Changing Patterns of
Production and the Arrival
other Conglomerates

Independent Filmmaking

During the 1930s and 1940s, seven major Hollywood studios had been responsible for producing two-thirds of the movies in the United States, including nearly all first-run films.¹ Still, there had always been room for independent producers who operated successfully along with several well-established but minor studios.² The decline of the Hollywood studio system during the 1950s, however, appeared to reverse this trend. By 1958, half of the features produced in the United States were "independent."³ Two years later, two-thirds of the feature films being produced in the United States were attributed to 165 different production entities.⁴ The major studios might have invested in nearly all of these productions and might have reached a distribution agreement with the producers of practically all of them before filming began. Still, the overwhelming majority of the productions were correctly called independent because they were produced outside the direct creative control of the studio. By 1960, the movie industry was well on its way toward a model of production in which practically each new movie was put together, packaged, and financed individually, with distribution arranged through one of Hollywood's major companies.⁵

By the mid 1960s, the major studios had already moved well beyond their traditional stock company model, in which producers, directors, writers, talent, and technical personnel were all studio employees on contract. Replacing that system was the practice of negotiating short-term contracts for each specific production. In this environment, a number of the successful studio producers went off on their own and became independents, even though they might continue to work in close concert with their former employer. Some of Hollywood's most successful actors were also setting up production companies of their own.⁶ The most common new Hollywood model for production agreements was pioneered by United Artists, which began in the early 1950s to finance independent producers (sometimes backing them up to 100 percent) in return for a cut of the profits along with set distribution fees that were promised to the company.⁷

The emerging model for motion-picture production in the United States during the 1960s was based on "the deal" or "the package," a contractual agreement (often an oral contract) that brought together such diverse elements as a script, director, lead talent, and director of photography, among others, as a basis for securing financing and a distribution agreement from a major studio.⁸ As this new system evolved, some projects might be pursued with little or no studio control over the actual production. "They'd never see a script," remarked George Axelrod, who in partnership with Frank Sinatra produced THE MANCHURIAN CANDIDATE (1962) for United Artists. "Once they ok'd [a project]," he continued, "they'd say, 'Goodbye, bring us a print.' It was a lovely way to work.... We were allowed to do wild things."⁹

Frank Sinatra (left, with Lawrence Harvey) acted in and co-produced THE
MANCHURIAN CANDIDATE (1962).

Typically, however, such lassitude and freedom could hardly sustain the workings of a complex industry in which the unit costs of production were so high. The arrangements between individual producers and major Hollywood companies were nearly always unique, and frequently open to disagreement. As contracts and agreements became more detailed, lawyers and agents increasingly gained prominence in the motion picture industry. Typical of the changing Hollywood environment was the "change of elements" clause that came to be written into practically all movie production agreements. The clause ensured that while a project was in development and being offered around to different studios, it became impossible to change a major element-the script, the director, or the star-until after the first studio that was approached with the project was bought out. Such a clause assured that a significant position of strength was still held by the studio even in the planning stages of a project, no matter how and by whom it might eventually be financed. The Hollywood of the moguls was in decline, but studio control over the industry was shifting, not disappearing.¹⁰

Distribution was at the fulcrum of the changing Hollywood motion picture industry in the 1960s. All the majors were moving from company-owned pictures to those owned either partially or entirely by independent producers.¹¹ Some observers might argue in hindsight that the majors' concentration on motion picture distribution came about by default. They had been forced out of ownership of movie theaters by the federal courts, and although several companies had dragged their feet on selling off their theaters (20th Century-Fox, most notably) the divestiture was essentially complete by 1960. By contrast, distribution was an area of the business that had been left unchanged. Distribution was the most flexible and profitable branch of the motion picture business, especially in an era of rapidly changing audiences, tastes, and technologies.

The central importance of motion picture distribution, and control over it, was evidenced in many ways during the 1960s as the majors shifted from making movies to financing them. A suit by Samuel Goldwyn, Jr., against 20th Century-Fox was the first significant legal action filed in the motion picture industry in the 1960s. He claimed that through secret and monopolistic practices Fox had prevented him from distributing and exhibiting seven different features on which lie had served as producer.¹² Although the case was settled out of court, as many similar cases would be, Goldwyn's complaint was emblematic of the central issue facing independent producers in a changing industry. As James B. Harris, the producer of LOLITA (1962) and THE BEDFORD INCIDENT (1965), summed up the situation, "It's great to be left alone when you're making a movie, but not when you're finished with it!"¹³ A major studio might no longer supervise a production directly, but it still controlled the terms under which a finished movie reached the theaters. Control of distribution meant complete leverage over the promotion and exploitation of a film, which could greatly influence its draw of audiences.

The financial inducement and legal incentives were strong for establishing new motion-picture production companies. An expanding U.S. economy provided increasing venture capital, and after 1963 the federal tax codes provided considerable write-offs for motion-picture production and a shelter for such investments that ended only in 1976.¹⁴ Just as the Hollywood majors began scrambling in the mid 1960s to find the right films for a drastically changed audience, the attraction grew as well of putting money into projects with independent production entities. However, the idea that independent production would necessarily translate into increased artistic freedom that would protect a significant number of projects from the worst vicissitudes of commercialism remained an illusion.¹⁵

The realities of feature film production transcended the avarice of moguls and the assembly-line practices of the studio era. Production values, not production procedures, fundamentally drove up the cost of making movies. Even for independents there was no avoiding the need to invest big money in a picture,¹⁶ and, especially for independent producers, there loomed the inevitable problem of distributing, promoting, and exploiting a completed film effectively. Rather than leading American film toward more adventurous risk-taking, the demise of the studio system actually meant that in most cases hits could no longer be counted on to cover the losses of box-office failures. A picture-by-picture production system can be recognized, in hindsight, as pointing inevitably toward less room for experimentation and high-risk production and leading to greater emphasis on projects that stayed closer to tested formulas. Studios held control over creativity in the studio system, but nearly all movies were being made under an economic "big tent" that provided at least some protection for losses on individual films.

Even though the new Hollywood system was more tenuous and precarious, many observers who regard risk-taking as an element of creativity applauded the changes. Soon after he became president of the Motion Picture Association of America (MPAA) in 1966, Jack Valenti appraised the situation: "This business has changed. The old bankers in the East, big Moguls in the West, concept is dead. Now a fellow like Kirk Douglas can find a script he likes, find his own financing up to a point, hire a big studio that will do all the planning and set up exhibition. That opens up the way for creativity right down the line, and a chance to modernize some of the business techniques."¹⁷

The vocation of movie producer opened up in the 1960s to agents, actors, writers, directors, financiers, and former high-ranking production personnel at the studios. New producers needed industry connections, avenues for communication, and sufficient networking in Hollywood to put together a production package that could be sold to a major company. Personal links to executives at the major companies were always vital and provided the most important key to success. Other aspects and amenities of the business world were less important. Successful new producers emerged by being skilled at "packaging" creative talent and financing into a production deal. Those producers were not employees of the major studios, nor were they entrepreneurs in the traditional sense. They succeeded through personal contacts and their lifeline was the telephone. As Frank Yablans, one of the leading new producers of the 1960s, explained, "If someone could find a way of grafting a phone-jack to my ass, I wouldn't even need an office."¹⁸

AMERICAN INTERNATIONAL PICTURES

Not all feature production was financed by the major studios. By finding a specific niche and relentlessly exploiting it, the single most successful independent production company to thrive entirely outside the sphere of the Hollywood majors during the 1960s was American International Pictures (AIP). The company had been founded in the early 1950s by Samuel Z. Arkoff and Ben Nicholson, neither of whom was considered enough of an industry insider to have been invited to join the Academy of Motion Picture Arts and Sciences until well into the the next decade.¹⁹ Nonetheless, by 1964 AIP was annually producing twenty-five feature films, a quantity that substantially outnumbered features being financed by any of the major Hollywood studios.²⁰

Roger Corman, American International Pictures' prime
producer/director, at work.

AIP's foremost producer and director was Roger Corman, who became known to many in the industry during the mid 1960s as the "King of the Bs." As Corman himself pointed out, however, that nickname was a misnomer. By the time that he and AIP became prominent in Hollywood, the so-called "B" films, which were intended to run second on a double bill, had disappeared.²¹ Corman's movies, like almost all of AIP's productions, were low budget and aimed primarily at the teenage audience that was growing exponentially in America's suburbs. Typical of these features was the company's most financially successful movie, THE WILD ANGELS (1966). Produced and directed by Corman and starring Peter Fonda and Nancy Sinatra, it was the largest grossing lowbudget film yet. Even more surprisingly, it was a critical success. THE WILD ANGELS made it onto the program of the prestigious Venice International Film Festival in Italy, causing no small degree of consternation among representatives of the major Hollywood studios who were in attendance. Since THE WILD ANGELS portrayed what many critics considered an underside of American society better ignored, establishment Hollywood tended to condemn the movie as "unpatriotic."²²

During the late 1950s and throughout the 1960s, American International Pictures made a specialty of this type of feature and called them "protest films," although great numbers of critics dismissed them as "motorcycle flicks."²³ Indeed, for such critics, AIP's approach to production was easily lampooned:

1. Spend no money.
2. Play up the basest, most sensationalist angle.
3. Exaggerate wildly in the advertising.
4. Book each film in as many theaters at once as possible, to forestall negative
"word of mouth." This last idea, dubbed saturation hooking, is the only film
distribution scheme that implies a film is worthless.²⁴

In spite of such negative characterizations, however, AIP's overall impact on the American feature film during the 1960s was highly salutary. The company's productions, especially those overseen by Corman, were frequently a springboard for talented young directors like Francis Ford Coppola, or promising acting talent like Jack Nicholson. Even when Roger Corman's last film at AIP, GAS-S-S-S (1970), failed at the box office, several young actors-Cindy Williams, Ben Vereen, Talia Shire, and Bud Cort, among the cast's twenty-five-year-old and under group that inherits the earth from tiresome older generations-were launched into successful screen-acting careers.²⁵ "You have to save your money so you can afford to work for (Roger Corman)," remarked Tina Hirsch, the highly regarded film editor, "but it's really worth it in many ways. The reason he turns out so many really good people is because he is willing to take a chance."²⁶

In 1970 Corman formed his own company, New World Pictures, in partnership with his wife Julie and his brother Gene. New World carried on many of the practices that Corman had pioneered at American International Pictures, but without the same industry- wide impact that AIP exerted during the mid 1960s. As the movie business changed in the early 1970s, New World shifted away from production to increasingly become a distributor for foreign films released in the United States.²⁷

Peter Fonda and Nancy Sinatra in THE WILD ANGELS, the "hiker flick" that made it
onto the program of the Venice International Film Festival in Italy.

CHILDREN OF HOLLYWOOD, OFFSPRING OF AIP

American International Pictures nurtured the careers of Peter Fonda and Dennis Hopper. Along with AIP veteran Jack Nicholson, they combined to play in EASY RIDER (1969), the most commercially successful, low-budget, "independent" production of the 1960s. Co-produced by Fonda and directed by Hopper, this movie appeared to many observers to successfully transcend the conventions and formulas of the "biker flick." Hollywood pundits and movie critics nationwide embraced EASY RIDER as a model for courageous low-budget production. At a time when pleas for authenticity and artistry reverberated among young moviegoing audiences, Fonda himself summed up his own interpretation of the film's potential for forging a new, independent spirit in the American cinema: "There's a better chance of honesty in a $400,000 picture than there is in a $2 million picture," he exclaimed.²⁸

It is arguable, however, how truly "independent" this film was. EASY RIDER had wide box-office exposure domestically and globally only because of a distribution deal with Columbia Pictures that had been arranged between Fonda (the scion of acting legend Henry Fonda) and Bert Schneider, who happened to be the son of longtime Columbia Pictures Board President Abe Schneider. EASY RIDER was independent in its creative vision and had been produced on a low budget. That it succeeded so well, however, was still a function of this distribution deal with one of the majors.²⁹

The new Hollywood production establishment took notice of the immediate boxoffice success of EASY RIDER. So, too, did Hollywood's critics, who believed that the film's appeal might he a beacon for a genuine breakthrough for independents and the advent of an alternative cinema based on low-budget production. Nonetheless, countervailing factors favored subtle adjustments in Hollywood, rather than radical transformations. Films meant to copy EASY RIDER fizzled at the box office. Independent producers had become commonplace in the American cinema throughout the 1960s, but feature film distribution remained unquestionably in the hands of the major studios. Moreover, none of the majors had disappeared. Instead, they were all being transformed during the late 1960s, becoming parts of far more wealthy and powerful commercial entities that could position these Hollywood companies to play a new and pivotal role in the emerging global entertainment industry.

Mergers and the Conglomerates

Variety's anniversary issue for the year 1966 listed ten items that constituted ferment in the motion picture and television industries during that year:

1. Election of Jack Valenti as President of MPAA.
2. Scrapping of the old Motion Picture Production Code.
3. MGM management in fight for its life.
4. Paramount absorbed by Gulf + Western.
5. THE SOUND OF MUSIC sets domestic box office record.
6. Columbia Pictures stock tenure offer by Swiss bank.
7. Formation of a fourth (television) network.
8. Bob Kinter (a vice president for programming) quits NBC.
9. Warner Bros. and CBS partner in film production experiment.
10. Exhibitors unite under NATO (National Association of Theater Owners).³⁰

Each of these events was important in its own right, and several of them marked significant, or even definitive trends for the motion picture and television industries. None, however, was more significant for the future of the American feature film than the item buried in the middle of the list (at number 4). The takeover of one of the Hollywood majors by a corporation that had no prior experience or financial interest in the movie industry marked a dramatic shift in what Hollywood was and how Hollywood would carry out its business in the future.

Gulf + Western, which acquired Paramount in 1966, had its origins in the auto parts industry. It began as "Michigan Bumper" in the early 1950s. By the end of that decade it was established as a rapidly growing company that had acquired vast holdings in automobile accessories and supplies.³¹ The company was headed by the Austrian-born Charles Bluhdorn. He had renamed his enterprise Gulf + Western in 1958 after acquiring Beard & Stone Electric of Houston, Texas, a manufacturing firm that made electronics for automobiles. The company's new name reflected the foreign-born owner's interpretation of his enterprise's geographic range: Houston, Texas = Gulf, and its Michigan home base = Western. Under his new corporate title Gulf + Western, Bluhdorn and his firm embarked on what was increasingly to become the company's speciality-the acquisition of controlling interest in profitable enterprises of all sorts. Gulf + Western was a forerunner in the practice of leveraged buyouts of various corporations. Operating in an increasingly diverse range of businesses, it provided a common model of entrepreneurial success for the last quarter of the twentieth century.³²

Gulf + Western C.E.O. Charles Bluhdorn. Under Bluhdorn
G+W became a forerunner in the practice of leveraged buyouts
in an increasingly diverse range of businesses.

Gulf + Western's buyout of Paramount was the first in a rapid succession of acquisitions of controlling interests in the Hollywood majors by larger and wealthier corporations during the late 1960s. The prelude to this changing structure, however, dated back to 1959, when MCA (The Music Corporation of America) bought out Universal Pictures. The growth of MCA to a position where it could acquire Universal, moreover, was part of the larger story of the motion picture industry's transition during the 1950s. The breakup of the studio system immediately benefited the interests of talent agents, and the best and most powerful of agents were at the huge MCA agency.³³

MCA was founded in the 1920s by a Chicago ophthalmologist named Jules Stein, who continued at the helm of the company through the 1950s. MCA's clout in the industry increased substantially in 1952 when the Screen Actors Guild agreed to a blanket waiver for MCA to represent talent and to produce television programming.³⁴ Largely as a result of that arrangement, MCA grew rich quickly. By 1959 it was in a position to purchase Universal Pictures.³⁵ This bold business move was engineered by Lew Wasserman, MCA's president since 1946. He pursued the acquisition as part of an overall scheme that included easing out the elderly Jules Stein from his position as chairman of the board at MCA.³⁶

Universal had entered production for television in the early 1950s. Wasserman's vision for the 1960s entailed shifting Universal further toward television production with the intent of erasing almost entirely the sense of distinction between motion-picture production and production for television. Within three years of MCA's acquisition of Universal, Wasserman could boast, "In its heyday MGM... produced one hundred hours of film a year. Today, we make three hundred hours of film at Universal."³⁷ During that period between 1959 and 1962 MCA/Universal's earnings nearly doubled.³⁸

By being the first of the Hollywood majors to achieve complete integration between motion picture and television production, the company carved out a profitable niche for itself. Wasserman's inspiration was one solution for Hollywood's business dilemma at the end of the 1950s and was widely admired within the industry. That admiration, however, did not extend beyond Hollywood to the halls of the U.S. Department of Justice. MCA/Universal's successes after the 1959 acquisition promptly drew the critical attention of the federal government's antitrust division. Faced with the threat of a government antitrust suit, the company divested itself entirely of its talent agency in 1962.³⁹

Among the Hollywood majors, however, Universal took the road less traveled in the 1960s: first, by forging ahead with production for television, and then by reintegrating feature production for theatrical distribution back into its business mix toward the end of the decade. In doing so, Universal established a horizontal integration of the company's business that was exactly the opposite of the traditional, vertical monopoly that the Hollywood majors had held over the production, distribution, and exhibition of motion pictures, and which the federal courts had judged to he in constraint of trade. By mixing production for television with the production of feature films for theatrical release, Universal's losses on less successful productions could he covered by hits, costs could be spread out to cover high overhead, and Universal's facilities could be kept in constant use.⁴⁰

The mergers and buyouts in Hollywood during the late 1960s were each different, and each had its own significance and importance for a changing industry. The takeover of Paramount by the auto parts supplier Gulf + Western was the first example of a buyout of a Hollywood major from outside the entertainment industry. An examination of the background of the buyout clarifies the motives behind all such Hollywood acquisitions in the late 1960s.

Gulf + Western's 1966 buyout of Paramount occurred immediately after the Hollywood major had first become the target of two Broadway producers, Cy Feuer and Ernest Martin. The pair, who jointly held a substantial block of Paramount stock, shaped an agreement with Herbert Siegel to acquire majority control of the company. Federal regulators, however, challenged Siegel's involvement in the deal because he held a majority interest in General Artists, a talent agency.⁴¹ Eventually, conflict-of-interest claims against Siegel by the federal regulators did not hold up in court. While the court's decision on the regulators' challenge to Siegel was pending, Gulf + Western moved successfully on Paramount.⁴² The targeting of Paramount for a buyout by several potential purchasers was common knowledge on Wall Street months before Gulf + Western made its move.⁴³

Among Hollywood professionals, the acquisition was greeted with skepticism and suspicion often bordering on dismay.⁴⁴ A story circulated in Hollywood for years that Gulf + Western had acquired Paramount not for its value as a producer and distributor of movies, but rather as part of a larger financial intrigue aimed at accumulating enough capital assets to acquire New Jersey Zinc Company, which Gulf + Western coveted.⁴⁵ However, a review of the financial dealings of Gulf + Western clarifies that the acquisition of New Jersey Zinc was actually completed before the acquisition of Paramount.⁴⁶ Many movie industry pundits were still not certain that the company's interest was in film production and distribution. The acquisition of valuable real estate, along with the film library of Paramount that could be exploited in the rapidly expanding television market were believed to be the real prizes Gulf + Western was pursuing.⁴⁷

It was widely known that the Hollywood majors had not been aggressive in exploiting their land holdings in southern California, or in closing down East Coast offices and consolidating management operations, or in marketing their array of older movies for television. Surely, each of those factors contributed to making them targets for buyout. The primary motive for the takeovers, however, was that any of these Hollywood companies could position their owners to thrive in an emerging new business sphere called "leisure"-favored by demographics and growing global affluence.

Gulf + Western's stewardship promptly placed Paramount at the center of what was labeled the company, "Leisure Time Group,"⁴⁸ in which the corporation invested heavily and developed quickly. Immediately, Gulf + Western added Desilu, a television production company and facility that had been founded by television stars Desi Arnaz and Lucille Ball. On the East Coast, Gulf + Western bought Madison Square Garden and acquired control of the arena's two main tenants, the New York Knicks professional basketball team and the New York Rangers professional hockey franchise. Ownership of Roosevelt Raceway, a harness racing track in suburban New York City, was added soon after. International Holiday on Ice, a traveling show of professional ice skaters, was the next purchase. The print media was not ignored: the specialty men's magazine Esquire was acquired, followed by Simon & Schuster Publishing and Monarch Books-all of which were added to the Leisure Group.⁴⁹ Under Gulf + Western, Paramount joined with an erstwhile competitor, Universal Pictures, in 1969 to open a new distribution company for the common market countries: Cinema International Corporation (CIC) was headquartered in the Netherlands.⁵⁰

Paramount's new production chief Robert Evans mingling
with the talent: (front left to right) Lee Marvin, Evans, Barbra
Streisand, Stanley Donnenfeld (studio vice president for
administration), Clint Eastwood, and (back, left to right)
Rock Hudson, John Wayne, and Yves Monta ul (1969).

A 1971 Congressional report concluded that "Gulf + Western manages its acquisitions and assets on a decentralized basis."⁵¹ In this regard, however, the corporation's buyout of Paramount was not typical. Gulf + Western CEO Charles Bluhdorn took a hands-on approach to Paramount's management, with one of his first moves at the studio being to replace the veteran production chief Howard Koch with Robert Evans, who was younger and had industry experience only as a minor actor and in 20th Century-Fox's international distribution division.⁵² In the Hollywood community, however, Evans quickly became a figure who symbolized "the bridge between the business world at large and show business."⁵³ His powerful personality and his working methods reminded many observers of Hollywood's legendary first generation of moguls. Thus, the first major personnel appointment at Paramount by the "outsider" Bluhdorn was someone with a highly personal style and whose reach, both in the company and throughout Hollywood, was all-encompassing: "[Robert Evans] passes on the script, the producer, the director, and the cast," noted Gerald Clarke in a 1974 Esquire article. The gossip in industry circles about a "takeover" at Paramount by a production chief who wanted to know only about the bottom line and profits at the expense of knowing nothing about the movies, could not have been less accurate.⁵⁴

Claims that Gulf + Western acquired Paramount and quickly forgot about the studio, consigning its operations to accountants tallying the ledger sheets, were far from the truth. Bluhdorn followed Evans's every move carefully and was duly impressed when the young production chief brought in the very successful ROSEMARY'S BABY (1968, Roman Polanski). In some instances, Bluhdorn himself even made the final decision on whether or not to pursue a movie project. One of his biggest gaffes was turning down the production of FUNNY GIRL (1968) that was set to star Barbra Streisand. Bluhdorn decided that he could not satisfactorily answer his own question, "Who wants to hear this Jewish girl singing?" Columbia Pictures picked up the project and audiences all across America provided a resounding response.⁵⁵

It was Bluhdorn who added the ambitious Frank Yablans to the Paramount production team,⁵⁶ and it was Bluhdorn who named the twenty-nine-year-old Stanley Jaffe as president of Paramount Pictures. Son of Leo Jaffe, the longtime board chairman of Columbia Pictures, Stanley Jaffe was a graduate of the Wharton School of Finance at the University of Pennsylvania.⁵⁷ Stanley Jaffe reflected the changing world of the Hollywood majors. In addition to genuine credentials in the increasingly sophisticated practices of contemporary business, he had connections in the industry. He had something else in his favor, too: his age. As Bluhdorn commented, "To me, Mr. Jaffe epitomizes what the motion picture business is all about today. He is a knowledgeable young man in an industry that is appealing, first of all, to the youth market."⁵⁸

FOX ON THE RUN

The motives for the Gulf + Western acquisition of Paramount were emblematic of the string of acquisitions of the Hollywood majors by conglomerates in the late 1960s, but it was nonetheless a distinctive and sui generis purchase and takeover. The story of the fate of each of the major studios differed. Moreover, despite the widespread impression that Hollywood had been monolithic and single-minded historically, the majors did not necessarily mimic the business practices of one another even in the heyday of the studio era.

During the 1960s, such differences became even more apparent and telling. For example, 20th Century-Fox, which was controlled by the Zanuck family, took a wholly different approach than any of the other companies that were financially in the red at the beginning of the 1960s. After losing over $15 million on its motion-picture production and distribution activities in the fiscal year 1960, the company began to sell off stock and real estate to cover its shortfalls.⁵⁹ In April of 1961, 20th Century-Fox sold its 260-acre lot in west Los Angeles to ALCOA, an aluminum manufacturing company that developed the property into a commercial and residential community named "Century City."⁶⁰ The large profits from that land sale, however, did not suffice to reverse Fox's precarious financial situation. At the same time that the land deal was being completed, 10th Century-Fox was embarking on a film production that would prove disastrous. Indeed, the history of 20th Century-Fox in the 1960s was so bound up with the colossal failure of CLEOPATRA (1963) that the company's financial crisis through the rest of the decade can be understood in the ensuing bust-boom-bust cycle that began with that film.

Originally conceived as a relatively modest production that was to star Joan Collins, one of 20th Century-Fox's remaining contract players, CLEOPATRA escalated into a runaway fiasco starring Elizabeth Taylor, who was paid over a million dollars to play the lead role. Soon after Taylor came on board, she suffered a string of serious illnesses that delayed production. Once she was well enough for production to start, her romance with co-star Richard Burton and the resulting estrangement from her husband, Eddie Fisher, swept the media's fascination. The coverage of this romantic triangle reached a new high-or low-in celebrity journalism for the mainstream press. "Probably no news event in modern times has affected so many people personally," humorist Art Buchwald commented. "Nuclear testing, disarmament, Berlin, Vietnam, and the struggle between Russia and China are nothing comparable to the Elizabeth Taylor story."⁶¹

To what degree this publicity deluge, and its attendant turmoil, really affected the production is arguable. In the midst of the celebrity scandal, film critic William K. Zinsser wrote an article wondering why 20th Century-Fox hadn't already scrapped the project, which was clearly out of control.⁶² Managing long production delays and 10,000 extras, the veteran producer Walter Wanger, who had "loaned" himself from his own production company to Fox for CLEOPATRA, lamented that the entire undertaking was "crazy."⁶³ With CLEOPATRA leading the way toward the abyss, the Hollywood industry appeared to he embarking on a reckless and irrational course that could cripple the entire American motion-picture industry. The production's "craziness" called into question the accountability and lines of responsibility in a production scheme improvised from a mixture of studio backing and independent production entities. For many, CLEOPATRA amounted to such an indictment of Hollywood in general that it raised fundamental questions about the industry and how long it could survive.

CLEOPATRA provided an interesting story and grist for the mill of Hollywood's critics. Its true significance for the institutional history of the industry, however, was its place in time. Hollywood had reached its low point in total feature film production, and competition from European production was steadily rising. Most importantly, the studio era model of systematic and tightly managed production appeared entirely erased from Hollywood practice. CLEOPATRA'S initial director, Rouben Mamoulian, who had been established as one of the greats of the classic Hollywood era, slimmed up the entire problem of the post-studio era's free-lance system and the deterioration of a clear chainof- command in Hollywood production. Shooting the film on location in Rome with the producer Walter Wanger, Mamoulian quickly developed a response to suggestions by Wanger: "You didn't hire me-Skouras (the production chief at Fox), Adler, and Screiber did."⁶⁴ "Eventually, however, Mamoulian was dismissed as the film's director and replaced by Joseph L. Mankiewicz, thus creating more chaos on the set.

As the production process veered out of control, so, too, did the picture's expenses. The final negative cost exceeded $40 million. Even though the picture's gross rental revenue was on a par with the big roadshows of the late 1950s, including THE TEN COMMANDMENTS (1956), THE BRIDGE ON THE RIVER KWAI (1957), SOUTH PACIFIC (1958), and BEN-HUR (1959), Fox came nowhere near recovering its enormous investment in the film. Relatively good business in the domestic market, coupled with satisfactory earnings abroad, simply could not cover the staggering production costs.⁶⁵ As one Hollywood pundit put it, "Don't send a movie critic to review it, send a CPA."⁶⁶

For some observers, the misadventure summed up everything bad about moviemaking in America circa 1963. CLEOPATRA was not just a movie that had spun out of control; rather, it was emblematic of the breakdown of an entire production process that historically had been well planned, systematic, and accountable. As an aftermath to the CLEOPATRA affair, 20th Century-Fox filed a 850 million lawsuit in 1964 against Richard Burton and Elizabeth Taylor on grounds that their "deportment" had been injurious to the production.⁶⁷ The suit was later dropped, but the following year Fox fired its head of production, Spyros Skouras, on whose watch CLEOPATRA had been produced.⁶⁸

20th Century-Fox, however, rebounded mightily in 1965 when THE SOUND OF Music became a sensational hit. Banking on THE SOUND OF MUSIC formula, the family- run studio controlled by the Zanucks then went on to produce two lavish and expensive musicals, DOCTOR DOLITTLE (1967) and STAR! (1968). The films recorded staggering losses, estimated at $11 million and over $15 million, respectively. Fox posted an overall loss of $36.8 million in 1969.⁶⁹ By the end of 1970, the Zanucks found themselves having to answer for company losses that were approaching $80 million. An intense battle among stockholders ensued, ending in the confirmation of Dennis Stanfill, a Naval Academy graduate and a former Rhodes scholar, to reorganize the company in 1970.⁷⁰

COLUMBIA PICTURES

Of the Hollywood majors, only 20th Century-Fox and Columbia Pictures actually survived the decade without merging with or being bought out by a larger corporation. Of the two, Columbia Pictures had a much happier fate during the 1960s. A group of European investors made a takeover attempt in 1966 immediately after Gulf + Western acquired Paramount. That move, however, was blocked by the Federal Communications Commission (FCC). The regulators argued that since Columbia held financial interests in both radio and television broadcasting, there were sufficient grounds to prohibit foreign interests from investing in the company. Columbia was able to remain under the financial control of the Schneider family-father Abe and his sons, Stanley and Bert.⁷¹

Columbia's successes during the 1960s were the envy of the other majors. The company produced big money-making films in England, including LAWRENCE OF ARABIA (1962), A MAN FOR ALL SEASONS (1966), and OLIVER! (1968). Columbia scored well at the box office with vehicles for Sidney Poitier-TO SIR, WITH LOVE (1967), IN THE HEAT OF THE NIGHT (1967), and GUESS WHO'S COMING TO DINNER (1967). Columbia also found an off-beat success with IN COLD BLOOD (1967), a bleak and unrelenting portrayal of murder in the American heartland, and it picked up a veritable gold mine with its agreement to distribute EASY RIDER in 1969.⁷² Columbia made huge earnings on the Barbra Streisand musical FUNNY GIRL in 1968, after Paramount had dropped the project and in the same year that Fox's big budget musical, STAR!, bombed.⁷³

Gulf + Western's buyout of Paramount in 1966 was a catalyst that propelled the entire motion picture industry into new directions. TransAmerica Corporation bought out United Artists the following year. Once it had acquired 87 percent of United Artists stock, TransAmerica's management swiftly and efficiently diversified the company toward its own spin on the leisure market by buying up restaurant chains, motels, bowling alleys, and service stations.⁷⁴ During the early 1960s, United Artists had pursued excellent film production projects in Great Britain, including TOM JONES (1963), A SHOT IN THE DARK (1964), the Beatles' film A HARD DAY'S NIGHT (1964), and the James Bond series.⁷⁵ TransAmerica's directors wisely kept the highly successful and stable management team of Arthur Krim and Robert Benjamin in charge of production through the remainder of the 1960s. In 1969 the pair brought in vet another box-office and critical success with MIDNIGHT COWBOY, which earned the Academy Award for best picture that year.⁷⁶

In 1967, Warner Bros. merged with the Seven Arts entertainment corporation of Toronto, Canada.⁷⁷ Seven Arts was initially interested in Warner's film library for the purpose of distributing and exploiting older films for television. In 1969, Warner Bros.-Seven Arts was acquired by Kinney National Services Corporation, which was headed by Steven Ross. Kinney manufactured and sold shoes, managed parking lots, and operated car rental agencies as well as a chain of funeral homes.⁷⁸ Warner Bros.-Seven Arts was the corporation's second major acquisition in the entertainment business, following the purchase of the Ashley Famous Agency from longtime show business entrepreneur Ted Ashley. Kinney then acquired Mad magazine for its entertainment division, dropped the Seven Arts from the Warner corporate name, and placed Ted Ashley in charge of movie production. He found immediate success with the popular "rockumentary" Woodstock (1970), which was produced cheaply and garnered excellent box-office earnings.⁷⁹

Metro-Goldwyn-Mayer (MGM) entered the year 1969 under the presidency of Louis J. Polk, whose primary backers among stockholders were Edgar J. Bronfman (Seagrams Distillery) and the Time-Life magazine group. Soon, a second bidding faction, led by Las Vegas financier Kirk Kerkorian, whose wealth was primarily in airlines and hotels, moved on the studio. Kerkorian won the competition for control. Polk was ousted, and James T. Aubrey, his replacement, was hired from CBS Television. Aubrey moved quickly to redirect MGM's activities. To the chagrin of many Hollywood insiders, among whom he became known as "the Smiling Cobra," Aubrey promptly canceled fifteen feature film projects and moved ahead in selling off motion-picture industry branches of MGM, as well as the back lot, props, and the music library. The profits were poured into Kerkorian's MGM Grand Hotel and Casino development in Las Vegas.⁸⁰ Kerkorian's acquisition of MGM was the one instance of 'a buyout of one of Hollywood's "majors" during the 1960s that resulted in a de-emphasis of motion-picture production in favor of other leisure-based investments.⁸¹

THE EFFECTS ON HOLLYWOOD

Assessing the effect of the buyouts, Variety columnist Thomas M. Pryor concluded: "So far the congloms haven't brought any new ideas to the making and distributing of motion pictures."⁸² The conglomerates did bring a "new anchor" of financial stability for the motion-picture industry, as the insightful independent producer Joseph E. Levine noted.⁸³ The New York-based Levine, who had pioneered co-productions with Europe, experienced the stability firsthand. In the summer of 1968 his small but prosperous Embassy films had been bought out by AVCO, a manufacturer of defense and aerospace equipment.⁸⁴ Indeed, the highly successful and resourceful film producer Frank Yablans argued that the movie industry began to "grow up" only when the major studios were incorporated into the larger business structures of the conglomerate corporations that acquired them.⁸⁵

Hollywood majors continued to find financial backing from the banks they had relied on historically, especially Chase Manhattan and the Bank of America.⁸⁶ Nonetheless, while the sources of capital did not change abruptly, the financial strength of the conglomerates that took over the Hollywood companies assured a stable program of motion-picture production and substantially increased the borrowing power of the studios.⁸⁷ The British journal The Economist, which devoted nearly an entire issue in 1972 to an analysis of the effects, concluded that the large corporations' takeovers of the Hollywood majors saved the American feature film industry. Only with that fiscal stability and financial clout could Hollywood have survived and recovered from its economic depression of 1969-1971.⁸⁸ Film historian Garth Jowett, taking measure of Hollywood several years later, reached the same conclusion.⁸⁹

Many critical voices were raised over the buyouts from within the Hollywood creative community. Young film director George Lucas expressed a view that would be echoed frequently: "The studios are corporations now and the men who run them are bureaucrats. They know as much about making movies as a banker does."⁹⁰ Veteran actress Katharine Hepburn noted that legendary moguls, like Sam Goldwyn, Louis B. Mayer, and Harry Cohn, "wanted to make money, too, but they had a romantic attitude toward the people who made movies and the movies themselves."⁹¹ That argument was taken up by William Fadiman in his 1973 book, Hollywood Now. The Hollywood moguls were "monsters and pirates and bastards right to the bottom of their feet," he wrote, "but they loved movies, and they protected the people who worked for them."⁹² Such opinions aside, the mergers and takeovers in Hollywood during the late 1960s stabilized studio finances and quickly set feature film production in the United States back on a promising financial course.

Hollywood bent but did not break during the 1960s. The entire feature film industry in the United States teetered briefly, but did not topple. From a low of just over 140 features produced in 1963, the number climbed back to 230 by the end of the 1960s. By the mid 1970s that number exceeded 300, equaling once again the volume of production in the mid 1950s.⁹³ There might be romantic motives for adoring Hollywood's colorful and legendary moguls of the past and preferring them to the new "suits" who had earned MBAs from such prestigious programs as Harvard and the Wharton School at the University of Pennsylvania. The historic truth, however, is more prosaic: corporate America saved Hollywood in the late 1960s and provided the motion picture industry the wherewithal and acumen for growth and prosperity during the 1970s and 1980s.

Notes

1. Janet Wasko, Movies and Money: Financing the American Film Industry (Norwood, N.J.: ABLEX Publishing Corp., 1982), p.107.

2. Arthur Mayer, "Growing Pains in a Shrinking Industry," in Arthur McClure, ed., The Movie, An American Idiom: Readings in the Social History of the American Motion Picture Industry (Fairleigh Dickinson University Press, 1971), p.45.

3. Wasko, Movies and Money, see pp.111-119 for an excellent discussion of the majors' financing of "independent" productions.

4. "Summary of Studio Activities," Variety, October 25, 1960, p.1 ff.

5. Frederic Stuart, The Effects of Television on the Motion Picture and Radio Industries (New York: Arno Press, 1976), p.54.

6. "Summary of Studio Activities," pp.22, 23.

7. Variety, May 18, 1960, p.3.

8. David Pirie, "The Deal," in David Pirie, ed., Anatomy of the Movies (New York: Macmillan, 1981), pp. 56, 57.

9. Los Angeles Herald Examiner, February 18, 1988, p.19.

10. Pirie, "The Deal," p.57.

11. Variety, Special Anniversary Issue, October 1961, pp.8, 9.

12. Box Office, May 8, 1961, p.11.

13. Mitch Tuchman, "Independent Producers; Independent Distributors, in Pine, ed., Anatomy of the Movies, p.89.

14. Robert Stanley, The Celluloid Empire: A History of the American Motion Picture Industry (New York : Hastings House, 1978), p.241.

15. Wasko, Movies and Money, p.107.

16. See Kirk Bond, "For a New American Film Industry, There's No Evading Big Money," Variety, May 8, 1961, pp.10, 11, where he engages in a lively written debate with columnist Gideon Bachman over the lack of "artistically significant" movies in the United States.

17. Quoted in Jack Carmody, "The Man Who Moves Movies," Los Angeles Times, November 13, 1966.

18. Quoted in Pirie, "The Deal," p.47.

19. Los Angeles Times, July 15, 1962, p.32.

20. Hollywood Reporter, January 2, 1964, p.6.

21. Ed Naha, The Films of Roger Corman: Brilliance on a Budget (New York: Arco, 1982), p.42.

22. Variety (Daily), September 7, 1966, p.3.

23. Digby Diehl, "Roger Corman: A Double Life," Action (July/August 1969): pp.27-29.

24. Wheeler Dixon, "In Defense of Roger Corman," unpublished paper, Film and Video Research in Progress, a Service of the University Film & Video Association (UFVA), 1985, p.3.

25. Naha, Films of Roger Corman, pp.66 ff.

26. Vincent LoBrutto, Selected Takes: Film Editors on Editing (New York: Praeger, 1991), p.191.

27. J. Philip DeFranco, The Movie World of Roger Corman (New York: Chelsea House, 1979), p.158.

28. Film Daily, August 24, 1967, p.6.

29. Stanley, Celluloid Empire, pp.238, 239.

30. Thomas M. Pryor, "A Year of Industry Ferment," Variety, Special Anniversary Issue, October 1966, p.1 ff.

31. "Investigation of Conglomerate Corporations." Report by the Staff of the Antitrust Subcommittee on the Committee on the Judiciary, United States House of Representatives, 92nd Congress, 1st Session, 1971, p.163. (Hereafter cited as "House Antitrust Subcommittee Report.")

32. Michael Korda, "The Last Business Eccentric: Why There Aren't Any More CEOs like Gulf + Western's Charles Bluhdorn," New York magazine, December 16, 1996, pp.32 ff. See also Chris Welles, "Charles Bluhdorn: Collector of Companies," manuscript, undated, Files of the Academy of Motion Picture Arts & Sciences, Center for the Study of the Motion Picture, Beverly Hills, California. No source adequately explains why a plus sign replaced the original ampersand in the company's name soon after its founding.

33. Thomas Schatz, Old Hollywood / New Hollywood: Ritual, Art, and Industry (Ann Arbor: UMI Research Press, 1983), p.172.

34. David F. Prindle, The Politics of Glamour: Ideology and Democracy in the Screen Actors Guild (Madison: University of Wisconsin Press, 1988), p.89.

35. Dick Atkins et al., Method to the Madness (Hollywood Explained) (Livingston, N.J.: Prince Publishers, 1975), p.42.

36. Time, January 1, 1965, p.69.

37. Schatz, Old Hollywood/New Hollywood, p.189.

38. Time, January 1, 1965, p.69.

39. Robert Sklar, Movie-Made America: A Cultural History of American Movies, rev. ed. (New York: Vintage Books, 1994) , p.287.

40. Atkins et al., Method to the Madness, p.42.

41. I. G. Edmonds and Reiko Mimura, Paramount Pictures, pp.253, 254.

42. Charles Higham, Hollywood at Sunset (New York: Saturday Review Press, 1972), p.165.

43. "House Antitrust Subcommittee Report," p.196.

44. Ibid., p.163.

45. Ibid., p.196.

46. Ibid., p.163.

47. Jerzy Toeplitz, Hollywood and After: The Changing Face of American Cinema, Boleslaw Sulik, trans. (London: George Allen and Unwin, Ltd., 1974), p.31.

48. Los Angeles Times, July 11, 1979.

49. James Monaco, American Film Now (New York: Oxford University Press, 1979), p.36.

50. Axel Madsen, The New Hollywood (New York: Crowell, 1975), p.89.

51. "House Antitrust Subcommiittee Report," p.191.

52. Hollis Alpert, "Last of the New Tycoons," Film International (July 1975): 12-14.

53. Joe Hyams, "Poured in the Mogul Mold," Los Angeles Times: West Magazine, June 11, 1967.

54. Gerald Clarke, "Can Bob Evans Find True Happiness?" Esquire (February 1974): 72.

55. Robert Evans, "Confessions of a Kid Mogul," in Pirie, ed., Anatomy of the Movies, p.84.

56. Alpert, "Last of the New Tycoons," p.13.

57. Nancy Collins, "Arts and Pleasures," Women's Wear Daily, April 7, 1976.

58. Stanley Penn, "Focusing on Youth," Wall Street journal, n.d., Cinema Collections of the Doheny Library at the University of Southern California.

59. Variety, May 3, 1961, p.1.

60. Stanley, Celluloid Empire, p.148.

61. Art Buchwald, "Let's Have a World-Wide Referendum on Our Cleo," Los Angeles Citizen News, April 20, 1962, p.18.

62. William K. Zinsser, "Cleo, Liz, and Coincidence," Show Business International, January 2, 1962.

63. Walter Wanger with Joe Hyams, "The Trials and Tribulations of an Epic Film: CLEOPATRA," Saturday Evening Post, June 1, 1963, p.28.

64. Wanger with Hyams, "Trials and Tribulations," p.28.

65. Calvin Pryluck, "Front, Box Office, and Artistic Freedom," in Michael T. Marsden, John G. Nachbar, and Sam L. Grogg Jr., eds., Movies as Artifacts: Cultural Criticism of Popular Film (Chicago: Nelson-Hall Publishing, 1982), p.50.

66. Joe Hyams, "CLEOPATRA: Hollywood's Most Expensive Girl Friend," This Week Magazine, November 25, 1962, p.12.

67. Los Angeles Times, April 23, 1964, p.38.

68. Thomas M. Pryor, "The Era of Great Discontent, or How's Life in the Executive Suite?" Variety, Special Anniversary Issue, October 1965, p.2.

69. "Independents and Marketing/Distribution Innovations," in Jon Lewis, ed., The New American Cinema, (Durham: Duke University Press, 1998), pp.66, 165-172.

70. Solomon, Twentieth Century Fox, p.160; see also Thomas Sclhatz, "The New Hollywood," in Jim Collins, Hilary Radner, Ava Preacher Collins, eds., Film Theory Goes to the Movies, (New York: Routledge, 1993), p.14.

71. Stanley, Celluloid Empire, pp.238, 239.

72. Steinberg, Reel Facts, pp.73 , 74.

73. Robert Evans, "Confessions of a Kid Mogul," in Pirie, ed., Anatomy of the Movies, pp.83, 84.

74. Gain R. Edgerton, American Film Exhibition and an Analysis of the Motion Picture Industry's Market Structure, 1963-1980 (New York: Garland, 1983), p.36.

75. Solomon, Twentieth Century Fox, p.154.

76. Stanley, Celluloid Empire, p.254.

77. Steinberg, Reel Facts, p.82.

78. Gustafson, "What's Happening to Our Pix Biz? From Warner Brothers to Warner Communications," in Balio, ed., Hollywood in the Age of Television (Boston: Unwin Hyman, 1990), p.575.

79. Stanley, Celluloid Empire, p.263.

80. John Douglas Eames, The MGM Story: A Complete History of Fifty Roaring Years (New York: Crown Publishers, 1979), p.9.

81. Leonard Quart and Albert Auster, American. Film and Society Since 1945 (New York: Praeger, 1984), p.75.

82. Thomas M. Pryor, "The Decade of the Conglomerates," Variety, Special Anniversary Issue, October 1969.

83. Box Office, September 9, 1968, p.1.

84. Stanley, Celluloid Empire, p.258.

85. Madsen, New Hollywood, p.69.

86. "House Antitrust Subcommittee Report," p.186.

87. Michael F. Mayer, The Film Industries (New York: Hastings House, 1978), pp.109, 110.

88. Economist (April 1972): see the entire edition.

89. Garth Jowett, Film: The Democratic Art (Boston: Little, Brown, & Co., 1978), pp.428-457.

90. Schatz, Old Hollywood/New Hollywood, p.194.

91. Clarke Taylor, "Hepburn's Off-Screen Intimacy," Los Angeles Times, March 26, 1986, p.32.

92. William Fadiman, Hollywood Note (London: Thames & Hudson, 1973), p.24.

93. Steinberg, Reel Facts, p.43.