Hollywood in the Age of Television

Tino Balio, Tino Balio

• Publisher: Routledge
• Year: 2013
• ISBN:
  9781317929147
• Edition: 1
• Topic: Media & Performing Arts
• Subtopic: Film & Video

This collection of papers examines the evolving relationship between the motion picture industry and television from the 1940s onwards. The institutional and technological histories of the film and TV industries are looked at, concluding that Hollywood and television had a symbiotic relationship from the start. Aspects covered include the movement of audiences, the rise of the independent producer, the introduction of colour and the emergence of network structure, cable TV and video recorders. Originally published in 1990.

Part I

Responding to Network Television

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Introduction to Part I

Tino Balio

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After World War II, things were never the same for the motion picture industry. Beginning in 1947, Hollywood entered a recession that lasted for ten years; movie attendance dropped by half, four thousand theaters closed their doors, and profits plummeted. In foreign markets, governments erected trade barriers to limit the importation of motion pictures. Thus, instead of enjoying sustained prosperity after the war, which many had predicted, Hollywood retrenched. Production was severely cut back; “B” pictures, shorts, cartoons, and newsreels were dropped and the studios concentrated their efforts on fewer and fewer “A” pictures. The studio system went by the board as companies disposed of their back lots, film libraries, and other assets and pared producers, directors, and stars from the payrolls.

Television is usually identified as the main culprit for this state of affairs, but TV did not make significant inroads into moviegoing until the mid-fifties; rather, the postwar recession in Hollywood was caused in large part by the migration to the suburbs and the baby boom, which focused consumer spending on appliances, automobiles, and new housing. For entertainment, suburbanites with small children, far removed from the downtown location of movie palaces, found a substitute for the movies in radio, which enjoyed unprecedented growth in the late forties.

Even after suburban families substituted television for radio, other nonmedia factors still influenced moviegoing. During the fifties, shorter working hours, paid vacations and holidays, and general prosperity started a middle-class spending spree on leisure—domestic and foreign pleasure travel, vacation homes, athletics, hunting and fishing, gardening, boating, games and toys, records and hi-fi’s, and do-it-yourself projects around the home. The challenge facing Hollywood therefore was not just the rise of television but changing demographics and audience tastes as well.

REORGANIZATION

Impact of the Paramount Case

Agitation over the monopolistic trade practices of the industry by Congress, organized religion, and the education establishment prompted the Justice Department to file an antitrust action against the eight major motion picture companies in 1938, known as United States v. Paramount Pictures, Inc.etal—the Paramount case for short. The defendants consisted of the Big Five—Paramount, Warner Bros., Loew’s, Inc. (MGM), Twentieth Century-Fox, and RKO—and the Little Three—Universal, Columbia, and United Artists. The Big Five were fully integrated; they owned studios, operated worldwide distribution facilities, and controlled chains of theaters where their pictures were guaranteed a showing. With stables of stars, writers, directors, producers, cameramen, and the rest, each of these companies produced from 40 to 60 pictures a year. Although in total their productions represented at most 50 percent of the industry’s annual output, about three-fourths of the class-A features, the ones that played in the best theaters and received top billing, were made and distributed by the Big Five. The Big Five’s greatest strength, however, was in exhibition. Of the twenty-three thousand theaters operating in the United States in 1930, the five majors either owned or controlled only three thousand, but this number represented the largest and best first-run houses in the metropolitan areas that accounted for 50 percent of domestic film rentals.

The Little Three operated in a sort of symbiotic relationship to the Big Five: Universal and Columbia had their own studios and distribution facilities and were useful to the majors in supplying low-cost pictures for frequent program changes and double features; United Artists functioned solely as a distributor for a small number of elite independent producers.

Poverty Row existed on the bottom rung of the industry. Tiny studios such as Monogram, Republic, Grand National, and Producers’ Releasing Corporation serviced the lesser theaters in small towns and rural areas by churning out scores of low-budget Westerns and formula crime melodramas. As a group, they had a marginal impact on the industry.

TABLE I.1

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The Big Five and Successor Companies After the Consent Decrees

Successor Motion Picture Company (Theaters before divestiture)	Successor Theater Company (Theaters after divestiture)
Paramount Pictures (1, 424)	United Paramount Theatres (650)
Twentieth Century—Fox (549)	National Theatres (321)
Warner Bros. (436)	Stanley Warner (297)
Metro-Goldwyn-Mayer (129)	Loew’s Theatres (100)
RKO Pictures (124)	RKO Theatres (82)

The Paramount case reached the Supreme Court in 1948, after thousands of pages of testimony and exhibits, consent decrees, two lower-court decisions, and appeals. In a landmark decision, the court held that the Big Five conspired to monopolize motion picture exhibition. Trade practices such as block booking, whereby the majors rented their pictures to independent exhibitors in groups on an all-or-nothing basis, unfair clearances and runs that prolonged the time independent theaters had to wait to receive new films, and preferential arrangements among members of the Big Five were declared illegal restraints of trade. To remedy the monopoly in exhibition, the Supreme Court remanded the matter to the district court, which insisted that the Big Five divorce their theater chains from their production and distribution branches.

Paramount and RKO were the first to enter into consent decrees in 1949, and by 1959 the remaining majors had followed suit. The consent decrees contained these provisions: (1) the prohibition of unfair distribution trade practices so that each picture would be rented on an individual basis, theater by theater, without regard to other pictures or exhibitor affiliation; (2) the divorcement of the theater chains of the Big Five companies from their production and distribution operations; (3)the divestiture of all jointly owned theaters or theaters in closed towns—that is, where an exhibition chain had no competitors; and 4)the establishment of voting trusts to prevent stockholders in the former integrated companies from exercising common control of both successor companies (see table I.1).

As far as the Little Three were concerned, some economists have argued that they should not have been made defendants in the case, because they owned no theaters. Nonetheless, the court subjected the companies to the same price-fixing and trade-practice prohibitions as it had the Big Five.

The motion picture industry underwent many changes during the postwar period, and it is difficult to separate the effects of the decrees from the shifts in audience demand and the rise of television. But this much is certain. Although divorcement and divestiture restructured the industry, these provisions by no means reduced the importance of the majors. In 1954, the Big Five and the Little Three plus two minor companies collected most of the domestic film rentals, as did ten companies (not all the same ones) 20 years later. Overseas, the majors fared just as well. Despite trade restrictions and stiffer competition from foreign producers, U.S. film companies continued to dominate foreign screens; they distributed the biggest box office attractions and captured the lion’s share of the gross. Before the war, about a third of their revenue came from abroad; during the fifties, the proportion rose to one-half.

By allowing the defendants to retain their distribution arms, the court, wittingly or not, gave them the means to retain control of the market. The reason, simply stated, is that decreasing demand for motion picture entertainment during the fifties foreclosed the distribution market to newcomers. Distribution presents high barriers to entry. To operate efficiently, a distributor requires a worldwide sales force and capital to finance 20 to 30 pictures a year. During the fifties, annual overhead costs of a major distributor amounted to over $25 million, and financing a full roster of pictures came to more than twice that amount. Since the market absorbed less and less product during this period, it could support only a limited number of distributors—about the same as existed at the time of the Paramount case. Without new competition, the film rentals collected by the majors represented a market share of 90 percent in 1972, the same share they collected during the halcyon days of the thirties and forties.

After the consent decrees, the divorced theater circuits also fared well. The successor companies—United Paramount Theatres, National Theatres, Stanley Warner, Loew’s, and RKO Theatres—still owned considerable holdings and were assured a dominant role in the business throughout the fifties and sixties. As a result of divestiture, they sold off their weaker houses in small towns while retaining their large first-run houses. During the fifties, the big houses in the big cities, which accounted for 20 percent of the theaters, still generated the bulk of the business. As will be discussed later, the major companies concentrated their efforts on producing blockbusters to win back audiences. Only the first-run houses had the seating capacity, the location, and the bargaining power to successfully bid on new pictures. Thus, despite the impact of television, revenues per theater for many of the circuits actually increased. Moreover, their buying power guaranteed their prominence in the exhibition field.

The independent exhibitor, on the other hand—the supposed beneficiary of the decrees—fared less well. Outside the first-run market, conditions were disastrous. By the time the exhibition market bottomed out in 1963, the number of four-wall theaters had dropped an astounding 48 percent since 1947. To carve a niche for itself in the market, some independent theaters converted to art films. In adjusting to the new business climate of the fifties and sixties, the marginal theaters faced a dilemma. On the one hand, the inner-city and neighborhood houses found it difficult to lure suburbanites back to the city: public transportation was inadequate, parking was expensive, and business districts were starting to deteriorate. On the other hand, a chronic product shortage existed, the result of the phaseout of B and medium-budget pictures by the majors.

To stay alive, one option was to convert to art films by targeting the “Lost Audience.” As described by Variety, the Lost Audience consisted of

mature, adult, sophisticated people who read good books and magazines, who attend lectures and concerts, who are politically and socially aware and alert. … These people have been literally driven out of the motion picture theatre by the industry’s insistence on aiming most of its product at the lowest level.

The size of this audience, estimated the trade paper, was around 25 million.¹ The number of art houses in 1950 was only 83 theaters, but by 1966 the number had grown to 664. A smallish, intimate theater typically seating around five hundred, the art house was located at first in the inner city and neighborhoods of metropolitan areas and later in college and university communities and in the suburbs. Most of these theaters were individually owned, although several small chains operated in New England, the Midwest, and on the West Coast. New York City, with 25 houses, was the most prestigious market for imports and served as the launching pad for new releases. Los Angeles, with an equal number of art theaters, was the second most important hub.

To create an attractive and comfortable ambience for the adult sophisticated audience, exhibitors remodeled the interiors of their theaters, installed comfortable seats, and, in the lobbies, exhibited works of local artists, sold specialized film books and magazines, and served freshly brewed coffee, fine teas, and Swiss chocolates. The exhibition policy of these houses varied. Some showed foreign films only occasionally; some presented a mix of avant-garde shorts, documentaries, classic American films, and imports; while others specialized in a few award-winning art films.

Significant demand existed for foreign films during the sixties, but their share of the total market remained remarkably stable. Every year one or two foreign pictures achieved the status of art-house blockbusters whose grosses compared favorably with domestic product. In addition, several others each year did moderate business, enough to turn a small profit. However, it was a volatile market and one that could not be sustained using traditional means.

The one bright spot in independent exhibition during this period was the drive-in. As conventional four-wall theaters closed their doors, a new type of theater, the drive-in, rescued exhibition from the full impact of television. At the end of World War II, the number of “ozoners, ” the industry term for drive-ins, was estimated at between 60 and 300; by 1958, the number had grown to 4, 700, or nearly a third of all the theaters in the country. Drive-ins ranged in size from a 200 to 2, 500 car capacity and were located in every state. Although drive-ins were limited to a 30-week season in most parts of the country because of winter weather, those in the South and Southwest operated throughout the year. Generating a mere trickle of revenue in 1948, drive-ins accounted for 20 percent of all film rentals ten years later and more than made up for the total seats lost through the closing down of theaters.

The drive-in boom resulted from the rise in automobile sales, the high level of general prosperity, and the marketing strategies of drive-in owners. Automobile production had stopped during the war, to resume in 1946. Afterward, car ownership, and gasoline consumption, grew until, by 1954, 60 percent of the nation’s 54 million families owned cars. Car ownership accounted, in part, for the migration to the suburbs. In 1929, 60 percent of Americans lived in big cities or on farms; in 1953, the same percentage lived in suburbs and in small towns. Fueling the suburbanization trend was the growth in real income. In 1929, 29 percent of American families had a real income of three thousand to ten thousand dollars; in 1953, 58 perce...

Table of contents

• Cover Page
• Half Title page
• Title Page
• Copyright Page
• Original Title Page
• Original Copyright Page
• Contents
• List of Table
• Editor's Acknowledgments
• Part I Responding to Network Television
• Part II Responding to New Television Technologies
• Contributors
• Index