On
March 20, 1948, the elite of Hollywood, braving freezing
temperatures and gale-force winds, filed past the newsreel
cameras into the Shrine Auditorium in Los Angeles for
the twentieth annual presentation of the Academy Awards.
Once inside, they discovered a stage that had been transformed
into a towering birthday cake, with twenty giant Oscar
statuettes in place of candles.
The
studios had much to celebrate that night. Their movies,
the most democratic of all art forms, had become the
principal mode of paid entertainment for the vast majority
of Americans. In an average week in 1947, 90 million
Americans, out of a total population of only 151 million,
went to a movie, paying on the average forty cents for
a ticket. Nor was this massive outpouring, about two
thirds of the ambulatory population, the product of
expensive national marketing campaigns. It was simply
the result of regular moviegoers going to see whatever
was playing at their neighborhood theaters.
Most
of these moviegoers didn’t go to the theater to
see a particular film. They went to see a program that
included a newsreel; a short comedy film, such as the
Three Stooges; a serial, such as Flash
Gordon; animated cartoons, such as Bugs Bunny;
a B feature, such as a western; and finally, the main
attraction. In 1947 in America, movie houses were more
ubiquitous than banks. There were more than eighteen
thousand neighborhood theaters. Each had only one auditorium,
one screen, one speaker (located behind the screen),
one projection booth, and one marquee. Every week, usually
on Thursday, a UPS truck picked up the previous week’s
reels and delivered the new ones. The new film’s
title on the marquee and the listings for it in the
local newspapers constituted all the advertising most
movies got.
Virtually
all of these movies and shorts came from regional exchanges
owned and operated by seven distribution companies that
were, in turn, owned by seven Hollywood studios: Paramount,
Universal, MGM, Twentieth Century–Fox, Warner
Bros., Columbia, and RKO. In little over a generation,
these studios had perfected a nearly omnipotent mechanism
for controlling what the American public saw and heard.
It was known, collectively, as the studio system.
These
studios had their common origins in the arcades, nickelodeons,
and exhibition halls of the silent-film era. Their founders,
self-made and self-educated Jews, had been part of the
late-nineteenth- and earlytwentieth- century wave of
immigration from Eastern Europe. They had worked at
menial jobs as ragpickers, furriers, errand boys, butchers,
junk peddlers, and salesmen and then gone into the business
of showing movies. Here they found an enthusiastic audience,
especially among those not yet fully literate in English,
and a great deal of competition for it. To rise above
their competitors, they instinctively sought what later
economists would call “economies of scale.”
Louis B. Mayer, the founder of MGM, borrowed money to
expand from a single theater in Haverhill, Massachusetts,
to a small group of theaters that he combined into a
“circuit”—so called because the reels
of a single movie could be sent by bicycle from one
theater to the next (with showtimes cut so close that
sometimes one theater was showing the first reel of
a film while another theater was showing the last),
allowing multiple screenings of—and multiple admissions
for—the movies he rented from film exchanges.
As their circuits expanded, these entrepreneurs began
opening their own film exchanges and distributing movies
to other theater owners, but they still made most of
their money from tickets bought at their own box office—
so called because the cash went into locked boxes.
When
they found that they could not get enough movies on
a regular basis from independent moviemakers, these
new distributors took the next step and started making
their own films. Initially, their studios were in the
East, but as their production expanded after the turn
of the century, they came under increased pressure from
the Edison Trust, the legal entity formed by Thomas
A. Edison to control the basic patents on movie cameras
and projectors in America. The Trust filed a constant
stream of lawsuits against the nascent film companies,
who finally decided to relocate their studios a continent’s
width away from the reach of the Trust’s East
Coast lawyers. They chose the newly incorporated village
of Hollywood, California—a place they could control—for
their new home. In less than a generation, these entrepreneurs
had literally gone from rags (or furs) to riches. By
the 1940s, the studio heads were among the highest-paid
executives in the world. Having come from poverty, they
reveled in this wealth and dubbed themselves moguls—an
appellation that, although perhaps not strictly appropriate
since it originally referred to absolute Moslem rulers,
became part of their identity. Louis B. Mayer, who had
scavenged rags as a newly arrived immigrant and at nineteen
did not have, as his son-in-law David O. Selznick later
put it, “the price of a sandwich,” was in
1947 the highest-paid executive in America, with an
annual salary from MGM of $1.8 million.
The
studios produced nearly five hundred films in 1947—features
and B movies. While marketing strategies varied slightly
from studio to studio, the movie business in 1947 was
a relatively simple affair. The studios did not license
their films to television or other media or license
their characters for toys, games, T-shirts, or other
merchandise. Foreign markets provided some revenue,
but that income was mostly offset by high taxes—Britain
had a 75 percent import tax, for example—and most
European and Asian countries had restrictions on currency
repatriation. As a result, profits from abroad were
almost impossible to retrieve.
In
short, studios looked to a single source for virtually
all their money: the American box office. In 1947 the
six major studios earned over 95 percent of their revenue
from their share of ticket sales (called “rentals,”
since it was technically the “rent” theaters
paid for films) at North American movie houses. This
came to $1.1 billion, which made movies, after grocery
stores and automotive sales, America’s third-largest
retail business.
The
studios were able to harvest this windfall extremely
efficiently because they controlled almost all the movie
theaters. MGM, Warner Bros., Paramount, Twentieth Century–Fox,
and RKO had their own theater chains, which produced
about half of their total revenue, while Columbia and
Universal controlled chains of theaters less directly
through their distribution arms. Among the theaters
under studio control were most of the first-run houses
in major cities in the United States and Canada, where
films had their premieres. During these first runs,
films got their reviews, garnered publicity, and generated
the word of mouth that served as the principal form
of advertising. Thanks to their direct ownership of
the theaters, studios were able to determine where,
when, and for how long their films played in their first
run. Such engagements could extend for many months while
studios prepared the subsequent release to neighborhood
theaters. For example, in 1947, Samuel Goldwyn’s
The Best Years of Our Lives was still playing
at New York’s Astor Theater, owned by MGM through
its Loews subsidiary, six months after its premiere.
In addition, the studios indirectly controlled almost
all independently owned theaters, which included most
of the neighborhood and secondrun movie houses, through
ironclad contracts that forced the theater owners to
commit to show a given number of films (usually ten)
in a socalled block. If they did not accept a block,
they got no studio films at all—which meant they
did not have the star names to attract an audience.
Only a few dozen art theaters that showed foreign films
could afford to turn down this “blind-bidding”
arrangement.
Not
only were the studios able to control the bookings of
their films, but they enjoyed a monopoly on the resulting
revenue. Stars, directors, writers, and other talent
did not share in it. Neither did producers. In rare
cases these participants might receive a share of the
eventual profits, but never of the studio’s rentals.
The
studios were further aided by low distribution and marketing
costs. Because films opened in only a handful of theaters
in major cities before moving on to other regions, the
same prints and posters could be used first in the Northeast
and later on in the South and West. Distribution costs
therefore were low, averaging only about $60,000 a film
in 1947. Further, there were no national advertising
campaigns, and since theaters paid a good part of local
advertising and stars freely supplied the publicity
on radio and in newsreels, the advertising budgets averaged
less than $30,000 a picture.
What
remained after these distribution and advertising costs
were deducted from the rental revenue were the studios’
net receipts. In 1947 these totaled approximately
$950 million.
To
ensure a profit, studios obviously had to produce their
films for less money than their net receipts totaled.
To maximize their economies of scale, each studio had
organized what amounted to a film factory, with staff
and equipment that could operate around the clock. On
their soundstages, shadowless light was cast by vast
arrays of arc lamps, artificial weather was whipped
up by wind, rain, and snow machines, and seas were created
in indoor pools. On their back lots, exotic locales
could be replicated and filled with extras dressed from
the stocks of costumes and other props stored in their
warehouses. For example, in 1947, MGM shot the adventure
movie The Three Musketeers, which was set in
seventeenth- century France, entirely on its soundstages
and back lots.
The
studios’ technological apparatus included synchronous
background projection, which allowed them to seamlessly
integrate actors in current films with stock footage
from their extensive film libraries and with film shot
elsewhere by second units. They also had animation cameras
to convert miniaturized models, puppets, and other replicas
into the illusion of full-scale phenomena. To do all
this, a veritable army of electricians, camera operators,
seamstresses, makeup artists, set dressers, sound engineers,
and other technicians were paid weekly wages. The MGM
studio in Culver City, which in 1947 was the largest
of the studios, could churn out on its soundstages six
different films at the same time. With the aid of these
assembly-line facilities, feature films could be shot
in less than a month, and some B films were shot in
a week.
Under
this factory system, studios were also able to keep
a tight rein over their product. Frank Capra wrote in
a letter to The New York Times in 1939 that
“about six producers today pass on about 90 percent
of the scripts and edit about 90 percent of the pictures.”
These producers reported to the studio
chief, who was directly responsible to the studio’s
owners.
The studios also had locked up all the stars who attracted
audiences to movie theaters in a contractual arrangement
called the star system. In 1947, 487 actors and actresses—including
such marquee names as Bing Crosby, Bob Hope, Betty Grable,
Gary Cooper, Ingrid Bergman, Humphrey Bogart, Clark
Gable, John Wayne, Alan Ladd, and Gregory Peck—
were under such contracts. Since these contracts usually
ran seven years, precluded the actors from working elsewhere,
and had renewal options, the stars were, for that period
at least, essentially the studios’ chattel. They
had to play every part and perform every bit of publicity
assigned to them. If they balked, they could be suspended
without pay, as Lana Turner was in 1947 by MGM when
she initially refused a part in The Three Musketeers.
With no further recourse and facing the prospect of
not being allowed to work at the height of her stardom,
she finally acceded to MGM’s casting and played
the part. In addition, studios could rent stars out
to other studios for more than their salaries and pocket
the difference. Joan Crawford, under contract to MGM,
was loaned to Columbia for They All Kissed the Bride
in 1942; and Bette Davis, under contract to Warner Bros.,
was loaned to RKO for The Little Foxes
in 1941.
The
contracts also usually gave the studios control of the
stars’ public image to further their publicity
campaigns for their movies. This meant, in practice,
that studios could script stars’ interviews and
dictate their public utterances, photographic poses,
and gossip-column items. They could order them to alter
their facial appearance, hair color, biographical details,
and, as was commonly done, their name. Issur Danielovitch,
for example, had his name changed to Kirk Douglas, Marion
Morrison to John Wayne, and Emanuel Goldenberg to Edward
G. Robinson. In return, the studios provided their contract
actors with an annual salary, roles in major films,
and publicity in the media that they owned or controlled,
which included newsreels and fan magazines. Whatever
publicity benefits stars enjoyed by being contractually
linked to a studio, however, their salaries were relatively
low compared with the additional revenue they produced
at the box office. In 1947 even highly successful stars,
such as Clark Gable, made on averag less than $100,000
a film. Until their contracts ran their course, stars
could not increase their fees as they became more popular
with audiences and more prominent in the entertainment
media. The star system, in effect, allowed the studios
to brand their products via the personas they had created—for
example, a James Cagney gangster film, a Roy Rogers
western, a Clark Gable romance —and take the full
profits from them.
By
locking in actors’ salaries, Hollywood studios
were able to control the cost of manufacturing their
products. Indeed, virtually all their films made money.
Since the average cost of producing a film in 1947,
including all studio overhead, was only $732,000, and
the average net receipts for a studio feature amounted
to $1.6 million, filmmaking was a lucrative enterprise
for studios. Less successful films might eke out a profit
of only a few thousand dollars, but the hits that appealed
to a broad adult audience, like The Best Years of
Our Lives, made profits in excess of $5 million.
But the studio moguls wanted more from their invention
than mere profits. Not entirely secure with their rapid
ascent to wealth, they also wanted the kind of respect,
admiration, and status that would reinforce their position.
This social part of the equation had been formally recognized
some twenty years earlier, in 1927, at a dinner at the
Ambassador Hotel, when Louis Mayer had proposed to thirty-five
other top studio executives that they institute a way
to honor Hollywood’s (i.e., their own) achievements.
The result was the establishment of the Academy of Motion
Pictures Arts and Sciences and its annual ritual of
bestowing honors in the form of Academy Awards.
The
Oscar for the Best Motion Picture of 1947 went to Twentieth
Century–Fox’s Gentleman’s Agreement.
Adapted from the book of the same title by Laura Z.
Hobson, the black-and-white film included the studio
contract players Gregory Peck, Celeste Holm, John Garfield,
and Dorothy McGuire. The Moss Hart script, like those
of most of Hollywood’s feature films, had all
the elements of a classic narrative: a beginning, a
middle, and an end; rising and falling action; conflict,
confrontation, and resolution. It also had a character
with whom the audience could readily identify in Philip
Green (Gregory Peck), a gentile magazine writer who
pretended to be Jewish so he could report firsthand
on anti- Semitism. The conflict was almost entirely
an intellectual one, resolved without mayhem or bloodshed.
Nor was there any sex, nudity, profanity, or even suggestive
language, all of which was proscribed by the studios’
own censorship system.
Director
Elia Kazan also won an Oscar for Gentleman’s
Agreement. The thirty-eight-year-old stage director
had been retained by Twentieth Century–Fox after
the studio had bought the book, commissioned and approved
Moss Hart’s script, and assigned all the major
roles to its contract stars. Like almost all other directors
under the studio system, Kazan arrived at the beginning
of principal photography and departed when it ended.
The director’s job was to exact the best performance
from the actors and technicians within a shooting schedule
prepared by the studio.
Twentieth
Century–Fox executives, including studio head
Darryl F. Zanuck, reviewed Kazan’s daily progress
during the twelve weeks of production. Zanuck then supervised
the film’s editing and musical score. Absolute
authority over the creative process had been invested
in the studio head ever since Irving Thalberg at MGM
had perfected the system in the late 1920s. Zanuck had
produced 170 of Fox’s films, and Gentleman’s
Agreement, which he had supervised from start to finish,
was no exception.
When
Kazan accepted the Oscar for Gentleman’s Agreement
that night, the film was still, four months after opening
at the Mayfair Theater in New York, in its first run.
Even at this point, without having yet moved to neighborhood
theaters, it had already earned back the $2 million
it had cost to make. Although it was a cerebral film
intended mainly for adults, it could reasonably be expected
to draw a much larger audience once it was released
more widely because, like all studio features, it would
be part of a theater program that included a B film
for teenage audiences and cartoons for children.
On
that cold night in March 1948, all the signs seemed
to indicate that the system was still operating almost
flawlessly, and many of the old faces were there to
attest to it. For the Academy Awards’ twentieth
anniversary, all the original moguls were present except
Carl Laemmle, the founder of Universal, who had died,
and William Fox, the founder of Twentieth Century–Fox,
who, after nearly succeeding in taking over MGM in 1929,
had gone bankrupt and then to prison for attempting
to bribe a judge in his bankruptcy case. But if there
is one lesson Hollywood teaches, it is that looks can
be deceiving, and in 1948 the world of American moviemaking
was on the verge of radical and irreversible change.
Although it was not evident in their demeanor that night,
the power elites gathered at the awards ceremony knew
that ominous storm clouds were amassing on the horizon.
Hollywood was becoming the principal target of the House
Un-American Activities Committee’s efforts to
uncover Communist subversion. In 1947 a large number
of writers, actors, and directors had been called before
the committee and asked to name subversives in the film
industry. Many of those who refused to cooperate were
then cited for contempt of Congress, and ten of them,
the so-called Hollywood Ten, had to choose between prison
and flight from the country. Caught in this bind, many
leading writers—including Joseph Losey, Ben Barzman,
and Donald Ogden Stewart—had moved abroad to avoid
being subpoenaed.
The
studios, rather than defying the congressional inquisition,
had declared that anyone who invoked his or her constitutional
right against self-incrimination or refused to cooperate
by naming names would be fired and blacklisted. The
Screen Actors Guild, headed by Ronald Reagan, in turn
supported the studios, which had hired ex–FBI
agents to help them weed out employees who had a politically
suspect past. The smiles and jokes during the awards
ceremony notwithstanding, the ugly issue of what constituted
loyalty was threatening to tear apart the social fabric
of the film community.
Another
cloud was even darker and more threatening. For nearly
ten years, in U.S. v. Paramount et al., the
Justice Department had been pressing an antitrust suit
against the studios, alleging that the studios’
control over the means by which movies were distributed
and exhibited constituted an illegal restraint of trade
under the Sherman Anti-Trust Act. The lower courts had
decided in favor of the Justice Department, and the
studios were running out of appeals. To settle the case,
the government had demanded that the studios end their
block booking and divest themselves of either their
distribution arms or their theaters. In either case,
they would lose control over what was shown—and
that control, as every studio owner realized, was the
jugular of the studio system. RKO—the weakest
of the studios—was on the verge of breaking ranks
and signing a consent decree. If it did, the other studios
would come under tremendous, if not irresistible, pressure
to follow suit. And once they did, the studio system
would be dead.
The
darkest cloud on the horizon, however, was the advent
of an alternative entertainment medium: television.
To be sure, at that point the new technology offered
only a few hours of primitive programming a day in black
and white, but it offered that at no cost to the consumer.
Advertisers, not the audience, paid the broadcasters.
The Hollywood studios had attempted to hobble this infant
medium, if not kill it, by refusing to let the networks
show films from their libraries or use their facilities
to produce programs. Nevertheless, the television broadcasters
were finding alternatives: live sports, news, game shows,
and independent movies. And, although there were only
1 million sets in American homes in 1947, television
manufacturers were expecting that number to quadruple
by 1949. If these projections were realized, it would
only be a matter of time before a good part of the 90
million people who paid to see movies at theaters would
choose instead to watch free television. Since the studios
were almost entirely dependent on this audience for
their revenues, any substantial decrease would be an
economic disaster.
***
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The
US has the oldest film industry and largest in terms
of revenue. Los Angeles is the primary mecca
for the American film industry. Other cities are known
for there influence in the film industry New York City
is a classic filming destination as well as Las Vegas.
Las Vegas and New York
have the flare and appeal that many directors and producers
love. These directors and producers have made hotels
in New York City as well as
Las Vegas hotels
famous throughout the world. The Plaza hotel and
MGM Grand are just two hotels
made famous by movies.
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