Twentieth Century–Fox

The Zanuck-Skouras Years, 1935–1965

Peter Lev

• Publisher: University of Texas Press
• Year: 2013
• Topic: Media & Performing Arts
• Print ISBN:
  9780292762107
• Subtopic: Business History
• eBook ISBN:
  9780292744493

When the Fox Film Corporation merged with Twentieth Century Pictures in 1935, the company posed little threat to industry juggernauts such as Paramount and MGM. In the years that followed however, guided by executives Darryl F. Zanuck and Spyros Skouras, it soon emerged as one of the most important studios. Though working from separate offices in New York and Los Angeles and often of two different minds, the two men navigated Twentieth Century-Fox through the trials of the World War II boom, the birth of television, the Hollywood Blacklist, and more to an era of exceptional success, which included what was then the highest grossing movie of all time, The Sound of Music. Twentieth Century-Fox is a comprehensive examination of the studio's transformation during the Zanuck-Skouras era. Instead of limiting his scope to the Hollywood production studio, Lev also delves into the corporate strategies, distribution models, government relations, and technological innovations that were the responsibilities of the New York headquarters. Moving chronologically, he examines the corporate history before analyzing individual films produced by Twentieth Century-Fox during that period. Drawn largely from original archival research, Twentieth Century-Fox offers not only enlightening analyses and new insights into the films and the history of the company, but also affords the reader a unique perspective from which to view the evolution of the entire film industry.

CHAPTER 1

The Merger, 1935–1939

Fox Film Corporation

In the late 1920s William Fox, founder and president of the Fox Film Corporation, executed a daring plan to take over the American film industry. First, in 1927 Fox Film bought the Wesco Theaters chain, the leading chain in California and the states west of the Rocky Mountains. Wesco’s assets also included 20 percent of First National Pictures, a large Hollywood production studio that was owned by a consortium of exhibitors. Then in March 1929 Fox acquired a controlling interest in a major competitor, Loew’s Inc., which owned an East Coast theater chain as well as the Metro-Goldwyn-Mayer film studio. Loew’s was a successful business with excellent prospects, but the death of founder Marcus Loew in 1927 had created the possibility of a merger or takeover. William Fox assembled a 53 percent bloc of Loew’s Inc. shares by buying out Marcus Loew’s widow plus other shareholders, including Nicholas Schenck, the new president of the company. The Loew’s theater chain, with many first-run houses in New York City and other large markets, nicely complemented Fox Film’s dominance in the western United States. MGM was an amazing acquisition, because under the strong leadership of Louis B. Mayer, Irving Thalberg, and Harry Rapf it was already Hollywood’s most prestigious production studio. MGM emphasized high-quality A productions, and it had dozens of well-known stars under contract. Fox, by contrast, had only recently moved into big-budget productions with titles like Seventh Heaven and Sunrise (both 1927), and it lacked MGM’s glamour. To supplement his American purchases, William Fox bought a 50 percent share of Gaumont British, a British company with 300 theaters and a production business.

Even before the takeover of Loew’s, Fox Film was one of the largest and most successful film companies in the world. It was a vertically integrated business, meaning that it owned all the stages of the production and distribution of its product. Fox owned or controlled hundreds of movie theaters, including the Wesco chain and a smaller chain on the East Coast; the company had an extensive distribution business that sold its films in North America and throughout the world; and it owned a state-of-the-art production facility on Pico Boulevard in West Los Angeles. Fox had moved rapidly to take advantage of the introduction of sound films by Warner Bros. (a smaller competitor), and indeed Fox’s Movietone sound system was superior to Warner Bros.’ Vitaphone system. By adding Loew’s and its subsidiary MGM to his corporate holdings, William Fox now controlled two of the “big three” Hollywood studios (the third was Paramount), and thus he seemed poised to become the dominant force in American film—and in the world film industry, for then, as now, the large Hollywood companies were by far the leading exporters of motion pictures.

It must have given William Fox great satisfaction to suddenly have power over Mayer, perhaps the best-known Hollywood executive, his top assistants Thalberg and Rapf, and MGM’s human and physical assets. Fox was a hard-driving Jewish immigrant who had started in the New York garment industry before buying his first storefront theater in Brooklyn in 1904. Mayer, Thalberg, and Rapf were also Jewish but more sophisticated and more assimilated. The new distribution of power was on display for Fox Film Corporation’s 28 June 1929 opening of an elegant $5 million movie palace in San Francisco, seating about five thousand and called, naturally, the “Fox.” Mayer attended the opening with his wife and daughters; Thalberg was there with his wife, MGM star Norma Shearer; the array of movie stars, mostly from MGM and Fox, included Warner Baxter, Wallace Beery, Ronald Colman, Gary Cooper, Joan Crawford, Janet Gaynor, John Gilbert, Buster Keaton, Harry Langdon, Polly Moran, George O’Brien, Mary Pickford, Norma Talmadge, and Lupe Velez, among many others. William Fox himself did not bother to attend; he was represented by his wife.¹

However, despite his acquisition of a majority share of Loew’s Inc. stock, William Fox never took complete command of Loew’s or MGM. His new empire failed because of bad timing, antitrust problems, and personal misfortune. Fox had borrowed enormous sums of money to finance purchases of Loew’s Inc. and Gaumont British stock, and after the stock market crash of October 1929 it was hard to find further loans to sustain his acquisitions and his ongoing businesses. At the same time, the purchase of Loew’s was opposed by the federal government on antitrust grounds, with a possible behind-the-scenes assist from Louis B. Mayer. Mayer’s biographer Scott Eyman notes that the MGM boss was extremely friendly with Herbert Hoover, the newly inaugurated president of the United States—indeed, Mayer was the first overnight guest at the Hoover White House. There is no hard evidence of Mayer or Hoover influencing the decision, and it is even possible that Mayer’s opposition had been softened by a payment from William Fox, but nevertheless the Justice Department was working on a case against Fox when other events made the antitrust action moot.² Also, William Fox was seriously injured in an automobile accident in July 1929 at a crucial stage of the process of consolidating Fox Film and Loew’s; he recovered at home for the next three months. Further, the various creditors of Fox Film, notably Chase National Bank, General Theaters Equipment Company, and American Telephone Company, had decided by the spring of 1930 to put the Fox Film Corporation into receivership rather than give William Fox a chance to right his troubled business empire. The continuing crisis surrounding William Fox meant that his control of MGM lasted for less than a year and that no Fox-MGM merger of personnel or facilities was ever completed. Fox Film Corporation was able to retain its 50 percent interest in Gaumont British until 1935, but this was scant comfort to William Fox himself, who was forced out of company management in 1930. He became an entrepreneur without an enterprise, a casualty of the brutal economic changes during the first months of the Great Depression.

What followed the collapse of the Loew’s/MGM deal has been called “the first looting of a Hollywood film company.”³ Harley R. Clarke of the General Theaters Equipment Company was installed as Fox Film Corporation’s new president. He announced that he would run both Fox Film and General Theaters Equipment efficiently, but in fact he forced renovations of Fox theaters at inflated prices to benefit his equipment company. Also, Clarke was taking over an unfamiliar business, the production and distribution of films, and so in this case a leading creditor was not the best choice to become Fox Film’s chief executive. American Telephone (better known as AT&T) required Fox to pay royalties on its sound film patents, even though William Fox and Fox Film controlled valid sound film patents of their own. Chase National Bank took over majority ownership of the Wesco theater chain and thus supervised that company’s payments of extensive loans owed to the bank. The conflicts of interest were so extensive, especially in the case of General Theaters Equipment, that veteran muckraker Upton Sinclair wrote a book in collaboration with William Fox exposing the abuses.⁴ Film historian Aubrey Solomon suggests that the conflicts of interest caused Fox Film to operate at a loss in 1931 and 1932,⁵ but general industry conditions surely played a role as well. Among the Hollywood film companies, Paramount, Warner Bros., and RKO all took heavy losses in 1932; only MGM was modestly profitable.

Fox Film’s recovery began in April 1932 when Sidney R. Kent became the company’s president. Unlike Harley Clarke or E. R. Tinker (a banker who was briefly president of Fox Film), Kent actually had a background in the motion picture industry. He had been a top executive at Paramount for fourteen years and had played an important role in the expansion of that company, which under Adolph Zukor had become the paradigm for what a large-scale integrated motion picture business should be. Kent was a businessman rather than a film producer, therefore he was generally content to work behind the scenes within a publicity-hungry industry. He had, however, contributed to a famous series of Harvard School of Business Administration lectures on the film industry in 1927; his lecture was titled “Distributing the Product.”⁶ Kent was well liked and respected in the film industry, and this was important because Fox Film urgently needed to regain the confidence of both its own industry and the financial community.

One of Kent’s immediate problems was to reestablish the profitability of Fox Film’s theater chains, which in 1932 and 1933—the low point of the Depression—were rapidly losing money. Most of Fox Film’s net worth was invested in motion picture theaters (this was true of Paramount and MGM as well), and so the performance of the theaters was absolutely vital to the survival of the company. Harley Clarke had decided that his managers and engineers would study the business, learn it, and run it efficiently, but the results had been disappointing. William Fox suggested that the problem was that so much of film exhibition relied on unwritten, intuitive practices—for example, estimating how much rental each theater in a chain could pay for a particular film. As Fox told Upton Sinclair:

There is no system at present known by which you can measure what the fair charge should be for the use of pictures made by any film company for its exhibitors. It is different from any other manufacturing line I know of; in any other line there is a standardized price, but in the leasing of motion pictures there is no such price. . . . There are so many ramifications that it really takes almost a life study to enable a person to arrange these contracts so that they will be equitable both to the theatre owner and the film leasing company.⁷

William Fox offered his own services to Clarke and Fox Film as an expert in film exhibition practices, but his offer was ignored. Instead, when Kent took over as president he turned to Skouras Brothers Theaters to manage Fox Film’s theater chains; the three Skouras brothers had made “almost a life study” of how to run a film exhibition business. This is how Spyros Skouras, the future president of Twentieth Century-Fox, became an executive at Fox Film Corporation.

Spyros Skouras and Skouras Brothers Theaters

Spyros Skouras was born near Mount Olympus in northern Greece in 1893. He emigrated to St. Louis as a teenager, working briefly as a waiter in a hotel restaurant. The three Skouras brothers—Spyros, older brother Charles, and younger brother George—bought their first movie theater, the Olympia, in Downtown St. Louis in 1914. Over the next several years they built or acquired other theaters in the area; this included the building of two showcase movie palaces, the 3,700-seat Missouri Theater in 1921 and the even more lavish 3,000-seat Ambassador Theater in 1926. According to the “Cinema Treasures” website, the Missouri was “one of the first theatres in St. Louis to have air conditioning,” and it featured “a chorus line of dancers known as the Missouri Rocket Girls,” who eventually moved to the Roxy Theater in New York City.⁸ The Ambassador Theater, part of a seventeen-story downtown office building, was built by Chicago architects Rapp & Rapp in “the firm’s typical Louis XIV Sun King theme.”⁹ Both of these theaters have now been demolished, but the 2,700-seat St. Louis Theater, also designed in the Louis XIV style, has been remodeled as Powell Symphony Hall, home of the St. Louis Symphony Orchestra. In the first half of the 1920s Skouras Brothers was directly competing with Paramount, which was trying to control exhibition in St. Louis through a local affiliate. Skouras Brothers outperformed Paramount in the St. Louis area, resisted a buyout offer from the much larger company, and eventually became the Paramount affiliate for Metropolitan St. Louis. By 1926, the three brothers owned thirty-five theaters in St. Louis, and they controlled theater chains in Kansas City and Indianapolis as well.

Skouras Brothers also became a part of First National Pictures, an effort by regional exhibition chains to fight the industry-wide influence of Paramount Pictures. Paramount’s combination of high-quality film production and a national distribution network had given the company a powerful position in the American motion picture industry circa 1915–1920. Local exhibitors wishing to show Paramount’s high-quality products had to accept Paramount’s terms, which might include block booking (the requirement that theaters show a whole slate of Paramount pictures, rather than choosing films of particular interest), a split of receipts favoring the production company, favoritism to Paramount theaters, and so forth. First National was a coalition of exhibitors who banded together in 1917 to increase their bargaining power. In 1918 First National added a film production studio, thus becoming a vertically integrated business. Paramount quickly responded to First National’s challenge by assembling a theater chain of its own.¹⁰ Skouras Brothers Theaters had not been an original member of First National because in 1917 the Skouras company was too small. However, by the mid-1920s Skouras Brothers was very actively participating in First National.¹¹

The basic strategy of First National was to have theater chains contribute money to support a program of high-quality motion pictures. This effort was at least moderately successful, but the loose organization of First National caused continuing problems. Though united by their need for quality pictures, the exhibitors who ran First National Pictures were both widely dispersed and fiercely independent. Who was to run First National? How were decisions to be made? A partial solution came when some of the owners created a voting trust that controlled a majority of stock; the three trustees were Spyros Skouras, Barney Balaban of Balaban & Katz (based in Chicago), and Irving Rossheim of Stanley Company of America (based in Philadelphia).¹² However, many decisions were still made by extensive consultation between all owners. A bitter power struggle came in 1928 when Joseph P. Kennedy, the father of future U.S. President John F. Kennedy, was asked to take over First National’s production and distribution business. Kennedy already controlled three film industry businesses—the theater chain Keith-Albee-Orpheum and two low-budget production studios—so the idea was probably to form a new conglomerate that could compete with Paramount, Loew’s, and Fox.

Spyros Skouras and some of the other First National owners were dissatisfied with Joseph Kennedy’s management. They felt he was too preoccupied with cutting costs at the production studio, whereas the priority should always have been providing A quality pictures to the exhibitor-owners. They also felt he was too concerned with the interests of his other businesses.¹³ One of the inherent difficulties of First National Pictures was that everybody had an outside business. Though Joseph P. Kennedy had been offered a contract to run First National in June 1928, the company’s board of directors declined to ratify that contract in August of the same year.

Because the business was fragmenting, and because of discord with Joseph Kennedy’s management, Spyros Skouras tried to find a buyer for First National. According to Skouras’s unpublished memoirs, he played a primary role in creating the merger between First National and Warner Bros.; this role is not mentioned in film history textbooks, but a 1936 Wall Street Journal article describes Skouras as “the theatre operator who brought the First National deal to Warner.”¹⁴ Spyros Skouras arranged for Warner Bros. to purchase three interconnected film industry businesses: Stanley Company of America, the East Coast chain that held the biggest chunk of First National stock; Skouras Brothers Theaters; and the First National production studio. These acquisitions transformed Warner Bros. from a relatively small film company to a large, vertically integrated business. Spyros Skouras had good relations with Warner Bros. because Skouras Brothers Theaters had been one of the first chains to convert to sound film projection, and in the late 1920s Warner Bros. was an important supplier of sound films. William Fox also made an offer for First National—this acquisition would have made his company even more formidable—but Skouras felt he was already committed to Warner Bros.¹⁵

As part of the deal, Spyros Skouras and his brothers were employed by Warner Bros.; Spyros became the general manager in charge of all of Warner Bros. theaters. However, he quickly became disillusioned with his new job because Harry Warner broke the promises he made before the merger. For one thing, Warner Bros. revised the ...

Table of contents

• Cover
• Title Page
• Copyright
• Dedication
• Contents
• Acknowledgments
• Introduction
• Chapter 1: The Merger, 1935–1939
• Chapter 2: Wartime Prosperity, 1940–1945
• Chapter 3: Peak Achievements, 1946–1950
• Chapter 4: A Slow Decline, 1951–1960
• Chapter 5: Bust and Boom, 1961–1965
• Epilogue, 1966–2011
• Notes
• Selected Bibliography
• Index