the NOTORIOUS , BACHELOR AND THE BOBBY-SOXER , and FARMER’S DAUGHTER packages (with profit participation to Selznick), and also the loan of the Selznick contract talent attached to each project—including Dore Schary.

Thus, Schary joined Sam Goldwyn, Walt Disney, Leo McCarey, and others as an outside producer at RKO. His efforts there were eminently successful—so successful, in fact, that within a year he would be installed as RKO’s production chief after the death of Charles Koerner. That promotion marked the culmination of Schary’s remarkable climb through the filmmaking and executive ranks in wartime Hollywood, and it also indicated that the industry’s “independent” ranks were still intimately tied to the major studio powers. Those ties would continue, of course, as long as the studios controlled the means of production and distribution, and as long as it remained necessary to rely on outside talent to satisfy the market demand for A-class product.

The studios also had the resources to exploit these A-class pictures, and in fact their sales, promotion, and marketing operations were geared up to another level during the war years. Indeed, not only the war-related market surge but also the post-decree sales policies, which took effect in late 1941, virtually demanded that the studios adopt more aggressive strategies in promoting and selling their high-end pictures. Some companies were more aggressive than others, but all recognized that both the war and the antitrust campaign meant that the marketing as well as the making of motion pictures was changing dramatically.

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