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Studio Operations and Market Strategies - THE MAJOR STUDIOS, THE MAJOR-MINORS AND MINOR STUDIOS

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Paramount Pictures dominated the movie industry throughout the postwar era because of its massive theater holdings, superior resources, and stable and capable management setup. Barney Balaban continued to run the company and to oversee sales and exhibition out of the New York office. Frank Freeman managed the studio, mainly handling contract negotiation and labor relations with the studio’s 3,200 employees, while Henry Ginsberg guided filmmaking operations. 18 Paramount had a classic top-down management structure, with virtually all decisions emanating from Balaban, in fact, an inviolable company policy was that Balaban had to approve any expenditure over $100. Balaban gave his top executives ample authority, however, and Ginsberg clearly ruled studio filmmaking operations. As a 1947 Fortune profile of the company asserted: “The focus … in the whole studio, inevitably, is on Ginsberg. He is the man who makes the decisions in picture making, and although he is in constant consultation with other executives, from Balaban on down, his is the final word.”

Paramount’s postwar output was essentially a continuation of its wartime efforts—a succession of light comedies and romantic dramas, punctuated by an occasional Road picture with Hope, Crosby, and Lamour (ROAD TO R IO in 1947), an occasional DeMille epic (UNCONQUERED in 1947, SAMSON AND DELILAH 1949), and an occasional Wilder-Brackett triumph (A F OREIGN A FFAIR in 1948). Hope, Crosby, and Alan Ladd continued to be its dominant stars, with William Holden on the rise and top freelancers like Gary Cooper, Barbara Stanwyck, and Olivia de Havilland coming in for one-and two-picture stints.

Paramount enjoyed tremendous success in the mid to late 1940s, setting an industry record with profits of over $15 million in 1945 and then far surpassing that total in each of the next three years. Its most profitable year was 1946, when net proceeds were nearly $40 million. 20 Significantly enough, even during that period of routine $3 million rentals, the company’s record pace owed far more to its “highly profitable and strategically located theater holdings” than to its hit films, as Balaban told Variety’s Ira Witt in 1946. “Balaban’s disclosure,” stated Witt, “indicates that the theater end continues to be the bigger money-getter of the film business.” 21 At the time, Paramount had a stake in roughly 1,500 theaters, including about 250 overseas. It held majority ownership in some 1,200 theaters in the United States, most of which were located in major markets. And because of the relative size of these houses, Paramount controlled roughly one-eighth of all the theater seats in the United States (1.45 million out of a total of 11.4 million).

Paramount responded relatively quickly to worsening market conditions in 1947, and by mid-1948 the studio had reduced its overhead by a reported 30 percent. 23 Paramount also reissued films very aggressively throughout the late 1940s, keeping literally dozens in circulation at any given time. This reliance on reissues was more than an effective defensive market strategy; it also enabled Balaban to test his conviction that Paramount’s old films would be vital to its anticipated move into television. 24 Indeed, Balaban’s hopes for television as the key to Paramount’s future helps explain his willingness to divest the all-important theater chain without a serious fight after the Paramount decree. By 1949, the company had pretty well abandoned theater-based video projection, and Balaban saw Paramount’s future television plans primarily in terms of feature film distribution through Paramount-owned TV stations . Thus, Balaban, despite his extensive background in exhibition, decided to stay on with Paramount   Pictures after divestiture rather than take over the newly created United Paramount Theaters.

Twentieth Century-Fox, Paramount’s chief competitor through the postwar era, also enjoyed stable and capable management, led by Spyros Skouras in New York and Darryl Zanuck at the studio. As in earlier years, Fox’s postwar output evinced a fundamental split between Technicolor hokum on the one hand—chiefly Betty Grable musicals and Tyrone Power costume adventures—and relatively ambitious, socially astute drama on the other, much of it supplied by producer-directors like Otto Preminger and Joe Mankiewicz. The latter ranged from noir thrillers and realistic crime films to women’s pictures and social problem dramas, all trends which Fox developed and dominated in the late 1940s. Perhaps the best example of the studios split personality can be seen in the two late-1947 films which finished among the top ten box-office hits of 1948: C APTAIN FROM C ASTILE , a color costume drama starring Tyrone Power and directed by the spectacle specialist Henry King, and GENTLEMAN’S AGREEMENT , a drama about anti-Semitism starring Gregory Peck, produced by Zanuck, and directed by Elia Kazan.

Like most of Fox’s postwar successes, these were solid but unspectacular hits. Fox relied on a steady supply of profitable A-class films, which it delivered in the late 1940s perhaps as consistently as any studio besides MGM. Moreover, owing to Zanuck’s practical approach to the marketplace, Fox relied more heavily on B’s than any other major. Actually, Fox hedged its bets in this area by phasing out active B production at the studio in 1946, dismissing the head of the B unit, Bryan Foy (who went to PRC), and subcontracting B-picture production to independent low-budget producers like Sol Wurtzel, Ben Pivar, and Bernard Small. These moves gave Fox considerable flexibility, enabling Zanuck to revert to a high-output strategy, all through outside producers. (The twenty-one B’s Fox produced for the 1947-1948 season account for the studios one-year surge from twenty-seven releases in 1947 to forty-five in 1948). When the strategy did not pay off, Zanuck simply scaled back Fox’s outside B commitments, although its thirty-one releases in 1949 still included a few B pictures.

Another measure of Zanuck’s pragmatism was his willingness to shoot pictures away from the studio to curb escalating production costs. Fox helped start the trend toward location shooting in 1945 with THE HOUSE ON 92ND STREET, the first film of the era to be shot entirely on location in New York City. That was done more as a production experiment (at the behest of the producer Louis de Rochemont) than as a cost-cutting measure, but by 1947-1948 brutal inflation and labor problems had Fox (and other studios) mounting “runaway” productions for economic reasons as well, in fact, by 1948 Zanuck sometimes had more pictures being shot on location than at the studio.

Like Paramount, Fox was considering its television options as the ascendancy of the new medium and theater divorcement appeared increasingly inevitable in the late 1940s. For Fox, the principal thrust was in video projection for theaters through a cooperative research and development effort with RCA; Fox also actively pursued a plan to purchase ABC-TV in 1948. But as with Paramount, Fox’s move into television would be undercut by the FCC in the wake of the 1948 antitrust decree.

MGM, more than any other studio, actively sustained the studio system at all levels during the postwar era, continuing to produce relatively expensive A-class star vehicles and to keep more top talent under contract than any other company after the war. The studio still had nineteen directors and eighty stars under contract in 1949, for example, fifty of whom were top-billed. 28 For its high-end product, Metro continued to rely on costume pictures, historical romances, and especially musicals, many of them in Technicolor, in fact, in 1948-1949 MGM produced twenty-two of Hollywood’s seventy-four color releases. 29 And as mentioned earlier, MGM concentrated more on distribution and sales than did its theater-heavy major counterparts.

Thus, MGM did quite well in terms of both gross revenues and rental income in the late 1940s. Combining Variety’s annual lists of leading moneymakers from 1946 to 1949, MGM accounted for 65 of the 316 most successful films (versus Fox with 55, Paramount with 49, Warners with 47, and RKO with 40). 31 Cost-efficiency was another matter, however: MGM’s steadily narrowing profit margins reached crisis proportions by 1948, when its gross revenues of $164 million, roughly on a par with both Fox’s ($163.4 million) and Paramount’s ($170.4 million), yielded profits of only $4.2 million, far below Fox’s $12.5 million and Paramount’s $22.6 million.

At that point, Loew’s chief executive, Nick Schenck, and his board of directors demanded that Mayer make wholesale changes in MGM’s production and management operations and its general market strategy. The most significant changes involved studio management. In late 1947, Metro announced a realignment of its executive staff and “an abandonment of the executive producer system, which has been in effect for more than 10 years”—that is, since the death of Irving Thalberg in 1936, when Louis B. Mayer initiated his management-by-committee system. Then, in early 1948, Schenck issued his now-famous directive to Mayer: “Find another Thalberg.” That resulted in the July 1948 hiring of Dore Schary as the vice president in charge of production (at a salary of $6,000 per week). On his arrival, Schary promised to make “good films about a good world,” including five to ten “progressive” films per year—a rather dubious prospect in those days perhaps, but one consistent with Schary’s liberal bent.

Schary was successful in reducing production and operating costs at MGM without compromising the overall quality of the company’s products. His role, in essence, was to oversee all production except for the musicals, most of which were handled by the producers Arthur Freed (EASTER PARADE, 1948; ON THE TOWN, 1949) and Joe Pasternak (A DATE WITH JUDY, 1948; IN THE GOOD OLD SUMMERTIME, 1949). MGM continued to turn out lavish costume pictures and adaptations like THE THREE MUSKETEERS (1948) and MADAME BOVARY (1949) as well, but Schary’s overall effort to reduce both the costs and scale of production was effective. Among MGM’s biggest hits in 1949, in fact, was A DAM’S R IB, a lean, high-energy Tracy-Hepburn comedy directed by George Cukor in only thirty-seven days. And Schary did manage to turn out a few “progressive” films, notably an adaptation of William Faulkner’s INTRUDER IN THE DUST and his own production of BATTLEGROUND in 1949.

Dore Schary’s move to MGM followed a massive shake-up at RKO in May 1948 after Howard Hughes purchased the company from Floyd Odium. As mentioned earlier, Schary had arrived at RKO in late 1945 to manage a multi-film package put together by David Selznick, and Schary stayed on with the studio after the death of the production chief Charles Koerner in 1946. Under Koerner, RKO had finally achieved stability and financial success, recording profits of over $12 million in 1946 and settling into an ideal balance of modest in-house productions and more ambitious pictures from allied independents like Goldwyn and Disney. Schary shifted from outside producer to production head in January 1947, and among his primary objectives was to upgrade the quality of RKO’s high-end productions. The strongest of the in-house A pictures were noir thrillers like CORNERED (1945), THE SPIRAL STAIRCASE (1946), and CROSSFIRE (1947). RKO’s outside productions in 1946 included some of the best films of the postwar era, including THE BEST YEARS OF OUR LIVES, NOTORIOUS, and IT’S A WONDERFUL LIFE. The studio also scored with two Cary Grant vehicles, THE BACHELOR AND THE BOBBYSOXER (1947) and MR. BLANDINGS BUILDS HIS DREAM HOUSE (1948), both initiated under Schary’s regime.

Schary’s efforts to upgrade in-house production increased RKO’s revenues in 1947, although its profits fell to $5 million. Still, the studio was clearly in better shape than at any period in its troubled twenty-year history. Hughes’s buyout of RKO in May 1948, within days of the Paramount decree, effectively ended the climb to profitability. Shortly after his takeover, Hughes fired RKO’s president, Peter Rathvon, and closed down the studio, rendering it “practically non-existent during its process of reorganization,” according to Film Daily’s J. P. McGowan. 35 RKO eventually resumed production, but Hughes’s obsessive quest to cut costs, root out subversives, and control production kept the studio in complete turmoil. Hughes ran the company until 1954, but the studio never regained its stability or financial health. The Hughes purchase, as Douglas Gomery aptly states, “signaled the end of RKO as a serious movie concern.”

Warner Bros, moved completely to a unit system in the postwar era. Steve Trilling, Jack Warner’s longtime aide and casting director, was named executive assistant in charge of production in 1945, but he had far less control over the actual filmmaking process than top producers like Henry Blanke and Jerry Wald or producer-directors like Michael Curtiz and John Huston. The most significant of these, without question, was Jerry Wald. Allegedly the model for Budd Schulberg’s hero Sammy Glick in What Makes Sammy Run?, Wald had been Warners’ most prolific writer in the late 1930s and developed into an efficient and successful associate producer during the war. Wald hit his stride as a producer in 1945 with two solid hits, OBJECTIVE BURMA and MILDRED PIERCE, and by the late 1940s he was personally producing eight to ten pictures per year—almost half of Warners’ output. These tended to be the company’s more action-and male-oriented product, although Wald handled Joan Crawford’s pictures as well. Meanwhile, Blanke produced most of Warners’ prestige pictures, notably its Bette Davis vehicles.

Warners produced very few top hits during the postwar era but did turn out its share of solid box-office performers. Most characteristic perhaps was its string of Bogart vehicles, including THE BIG SLEEP (1946), DARK PASSAGE (1947), THE TREASURE OF THE SIERRA MADRE (1948), and KEY LARGO (1948). A 1947 adaptation of the long-running Broadway hit LIFE WITH FATHER was the only Warners release from 1946 to 1949 to earn over $5 million (it returned $6.25 million), and remarkably enough, in 1949 Warners failed to place a single film even in the top twenty-five. By then, Harry and Jack Warner had closed the studio and were overhauling studio operations and in 1948-1949 began phasing out the contracts with many of its biggest long-term stars, including Bette Davis, Humphrey Bogart, Errol Flynn, and Edward G. Robinson. Davis left in 1949 and did not work at the studio again until the early 1960s. More typical was the pattern established by Cagney and Bogart, who played out their contracts but returned for occasional one-picture deals over the next few years.

In early 1950, with divorcement imminent, the Warners began to trim the producer ranks as well. In February 1950, Jack Warner renegotiated Henry Blanke’s fifteen-year contract (signed in 1945), cutting his salary and giving him an “advisory capacity” with the studio. 38 In June 1950, Warner sold Jerry Wald’s contract for $150,000 to Howard Hughes and RKO—where Wald lasted only a few months before leaving to start his own independent company. 39 The demotion of Blanke and departure of Wald indicated how serious the Warners were about revamping operations and cutting costs. In what was perhaps the consummate irony in the studio’s history, Warners’ net profits of $10.3 million in 1950 were the highest of any studio. This was the first time Warners had ever finished at the top of the Hollywood heap, but the achievement resulted less from hit pictures than from the elimination of studio personnel to reduce overhead.

THE MAJOR-MINORS AND MINOR STUDIOS

Columbia, Universal, and UA, like the major studios, peaked immediately after the war and in 1947 began a rapid, steady fade. UA and Universal suffered parallel and fairly severe declines, and both companies posted losses in 1948. Columbia, which had not posted a deficit in its history, managed to keep that streak alive through the late 1940s, in fact, it was the only nonintegrated motion picture company, including Republic, Monogram, and Eagle-Lion, to avoid posting losses in the late 1940s. Columbia’s management team of Joe and Harry Cohn was crucial to its modest postwar success, as were a few well-timed hits like GILDA and THE JOLSON STORY in 1946, and SINGS AGAIN in 1949. Columbia also developed an unlikely star in Broderick Crawford, who scored in ALL THE KING’S MEN (1949) and BORN YESTERDAY (1950).

Columbia always had relied on outside producer-directors for one or two high-class productions per year, but in the late 1940s Harry Cohn began signing multipicture deals with independent companies—including the companies of stars, such as Gene Autry Productions in 1947 and Humphrey Bogart’s Santana Productions in 1948. 40 By mid-1949, remarkably enough, Columbia had nine independent pictures in the works and was the most active distributor of independent productions besides UA. Most of these were crime dramas and social problem films rather than the romantic comedies that had been Columbia’s trademark in earlier years, although the company did reissue most of its comedy hits from the Depression and prewar era. And as always, Harry Cohn relied on B pictures and series programmers for the company’s bread and butter.

Universal had, of course, been relying on in-house independents and outside talent for its A-class pictures throughout the 1940s, and in the immediate postwar era it moved even more emphatically in that direction. In August 1946, J. Cheever Cowdin and Nate Blumberg merged Universal with International Pictures, an independent production company run by Leo Spitz and William Goetz that specialized in prestige productions. The merger was orchestrated by the British producer J. Arthur Rank, who already had an elaborate coproduction and codistribution deal with Universal. 42 Rank clearly planned to play a major role in the reorganized company, albeit from a considerable distance. In terms of studio operations, Goetz and Spitz were to supervise all production at Universal-International, with Cliff Work staying on as “senior studio executive.” All A production, including Westerns, was to be phased out as the company concentrated on some twenty-five first-run pictures per year.

At the time of the merger, Universal already had contracts with independent filmmakers like Walter Wanger, Fritz Lang, and Mark Hellinger, who leased studio space and distributed what were essentially coproductions through Universal. Now similar deals were cut with Ben Hecht, Garson Kanin, Sam Wood, Douglas Fairbanks Jr., and others. Complex international distribution arrangements also were worked out with Rank and Alexander Korda. In terms of in-house production, Spitz and Goetz eliminated all low-budget series and set a minimum length of seventy minutes for all features. Universal still turned out subpar product as well, but that was scaled back along with the company’s overall output. After averaging fifty releases per year during the war (by 1944-1945 roughly twice the majors’ output), Universal cut its annual output to thirty-five pictures after the merger.

The results of the Universal-International merger were critically favorable but commercially disastrous. For the first time in a decade, Universal pictures were on ten-best lists and in contention for major Oscars. Not since 1937-1938 had any Universal release been nominated for best picture, best director, best actor, or best actress. Then, from 1946 through 1948, Universal scored ten nominations in these categories. All ten were for outside productions or imports, and seven went to nominees who never set foot on the Universal City lot—including Laurence Olivier, who directed and starred in HAMLET , which won Oscars for best actor and best picture of 1948. But by then it was evident that Universal could ill afford the high cost of prestige. The company had gone into a financial tailspin after the merger, falling from record profits of $4.6 million in 1946 to a net loss of $3.2 million in 1948.

So it was back to basics at Universal City—high-volume, low-cost formula films for the subsequent-run market. And it was back to the old management regime as well,. Universal phased out its arrangements with outside producers, along with the management team of Spitz and Goetz (though the two did remain at the studio), while the long-time plant manager Edward Muhl took over production. Universal reversed its market strategy as well, turning from the competitive and uncertain first-run market to the less lucrative but more consistent subsequent-run market. After the Paramount decree, escalating rental prices for top features forced smaller exhibitors to settle for second-rate product, and Universal planned to supply it. Key to this effort were several low-budget series initiated late in the decade, notably the Abbott and Costello Meet … series begun in 1948, the Ma and Pa Kettle series in 1949, and the Francis the Talking Mule series in 1950. All were targeted for small-town and rural markets, which generally were poorly served by Hollywood except for B-Western production, and all were enormously successful.

The three minor studios, Republic, Monogram, and PRC, also found it tough going in the late 1940s. The British studio Eagle-Lion bought PRC in 1947, securing a distribution setup in the United States and also a source of low-budget product for Britain. While the deal marked yet another effort to exploit the favorable market conditions, the late-1940s industry decline in England and the United States severely undercut this venture. 44 Meanwhile, Monogram and Republic, like the other studios, earned record prof its in 1946—$1.1 million for Republic, and $397,000 for Monogram. While minuscule by the majors’ standards, these profits were sufficient to encourage both companies to upgrade production. Though financially trying in the short term, upgrading was crucial to their long-term survival. Monogram in 1947 created Allied Artists, a wholly owned Page 341  subsidiary through which it released productions with budgets ranging up to $1 million, most of them produced by outside independents. Republic in the late 1940s began producing “Premiere” productions, the term it used to designate its high-end releases, which cost $500,000 to $1 million and were done exclusively through arrangements with outside independents.

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