Studio system

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The studio system was a means of film production and distribution dominant in Hollywood from the early 1920s through the early 1950s. The term studio system refers to the practice of large motion picture studios (a) producing movies primarily on their own filmmaking lots with creative personnel under often long-term contract and (b) pursuing vertical integration through ownership or effective control of distributors and movie theaters, guaranteeing additional sales of films through manipulative booking techniques. A 1948 Supreme Court ruling against those distribution and exhibition practices hastened the end of the studio system. In 1954, the last of the operational links between a major production studio and theater chain was broken and the era of the studio system was officially dead. The period stretching from the introduction of sound to the court ruling and the beginning of the studio breakups, 1927/29–1948/49, is commonly known as the Golden Age of Hollywood.

During the Golden Age, eight companies comprised the so-called major studios that promulgated the Hollywood studio system. Of these eight, five were fully integrated conglomerates, combining ownership of a production studio, distribution division, and substantial theater chain, and contracting with performers and filmmaking personnel: Fox (later 20th Century-Fox), Loew’s Incorporated (owner of America's largest theater circuit and parent company to Metro-Goldwyn-Mayer), Paramount Pictures, RKO (Radio-Keith-Orpheum), and Warner Bros. Two majors—Universal Pictures and Columbia Pictures—were similarly organized, though they never owned more than small theater circuits. The eighth of the Golden Age majors, United Artists, owned a few theaters and had access to two production facilities owned by members of its controlling partnership group, but it functioned primarily as a backer-distributor, loaning money to independent producers and releasing their films.

Contents 1 Sound and the Big Five 2 Reign of the majors 3 The end of the system and the death of RKO 4 The studio system in Europe and Asia 5 The eight majors in the post-system era 5.1 Columbia Pictures 5.2 20th Century-Fox 5.3 Warner Bros. 5.4 Paramount Pictures 5.5 Universal Studios 5.6 Metro-Goldwyn-Mayer (merged into Columbia) 5.7 United Artists (merged into MGM) 5.8 RKO Pictures (defunct 1960-80, dormant 1993-97) 6 See also 7 Notes 8 Sources 8.1 Published 8.2 Online 8.2.1 Authored 8.2.2 Archival

[edit] Sound and the Big Five

The years 1927 and 1928 are generally seen as the beginning of Hollywood's Golden Age and the final major steps in the establishment of studio system control of the American film business. The success of 1927's The Jazz Singer, the first feature-length "talkie" (in fact, the majority of its scenes did not have live-recorded sound) gave a big boost to the then midsized Warner Bros. studio. The following year saw both the general introduction of sound throughout the industry and two more smashes for Warners: The Singing Fool, The Jazz Singer's even more profitable follow-up, and Hollywood's first "all-talker" feature, Lights of New York. Just as significant were a number of offscreen developments. Warner Bros., with money to spend, did so wisely, acquiring the extensive Stanley theater chain in September 1928. One month later, it purchased a controlling interest in the First National production company (more prominent than Warners itself not long before), which had not only a 135-acre studio and back lot but its own large string of movie theaters. Warners had hit the big time.

Nineteen twenty-eight also saw the emergence of the fifth of what would come to be known as the "Big Five" Hollywood conglomerates of the Golden Age. The Radio Corporation of America (RCA), led by David Sarnoff, was looking for ways to exploit the cinema sound patents, newly trademarked RCA Photophone, owned by its parent company, General Electric. As the leading film production companies were all preparing to sign exclusive agreements with Western Electric for their technology, RCA got into the movie business itself. In January, General Electric acquired a sizable interest in Film Booking Offices of America (FBO), a distributor and small production company owned by Joseph P. Kennedy, father of the future president. In October, through a set of stock transfers, RCA gained full control of both FBO and the Keith-Albee-Orpheum theater chain; merging them into a single venture, it created the Radio-Keith-Orpheum Corporation, Sarnoff chairing the board. With RKO and Warner Bros. (soon to become Warner Bros.–First National) joining Fox, Paramount, and Loew's/MGM as major players, the Big Five that would rule Hollywood—and thus much of world cinema—for decades to follow were now complete.

[edit] Reign of the majors

The ranking of the Big Five in terms of profitability (closely related to market share) was largely consistent during the Golden Age: MGM was number one eleven years running, 1931–41. With the exception of 1932—when all the companies but MGM lost money, and RKO lost somewhat less than its competitors—RKO was next to last or (usually) last every year of the Golden Age, with Warners generally hanging alongside at the back of the pack. Paramount, the most profitable studio of the early sound era (1928–30), faded for the better part of the subsequent decade, and Fox was number two for most of MGM's reign. Paramount began a steady climb in 1940, finally edging past MGM two years later; from then till its reorganization in 1949 it was again the most financially successful of the Big Five. Of the remaining three nominal majors, United Artists reliably held up the rear, with Columbia strongest in the 1930s and Universal ahead for most of the 1940s.^[1]

[edit] The end of the system and the death of RKO

One of the techniques used to support the studio system was block booking, a system of selling multiple films to a theater as a unit. Such a unit—five films was the standard practice for most of the 1940s—typically included only one particularly attractive film, the rest a mix of A-budget pictures of dubious quality and B movies.^[2] On May 4, 1948, in a federal antitrust suit known as the Paramount case brought against the entire Big Five, the U.S. Supreme Court specifically outlawed block booking. Holding that the conglomerates were indeed in violation of antitrust, the justices refrained from making a final decision as to how that fault should be remedied, but the case was sent back to the lower court from which it had come with language that suggested divorcement—the complete separation of exhibition interests from producer-distributor operations—was the answer. The Big Five, though, seemed united in their determination to fight on and drag out legal proceedings for years as they had already proven adept at—after all, the Paramount suit had originally been filed on July 20, 1938.

However, behind the scenes at RKO, long the financially shakiest of the conglomerates, the court ruling was being looked at as something that could be turned to the studio's advantage. The same month that the decision was handed down, movie-crazy multimillionaire Howard Hughes had acquired a controlling interest in the company. As RKO controlled the fewest theaters of any of the Big Five, Hughes decided that starting a divorcement domino effect could actually help put his studio on a more equal footing with his competitors. Hughes signaled his willingness to the federal government to enter into a consent decree obliging the breakup of his movie business. Under the agreement, Hughes would split his studio into two entities, RKO Pictures Corporation and RKO Theatres Corporation, and commit to selling off his stake in one or the other by a certain date. Hughes's decision to concede to divorcement terminally undermined the argument by lawyers for the rest of the Big Five that such breakups were unfeasible. While many today point to the May court ruling, it is actually Hughes's agreement with the federal government—signed November 8, 1948—that was truly the death knell for the Golden Age of Hollywood. Paramount soon capitulated, entering into a similar consent decree the following February. The studio, which had fought against divorcement for so long, became the first of the majors to break up, ahead of schedule, finalizing divestiture on December 31, 1949. The Golden Age was over. Through Hughes's deal with the feds, and those by the other studios that soon followed, the studio system lingered on for another half-decade. The major studio that adapted to the new circumstances with the most immediate success was the smallest, United Artists; under a new management team that took over in 1951, overhead was cut by terminating its lease arrangement with the Pickford-Fairbanks production facility and new relationships with independent producers, now often involving direct investment, were forged—a business model that Hollywood would increasingly emulate in coming years. The studio system around which the industry had been organized for three decades finally expired in 1954, when Loew's, the last holdout, severed all operational ties with MGM.

Hughes's gambit helped break the studio system, but it did little for RKO. His disruptive leadership—coupled with the draining away of audiences to television that was affecting the entire industry—took a toll on the studio that was evident to Hollywood observers. When Hughes sought to bail out of his RKO interest in 1952, he had to turn to a Chicago-based syndicate led by shady dealers without motion picture experience. The deal fell through, so Hughes was back in charge when the RKO theater chain was finally sold off as mandated in 1953. That year, General Tire and Rubber Company, which was expanding its small, decade-old broadcasting division, approached Hughes concerning the availability of RKO's film library for programming. Hughes acquired near-complete ownership of RKO Pictures in December 1954 and consummated a sale with General Tire for the entire studio the following summer. The new owners quickly made some of their money back by selling the TV rights for the library they treasured to C&C Television Corp., a beverage company subsidiary. (RKO retained the rights for the few TV stations General Tire had brought along.) Under the deal, the films were stripped of their RKO identity before being sent by C&C to local stations; the famous opening logo, with its globe and radio tower, was removed, as were the studio's other trademarks. Back in Hollywood, RKO's new owners were encountering little success in the moviemaking business and by 1957 the gig was up. The tiremen shut down production and unloaded the main RKO facilities, which were purchased by Lucille Ball and Desi Arnaz's company, Desilu. Just like United Artists, the studio now no longer had a studio; unlike UA, it barely owned its old movies and saw no profit in the making of new ones. In 1959 it abandoned the movie business entirely.

[edit] The studio system in Europe and Asia

While the studio system is largely identified as an American phenomenon, film production companies in other countries did at times achieve and maintain full integration in a manner similar to Hollywood's Big Five. As historian James Chapman describes,

In Britain, only two companies ever achieved full vertical integration (the Rank Organization and the Associated British Picture Corporation). Other countries where some level of vertical integration occurred were Germany during the 1920s (Universum Film Aktiengesellschaft, or Ufa), France during the 1930s (Gaumont-Franco-Film-Aubert and Pathé-Natan) and Japan (Nikkatsu, Shochiku and Toho). India, which represents perhaps the only serious rival to the U.S. film industry due to its dominance of both its own and the Asian diasporic markets, has, in contrast, never achieved any degree of vertical integration.^[3]

For instance, in 1929 nearly 75 percent of Japanese movie theaters were connected with either Nikkatsu or Shochiku, the two biggest studios at the time.^[4]

[edit] The eight majors in the post-system era

Since the disintegration of the studio system, the eight major film studios of Hollywood's Golden Age have gone through the following ownership changes ("purchased" meaning acquired anything from majority to total ownership):

[edit] Columbia Pictures

• independent, through 1982
• Coca-Cola, 1982-1987 (purchased by Coca-Cola; Tri-Star Pictures, a joint venture with HBO and CBS initiated in 1982—CBS drops out in 1984)
• independent as Columbia/Tri-Star, 1987-1989 (divested by Coca-Cola; also in 1987, HBO drops out of Tri-Star, which merges with Columbia)
• Sony, 1989-present (purchased by Sony)

[edit] 20th Century-Fox

• independent, through 1985 (purchased by Marc Rich and Marvin Davis in 1978; Rich sells his shares to Rupert Murdoch's News Corporation in 1981)
• News Corporation, 1985-present (Murdoch's company purchases Davis's shares and assumes control)

[edit] Warner Bros.

• independent, through 1967
• Warner Bros.-Seven Arts, 1967-1969 (purchased by and merged with Seven Arts Productions)
• Kinney National Company, 1969-1975 (Kinney purchased Warner Bros.-Seven Arts)
• Warner Communications, 1975-1989 (Kinney changed name)
• Time Warner, 1989-present (Warner merged with Time Inc.; from 2000 to 2003, the parent company was known as AOL Time Warner, following merger with AOL)

[edit] Paramount Pictures

• independent, through 1966
• Gulf and Western Industries, 1966-1989 (purchased by Gulf+Western)
• Paramount Communications, 1989-1994 (Gulf+Western changed name after selling non-entertainment assets)
• Viacom, 1994-2005 (Viacom purchased Paramount)
• Viacom, 2006-present (Viacom split into two companies: "new" Viacom—with Paramount Pictures, MTV, BET, and other cable channels—and CBS Corporation—which includes CBS Paramount Television)

[edit] Universal Studios

• independent, through 1946
• independent as Universal-International, 1946-1952 (merged with International Pictures)
• Decca, 1952-1962 (purchased by Decca)
• MCA, 1962-1990 (MCA purchased Decca)
• Matsushita Electric, 1990-1995 (Matsushita purchased MCA)
• Seagram, 1995-2000 (purchased by Seagram from Matsushita)
• Vivendi, 2000-2004 (Vivendi purchased Seagram)
• General Electric, 2004-present (purchased by GE from Vivendi and merged with NBC to form NBC Universal)

[edit] Metro-Goldwyn-Mayer (merged into Columbia)

• Loew's Incorporated, through 1959 (Loew's ceded operational control to studio management in 1954)
• independent, 1959-1981 (fully divested by Loew's; purchased by Edgar Bronfman Sr. in 1967; purchased by Kirk Kerkorian in 1969)
• independent as MGM/UA, 1981-1992 (Kerkorian purchased United Artists and merged it into MGM; purchased by Ted Turner in 1985; repurchased by Kerkorian seventy-four days later; purchased by Giancarlo Parretti in 1990)
• Crédit Lyonnais, 1992-1997 (Parretti in default, his bank foreclosed on MGM/UA)
• independent as MGM/UA, 1997-2005 (repurchased by Kerkorian)
• Sony/Comcast/4 private equity firms, 2005-present (purchased by Sony, backed by cable company Comcast and private investment firms—Providence Equity Partners, in fact, currently owns the greatest number of shares—and merged into Columbia; see above for further detail)^[5]

[edit] United Artists (merged into MGM)

• independent, through 1967 (operational control by Arthur Krim and Robert Benjamin from 1951; fully purchased by Krim and Benjamin in 1956)
• Transamerica, 1967-1981 (purchased by Transamerica)
• MGM/UA, 1981-present (purchased by Kirk Kerkorian from Transamerica and merged into MGM; see above for further detail)

[edit] RKO Pictures (defunct 1960-80, dormant 1993-97)

• independent, through 1955 (controlling interest by Howard Hughes from 1948; Hughes interest purchased by Stolkin-Koolish-Ryan-Burke-Corwin syndicate in 1952; interest repurchased by Hughes in 1953; fully purchased by Hughes in 1954)
• General Tire and Rubber, 1955-1984 (purchased by General Tire and Rubber—coupled with General Tire's broadcasting operation as RKO Teleradio; production and distribution ceased in 1957; RKO Pictures dissolved in 1959 and RKO Teleradio renamed RKO General; RKO General established RKO Pictures as production subsidiary in 1981)
• GenCorp, 1984-1987 (reorganization creates holding company with RKO General and General Tire as primary subsidiaries)
• Wesray Capital, 1987-1989 (spun off from RKO General, purchased by Wesray—controlled by William E. Simon and Ray Chambers—and merged with amusement park operations to form RKO/Six Flags Entertainment)
• independent, 1989-present (split off from Six Flags, purchased by Dina Merrill and Ted Hartley, and merged with Pavilion Communications; no films produced or distributed from 1993 through 1997)

[edit] See also

• Filmmaking
• Major movie studio

[edit] Notes

[edit] Sources

[edit] Published

• Bergan, Ronald (1986). The United Artists Story (New York: Crown). ISBN 0-517-56100-X
• Chapman, James (2003). Cinemas of the World: Film and Society from 1895 to the Present (London: Reaktion Books). ISBN 1-86189-162-8
• Finler, Joel W. (1988). The Hollywood Story (New York: Crown). ISBN 0-517-56576-5
• Goodwin, Doris Kearns (1987). The Fitzgeralds and the Kennedys (New York: Simon and Schuster). ISBN 0-671-23108-1
• Hirschhorn, Clive (1979). The Warner Bros. Story (New York: Crown). ISBN 0-517-53834-2
• Jewell, Richard B., with Vernon Harbin (1982). The RKO Story (New York: Arlington House/Crown). ISBN 0-517-54656-6
• Orbach, Barak Y. (2004). "Antitrust and Pricing in the Motion Picture Industry," Yale Journal on Regulation vol. 21, no. 2, summer (available online).
• Schatz, Thomas (1998). The Genius of the System: Hollywood Filmmaking in the Studio Era (London: Faber and Faber). ISBN 0-571-19596-2
• Schatz, Thomas (1999 [1997]). Boom and Bust: American Cinema in the 1940s (Berkeley, Los Angeles, and London: University of California Press). ISBN 0-520-22130-3
• Utterson, Andrew (2005). Technology and Culture—The Film Reader (Oxford and New York: Routledge/Taylor & Francis). ISBN 0-415-31984-6

[edit] Online

[edit] Authored

• Brand, Paul (2005). "'Nice Town. I'll Take It': Howard Hughes Revisited", Bright Lights Film Journal 47, February.
• Freiberg, Freda (2000). "Comprehensive Connections: The Film Industry, the Theatre and the State in the Early Japanese Cinema", Screening the Past 11, November 1.

[edit] Archival

• The Hollywood Antitrust Case, aka The Paramount Antitrust Case detailed history from the Society of Independent Motion Picture Producers research archive.