Hollywood vault: the business of film libraries, 1915-1960

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Content HOLLYWOOD VAULT: THE BUSINESS OF FILM LIBRARIES, 1915—1960 by Eric Hoyt A Dissertation Presented to the FACULTY OF THE USC GRADUATE SCHOOL UNIVERSITY OF SOUTHERN CALIFORNIA In Partial Fulfillment of the Requirements for the Degree DOCTOR OF PHILOSOPHY (CINEMA-TELEVISION: CRITICAL STUDIES) May 2012 Copyright 2012 Eric Hoyt ii DEDICATION For Emily, Rumi, and Liam iii ACKNOWLEDGEMENTS I could not have asked for a more supportive environment to write a dissertation than the Critical Studies Division of the University of Southern California’s School of Cinematic Arts. A Provost’s Fellowship gave me time to research and write. Travel funding from the Graduate School, School of Cinematic Arts, and Center for Law, History, and Culture enabled me to conduct research at archives across the country and present my work at international conferences. Most of all, I benefited from working closely with outstanding faculty members, who challenged me to become a better scholar. I am especially grateful to my five dissertation committee members who have supported my professional development in more ways than I could possibly list. Priya Jaikumar, Henry Jenkins, Rick Jewell, and Tara McPherson all opened conceptual doorways that changed the way I think about film libraries and connected me to practical opportunities that changed my career. I owe my biggest thanks to my mentor and committee chair, Ellen Seiter, who empowered me to write the dissertation I wanted to write and continually challenged me to make it better. Ellen helped me develop professionally through her incisive feedback and savvy advice, and she came to the rescue in the midst of personal trauma too. I will never be able to repay her, but as I leave graduate school for my first faculty position, I will try my best to measure up to the standard of mentorship that she has set. Beyond my dissertation committee, I benefited at USC from the support of numerous faculty and staff. David James and Anne Friedberg helped me make the transition from Peter Star Producing Program M.F.A. graduate to Critical Studies Ph.D. iv student, and I am grateful to Larry Turman and Richard Shepard in the Stark Program for supporting me in my change of career direction. I grew as a scholar through courses with Akira Lippit, Michael Renov, Alison Renteln, Joe Cohen, and Jeffrey Korchek, and I would have lost my way a long time ago without the guidance and patience of Bill Whittington, Aniko Imre, Kim Greene, Alicia Cornish, and Linda Overholt. I appreciate the intellectual and emotional support that my fellow Critical Studies graduate students have offered. James Crawford, Kate Fortmueller, Casey Riffel, and Brett Service have been particularly treasured friends and collaborators. My thanks also go to Patty Ahn, Leah Aldridge, Amber Bowyer, Lara Bradshaw, Mike Dillon, Ghia Godfrey, Chris Hanson, Tim Holland, Stephanie Hoover, Brian Jacobson, Shawna Kidman, Alison Kozberg, Dave Lerner, Luci Marzola, Ayana McNair, Taylor Nygaard, Ken Provencher, Paul Reinsch, Courtney White, and Genevieve Yue. In researching this historical dissertation, I depended on the generosity of archivists, librarians, and friends at USC and beyond. Sandra Lee Aguilar and Jonathon Auxier at USC’s Warner Bros. Archives and Ned Comstock at USC’s Cinematic Arts Library were vital collaborators and connected me to primary sources that vastly improved my dissertation. Thank you to the tremendous team at the Academy of Motion Pictures Arts and Sciences Margaret Herrick Library, especially to Barbara Hall, Val Almendarez, Jenny Romero, and Sandra Archer. On my research trips away from Los Angeles, Harry Miller at the Wisconsin Historical Society and Tab Lewis at the National Archives and Record Administration in College Park, Maryland facilitated access to extraordinary materials. I’m grateful to Wendy Hagenmaier and Joseph Pomp for taking v photographs of documents in Austin, Texas and New York City when I was not able to visit research sites in person. Thank you to Rudy Behlmer, Rick Jewell, Alison Trope, and Karl Thiede for loaning me documents from their personal collections. I feel fortunate to belong to a broader community of film and media scholars who are also interested in questions of industry history and media circulation. I am grateful to Charles Acland, Emily Carman, Peter Decherney, Phil Drake, Kathy Fuller-Seeley, Nitin Govil, Michele Hilmes, Jennifer Holt, Lea Jacobs, Barbara Klinger, Regina Longo, Paul McDonald, Ross Melnick, Toby Miller, Nina O’Brien, Lisa Parks, Alisa Perren, Jennifer Porst, Tom Schatz, David Shepard, Katherine Spring, Daniel Steinhart, Haidee Wasson, and Chuck Wolfe for stimulating conversations and perfectly timed words of encouragement. I presented portions of this dissertation at three conferences: “Media Fields: Infrastructures” hosted by the University of California Santa Barbara (2009), “What is Film?” hosted by the University of Oregon (2009), and “Rethinking Media Archivism” hosted by the National Library of Sweden (2010). The Introduction and Conclusion contain sections that were first published in “The Future of Selling the Past: Studio Libraries in the 21 st Century,” Jump Cut 52 (Summer 2010). Thank you to the conference organizers, journal editors, and audiences—your feedback made this project stronger. I could not have completed this dissertation without the help of Tom Kemper and David Pierce, who loaned materials from their collections and read every chapter draft I gave them. Tom Kemper offered thoughtful notes on each page, and I’ve come to regard him like an older brother—a great friend who simultaneously awes me in his abilities as a vi film historian, teacher, and parent of young children. David Pierce knows more about the history of Hollywood film libraries than anyone else on the planet, and I cannot thank him enough for the insights he offered, mistakes he corrected, and archival documents he shared. Getting to know David and collaborating with him on building the Media History Digital Library has been one of the unexpected joys of this project. Reaching deeper into my personal vault: Scott Curtis, Paul Edwards, Chuck Kleinhans, and Michael Sherry all changed my life when I was an undergraduate at Northwestern University. I am grateful for the potential they saw in me back then and for the support they continue to offer. Thank you to the Block Cinema crew of Will Schmenner, Jeff Deutchman, Jon Lefkovitz, and Kyle Smith for always giving me new things to love about the movies. Thank you, Miranda July, for supporting my transition to academia and teaching me not to settle until you’ve made a piece of writing as good as you possibly can. And thank you to Jake Goldstein, Derek Sandhaus, Matt Charney, Todd Hetrick, and Brad Holloway, loyal friends through thick and thin. Finally, I extend my supreme thanks and love to my family. I would not be the person I am today without my father and mother, Christopher and Elizabeth Hoyt, who encouraged me as a teenager to pursue my passion and modeled the values of empathy, compassion, and hard work. They continue to play essential roles in my life (the most recent evidence of which is my mother’s generous act of proofreading this entire dissertation!). Thank you to my sister, Whitney Hoyt, and brother, Will Hoyt, for everything they teach me about life. We lost three of our grandparents between the time I began and finished this dissertation, and I think every day about what Bill Rutledge, vii Donna Rutledge, and Stuart Hoyt meant and still mean to us. I am grateful for the ongoing involvement of my grandmother Barbara Kreuzer in my life, despite the more than 5,000 miles that separates California from Hamburg, Germany. I am fortunate to have a second set of parents, Carl and Debby Hagenmaier. The term “in-laws” is wholly inadequate to describe what Carl, Debby, and Wendy Hagenmaier have contributed to my personal and professional development. Thank you for opening your home to me, teaching me how to program a computer, and for extending the love in Liam and Rumi’s daily life. Finally, this dissertation is dedicated to my wife, Emily Hagenmaier, and two children, Liam Oliver Hoyt and Rumi Boone Hoyt, who are about to turn one year old as I finish this project. Emily, thank you for your love, partnership, and always believing in me. I remain in awe of your wisdom, compassion, thoughtfulness, and beauty. Liam and Rumi, we completed this project together: I wrote Chapter One while you were growing inside your mother; outlined Chapter Two while sitting in your hospital NICU room; created graphs for Chapter Three with Rumi asleep on my chest; and edited Chapter Four as Liam gleefully bounced up and down in his Jumperoo. You have shown me how much more to the world there is than academia while, simultaneously, providing my motivation to finish this dissertation and obtain a job. I can’t wait to watch City Lights, Meet Me in St. Louis, and the other treasures of Hollywood’s vault with you. viii TABLE OF CONTENTS DEDICATION ii ACKNOWLEDGEMENTS iii LIST OF TABLES x LIST OF FIGURES xi ABSTRACT xii INTRODUCTION 1 Historical Scope, Argument, and Intervention 3 Methodology and Fields of Study 6 Concepts and Themes for Understanding the Uses of a Film Library 10 Style, Organization, and Chapter Descriptions 18 Introduction Notes 25 CHAPTER ONE: THE GOOD ONES NEVER DIE: WILLIAM S. HART, THE TRIANGLE FRAUDS, AND THE BIRTH OF THE FILM LIBRARY 29 The Transformation of Film’s Value 33 Triangle and the Birth of a Library 45 Star Power: Douglas Fairbanks and William S. Hart 50 Collateralizing the Library 54 W.H. Productions: Renewing the Library 56 The Federal Trade Commission Cases 66 Demand, Not Deception 76 William S. Hart: Profiting from the Critics 92 Financial Fraud and the Library 94 The Triangle Legacy and the Studio System 99 Conclusion 104 Chapter One Notes 106 CHAPTER TWO: WARNER’S BACKLIST MELODY: DERIVATIVES, COPIES, AND SILENT FILM DESTRUCTION IN THE 1930s 117 Comparing Industries: The Library vs. the Backlist 119 Warner Bros., the Transition to Sound, and Industry Convergence 128 Producing Derivatives 132 The Copy: The Domestic Reissue Market 145 Revivals and Reissue Demand 155 Other Markets for the Copy 159 Silent Film Destruction 169 ix Conclusion 176 Chapter Two Notes 179 CHAPTER THREE: THE POSTWAR REISSUE BOOM AND THE TURN TOWARD THE LIBRARY 189 Prologue: Snowing Gold 189 Introduction 194 The 1940s Industry in Context: Decline, War Boom, and Decline 195 The Wartime Growth of the Reissue Market 200 The Postwar Reissue Marketplace 205 The Shared Studio Strategy: Libraries as Profit Centers 225 MGM: The Lion’s Cautious Tactics 229 Universal’s Library Machine 235 Conclusion 252 Chapter Three Notes 255 CHAPTER FOUR: COMPETING (TELE)VISIONS OF THE LIBRARY: MATTY FOX, ELIOT HYMAN, AND THE BROADCASTING MARKETPLACE 267 Marketplace Context 273 The Hollywood View of Television 274 Television’s Appetite for and Aversion to Hollywood Features 282 Government Regulation and Intervention 296 The Intermediaries: Matty Fox and Eliot Hyman 299 The RKO Library Sale 308 The Warner Bros. Library Sale 314 The Studios, DOJ, and Unions follow Fox and Hyman into Television 328 Library Convergence 332 Conclusion 336 Chapter Four Notes 345 CONCLUSION 361 Conclusion Notes 370 BIBLIOGRAPHY (ARRANGED BY GENRE) 372 COMPREHENSIVE BIBLIOGRAPHY 387 x LIST OF TABLES Table 1. MGM Theatrical Reissues, 1930-1939: Median age, rental revenue, and profit for the films. 148 Table 2. Lost Silent and Partially Synced Warner Bros. and First National Feature Films (as of 1956 inventory). 174 Table 3. Composition of Surviving Warner Bros. Silent Feature Library (as of 1956 inventory). 175 Table 4. Contribution of Reissue Revenue to MGM’s Total Seasonal Rental Revenue (includes both domestic and foreign rentals, 1939-1940 to 1949-1950). Note: Data does not include 1947 Gone with the Wind or Ninotchka reissues. Source: Eddie Mannix Ledger, AMPAS. 226 Table 5. MGM Reissue Profits compared to Total Profits (By Season, 1944-1945 to 1949-1950). Source: Eddie Mannix Ledger, AMPAS. 227 Table 6. Annual Gross Income and Net Income of Loew’s Inc. and Universal, 1945-1950. Sources: Film Daily Yearbook, 1949, 949; Film Daily Yearbook, 1952, 937, 943. Loew’s, Inc. Annual Report, 1949; Loew’s, Inc. Annual Report, 1951. 229 Table 7. Universal 16mm Gross Revenue, 1936-1952. Source: U.S. v. Twentieth Century Fox et al., National Archives and Records Administration. 249 Table 8. Estimated Volume of Television Advertising in U.S. (In Millions of Dollars). Source: International Television Almanac. 288 Table 9. Warner Bros. Library Earnings Comparison: Television vs. Theatrical Income. Source: United Artists Collection. 327 xi LIST OF FIGURES Figure 1. Triangle's most important star, William S. Hart. Photo courtesy of the USC Cinematic Arts Library. 52 Figure 2. W.H. Productions promoted old, re-titled William S. Hart films to the states rights market. Moving Picture World, January 19, 1918. Advertisement courtesy of the Media History Digital Library. 58 Figure 3. W.H. Productions advertised the reissued Keystone two-reel comedies, which it “absolutely own[s] and control[s]”. Moving Picture World, 19 January 1918. Advertisement courtesy of the Media History Digital Library. 74 Figure 4. This compilation of video stills from The Big Stampede (1933) demonstrates the film’s intercutting between new footage— including a shot of John Wayne—and old footage of cattle from Land Beyond the Law (1927). 140 Figure 5. Warner Bros.’ 1937 reissue of One Way Passage (1932) was the studio’s most successful reissue of the decade. Photo courtesy of USC Cinematic Arts Library. 150 Figure 6. Cecil B. DeMille added a topical prologue to his Roman epic, Sign of the Cross (1932), for the film’s 1944 reissue. Photo courtesy of USC Cinematic Arts Library. 205 Figure 7. “The Wiggle Test” results of The Sea Hawk (1940), published in Motion Picture Association’s 1948 booklet The Children’s Film Library and Special Children’s Programs. Courtesy of the Margaret Herrick Library of the Academy of Motion Pictures Arts and Sciences. 209 Figure 8. Ingrid Bergman and George Saunders in a publicity still from Rage in Heaven (1941). When reissued in the fall 1946, Rage in Heaven grossed three times the amount of its initial U.S. release. Photo courtesy of USC Cinematic Arts Library. 231 Figure 9. Eliot Hyman promoted Associated Artists Productions as offering stations the best movies and service of any television distributor. Broadcasting, 1956. 324 xii ABSTRACT This dissertation examines the history of how old movies became valuable and how the marketplace for film libraries emerged and evolved, spanning from the silent feature era to the sale of feature libraries to television. Film libraries—the collections of films that have completed the first distribution cycle but remain under copyright protection—gained value not because of the introduction of new technologies but because of the emergence and growth of specific markets. The marketplace for film libraries first developed in the mid-1910s when the star system, feature film, new distribution infrastructures, and copyright law enhanced the value of film negatives. Triangle’s re-titling of William S. Hart films turned film libraries into an industry problem, prompting the intervention of the Federal Trade Commission. As the vertically integrated studio system emerged in the early-1920s, the top studios subordinated the reissue of films in order to concentrate on maximizing revenue and market share. The transition to sound changed the value of film libraries: the derivative became more important than the copy, a fact that, in the late-1930s, influenced Warner Bros.’ decision- making process about what silent films to save and what to destroy. The post-World War II reissue boom changed the studio’s perception; film libraries became as a vital profit center in the midst of industry decline. In the 1950s, television syndicators Matty Fox and Eliot Hyman developed business models for aggressively harnessing film libraries that gained importance through the remaining 20 th century and early 21 st century. This study analyzes the full ecology of the media industries and argues against interpreting the business of film libraries simply as attempts by copyright holders to xiii exploit old assets. Instead, the author calls attention to a dynamic marketplace of producers, intermediaries, labor, business buyers, and audiences. The shifts in this marketplace have carried long-term consequences for the structure of the media industries and the public’s ability to access old works of media and culture. 1 INTRODUCTION In 2004, a consortium of Sony, Comcast, and three private equity firms made what looked like a safe investment: they bought a film library, acquiring MGM for $5 billion in a leveraged buyout. The consortium intended to produce and distribute new content, but the group would not have made the deal without the stable cash flow of MGM’s library of over 4,000 films and thousands of hours of television programming. 1 The MGM library had been a national news story two decades earlier, when, in 1986, Ted Turner purchased the MGM library from Kirk Kerkorian for roughly $1.1 billion—a sum that most commentators at the time thought was outrageously high. Within several years, however, Turner had proven the skeptics wrong, amortizing his purchase through colorization, cable distribution, and home video sales. 2 Turner absorbed MGM’s library of classics, including The Wizard of Oz (1939) and Meet Me in St. Louis (1944), into Turner Broadcasting Systems, which he eventually sold to Time Warner for $7.5 billion. 3 Although the post-Turner MGM had lost the Golden Age classics, the studio still boasted an impressive library—comprised of MGM’s post-1986 output, the United Artists library, and a patchwork of acquired libraries, including Orion, AIP, Filmways, and PolyGram. By all outward appearances, the 2004 leveraged buyout of MGM looked like a low-risk investment—DVD and cable distribution offered valuable ways to monetize old content, and MGM’s library generated over $500 million in cash for both 2007 and 2008. 4 MGM was not the only studio in the early-2000s enjoying high profit margins from the business of content libraries. 5 Edward Jay Epstein reports that Time Warner grossed over $2 billion in 2009 by distributing its library—which contains more than 2 6,000 feature films and 20,000 hours of television programs—across U.S. and global television (in other words, the figure does not even count the home video business). 6 Studios use the term “library” to describe the films and television programs they own that have already gone through the first cycle of distribution, which, in the case of films, encompasses separate windows for a theatrical release, video on demand, home video, pay television, network television, and syndicated television. After five to seven years, a particular film’s cost has already been fully depreciated as an asset, the executive responsible for the project has either been promoted or fired, and the movie has generated the vast bulk of its ultimate earnings. Any new money to come in as library value is largely profit. Multiply this by the huge volume of library titles—a fraction of which become “evergreens” that perform exceptionally well after first cycle—and the studio can add hundreds of millions of dollars each year to its bottom line. Unlike a major theatrical release—requiring tens of millions in marketing expenses—there are relatively few costs involved in bringing library titles to market. As Epstein has noted, these libraries give the established Hollywood studios a comparative advantage against any new firms entering the marketplace that lack the annual library revenues that help cover overhead and offset any disastrous new productions. 7 How did we get here? When did old movies become valuable? How has the marketplace for film libraries changed over time? And what have been the consequences? These are the questions that drove this dissertation from start to finish. The answers, on the other hand, bear little resemblance to the narrative I initially imagined. The history of studio libraries is not a linear tale of worthless assets increasing in value incrementally 3 through the introduction of new technologies. Instead, it is a chronicle of starts and stops, buyer demand and studio resistance, and, most of all, a shifting media and cultural marketplace. The 2004 MGM leveraged buyout did not go as expected. Whereas library revenues during the first few years generated enough cash to cover the studio’s overhead and interest payments, the library revenue decreased significantly in 2009. 8 The following year MGM filed for bankruptcy. Industry commentators noted that MGM’s buyers did not anticipate the drop in DVD and home video revenue. 9 In this view of events, Sony, Comcast, and the private equity firms erred by assuming that the future would resemble the past. But this was not the case. As I will demonstrate in the chapters ahead, MGM’s buyers erred by assuming the future would resemble the recent past. If private equity understood the full history of film libraries, then they might have charted a different course. Historical Scope, Argument, and Intervention Hollywood Vault is the story of how the business of film libraries emerged and evolved, spanning from the silent feature era to the sale of feature libraries to television. The history begins in the mid-1910s when the star system and other developments enabled a market for old films featuring current stars. Although the Triangle Film Corporation extensively exploited the reissue market in the late-1910s, the companies we’ve come to know today as the major Hollywood studios generally subordinated the reissue of films in the 1920s and 30s. Reissues interfered with the studios’ more pressing 4 goals of gaining market share, maximizing ticket sales in studio-owned first run theaters, and maintaining control over independent exhibitors. After the transition to sound, the reissue market declined but the studios used libraries for the production of remakes and other derivatives. The turning point in the history of studio libraries occurred during the mid-to-late-1940s, when changes in American culture and an industry-wide recession convinced the studios to employ their libraries as profit centers through the use of theatrical reissues. The dissertation ends at the moment when, according to conventional wisdom, the history of the film libraries’ economic significance began—the distribution of old Hollywood films on television. In contrast to the studios’ defensive uses of libraries and reissues in the 1940s, intermediary distributors Matty Fox and Eliot Hyman used the growing market of television in the 1950s to aggressively harness libraries as foundations for cross-media expansion, laying a blueprint that developed in importance in the 1960s and continues today. In Hollywood Vault, I seek to overturn the assumption that film libraries have gained value over time chiefly through the introduction of new technologies. In Movies at Home: How Hollywood Came to Television, for instance, Kerry Segrave describes the “Hollywood throwaway mentality” that “once a movie had made its way through theatres in its first to third runs, it was finished, no other possibilities existed for it, at least prior to television.” Segrave subsequently claims that “only Disney had a reissue policy in which films were recycled back into cinemas every seven years or so” and “it was generally agreed that the film capital had indeed ‘neglected’ the reissue market.” 10 These claims are simply inaccurate. As I argue in Chapter Three, film libraries became a vital profit center 5 to the Hollywood studios during the post-World War II theatrical reissue boom, a full decade before the studios sold their feature films to television. In fact, the market for film reissues was so large in the mid-to-late 1940s that the Hollywood unions vowed to take action against the “reissue problem” that they believed was depriving them of employment. In the absence of any thorough history of film libraries, it is easy to fall back on the assumption that old films were throwaways before the introduction of television and an array of subsequent technologies, including home video, colorization, DVD, and digital streaming. Film libraries became valuable not because of the introduction of new technologies but because of the emergence and growth of specific markets. During the period of 1915 to 1960, these markets were sometimes tied to new technologies, such as 16mm film and television. For most of this period, however, existing 35mm film projectors were the most financially significant technology for exploiting libraries. New technologies are important for the possibilities they afford. However, it is a dynamic marketplace of producers, intermediaries, labor, business buyers, and audiences that determines the adoption and impact of new technologies. Once we come to see the history of film libraries as rooted in markets, we are obliged to understand the full range of marketplace participants. Most of the contemporary literature about content libraries—including some of my earlier writings— suffers from focusing too heavily on the supply-side. 11 The industry press asks supply- side questions: How can studios exploit libraries across new technologies? How can they adopt new technologies in a way that creates new revenue streams without cannibalizing 6 traditional markets? These questions, while important, are insufficient. The answers they produce offer a top-down perspective on the industry, limiting our focus to the producers and suppliers: the studios. For most of the period from 1915 to 1960, however, the library business was driven by the demand of audiences and, especially, business buyers such as motion picture exhibitors and TV stations. During the early-1940s, the exhibitor demand for old movies actually outpaced the supply. Instead of focusing on the supply-side, this dissertation analyzes the full ecology of the media industries, framing the business of film libraries as a dynamic marketplace of producers, intermediaries, labor, business buyers, and audiences. Methodology and Fields of Study Hollywood Vault draws from and contributes to the existing historical scholarship on the American media industries and the growing sub-field of Media Industry Studies. No previous book has examined the history of Hollywood film libraries, but my dissertation intersects with a number of film and television histories. My study is particularly indebted to the work of Christopher Anderson, Tino Balio, William Boddy, David Bordwell, Douglas Gomery, Jennifer Holt, Richard B. Jewell, Michele Hilmes, Tom Kemper, Derek Kompare, Richard Koszarski, David Pierce, Michael Quinn, Alexander Russo, Thomas Schatz, Ben Singer, Janet Staiger, and Kristin Thompson. 12 In addition to providing essential secondary sources for my research, these scholars provide models of media industry historiography. I hope this dissertation shows that although the 7 American film and television industries have been widely studied, many areas remain unknown and rich for exploration. By examining the full ecology of the media industries, we also gain new insights into cinema’s cultural history, particularly American culture’s shifting relationship to old films. Peter Decherney, William M. Drew, Caroline Frick, Jennifer Horne, Barbara Klinger, Dana Polan, Anthony Slide, Alison Trope, and Haidee Wasson have all analyzed the historically shifting cultural value of old works of cinema. 13 In Museum Movies: The Museum of Modern Art and the Birth of Art Cinema, Wasson studies how the Museum of Modern Art’s Film Library (which I discuss briefly in Chapter Two) participated in the transformation of the “the status of cinema… from ephemeral entertainment to enduring cultural monument.” 14 Drawing from extensive primary sources, Wasson demonstrates “that the various forms of film’s value—aesthetic, historical, sociological, educational, financial—coexisted at MoMA.” 15 Although I discuss broad cultural shifts and the responses of critics and audiences to old movies, my dissertation belongs more to the field of industrial history than cultural history, focusing on the financial value of film libraries within a marketplace context. As I argue, though, the “industry” itself includes a diverse range of participants, which have frequently disagreed about the best and appropriate uses of film libraries. Furthermore, we need to consider how audiences—the end-users of film libraries—are also important participants within this business. By moving away from the supply-side view of film libraries, we gain a more nuanced perspective on the way old films have circulated in American culture. We also avoid 8 drawing a simple contrast between the studio owners of films versus non-profit institutions, critics, and audiences. In addition to the work of industrial historians and cultural historians studying media, I draw from the field of economics. My analysis into the ecology of the media industries is especially influenced by the work of Michael E. Porter and Richard Caves. Porter’s seminal 1980 book, Competitive Strategy: Techniques for Analyzing Industries and Competitors, offers a guide to the “structural analysis of industries,” stressing the importance of “relating a company to its environment.” Porter argues that an industry’s “five competitive forces—entry, threat of substitution, bargaining power of buyers, bargaining power of suppliers, and rivalry among current competitors— reflect the fact that competition in an industry goes well beyond the established players.” 16 We cannot understand a firm’s environment, in other words, simply through the established players, such as the major film studios and television networks. We need to account for the entire ecology of the industry, the full range of its marketplace participants and potential entrants. In Creative Industries: Contracts Between Art and Commerce, Richard Caves combines structural analysis with contract theory to identify the ways in which creative industries are distinguishable from other industries. Especially salient to the study of film libraries are Caves’ insights into how creative industries grapple with questions of performance uncertainty, storage costs, collecting rents, and internalizing versus eternalizing distribution. 17 Porter and Caves demonstrate that if we want to understand Hollywood libraries, we need to look beyond the studios and take stock of the intermediaries, business buyers, and other marketplace participants. 9 Porter and Caves offer excellent methods for economic analysis and for asking questions about media industry ecology. What they do not provide are the answers to those questions. Historical answers come from evidence, not abstract economic theories. I spent two years conducting research at numerous archives, including the Academy of Motion Pictures Arts and Sciences, Seaver Center for Western History Research at the Los Angeles County Museum of Natural History, Warner Bros. Archives at the University of Southern California, Special Collections of the Cinematic Arts Library at the University of Southern California, the Wisconsin Historical Society, and three sites of the National Archives and Records Administration (College Park, New York, and Riverside). Additionally, I read and searched across numerous historical trade papers, including Moving Picture World, Variety, and Broadcasting. Wherever possible, I triangulate these archival and journalistic sources—filling in gaps, testing claims off one another, and striving to present a history that is both rich and accurate. Chapter One, for instance, synthesizes the files of the Federal Trade Commission at the National Archives, the Aitken Collection at the Wisconsin Historical Society, and the William S. Hart Papers at the Seaver Center of the Los Angeles County Museum of Natural History. During the research process, I attempt to immerse myself in the historical sources. In my analysis and writing, however, I have found it essential to prioritize. An industrial history tracking every single reissue or library deal would be tedious and endlessly long. I prioritize by calling attention to the most significant developments of the different periods—for instance, the importance of studio libraries for the production of derivatives in the early-1930s. I also prioritize by offering case studies of the most influential 10 companies and individuals to the history of film libraries, including Harry Aitken of Triangle, Matty Fox of Universal and C&C TV, and Eliot Hyman of Associated Artists Productions and Seven Arts. In the course of my analysis, I offer less attention to other companies in the evolving marketplace of film libraries. In Chapters One, Two, and Three, my tendency to focus on theatrical reissues, rather than 16mm and other small gauge film stocks, reflects the fact that the theatrical reissue market was far more financially significant than 16mm throughout the period of study. Nevertheless, I acknowledge that my emphasis on the theatrical market may omit interesting developments in the circulation of non-theatrical film libraries, especially in their impact upon audiences. Fortunately, the recent surge in non-theatrical film scholarship is already filling in many of these gaps. 18 Concepts and Themes for Understanding the Uses of a Film Library In the four chapters that follow, I track the ways in which film libraries have changed in value, but I concentrate especially on the ways in which marketplace participants have used film libraries. What constitutes a “library use” depends on the subject’s positioning within the marketplace. A studio owning a library considers different uses than an exhibitor considering buying (more accurately, renting) films from a library. Audiences, critics, government regulators, and labor groups may attempt to control or influence the uses of libraries. Out of the many uses and users, though, some have proven to be especially consequential. Throughout Hollywood Vault, I return to five concepts and themes central to the business uses of film libraries: one, the copy and the 11 derivative; two, strategic industry functions and industry specificity; three, innovations from the margins; four, the demand-side of business buyers and audiences; and five, labor’s struggle for compensation and control. The Copy and the Derivative From the standpoint of a copyright owner, all commercial uses of a film library can be distilled into one of two categories: the copy and the derivative. My distinction between the copy and the derivative stems from U.S. copyright law, which in fact grants motion picture copyright owners five exclusive rights: one, to reproduce the work in copies; two, to prepare derivative uses of the work; three, to distribute copies; four, to perform the work publicly; and five, to display the work publicly. 19 For the purpose of analyzing film libraries, however, I have chosen to bundle the rights to copy, distribute, perform, and display works as all being part of the copy. If you own the copyright to a film, you exclusively control the right to circulate copies of the work for the duration of that copyright. The copy circulates through theatrical reissues, 16mm rentals, and television broadcasts. However, copyright owners also control the rights to create derivatives, works that use substantial portions of the copyrighted material. Derivative uses for film libraries include remakes and stock footage. Importantly, derivatives receive copyright protection as new works; their copyrights can live on even after the underlying material enters the public domain. The line between a copy and a derivative is not always clear. While a straightforward film-to-video transfer creates a copy that simply exists on a different 12 format, the colorization of a black-and-white film creates a derivative work entitled to new copyright protections (the legal reasoning is that the process, though repugnant to cinephiles, involves creative decisions about what colors to apply). 20 Despite the ambiguity, distinguishing between the two forms helps us to identify the ways a media company puts its library to use. Throughout this dissertation, I track shifts between which use—distributing copies or producing derivatives—the studios have considered more important. In the early-1930s, for instance, the studios valued their libraries primarily for the production of derivatives—remakes, shorts, and cartoons based on one or more copyright owned by the studio. In the late-1940s, on the other hand, the studios valued their libraries for the low cost, high margin business of distributing reissues (copies). Strategic Industry Functions and Industry Specificity Whether choosing to use their libraries through distributing copies or producing derivatives, owners must consider the industry functions of these uses and how library exploitation may impact the owner’s existing strategies. A comparison between the film library and the publishing backlist helps both to clarify the point and explain why the business of film libraries requires its own history and cannot be understood simply as an extension of the backlist. In a broad economic sense, film libraries and publishing backlists are similar. All “copyright industries” incur high fixed costs for the first unit of production and low marginal costs for reproduction. Despite this similarity, the business of film libraries developed and functioned differently than backlists. Since the late-18 th century, backlists have functioned for publishers as barriers to entry against potential 13 competitors and a low cost, low risk profit center. In contrast, the Hollywood studio system developed other strategies to perform these same industrial functions—most notably, vertical integration, B-movie production, and block booking. Furthermore, the studios deliberately subordinated the reissue of films during the 1920s and 1930s in order to concentrate on maximizing market share and the profitability of their first run theaters, which carried high fixed costs. It was not until the post-World War II industry recession that the studios turned toward their libraries as profit centers. The differences between the film library and publishing backlist are analyzed further in Chapter Two, which examines Warner Bros.’ uses of its library in the late- 1920s and 1930s. On the one hand, Warner Bros. offers an early example of the convergence between the motion picture industry and other industries, such as music, electronics, and textbook publishing. On the other hand, the Warner Bros. case study shows the need for scholars to be specific about which aspects of the industries are converging and which are not. The comparison between the film library and publishing backlist demonstrates that elements of two different industries that appear similar may actually play entirely different functions in the context of those industries. Through the structural analysis of industries, we can ensure that “media convergence” remains a starting point for new research questions, not a conclusion that overlooks important industry differences. 14 Innovations from the Margins Because the most successful Hollywood studios were vertically integrated corporations that subordinated the business of reissues in order to advance more important strategic objectives, the major innovations in the business of film libraries have come from the industry’s margins. The term “margins” is, of course, relative. In the present context, I use it as a way to group the second-tier studios and intermediary distributors that innovated new methods for exploiting library copies. Chapter One profiles Harry Aitken, who, after running the Triangle Film Corporation into the ground, monetized his library through re-titling and reissuing William S. Hart films. In Chapter Three, I provide a case study of postwar Universal Pictures, one of the “Little Three” studios that did not own theaters. In contrast to the more conservative MGM, Universal aggressively exploited its libraries across media—creating a subsidiary, run by Matty Fox, which acquired 16mm film libraries and distributed certain titles to non-theatrical venues and television. In addition to the contributions of second-tier studios, the other most important innovators in the library business have been intermediary distributors. Although the category of intermediary distributors includes non-theatrical film services, I focus most of my attention on the distributors servicing movie theaters and television stations. These intermediaries obtained feature films by purchasing or licensing them from independent producers, who, in turn, were more incentivized than the studios to exploit their old assets because they had no distribution infrastructure or exhibition business which they needed to prioritize. During World War II, the box office success of two intermediary 15 distributors, Astor and Film Classics, persuaded the major studios to abandon their temporary policy of no reissues and instead imitate the intermediary distributors by pre- packaging double features from two old films. In the 1950s, the first two major Hollywood film libraries reached television through the innovative buying and selling methods of Matty Fox (who obtained the RKO library) and Eliot Hyman (who purchased the Warner Bros. library). Matty Fox believed that pay television would transform the business of film libraries, though he sold the rights to the RKO library long before this ultimately occurred. Hyman recognized that the value of film libraries for television could provide the financing mechanism (through cash flow and borrowing base) to grow a small company into a major Hollywood studio. In pursuing this vision, Hyman created the blueprint for the uses of the modern conglomerate content library. The Demand-side: Business Buyers and Audiences No matter their cleverness, the intermediary distributors would have had no business to innovate were it not for the demand of buyers. For most of the period of 1915 to 1960, the business of film libraries was driven by the needs of business buyers—most notably, motion picture exhibitors and television stations. Motion picture exhibitors demanded old movies not as expressions of cinephilia but as a conservative business strategy. As explored in Chapters One, Two, and Three, exhibitors rented reissues and revivals for a fraction of the price of a new film. Additionally, old movies were attractive to exhibitors due to their predictability. Unlike a new release, which might range significantly in quality, an old picture’s star power, popularity, and merit were known in advance. The needs of local television stations for filmed content in the late-1940s and 16 early-1950s led to the development of a similar marketplace for old films, even though TV stations prior to 1956 lacked access to most top Hollywood features. Exhibitors and television stations demanded old movies to serve their business needs, but they were ultimately in the business of entertaining audiences. In addition to business buyers, we need to consider the demand from the industry’s end-users (though for the sake of readability, I generally use the more human sounding term “audiences” over “end-users”). Since the rise of the star system in the early-to-mid-1910s, movie fans have sought access to the old films of their favorite stars. Fans preceded critics as proponents for old film screenings. In the 1910s and 1920s, most critics believed that rapid developments in the art of film rendered most old movies inherently inferior to new films. Critics of the era were more likely to discourage than encourage audiences from watching old films. Critical attitudes toward older films warmed in the years following the transition to sound. And during the 1940s, the demand from both audiences and critics for old films underwent a noticeable shift—moving from the fringes of fandom more toward the mainstream. This shift was part of broader wartime and postwar cultural turns toward nostalgia. When old films reached television in the late-1940s and 1950s, the willingness of audiences to stay up late and watch “bad movies” provoked the condescending remarks from critics, leading the Chicago Daily Tribune to wryly remark, “Nobody except the public likes movies on TV.” 21 Business buyers anticipated the demands of audiences for certain types of older films and sometimes solicited their input. Postwar revival theaters encouraged participation by inviting audience members to cast votes for the old films they wanted to 17 see again Audiences gradually obtained non-commercial means to access old films—such as the Museum of Modern Art’s Film Library and the growth in film societies and college film courses following World War II. Yet the reach of these non-profit alternatives was small compared to commercial mediums of motion picture exhibition and television. Small gauge film libraries, such as the 16mm and 8mm Kodascope Library, offered another means of access. For the film lover fortunate enough to own a 16mm or 8mm projector and possess enough disposable income to rent prints, the small gauge market offered the possibility of full control over film programming—limited, of course, to whatever titles the catalog offered. Despite the rise of non-profit and small gauge alternatives, however, most Americans during the period of 1915 to 1960 encountered old films while attending commercial movie theaters and, later, watching television. Audiences participated in the commercial marketplace for film libraries, demanding that business buyers obtain specific types of old movies. Labor’s Struggle for Compensation and Control As business buyers and audiences demanded access to old movies, Hollywood labor groups advocated for their own needs. “Our industry is one of the few in the world where talents and skills of its workers, preserved on strips of celluloid, can be used repeatedly without any remuneration to the possessors of those talents and skills,” wrote screenwriter Lester Cole in 1947. 22 At the time—a full nine years before Hollywood’s feature libraries reached television—the Screen Writer’s Guild was leading the other Hollywood guilds and unions in an effort to obtain compensation from the reissue of their films. And even before Hollywood’s unionization in the 1930s, star actors negotiated for 18 profit participation arrangements that ensured they would receive payment from the reuse of their work. Hollywood labor demanded residuals before the invention of television. For some stars and directors, the stakes of reuse went far beyond money. As discussed in Chapter One, William S. Hart and Douglas Fairbanks both argued that Triangle’s re-titling and excerpting of their films would damage their artistic reputations. These same arguments resurfaced with greater force during the “moral rights” campaigns that film directors led against television editing in the mid-1960s and colorization in the late-1980s. 23 My dissertation ends before those later campaigns, and due to the need to focus on other developments of the library business, I limit my examinations of Hollywood labor to sub-sections within Chapters One, Three, and Four. Nevertheless, the workers who built the films in Hollywood’s vault are an essential part of this story. And just as the history of film libraries did not start with the introduction of new technologies, we need to recognize that the history of labor’s demand for residual payments and moral rights also has a much longer legacy—one fundamentally about power and equity. Style, Organization, and Chapter Descriptions In Hollywood Vault, I have tried, as much as possible, to adopt a writing style worthy of my material. The best Hollywood films communicated complex ideas and emotions in a manner that a wide audience found understandable. Moreover, the innovators of the business of film libraries, such as Harry Aitken and Matty Fox, led personal and professional lives marked by grand vision, subterfuge, and fraud. In my writing style, I attempt to bring out the inherent drama of these historical narratives, while simultaneously offering incisive analysis of the industry (though with a minimum 19 of economic or theoretical jargon). I acknowledge the stylistic balance won’t be to every reader’s taste—too much storytelling for those wanting a detached dissection of the industry, too “academic” for those wanting a juicy behind-the-scenes Hollywood yarn. However, I hope the presentation style opens up my work to a broader community of readers who are interested in a rigorously researched history of film’s changing value but would feel alienated by an abundance of italicized economic or critical theory terms. I have structured Hollywood Vault as four lengthy chapters, each one focused on the business of film libraries during a particular decade. The exception is Chapter One, which extends from 1915 to 1927 but concentrates especially on the years of 1917 to 1920. Otherwise, the chapters mostly stick to a single decade—Chapter Two examines the 1930s, Chapter Three the 1940s, and Chapter Four the 1950s. All of the chapters combine the synoptic with the specific, pairing broad descriptions of the marketplace with case studies that illustrate how particular companies responded to and acted upon the business environment. In Chapter One, “The Good Ones Never Die: William S. Hart, the Triangle Frauds, and the Birth of the Film Library,” I explore the historical moment in which film libraries first gained commercial value and provoked controversy both inside and outside of the industry. In the mid-1910s, four developments caused the value of film negatives, the basis for reproducing prints, to greatly increase: the growth of motion picture copyright law, the rise of the star system, the growth of the feature film, and the innovation of new distribution infrastructures. In 1917, the financially troubled Triangle Film Corporation was the first major film company of this era to strategically exploit its 20 film library. Through a subsidiary, Triangle re-titled old William S. Hart pictures and sold them to states rights distributors, which rented them to “snipers”—small exhibitors that opened a star’s old film at the same time a star’s new film premiered in town. In response, the Federal Trade Commission investigated and passed a landmark ruling that limited the uses of a copyrighted film. Additionally, Triangle’s shareholders sued its president, Harry Aitken, who through self-dealing (selling and re-purchasing the same negatives) committed a $3 million financial fraud. The reissue business, however, was not limited to the supply-side. Through the late-teens and into the 1920s, groups of buyers (small exhibitors) and end users (movie fans) continued to demand the reissue of old films, even though critics and stars opposed these reissues. The trade press worried that the industry would cannibalize itself. Ultimately, what contained the reissue market was the rise of the vertically integrated studio system. The studios deliberately subordinated the library business in order to focus on maximizing ticket sales to their theatres and enhancing their market share as their films played in other theatres. The transition to sound did not destroy the value of silent film libraries, but it did transform them—from works that could be profitably re-circulated as copies into collections of properties for the production of derivatives. In Chapter Two, “Warner’s Backlist Melody: Derivatives, Copies, and Silent Film Destruction in the 1930s,” I survey the markets for copies and derivatives in the 1930s in order to understand Warner Bros.’ decision-making process in destroying hundreds of film negatives. The primary derivative markets were for remakes (which boomed in number) and stock footage. Warner Bros., in fact, specialized in producing “partial remakes” that included extensive 21 footage from silent films. The primary market for copies was the domestic reissue market, which grew in the mid-1930s due to exhibitor demand for cheap double-feature product. Three smaller markets for copies also developed during this period: the international reissue market; the 16mm market; and the institutional market, led by the Museum of Modern Art’s Film Library. The chapter also compares the business of film libraries to the backlist businesses of book publishing and music publishing, two industries that Warner Bros. entered during the same period. The chapter concludes with a case study of library destruction. Documents at USC’s Warner Bros. Archives reveal that the studio systematically went through its silent library, identifying films with no reissue value, extracting any stock footage that might be of use, and destroying whatever remained. The biggest selection criterion, though, was whether or not Warner Bros. possessed the copyright to the film. Fearing potential lawsuits from independent producers demanding the return of their films, Warner Bros. chose to save films that it no longer owned and destroy films that it owned completely. In Chapter Three, “The Postwar Reissue Boom and the Turn Toward the Library,” I argue that the mid-to-late 1940s marked a turning point in the history of film libraries. As the movie industry entered a postwar period of decline, studios theatrically reissued films at an unprecedented rate. Between 1947 to 1950, roughly one out of every four films on American screens was an old movie. From analyzing the financial data of multiple studios, we clearly see that though these reissues generated only modest revenues, they yielded high profits—making the difference, in some cases, between a profitable year and a losing one. Film libraries had finally come to occupy the industry function that backlists had long held 22 in the book publishing world: a low-cost, low-risk profit center. Old films, like literature, also benefited from a turn toward the library in American culture—critics and audiences expressed both nostalgia for works of the pre-war years and a desire to reevaluate them. Unlike publishing, however, the talent of the films received no compensation for the reuse of their work. Hollywood labor demanded residual payments for theatrical reissues and, soon after, television broadcasts. After setting up the industrial and cultural contexts of the postwar reissue boom, I offer case studies of how two different studios navigated within the marketplace. Vertically integrated MGM adopted a conservative library strategy—using a handful of “quality” reissues each year to enhance its profitability, but never seeking revenue streams beyond theatrical distribution and exhibition. Universal, on the other hand, owned no theatres and employed a far more aggressive library strategy, exploiting its old films through reissues and a subsidiary responsible for 16mm and television distribution. Universal flooded the marketplace with its old films, angering theatre owners, labor groups, and the other studios. In Chapter Four, “Competing (Tele)Visions of the Library: Matty Fox, Eliot Hyman, and the Broadcasting Marketplace,” I examine the initial movement of Hollywood film libraries to television by analyzing the two most important film-to-TV syndicators: Matty Fox and Eliot Hyman. The two men worked together and formed a library in the early-1950s through pooling their collections of films. They were also competitors, with each attempting to outmaneuver the other to buy the RKO library (Matty Fox ultimately prevailed, though Eliot Hyman acquired the even more valuable Warner Bros. library just months later). Beyond a chronicle of rivalry, though, my 23 analysis of Fox and Hyman examines the innovative methods they used to buy, sell, and leverage libraries. Additionally, I explore the demand of TV stations for feature films, as well as the reluctance of the major networks and studios to allow old films to reach “free television.” Ultimately, I argue that Eliot Hyman’s vision for leveraging a library to finance and expand an entertainment company became the model for the content libraries of the conglomerate-owned Hollywood studios. The history of film libraries is the intertwined stories of industry transformation and cultural access. The Hollywood studio system initially subordinated film libraries, then changed course during the industry’s post-World War II recession by defensively utilizing libraries as profit centers. The innovations of intermediary television distributors created a new business model, one that deployed libraries aggressively as foundations for the expansion of an entertainment corporation’s reach. This business model hinged on the stable revenue streams from televising libraries, which attracted the interest of Wall Street and eventually prompted conglomerates to purchase studios to acquire their film assets. Through every step of this industry transformation, the American public’s access to film history changed. In the early-21 st century, consumers have grown accustomed to media products promising high levels of access and control. We buy access to streamable library services, like Netflix, and build personal libraries through purchasing DVDs, Blu- Rays, and digital files (which many consumers opt not to purchase but download, collect, and trade anyway). During the period of 1915 to 1960, some film fans owned 16mm projectors and collected films through scouring mail-order catalogs for the relatively 24 small number of available Hollywood features. Most audiences, however, lacked this level of control. Most audiences depended on one of two types of business buyers— movie theaters and television stations—to obtain access to an old film. We know a great deal about the commercial film industry that first produced, distributed and exhibited King Kong (1933), Casablanca (1943), and Gone with the Wind (1939). What follows is an account of the parallel commercial media industry that delivered them to audiences the third, tenth, and twentieth times; probably, the time you first saw them too. 25 Introduction Notes 1 William M. Kunz, Culture Conglomerates: Consolidation in the Motion Picture and Television Industries (Lanham, MD: Rowman & Littlefield, 2007), 47; Comcast, Press Release, 23 September 2004, http://www.comcast.com/About/PressRelease/PressReleaseDetail.ashx?PRID=193 (accessed October 29, 2009). 2 Richard Natale and James Walsh, “Unscathed?,” California Business, November 1987, 40. 3 Mark Landler, "Turner to Merge into Time Warner; a $7.5 Billion Deal," New York Times, 23 September 1995, http://search.proquest.com/docview/430296990?accountid=14749 (accessed 13 February 2012). 4 Claudia Eller, “MGM Passes Audit, Says It’s in ‘Full Compliance’ with Debt Requirements,” Los Angeles Times, 16 July 2009, http://articles.latimes.com/2009/jul/16/business/fi-ct-mgm16 (accessed 20 October 2009). 5 I discuss the early-21 st century business of exploiting content libraries in more depth in “The Future of Selling the Past: Studio Libraries in the 21 st Century,” Jump Cut 52 (Summer 2010), http://www.ejumpcut.org/currentissue/hoytStudioLibraries/index.html (accessed 12 February 2012). This Introduction contains excerpts previously published in “The Future of Selling the Past.” 6 Edward Jay Epstein, “Hollywood’s Real Money Machine,” Wall Street Journal, 4 March 2010, http://www.edwardjayepstein.com/moneymachine.htm, (accessed 7 February 2012). 7 Edward Jay Epstein, “Hollywood's Profits, Demystified,” Slate Magazine, 8 August 2005, http://www.slate.com/id/2124078/ (accessed 7 February 2012). 8 Claudia Eller, “MGM Passes Audit, Says It’s in ‘Full Compliance’ with Debt Requirements,” Los Angeles Times, 16 July 2009, http://articles.latimes.com/2009/jul/16/business/fi-ct-mgm16 (accessed 20 October 2009). 9 Mike Spector and Lauren A.E. Schuker, “Auction Alone Unlikely to Resolve MGM Woes,” Wall Street Journal, 22 January 2010, B3; Mike Spector and Lauren A.E. Schuker, “MGM Debt Drama Nears a Climax,” Wall Street Journal, 28 October 2010, A1; Ben Fritz and Claudia Eller, “MGM, in deal, files for Chap. 11,” Los Angeles Times, 4 November 2010, B1; Erica Orden, “For MGM, a Tighter Focus,” Wall Street Journal, 27 December 2011, B1. 26 10 Kerry Segrave, Movies at Home: How Hollywood Came to Television (Jefferson, N.C.: McFarland, 1999), 72–73. 11 Marc Graser, “Film Library Values Get a Rethink,” Variety, 15 February 2010, 6, 13; Marc Graser, “Vault in Their Wounds,” Variety, 12 April 2010, 1; Eric Hoyt, “The Future of Selling the Past: Studio Libraries in the 21 st Century,” Jump Cut 52 (Summer 2010), http://www.ejumpcut.org/currentissue/hoytStudioLibraries/index.html (accessed 12 February 2012). 12 Christopher Anderson, Hollywood TV: The Studio System in the Fifties (Austin: University of Texas Press, 1994); Tino Balio, United Artists: The Company Built by the Stars (Madison, Wisconsin: University of Wisconsin Press, 1976); Tino Balio, Grand Design: Hollywood as a Modern Business Enterprise, 1930-1939 (New York: Charles Scribner’s Sons, 1993); William Boddy, Fifties Television: The Industry and Its Critics (Urbana and Chicago: University of Illinois Press, 1992); David Bordwell, Janet Staiger, and Kristin Thompson, The Classical Hollywood Cinema: Film Style & Mode of Production to 1960 (New York: Columbia University Press, 1985); Douglas Gomery, The Hollywood Studio System: A History (London: British Film Institute, 2005); Douglas Gomery, Shared Pleasures: A History of Movie Presentation in the United States (Madison, Wis.: University of Wisconsin Press, 1992); Douglas Gomery, The Coming of Sound: A History (New York: Routledge, 2005); Jennifer Holt, Empires of Entertainment: Media Industries and the Politics of Deregulation, 1980-1996 (Piscataway, NJ: Rutgers University Press, 2011); Richard B. Jewell, The Golden Age of Cinema: Hollywood, 1929-1945 (Malden, Mass.: Blackwell, 2007); Michele Hilmes, Hollywood and Broadcasting: From Radio to Cable (Urbana and Chicago: University of Illinois Press, 1990); Tom Kemper, Hidden Talent: The Emergence of Hollywood Agents (Berkeley: University of California Press, 2010); Derek Kompare, Rerun Nation: How Repeats Invented American Television (New York: Routledge, 2005); Richard Koszarski, An Evening’s Entertainment: The Age of the Silent Feature Picture, 1915-1928 (New York: Scribner, 1990); David Pierce, “The Legion of the Condemned - Why American Silent Films Perished,” Film History 9, no. 1 (1997): 5–22; David Pierce, “‘Senile Celluloid’: Independent Exhibitors, the Maior Studios and the Fight over Feature Films on Television, 1939-1956,” Film History 10, no. 2 (1998): 141–164; Michael Joseph Quinn, “Early Feature Distribution and the Development of the Motion Picture Industry: Famous Players and Paramount: 1912-1921” (Ph.D. Dissertation, The University of Wisconsin - Madison, 1998); Alexander Russo, Points on the Dial: Golden Age Radio Beyond the Networks (Durham, N.C.: Duke University Press, 2010); Thomas Schatz, Boom and Bust: The American Cinema in the 1940s (New York: Charles Scribner’s Sons, 1997); Ben Singer, “Feature Films, Variety Programs, and the Crisis of the Small Exhibitor,” in American Cinema’s Transitional Era: Audiences, Institutions, Practices, ed. Charlie Keil and Shelley Stamp (Berkeley: University of California Press, 2004), 76– 100. 27 13 Peter Decherney, Hollywood and the Culture Elite: How the Movies Became American (New York: Columbia University Press, 2005); William M. Drew, The Last Silent Picture Show: Silent Films on American Screens in the 1930s (Lanham, Maryland: Scarecrow Press, 2010); Caroline Frick, Saving Cinema: The Politics of Preservation (New York: Oxford University Press, 2011); Jennifer Horne, “Nostalgia and Non-fiction in Edison’s 1917 Conquest Program,” Historical Journal of Film, Radio and Television 22, no. 3 (2002): 315–331; Jennifer Horne, “A History Long Overdue: The Public Library and Motion Pictures,” in Useful Cinema, ed. Charles R. Acland and Haidee Wasson (Durham, N.C.: Duke University Press Books, 2011); Barbara Klinger, Beyond the Multiplex: Cinema, New Technologies, and the Home (Berkeley: University of California Press, 2006); Dana Polan, Scenes of Instruction: The Beginnings of the U.S. Study of Film (Berkeley: University of California Press, 2007); Anthony Slide, Nitrate Won’t Wait: A History of Film Preservation in the United States (Jefferson, N.C.: McFarland & Company, 2000); Anthony Slide, Before Video: A History of the Non- Theatrical Film (New York: Greenwood Press, 1992); Alison Trope, Stardust Monuments: The Saving and Selling of Hollywood (Hanover, NH: Dartmouth College Press, 2012); Haidee Wasson, Museum Movies: The Museum of Modern Art and the Birth of Art Cinema (Berkeley: University of California Press, 2005). 14 Wasson, Museum Movies, 2. 15 Ibid., 67. 16 Michael E. Porter, Competitive Strategy: Techniques for Analyzing Industries and Competitors (New York: Free Press, 1980), 3–6. 17 Richard E. Caves, Creative Industries: Contracts Between Art and Commerce (Cambridge, Mass.: Harvard University Press, 2000), 269–362. 18 See especially two recent anthologies: Charles R. Acland and Haidee Wasson, eds., Useful Cinema (Durham, N.C.: Duke University Press Books, 2011); Devin Orgeron, Marsha Orgeron, and Dan Streible, eds., Learning with the Lights Off: Educational Film in the United States (New York: Oxford University Press, 2012). 19 17 U.S.C.S. § 106, http://www.lexisnexis.com.libproxy.usc.edu/hottopics/lnacademic, (accessed 12 February 2012). 20 Dan Renberg, “The Money of Color: Film Colorization and the 100th Congress” Hastings Communications and Entertainment Law Journal 11 (1988-1989): 397–404. 21 Richard Blakesley. “Good Old Movies View Like New!,” Chicago Daily Tribune, 14 September 1957, C7. 28 22 Screen Writer, “Conference on Reissues,” August 1947, 42. 23 Peter Decherney, “Auteurism on Trial: Moral Rights and Films on Television,” Wisconsin Law Review 2011, no. 2 (2011): 273–330. 29 CHAPTER ONE: THE GOOD ONES NEVER DIE: WILLIAM S. HART, THE TRIANGLE FRAUDS, AND THE BIRTH OF THE FILM LIBRARY Mr. Exhibitor: You and I owe a whole lot to the motion picture public. The bootleggers of the industry are at it again. Let us hit them right between the horns and prove our gratitude to that motion picture public which supports us. -- William S. Hart, Open Letter in Exhibitor’s Trade Review, 1920. 1 KIND SIR_The inclosed circular correct. Only all STARS MAKE A MISTAKE NOT HAVING THE YEAR, STAMPED ON EVERY FOOT OF FILM, And include in CONTRACTS AFTER TWO YEARS ALL OLD PRINTS MUST BE DESTROYED NOT RE ISSUED that is the JUNK killing the business. I have a lot of your old RE ISSUED pictures to meet as COMPETITION in my town. -- William C. McIntire (Rose Theatre, Fayetteville, North Carolina) to William S. Hart, 1920. 2 What was the value of an old movie in 1920? According to a film company’s balance sheet, the answer was nothing. Accountants recognized that the value of film negatives had risen considerably over the previous decade, and they recommended that producers capitalize film negatives as assets, rather than deducting the costs as business expenses. Nevertheless, accountants felt “fairly certain that the cost of a picture should be depreciated within a period of twelve months from the date of its first public presentation. If the picture is a failure the cost should be depreciated in a shorter period.” 3 Why depreciate film negatives so quickly? For one, it was conservative accounting. Even if the occasional film enjoyed a longer commercial life, it was better to write down the asset quickly than inflate your balance sheet and misrepresent the value of your company. This conservative accounting practice, though, was rooted in a piece of common sense: the commercial lifespan of films was quite short. Old movies were worthless. 30 Film Studies has largely accepted this common sense about the silent era and film libraries. We imagine a growth narrative in which the valuation of old movies consistently rose over time, increasing in value thanks to the emergence of new technologies, such as television and home video, and new standards of critical appreciation. In Saving Cinema, for instance, Caroline Frick entitles one chapter’s sub- heading “Studio Preservation Strategies: From Silver Reclamation to Asset Management.” To her credit, Frick later complicates this implied growth narrative and notes: Motion pictures… have always existed as important assets for production entities. Although apocryphal narratives of film preservation depict an easy villain in the studio decisions and policies that purposefully destroyed superfluous reels of film to reclaim silver before 1927, the full story of how many films remain from cinema’s first decades is much more complicated and difficult to piece together. 4 The correspondence between Hart and McIntire offers a new perspective on the complicated story of film’s value during the silent era. (For more evidence about why certain silent films survive, see my next chapter’s analysis of Warner Bros.’ decision- making process in 1930s about which silent films to save and which to destroy.) Yes, most producers took advantage of the roughly twenty cents per pound they could earn by recycling old positive prints that were worn out or no longer needed. 5 However, William McIntire’s proposal to destroy all star-driven films after two years speaks to a different marketplace reality. McIntire perceived reissued old films as a competitive threat to the new ones. He wanted to destroy old films not because they were worthless, but precisely because they still held market value. 31 William S. Hart’s open letter and William McIntire’s personal reply are fragments of a larger story about the value of old movies in the late-teens and early-20s. For the three years leading up to his open letter to “Mr. Exhibitor,” William S. Hart had engaged in a series of legal disputes to exert control over the manner in which his old films circulated. The “bootleggers” Hart identified were distributors trafficking in re-titled old films. Some distributors had legally obtained the films from their owner; other exchanges circulated pirated prints. Hart’s struggle resulted in a Federal Trade Commission investigation that established an important precedent—setting boundaries for the exploitation of film libraries. Exhibitor William McIntire had watched his town of Fayetteville turn into a nest of snipers. “Snipers” were the industry’s term for an exhibitor who cheaply booked a star’s old picture to open the same week the star’s expensive new production opened down the street. 6 The sniper quietly waited for the legitimate exhibitor to buy up newspaper advertising, priming the community for the latest William S. Hart picture. It was then the sniper struck, posting BILL HART in giant letters across his own marquee. The film’s title was either buried in small font or modified so that moviegoers assumed they were walking into a new picture. The sniper’s theater was generally inferior to the legitimate showman’s hall, but the sniper compensated by offering equivalent star power at discount ticket prices. William S. Hart’s struggles, three Federal Trade Commission cases, and many of the industry’s sniping problems of the period emerged because of the Triangle Film Corporation. Triangle and its successors exploited the Triangle library more extensively 32 and widely than any other producer of the silent era. The Triangle library is the story of a fraud inside a fraud. Like a series of Russian Dolls, Triangle perpetrated a consumer fraud embedded within a larger financial fraud. The FTC investigated the consumer fraud and unfair competition practices of a secretive Triangle enterprise called W.H. Productions, which re-titled William S. Hart’s old films and sold them to states rights exhibitors. W.H. Productions was simultaneously part of a financial fraud carried out by Triangle’s founder, Harry Aitken. Aitken’s fraud and self-dealing resulted in a shareholder lawsuit and illustrated the way in which film negatives, as theoretically worthless assets, were ripe for financial manipulation. There is more here, though, than simply a juicy story. Through closely studying Triangle, we can identify the major themes that followed film libraries for the next century: the producer’s struggle to enhance and not cannibalize profits from old movies; the dual layers of demand for reissues from business buyers and audiences; the struggle of stars and labor to profit from their work in reissue; financial applications of film libraries that exceed revenue streams; and the debate about the artistic merit of old works and whether their integrity should be protected. The motion picture industry itself also studied Triangle, seeing it as representative of the opportunities and perils of selling a library. However, before Triangle perpetrated multiple frauds, before it taught the industry a lesson about film libraries, several forces converged that forever changed the value of a film negative. 33 The Transformation of Film’s Value Between roughly 1903 to 1915, four major developments occurred that fundamentally altered the value of a film negative, the basis for reproducing positive film prints. These four developments were the growth of motion picture copyright law, the rise of the feature film, the dominance of the star system, and the emergence of new distribution infrastructures. By 1916, a Price Waterhouse & Company accountant noted that the previous several years had witnessed a sea change: a shift from the era of a “cheap negative”—in which the cost of making positive prints exceeded cost of the negative from which they were based—to the era of the “high cost negative”—in which producers invested far more money in creating the film negative than the cost of striking positive prints. 7 To understand the ascendance of the “high cost negative,” we need to separately examine each of the four contributing developments. Copyright Law Cinema’s early years (1895 to 1903) were a pirate’s paradise, a time when, in the words of Jane Gaines, “copying was as much an industry practice as it was an industry problem.” 8 Motion picture companies acquired the positive prints of competitors’ films and then “duped” negatives from them. The “duper,” in industry slang, then used the dupe negative to make positive prints, which were distributed to a hungry exhibition market. Some filmmakers painted their company initials onto title cards and sets like cowhands branding the ranch symbol onto cattle, creating identifiable markers to foil any rustler who would pass off another company’s herd as his own. But other companies, 34 particularly those who saw themselves as equipment manufacturers, expressed less concern about film duping. No standardized film format accommodated all of the projectors on the market. “Distributors used duping as a method of bypassing technical limitations,” explains film historian Peter Decherney. “A Lumière film, for example, could be transformed into one playable on Edison projectors.” 9 The lack of standardized formats also gave first mover manufacturers a clear advantage. Once an exhibitor had invested in a particular projector technology, he or she was dependent on a supplier who could accommodate that technology. The first mover manufacturers also benefited from the patents they owned over camera and projection technologies. In the early-1900s, Thomas Edison sought to control the American motion picture industry through owning patents and licensing permission to use them to select manufacturers and exhibitors. Edison freely duped the works of foreign film producers, but he wanted more protection for his own films. The trouble was that no such thing as a motion picture copyright yet existed. Edison circumvented this legal gap through printing each individual frame of his films to paper and registering the entire of chain of film frames under one photographic copyright. Decherney explains that Edison and the other industry leaders “set some ground rules. They freely duped films that had not been registered as photographs, but they respected the copyright notices on films that had been registered.” 10 When Sigmund Lubin persisted in making dupes of films Edison had registered, Edison took the Philadelphia entrepreneur to court. Edison lost his case in the lower court, but the Third Circuit Court of Appeals reversed the ruling. Edison v. Lubin (1903) established that films could be copyrighted by registering an entire film as 35 one photograph. 11 The right to make prints from a film negative, in other words, was legally protectable under copyright law. The practice of registering paper prints for copyright protection also left a fortunate by-product: decades later archivists at the Library of Congress were able to reconstruct films, frame by frame, that had perished in celluloid form but still existed on paper. Much of the body of early American cinema we can view today comes from the paper prints at the Library of Congress. 12 Over the following decade, U.S. courts and legislatures enacted a series of changes to copyright law that effectively increased the protectability and potential profitability of a motion picture negative. In 1909, the U.S. Congress revised the Copyright Act, granting copyright protection to mechanical reproductions of music but not motion pictures—the result, Peter Decherney suggests, of film industry lobbying to continue to allow case law and self-policing, rather than statutory law, regulate the industry. Yet despite cinema’s omission from the Copyright Act of 1909, the revision included two changes that would prove essential for the future of film libraries. First, Congress doubled the period of protection. Prior to the 1909 Act, copyright protection lasted fourteen years, plus the option to extend for another fourteen years. After the 1909 Act, the duration of copyright expanded to twenty-eight years plus an optional extension of the same length. Second, the revision granted corporations the right to claim authorship in a copyrighted work, enabling greater leverage for companies producing “works made for hire.” 13 Congress amended the Act in 1912 and formally recognized motion pictures as copyrightable works in their own right, rather than as photographs that moved, but the extended protection and work for hire provisions of the 1909 Act carried 36 long-term significance for the film industry, allowing studios to claim ownership over the works its employees created and, subsequently, retain the exclusive rights to exploit those works for a potential fifty-six years. Between the 1909 Act and the 1912 amendment, the Supreme Court heard Kalem Company v. Harper Brothers (1911), a case that held enduring significance for film libraries. Copyright law grants authors the right to “derivative works”—those works based upon a pre-existing work. Ideas, however, are not copyrightable; only the expressions of ideas are copyrightable. Kalem v. Harper asked the question: did a motion picture adapted from a novel infringe the literary author’s copyright? Was a motion picture based on a novel a derivative work? Or could filmmakers liberally lift from the ideas of a novel, including characters, plot, and scenes, as long as they used silent pantomime instead of the literal words—the expression—on the page? Film producers around the turn-of-the-century assumed they could freely take whatever portions of a book or play they desired. In 1907, the Kalem Company produced one such unauthorized adaptation—a one-reel film consisting of sixteen shots depicting scenes from General Lew Wallace’s enormously popular 1880 novel, Ben-Hur. Wallace’s heirs, the novel’s publisher, and the Broadway producers who had licensed the dramatization rights sued Kalem for copyright infringement. Kalem lost in the lower court, but appealed twice, arguing that the film could not be considered a dramatization because motion pictures were mechanically recorded and not produced live. Writing for the Supreme Court’s majority, Justice Oliver Wendell Holmes rejected Kalem’s logic and established an important precedent. For Holmes, what was important was not the “mechanism 37 employed”—the moving picture technology—“but that we see the event or story lived.” An audience experienced a dramatization of Ben-Hur as they viewed recorded images at the nickelodeon just as surely as they did watching live actors on Broadway. Similarly, movie producers should have to license the rights to create a dramatization, a derivative work of a novel, just as stage producers were required to obtain the rights. 14 Holmes’s decision formed the basis for a separate motion picture adaptation right in literary works and forever transformed the value of film negatives and film libraries. What film producers lost in licensing fees they gained in exclusivity; after obtaining the motion picture rights to a novel, a producer could confidently move forward knowing none of his competitors could legally produce a film based on that same work. As a result, producers invested more in the production and marketing of movies based on well- known properties. The name recognition of a famous literary work, combined with the right of exclusivity, functioned to distinguish certain films from the rest of the crowd, a form of differentiation that, like the casting of film stars, enhanced the value of certain film negatives. Kalem v. Harper held additional significance for film libraries: beyond the film negatives, a producer’s library included all the underlying rights he had acquired to make the film. These rights could be used to produce a remake or sequel, or they could be sold off to another producer. Underlying literary rights have repeatedly proven to be one the greatest assets of film libraries, but ambiguity over which rights were acquired have also jeopardized library exploitation. As we will see, producers and their contract lawyers up through the early-1930s failed to anticipate the full range of uses their libraries might one day enjoy. 38 The Star System From roughly 1909 until the present day, no single production input has influenced the present and future value of film assets more than the casting of stars. The rise of the star system must be regarded as one of the most important developments in film history, one that immeasurably enhanced the value of film negatives. Up through the late-1950s, the most consistently lucrative films in a library were those featuring stars whose popularity had increased in the years following a given picture’s initial release. During the nickelodeon boom from 1905 to 1907, the film manufacturers (the term “producer” would be used more later) were apprehensive about promoting films based on their stars. Although star systems were present in theater and vaudeville, manufacturers wanted motion picture audiences to stay loyal to the manufacturer’s brand, rather than actors, who, if famous, might demand more money or defect to join a competitor. Audiences frequenting the nickelodeons, however, formed attachments with the people they watched on screen. They wrote to the studios, seeking to know more about the people they watched. What were their names, backgrounds, loves? By 1909, savvy manufacturers had recognized that centering films around popular actors and supplying the public with information about those actors helped to differentiate that manufacturer’s films from the others in the marketplace. In other words, the film negative featuring a star was a more valuable asset than the negative without the distinction of a star. 15 Several producers in the mid-teens found themselves in an enviable position, owning negatives that featured actors whose level of stardom (and salary) had 39 skyrocketed since the production of those negatives. Thanks to work-for-hire doctrine, the producer could capitalize on those old negatives and reissue the films. The Fayetteville exhibitor, who proposed stamping dates on every film frame and destroying films after two years, resented this practice. A competitor who booked a reissue received the benefit a top star offered—product differentiation—but for a fraction of the price. Destroy old movies, urged the big exhibitor, because they still held market value. For a producer, however, the entire reason to keep old films in the first place was because they might prove to be valuable again. Sure, some filmmakers and stars, including William S. Hart, carried sentimental attachments to their films. But from a business perspective, old movies were only worth the storage costs and fire risks if the producer believed those liabilities were less than the future earning potential of the film assets. Producers knew that some films in their growing libraries would have long-term reissue value. But which films? Which young player you hired as an unknown would emerge as tomorrow’s star? These questions could not be fully known at the time of production. Only a handful of films in your library might have future value, but you never could be fully sure about which handful. Storing many worthless negatives was necessary in order to capitalize on the few negatives that proved to have remaining market value. Distribution Copyright law gave producers legal control over their libraries, but, in practice, pirated prints circulated widely. Stars made some of the old films in those libraries valuable, but a producer needed a mechanism to extract that value from the marketplace. 40 The final development that forever changed the value of film negatives was the innovation of a new distribution system, a system that enabled producers to receive a greater share of revenues and exert more control over the circulation. The explanation of how this distribution system developed is complex, requiring us to consider the early film business, the rise of the feature film, and, especially, the rise and decline of the Motion Picture Patents Company (MPPC). Between 1908 to 1915, the MPPC provided stability for the burgeoning film business, expanded the domestic market for films, and innovated several important distribution strategies. Yet the Trust ultimately failed. The MPPC’s internal conflicts, ineffective campaign of patent litigation, production budget limitations, and distribution structure—one based around supplying short films to small exhibitors—all made it unable to keep pace with its rivals’ booming business of star-driven feature films. The early histories of motion pictures painted the MPPC as a villainous, slow- moving octopus, dislodged through the ingenuity of independent producers who founded many of the studios we still know today. 16 More recently, film historians have challenged that narrative, demonstrating that the reasons for the MPPC’s emergence and fast decline were more complex. 17 As Scott Curtis explains, the nickelodeon boom of 1905 to 1907 “created an unprecedented demand for films, but the lawsuits and lack of investment kept the supply very tight. Furthermore, intense competition among exchanges created a chaotic and unreliable distribution network, even while profits for exchanges soared.” 18 The exchanges operated so profitably because they purchased prints outright from the producers. An exchange might recoup the purchase price after only five rentals; every 41 rental beyond that was gravy. To maximize profits, exchanges were known to peddle a print until it literally fell apart, upsetting exhibitors who found themselves with unplayable or “rainy” (the industry jargon for badly scratched up) films. 19 Some exchanges did not even bother purchasing a new print from the producer; they duped films already in circulation or acquired another exchange’s old or duped prints. In this climate, producers had no reason to invest significant money in the production of film negatives. Even for a popular picture, most of the money would line the pockets of the exchanges that owned and rented out the prints. The positive print was king. To obtain a grater share of the profits, the large American film manufacturers persuaded Edison to call a détente on the patent wars and enter into a cooperative agreement. From 1908 through early 1909, the shape and structure of the MPPC was ironed out: Edison and chief rival Biograph agreed to pool their patents, which covered technologies essential to nearly every aspect of cinema; several other manufacturers, Kalem, Essanay, Vitagraph, Lubin, Selig, and Pathé Freres, and one importer, George Kleine, joined the pool as “licensee” members; Eastman Kodak agreed to sell raw film stock exclusively to the MPPC manufacturers; and, finally, films were rented only to those exchanges, and exhibited only by those theater owners, that paid a weekly license fee and stayed in the good graces of the MPPC. The word rented is important here—one of the MPPC’s greatest innovations was renting films to exchanges rather than selling them outright. The rental model allowed both for the manufacturers to obtain a larger chunk of the earnings and maintain a level of quality control, removing old damaged prints from the marketplace. 42 The MPPC was, to be sure, a cartel designed to monopolize and control the American film industry. However, the Trust also provided stability for the burgeoning film business, enabling the rapid expansion of movie theaters from roughly 6,500-plus screens in 1909 to an estimated 15,183 in 1913. 20 Licensee theaters could count on a dependable supply of one-reel films to fill their variety programs, which they changed daily and which generally consisted of three reels of different genres, interspersed with some song slides and live entertainment. The manufacturers could count on a dependable base of film sales, enabling them to produce more one-reel productions. Prior to the MPPC, European imports had dominated American screens. The Trust changed that balance of power; not only did domestic films outnumber imports, but American films became increasingly competitive in foreign markets. One year after its formation, the MPPC changed its distribution model. Exhibitors had continually complained about exchanges renting poor prints and employing discriminatory practices (many exchanges also owned theaters, so they sold themselves the best product and rented the inferior goods to other theaters). In response, the MPPC made the exchanges an offer they couldn’t refuse: sell out to the MPPC or lose your license. The MPPC thus acquired fifty-eight exchanges across the country, forming the infrastructure for a national distributor known as the General Film Company (GFC). The GFC codified many of the distribution practices that earlier cooperative arrangements, such as the Film Service Association (FSA), had formulated but could not enforce as effectively. Distributor favoritism was curbed. The GFC removed worn out prints from 43 circulation and maintained control over playable old prints, which the exchanges had all too often covertly sold or sub-rented. 21 For our purposes, though, the GFC’s most important distribution practice was its pricing system based on release date and flat rental fees. Through the pricing system, we can understand how the MPPC enhanced the value of film negatives, but imposed structural barriers that limited their potential earnings. Like the earlier FSA exchanges, the GFC set prices on a sliding scale based on a film’s release date. A brand new one- reeler in 1914 cost an exhibitor $7.50 per day, but that price quickly fell, bottoming out as low as 50 cents per day within a little over a month. 22 Small to mid-size exhibitors frequently booked mixed programs—not simply a mixture of genres (one comedy, one chase, one melodrama), but a mixture of ages (a new release, a one week to one month old reel, and a film in release longer than thirty days). 23 Distributors and exhibitors assumed that audiences wanted novelty in their screen entertainment. Granted, few of the successful films of the teens were completely new; the films featured familiar genres, stars, and stories, participating in a tradition of entertainment that cultural critics have long identified as balancing “repetition and difference.” 24 But the “and difference” part of that equation was important. Although studio libraries in the early-21 st century represent a huge profit center due to the many markets for exploiting old films, the movie business continues to organize itself around the release of new films, and the price points still cascade as the films age and work their way through a series of release windows. Price standardization was the second component of the GFC’s pricing system. Manufacturers were paid by the foot for every print they delivered. The GFC then rented 44 the films to exhibitors at a standard per-reel rate. The GFC had its reasons for standardizing the prices. The system calmed exhibitors, who had complained for years of uncertain supply and discriminatory pricing, and, initially, helped the manufacturers, who could calibrate production volume and budgeting to a market in which they could accurately predict their returns. The business model, however, was shortsighted. Whether a one-reel production cost one hundred dollars or one thousand dollars, the manufacturer received its same set rate—somewhere between 8 to 11 cents—per foot of positive film it delivered. Similarly, the exhibitor always paid the same per-reel rate. Manufacturers only shared revenues indirectly—successful films sold more prints to the GFC—and had little incentive to invest in more expensive, ambitious productions. More problematically, even if you changed the per foot payment equation, the amount that any single film could gross was limited by the overall distribution structure, built around the needs of the small exhibitor. Since exhibitors changed their programs every day, they seldom purchased local advertising for a particular film. Nor could they hold over a popular film for a few extra days since that print needed to be delivered to another nearby movie house, the real beneficiary if the first exhibitor made the miscalculation of buying a newspaper ad that raised public awareness. 25 The Feature Film The Trust’s structural decisions became fatal flaws as independents, undeterred by the Trust’s litigation, became increasingly competitive through exploiting feature films. We generally think of feature films today as movies that run an hour or longer, but 45 as Michael Quinn points out, the industry’s original definition revolved not around length but product differentiation. A feature was something special, a film distinguished by its production values, source material, or beloved star. Independent producers, unaffiliated with the Trust, made one-reel features, such as the 1912 Keystone films starring Charles Chaplin. Once audiences started demanding more Chaplin in 1913 and 1914, Keystone’s distributor, Mutual, began selling his films for a premium. Independent producers made two-reel features, such as the twenty-one westerns Thomas Ince produced from 1913 through mid-1915 starring his old friend, William S. Hart. Soon, though, length became an integral aspect of the feature film; the standard was five reels (around seventy-five minutes), but others ran longer. The top-tier features played for days or weeks in opera houses, legitimate theaters, and a growing number of specially built movie theaters seating fifteen hundred people or more, several times the number of people that a small movie house could hold. Features played longer to bigger crowds who paid more per ticket; the potential returns on a single film were dizzying. But those returns were only possible if the distribution system permitted it. Triangle and the Birth of a Library As the MPPC member companies lost power and declined in productivity, their distributor, GFC, flooded the market with reissues of one and two reel films. In 1915, Kalem reissued single-reel pictures starring Carlyle Blackwell and Alice Joyce. 26 In 1916, fellow MPPC members Essanay and Lubin similarly put old films back into circulation. 27 The MPPC member companies established a pattern that numerous other 46 film companies followed in the years to come—turning to the library as a last ditch survival strategy after losing their ability to meaningfully compete as a market leader. Out of all the MPPC members, Biograph pursued the most aggressive reissue strategy. In the summer of 1915, Biograph began weekly reissues of one- and two-reel pictures, made between 1911 to 1913, directed by a film artist whose reputation had recently rocketed skyward—D.W. Griffith. 28 No single film represented the ascendance of the feature film, star system, and post-MPPC industry more than D.W. Griffith’s The Birth of a Nation (1915). Griffith had directed over 500 one-reel and two-reel films for Biograph, but Birth was a project on an altogether different scale. A three-hour epic of the Civil War and Reconstruction periods, The Birth of a Nation was an immediate sensation, acclaimed for its artistry and emotional sweep, attacked for its vile racism. Audiences rushed to see the lightning rod of controversy for themselves. Griffith road-showed the film across the country; these theatrical engagements featured a large orchestra, reserved seating, and higher ticket prices than standard first run attractions. The film contained stars, Mae Marsh and Lillian Gish among others, but the real star was the film’s director, who received extensive coverage in the press. After months, years, and eventually decades of controversy, The Birth of a Nation grew to be much more than the sum of its parts (Griffith, Marsh, Gish, etc.) and the film’s reputation became its biggest selling point. But even from those first road-show engagements with inflated ticket prices, The Birth of a Nation clearly rebuked the logic of the MPPC. The Trust had pretended that all new films were equal, insisting that distributors pay producers, and exhibitors pay distributors, at a standard rate based on 47 feet of film. The positive film print was king. The Trust told you what a new, one month old, and three month old foot of positive film was worth; it didn’t matter what stars, inputs, or production costs went into creating the film negative. Audiences, however, wanted to see some reels of celluloid more than other reels and they would pay more for the privilege. The Birth of a Nation—containing more feet of film, worth more in the marketplace, than any American feature before it—marked the triumph of the film negative. The picture was also a triumph for the film’s producer, Harry Aitken. The son of a Wisconsin farmer, Aitken rode the wave of the industry’s rapid expansion in the early- teens. After operating a handful of film exchanges with his younger brother Roy, Harry Aitken branched into production with his Majestic and Reliance Film Corporations and then national distribution with the Mutual Film Corporation. From 1912 to 1915, Harry served as Mutual’s president and managed one of the only three nation-wide distribution networks of the time (the other two were the GFC and Universal). In late-1913, Aitken hired away D.W. Griffith from Biograph and, shortly thereafter, pledged $40,000 of Mutual’s money to Griffith’s ambitious production of The Clansman. When Mutual’s board of directors balked at the investment, Aitken put his own money into the picture instead. Aitken’s $40,000 investment in The Birth of a Nation paid enormous dividends—both enriching him personally and bolstering his industry reputation as a producer with exceptional taste and judgment. In May 1915, Aitken sold out his interest in Mutual to its quarrelsome board of directors and prepared to launch his most ambitious venture yet: the Triangle Film Corporation. 48 Triangle was the DreamWorks of its day; the name referred to three of the industry’s highest profile producer-directors: D.W. Griffith, Thomas Ince, and Mack Sennett. Aitken envisioned Triangle as a company that would deliver high quality films to customers who were willing to pay premium ticket prices for premium pictures. Aitken personally convinced Griffith, Ince, and Sennett to join him in Triangle. He also won over the backers of Ince and Sennett’s productions, New York Motion Picture Company owners Charlie Bauman and Adam Kessel, who had previously used Mutual to distribute their product. 29 In his most impressive act of salesmanship of all, Aitken raised five million dollars through issuing one million shares of stock, making Triangle one of the first movie companies to go public. 30 The shareholder equity fundamentally changed Aitken’s approach to business; he henceforth took large risks with other people’s money while he sought out hidden profit centers for his personal enrichment. Determined to create a vertically integrated enterprise, Aitken spent heavily on fixed costs: production facilities, theater leases, distribution exchanges, and talent contracts. In theory, the star contracts should have lessened Triangle’s risk, not heightened it. Audiences selected films based on the star more than any other factor. Trouble was, Aitken picked the wrong stars and paid them too much. Film historian Richard Koszarski explains: Aitken’s importation of expensive Broadway stars proved ill-timed and ill advised. It appears to have been modeled on Adolph Zukor’s 1912 scheme of ‘Famous Players in Famous Plays,’ but even Zukor had largely abandoned this policy by 1915; audiences had already indicated they preferred screen stars in their movies. The traditional example here is Aitken’s payment of $100,000 to Sir Richard Beerbohm-Tree for just two films, Macbeth (1916) and Old Folks at Home (1916), both of which were notable box-office failures. 31 49 Other pieces of Aitken’s grand plan similarly crumbled. Keen on charging the same premium ticket prices that made him a fortune on The Birth of a Nation, Aitken demanded that Triangle’s first run theaters adopt the road-show policy of two shows per day, reserved seating, and two-dollar tickets. Audiences stayed away in droves. Nearly all of Triangle’s exhibitors complained and some revolted outright. On the production end, problems mounted. Sennett and Ince had developed reputations as prolific producers, but Aitken’s meddling reduced their efficiency. As Rob King points out, Triangle’s highbrow ambitions also disrupted the successful, lowbrow formula that Sennett had perfected on his Keystone comedies. The Keystone style changed, and many Keystone fans found themselves geographically displaced from or priced out of the expensive theaters where the comedies now played. 32 Most disappointing of all, the man who should have been occupied the highest peak of the triangle, D.W. Griffith, contributed no value to the company and even tried to publicly distance himself from it. “The Triangle? I know very little about it for I have only made two pictures and they have been my own,” Griffith told the Los Angeles Examiner more than a year into the firm’s existence. 33 Griffith was too busy creating Intolerance—his epic answer to the critics of The Birth of a Nation—to bother supplying the Triangle exchanges and theaters with product. Soon, there were fewer and fewer Triangle exchanges and theaters to supply. By late-1916, just a little over a year after its founding, Triangle was selling off its distribution exchanges to raise money and slash overhead. 50 Star Power: Douglas Fairbanks and William S. Hart Amidst all of Triangle’s problems, there was a silver lining—the films of two stars that consistently delivered the goods, Douglas Fairbanks and William S. Hart. Harry Aitken brought Fairbanks from stage to screen, signing the actor, then known primarily for comedy, to Triangle’s Fine Arts unit for the high fee of $2,000 per week. Unlike Sir Herbert, Fairbanks proved worth every penny—his good looks, buoyant personality, and acrobatic physicality translated well to the screen. In September 1915, Aitken opened the first Triangle program at New York’s Knickerbocker Theatre with The Lamb, the first of thirteen Fairbanks vehicles Triangle released. 34 As Triangle weakened in power and stature the following year, however, Fairbanks became receptive to the overtures of Adolph Zukor, who urged the star to release films through Artcraft, the same distribution arm that handled Mary Pickford’s films. Whereas Zukor block booked most Famous Players Films, he sold the Artcraft pictures independently as specials—allowing these star-driven features to play longer at better houses and earn more for the stars’ profit positions. Fairbanks still had obligations to appear in Triangle pictures, but in January 1917 he wrangled out of his contract through a clever legal maneuver. Fairbanks’ contract guaranteed all his pictures would be supervised by D.W. Griffith. Truthfully, Griffith had little interest in either Triangle productions or Douglas Fairbanks; according to legend, Griffith thought the actor bounced up and down too much and suggested he’d be better suited for Keystone comedies. 35 Nevertheless, Fairbanks successfully argued in court that Griffith’s lack of supervision amounted to a breach of contract, nullifying the 51 actor’s obligations to Triangle. When Fairbanks joined Artcraft in early-1917, he left behind thirteen feature negatives and a gaping hole in Triangle’s star line-up. Fortunately, Triangle still controlled the services of William S. Hart (Figure 1). A far more unlikely star than Fairbanks, Hart appeared in his first motion picture at the age of forty-nine after a career on stage. Hart was performing in play in Los Angeles in 1914 when his old friend, Thomas Ince, approached him about appearing in a film. Hart and Ince had grown close from years of performing together in traveling companies, frequently rooming together on the road. Ince never achieved Hart’s level of stage success, prompting Ince in 1910 to look for opportunities in the motion picture business. Over the course of a few short years, Ince vaulted from acting in films, to directing them, to supervising the production of an entire slate of films at the same time. Ince managed the New York Motion Picture Company’s West Coast studio, and there, in Culver City, he innovated a form of unit-production that became the Hollywood studio system’s dominant mode of production. 36 Hart acted in two two-reel Westerns for Ince; both pictures became immediate hits. Ince signed Hart to perform in more films, paying him a starting weekly salary of around $100 per week in 1914, rising to $400 to $700 by mid- 1916. This was good money by stage standards—great money by the standards of the average American worker—but meager compared to the four and five figure weekly salaries being earned by Fairbanks, Pickford, and Chaplin. When Hart complained to Ince he was underpaid, Ince always found external forces to blame—the market for Westerns was weak, the New York Motion Picture Company’s owners were cheap. Hart trusted Ince, who he counted as a friend. 52 Figure 1. Triangle's most important star, William S. Hart. Photo courtesy of the USC Cinematic Arts Library. 53 After the New York Motion Picture Company joined Aitken’s Triangle venture, the lowly paid but highly popular Hart became one of Triangle’s greatest assets. Hart went from performing in two-reelers to starring and directing in five-reel features, which he brought in on remarkably tight budgets. Hart’s popularity only grew. Audiences at the time were drawn to his “good bad man” persona, and the moral ambiguity of his Triangle features, such as The Return of Draw Egan (1916) and Hell’s Hinges (1916), continues to startle viewers today. In late-1916 and early-1917, Hart became increasingly aware that his compensation did not reflect his true star value. “It is known for a fact that you alone are holding the exhibitors on the Triangle program,” wrote a Chicago-based manager pitching his services to Hart. “Once you leave the Triangle program and there will be nothing left that the exhibitors care much about.” 37 Hart used this and many similar offers to negotiate a tremendous pay hike. In March 1917, Triangle agreed to pay Hart $432,000 per year for the next two years. 38 However, just as Hart obtained his first major deal, Ince decided it was time to break away from the financially troubled Triangle. Ince sold out his interest in Triangle to Aitken for roughly $250,000, then persuaded Hart to abandon Triangle through exploiting a clause in his contract that required Ince to supervise his productions. Triangle’s actor contracts were bad not simply because, as previous historians have argued, they promised too much compensation. Triangle’s contracts were bad because they opened legal loopholes, promising that specific individuals would supervise star actors rather than binding the actor solely to the firm. Hart, like Fairbanks before him, exploited his contract’s loophole and turned to Zukor. Over the spring and summer of 54 1917, Hart, Ince, and their representatives negotiated a rich deal with Zukor: the mogul would pay Hart and Ince’s production company $200,000 per five-reel negative feature they delivered. The $200,000 went toward production costs and was treated as a minimum guarantee against the production company’s profit participation—a fifty-fifty split once Zukor recouped his payment plus the Artcraft distribution fee and costs. 39 By the fall of 1917, Triangle had lost its two bona fide stars. It still, however, controlled the negatives of their films, and this is the point where the story gets interesting. Teetering on bankruptcy, Aitken and the other leaders of Triangle displayed a shrewdness largely absent from their earlier management decisions. Aitken loved to make big deals, spend lavishly, see his name in the headlines. But his greatest talent lay in the minutiae, identifying niches and opportunities that others had missed. In the late-summer and early-fall of 1917, Triangle began exploiting its film library through two means. The first tactic involved collateralizing the library and renting Hart and Fairbanks reissues under the banner “The Good Ones Never Die.” 40 The second tactic involved setting up a series of subterfuges and masking the fact that the films had ben taken from the library at all. Collateralizing the Library Triangle’s first effort to monetize its library came more through the efforts of Stephen A. Lynch than Harry Aitken. Lynch remains a notorious figure in film history. He controlled a chain of theaters and exchanges in the American South. Beginning in the late-teens, Lynch and his “wrecking crew” at Southern Enterprises used ruthless tactics to 55 establish a dominant position for Paramount in the South. But before the height of the “wrecking crew’s” exploits, Lynch in 1916 bought into William Hodkinson’s company Superpictures. Superpictures, in turn, purchased Triangle’s national network of exchanges, forming the basis of a separate company called the Triangle Distributing Corporation. 41 When Triangle and Triangle Distributing both appeared to be losing business ventures in the fall of 1917, Lynch made a canny move. In September 1917, Lynch entered into a three-party agreement with the Triangle Film Corporation and Triangle Distributing that converted his equity in Triangle Distributing into debt. As part of the deal, Triangle Distributing obtained the exclusive reissue rights to Triangle’s library of Hart, Fairbanks, Keenan, and Talmadge pictures. The deal licensed the pictures for three years; Lynch was to receive all rental revenues, after costs, until the debts were completely paid off. 42 The deal valued Lynch’s holdings at $1,519,000 in mortgage notes, but on November 19, 1917 Lynch forgave $819,000 of the debt in recognition of the reissue value. 43 By converting his equity into debt, Lynch had reduced his own risk in Triangle and made himself more likely to recoup his investment. In the event of bankruptcy, the shareholders are wiped out and control of the company goes to the senior debtor. Through this conversion process, Lynch revealed an important function of film libraries: collateral. Producers had previously borrowed money against their unfinished, unreleased, and newly released negatives. However, the emphasis was on the new productions and the producer nearly always had to pledge other assets as well. In this instance, Triangle collateralized its debt through its library of star-driven film negatives. 56 A bank would have never gone for the deal. After all, old negatives had been completely depreciated and declared worthless on the balance sheets. Unlike mortgaging depreciated real estate and heavy machinery assets, no respectable appraisers worked with banks to determine the market value of depreciated film assets. But Lynch was a showman, not a banker. He knew that these films, though declared worthless on the accounting books, still carried market value. In fact, the market value was greater than most old star-driven films because Triangle’s poor distribution system and inflated ticket prices in 1915 and 1916 reduced the films’ circulations during their initial releases. In the fall of 1917, Lynch and Triangle Distributing Corp began selling the Hart and Fairbanks reissues under the program name “The Good Ones Never Die.” A few months later, Lynch auctioned off the states rights to the reissues to several different exchanges, keeping the Southern territories for himself. 44 His initial decision to involve himself in Triangle may have been misguided, but Lynch found a way to mitigate his risk and profit nicely once he obtained the rights to the library. W.H. Productions: Renewing the Library As a marketing slogan, “The Good Ones Never Die” both celebrated the quality of the films and acknowledged their age. Harry Aitken wanted to go one step further. Like Ted Turner and many library-oriented moguls to follow, Aitken wanted to take old film negatives and make them new again. For Aitken, this did not mean colorizing black and white images; instead, it meant changing the main titles of old films and marketing them like new productions. As Triangle Distributing handled the Hart and Fairbanks 57 features through the “The Good Ones Never Die” campaign in the fall of 1917, Harry Aitken covertly participated in the re-titling and reissue of twenty William S. Hart films, initially produced by New York Picture Company (NYMP) in 1914 and 1915. Triangle had officially acquired NYMP’s assets earlier in 1917, and Aitken was intent to put its library to use. Harry Aitken was not the first feature producer to try palming off a re-titled reissue, but he may have been the first to strategically create a separate entity to perform this function. For both his own protection and profit, Aitken instituted multiple buffers between himself and the re-titled pictures. First, Triangle sold the old NYMP Hart films—seventeen of which were two-reelers—to the Western Import Company. Though nominally managed by Hyman Winik, Western Import was founded by Harry Aitken and Roy Aitken. Harry and Roy continued to own large stakes in the company, which shared the same office space as Triangle. The company began as a foreign sales arm—Triangle sold foreign rights to Western Import, which subdivided the rights across European territories. But the Aitkens found additional uses for Western Import, as the stockholders of Triangle would come to find out. 58 Figure 2. W.H. Productions promoted old, re-titled William S. Hart films to the states rights market. Moving Picture World, January 19, 1918. Advertisement courtesy of the Media History Digital Library. 45 Western Import erected a second buffer between Triangle and the re-titled Hart films by licensing the negatives to Hyman Winik’s brother-in-law, Joseph H. Simmonds. '. January 19, 1918 THE MOVING PICTURE WORLD 323 To State Rights Buyers WE CAN PROVE That Our WILLIAM S. HART SUPERFEATURES Are the greatest BOX OFFICE ASSETS in the WORLD EXCHANGES HAVE PROVEN IT EXHIBITORS ARE PROVING IT ONE HART SERIES of FIFTEEN 2 Reelers is already SOLD for the entire territory. Some territory is still open on the following : 1 "TheTWO-GUNMAN" in "TheBARGAIN" 6 reels 2 "The BANDITand the PREACHER" 5 reels 3 "The HELL HOUND of ALASKA" 5 reds Communicate NOW for Your Territory W. H. PRODUCTIONS CO. 71 WEST 23rd ST. ^3TV NEW YORK 59 One step removed from Western Import and two steps removed from Triangle, Simmonds went into business as “W.H. Productions” and sold the re-titled Hart films to states rights distributors. For instance, W.H. Productions took Hart’s five-reel features On the Night Stage (1915) and The Darkening Trail (1915) and released them as The Bandit and the Preacher and The Hellhound of Alaska, respectively (Figure 2). The two-reel Scourge of the Desert (1915) became A Reformed Outlaw, and two-reel Cash Parish’s Pal (1915) masqueraded as Double Crossed. W.H. Productions generally only changed the film’s main title and supporting lithographic advertisements, but in one case, W.H. substantially changed the actual film. After releasing the two-reeler The Conversion of Frosty Blake (1915) under the title The Convert, W.H. Productions collaborated with Triangle to shoot three new reels of footage at Triangle’s Culver City studio. By inserting the three reels at the beginning of the film, W.H. Productions turned the two-reel oldie into a five-reel feature called Staking His Life. 46 By all accounts, W.H. Productions sold the re-titled Hart films at a brisk pace. Over twenty states rights exchanges throughout the country purchased licenses to rent to the films. Beginning in the fall of 1917 and continuing into 1918, W.H. Productions took out a series of trade press advertisements promoting the re-titled Hart films. Exhibitors read The Motion Picture News and The Moving Picture World; the ads were the best way to capture their attention. But Hart’s lawyers and corporate officers also read these trade papers, and they saw the ads too. Hart’s longtime lawyer and the vice president of his company, Bill Grossman, turned livid upon seeing the ads. Grossman wrote a letter to W.H. Productions demanding 60 a meeting. As a lawyer based in New York, Grossman was ideally situated to deal with the problem while Hart remained producing films in Southern California. In February 1918, Grossman obtained his meeting, not with Simmonds but with an attorney named J. Schechter who represented W.H. Productions. Grossman confronted the attorney, telling him that W.H. Productions, Inc. “had pursued a course of conduct that had every earmark of deliberate fraud, in that they had gone into business with old Hart pictures and adopted the name of W.H. Productions, Inc., in order to mislead those who were called upon to see the pictures or requested or invited to see them.” 47 Schechter denied any and all allegations of fraud. Here is Grossman’s account of their conversation: SCHECHTER: You don’t own any part of those pictures, do you? Mr. Hart does not claim to own the negatives or positives? GROSSMAN: No, so far as we know, they belong to the New York Motion Picture Company. Perhaps the Triangle Film Corporation has an interest in them. SCHECHTER: Well, as a matter of law, whoever owns them has a right to call them what he pleases. GROSSMAN: Yes, that would be true, if nobody is hurt by making the change, but even though you own this property yourself, you can not change the title for the purpose of perpetrating a fraud upon the public, nor change it such a manner as will tend to create a fraud or perpetrate a fraud upon the public. Perhaps Mr. Hart cannot complain personally as to the use of this property, nor perhaps our company, but don’t you think that the court might interfere in your doing anything, even with your own property, that might result in fraud upon the public? Now I want to tell you something, Schechter: we are getting a large number of letters from fans all over the country, who are complaining about the practice which your company has initiated. They are asked to go into theatres to see a picture of Hart. Hart produces very few a year, and his fans, like the fans of all stars, follow up every picture. They have seen ‘The Conversion of Frosty Blake,’ or whatever old titles there were of the pictures that were then out…. when they see a new title of a Hart picture, they spend their dimes or their quarters to enter 61 the theatre to see a new picture of Hart, only to find that there is exhibited to them a picture that they have seen some time before, under a new title. Now, the theatre gets in bad, Hart gets in bad. By the use of the name W.H. Productions Company, they think Hart is connected with this thing, and want to know from him whether he is a party to this deception upon the public, that ought to be stopped. 48 Grossman recalled this conversation nearly eighteen months after it occurred, enough time for the exact words to undoubtedly grow hazy, but the essence of the conversation boiled down to a disagreement over the limits of exploiting a film library. By controlling the copyrights and negatives, W.H. Productions argued it could exploit the films in any way it chose. Grossman conceded that Hart did not legally own the negatives, but insisted there were limitations in exploiting a film library. At this point, Grossman wasn’t sure the extent to which W.H. Productions had changed the old Hart films. His legal papers reveal his firm tried to build a case for an injunction and dispatched operatives to collect intelligence on how the old two-reel films had been modified, re-cut, and spliced together. Only later did Grossman realize that, barring one exception, only the titles of the films had been changed. Hart and Grossman’s fundamental objection was with the name of the operation—one calculated to sound like Hart’s own William S. Hart Productions. Meanwhile, W.H. Productions encountered a problem that it considered far more threatening than Hart’s potential lawsuit. Pirates were duping and distributing the W.H. Productions. The copyright reforms of a decade earlier had made duping illegal, but the practice still very much continued. Far more decentralized than national distribution, the states rights model left itself particularly vulnerable to both duping and the circulation of “outlaw” films (prints that circulated after the sub-distributors’ rights had expired). It 62 didn’t help that W.H. Productions’ made money through dealing with exchanges and exhibitors known for being deceptive. Within weeks, someone in this loose affiliation— an exchange or exhibitor—broke ranks and either copied or enabled the copying of the re-titled Hart films. The first step was using the positive prints from W.H. Productions to strike dupe negatives that could reproduce many more prints. The second step was channeling the prints to sub-distributors, who rented or sold them to exhibitors. One pair of notorious dupers copied the Hart films in New York, then sold them to states rights exchanges, which offered them to exhibitors. The network they created shadowed the practices of W.H. Productions at nearly every step. The pirate market for old Chaplin shorts topped even that for the Hart films. In 1917, Triangle sold dozens of old Keystone negatives, including several starring Chaplin, to W.H. Productions. The competition from Essanay’s Chaplin reissues and the pirated Chaplin shorts caused W.H. Productions to sell the Chaplin prints outright, rather than lease them, at the purchase price of $80 per reel. 49 By selling the reels outright, W.H. Productions acknowledged that the value had shifted back to the positive print. Simultaneously, the decision fanned the flames of the pirate market, flooding the market with even more prints that could be used to make dupes. W.H. Productions learned a lesson which all custodians of film libraries eventually learned: the more you exploited a film library, the less control you maintained over it. Piracy was and remains one of the biggest challenges for the business of film libraries. However, library exploitation—and the piracy that accompanied it—also had significant unintended consequences for the preservation of American cinema, 63 particularly American silent films. “Many of these films exist today only because of the W.H. Productions reissue,” explains Kalton Lahue about the Hart and Keystone films. “The original Mutual release prints had worn out long before Triangle expired and had the subjects not been re-released, only a slender record of the Ince and Sennett productions of the 1912—15 period would still remain on film.” 50 Piracy and preservation were two by-products of the business of film libraries. W.H. Productions initiated an all-out publicity campaign against the “parasites” duping the re-titled Harts. W.H. Productions offered the following warning, a poem of sorts, in a two-page advertisement that ran in a December 1917 issue of The Motion Picture News: DUPING Is the lowest form of THIEVERY ROBBING A blind man—or the poor box of a church—Is the epitome of honor compared with DUPING. Burglars and highway robbers command a kind of respect—They have the nerve to run the risks of their calling—but The Duper Works in the dark like A Rat Gnawing into the vitals of the brains and energies of the honest producer and distributor. Every honest man will expose The Duper Reliable Exchanges and Exhibitors please note: Several prominent crooks in the Industry are offering Duped two reel William S. Hart productions for sale. We intend prosecuting these parasites to the full extent of the law—and will give them a free National Publicity Campaign. 64 Do you want to be placed in the same category with these “Honorable” Gentlemen? Authorized two reel William S. Hart productions taken from the negatives bear the trademark of, and are distributed by W.H. PRODUCTIONS COMPANY 51 The following page listed twenty-two “Reliable Exchanges,” which had officially contracted with W.H. Productions to distribute its films on a states rights basis. The same page announced that the “following first SIX subjects are NOW ready for release.” The pot had called the kettle black, then left its business card behind for all to see. By decrying the dupers of the business, W.H. Productions sought to suppress its direct competition and gain credibility in the marketplace. Many other companies over the years had taken out trade ads decrying film pirates, but W.H. Productions especially stood to gain by linking itself to Hart’s company in the industry mind. “Hart Officials Complain of Film Pirates,” headlined a story in The Motion Picture News. The news story came not from any official of Hart’s company, but a press release cooked up by Simmonds that The Motion Picture News reprinted virtually verbatim. Toward the end of the press release, W.H. Productions warned that “the industry is waking up and really going after these parasites and the time is not far off when we shall be entirely free of them.” 52 What the industry actually woke up to was W.H. Productions. Hart took out trade ads explaining that W.H. Productions was using his initials and old films without his permission. During the summer of 1918, numerous trade papers and industry spokesmen weighed in on the matter of re-titled reissues. All agreed that reissuing old films under 65 new titles was both unethical and bad for business. “Do the exhibitors of this country want to be classed with quack doctors, patent medicine fakirs and bunco men?” asked The Moving Picture World. “The exhibitor who lends himself to frauds of this sort discredits his house in the eyes of his patrons,” wrote The Moving Picture World. Nevertheless, the Moving Picture World made it clear that reissues of great films, titled intact, occupied a legitimate place in the market. The other trade papers walked a similar line. Wid’s warned against “crooks” and “cheats” in the industry, but considered reissues of good productions “one of the surest sources of real revenue for the fair-minded, square shootin’ showman.” The Exhibitor’s Trade Review questioned the very logic of changing the title of a film: “Royalty may travel incognito, but a good picture should be known for all it’s worth. Its name is one of its assets… If a picture is worth re-issuing at all, it is as good under its original title as the day it was released.” Motion Picture News warned: Misleading the public will serve to destroy its valuable confidence in the motion picture and the industry back of it… Furthermore, and of great importance, it is obvious that new pictures of famous stars cannot profitably be produced if old pictures are allowed to compete with them under what the public construes as a new name and therefore a new picture. This, it is equally obvious, is destructive of the industry’s normal and necessary development. Secondly and with equal emphasis, we point out that this controversy does not apply whatsoever to pictures properly re-issued. 53 Why did Motion Picture News and the other trades excoriate re-titled reissues, but carefully pull their punches when it came to reissues on the whole? Quite simply, they had to appeal to their constituencies—the producers and small exhibitors who wanted to exploit old films, the large exhibitors that wanted to stop them, and the reissue distributors who purchased advertising. 66 By identifying re-titled reissue as a problem and calling out the names of its worst perpetrators, the trade press acted as a form of industry self-regulation—establishing the boundaries for acceptable behavior and publicly shaming those who crossed the line. The industry needed to self-regulate the matter, since the law, at that moment, provided no clarity. W.H. Productions legally controlled the negatives. “As a legal matter,” said its attorney, “whoever owns them has a right to call them what he pleases.” Could a copyright owner create any derivative work he pleased? The Federal Trade Commission was about to have the final word. The Federal Trade Commission Cases The Federal Trade Commission was still in its infancy when it began investigating the practice of re-titled reissues. Congress established the FTC in 1914 to investigate and prosecute business monopolies, but only a small percentage of the FTC’s docket over its first decade involved trust-busting. Instead, most of the early FTC cases involved investigating and enjoining business practices that the Commission considered “unfair competition.” 54 When William S. Hart’s lawyer brought W.H. Productions to the FTC’s attention, the Commission immediately recognized the scheme as the most basic form of unfair competition: “palming off.” To palm off is to deceptively imply your product is the product of a competitor. The law of unfair competition protects both businesses and consumers against this deceptive behavior. But which group does the law serve more: businesses or the public? The two are by no means mutually exclusive; preventing snake oil salesmen from using the trademarks of established pharmaceutical products protects 67 both the pharmaceutical companies and consumers who might be poisoned. But when read carefully, the decisions in unfair competition cases often rhetorically invoke the public to pursue ends that advance one business interest over another. This discursive tension, between protecting businesses and the public, is particularly significant when considering the FTC, which, by its mandate in the 1914 Clayton Act, may only issue a complaint "if it shall appear to the Commission that a proceeding by it in respect thereof would be to the interest of the public." The FTC is not authorized to enter into disputes in which the public interest is not at stake. 55 On October 30, 1918, the FTC issued two complaints against distributors trafficking in re-titled reissues. The FTC’s proceedings against W.H. Productions became the important test case, but the second complaint filed that same day also merits discussion, for it revealed that world events, not just stars, could be harnessed to monetize old celluloid. The big world event in 1918 was, of course, World War I. Although the fighting erupted between European powers in the summer of 1914, the United States abstained from entering the war until spring 1917. During the roughly eighteen months between the U.S.’s declaration of war against Germany until the war’s conclusion, the American motion picture industry participated in promoting the war: distributing shorts and features to training camps; using stars, such as Mary Pickford and William S. Hart, to sell war bonds; and producing gung-ho, anti-German features—like Rupert Julian’s now lost production, The Kaiser (1918)—which could support the American cause and clean up at the box office. 68 The Royal Cinema Corporation wanted to release a timely feature about the war without investing in a costly production. And so Royal Cinema acquired the negative of The Ordeal (1914), a five-reeler produced by the Life Photo Film Corporation, set during the Franco-Prussian War of 1870—1871. To update the film for the current conflict, Royal shot a new beginning and ending. The new version began with a young American man who refuses, against his family’s wishes, to enlist in the World War, then cracks open a book about the Franco-Prussian War (cue transition into The Ordeal). After reading the book—and the audience watching The Ordeal with a few cuts—the film returns to the present day as the young American, horrified by the barbarity of the Prussians, decides to enlist after all. 56 Royal re-titled the film, now six reels, The Mothers of Liberty and distributed the picture on a states right basis. The promotional materials failed to acknowledge the film’s source material, but this particular scheme in re-editing and re-titling might have escaped the FTC’s notice were it not for one overly aggressive salesman at Monopole Pictures, the exchange handling the picture across the New York City and Eastern New Jersey territories. In the summer of 1918, Monopole’s salesman screened a print of The Mothers of Liberty for Hoboken exhibitor Henry Bishop. By the second reel, Bishop recognized that the film he was watching was The Ordeal. Even he was surprised he could remember the title, he later admitted, considering he “ran a picture every day, and change every day.” Bishop turned to the salesman and accused him of trying to sell used goods. “I would not think of running anything like that in my house,” Bishop told the salesman. “I have a reputation to maintain and I have worked hard to get it, and want to hold it.” 69 Bishop told the salesman he should “go further down the street, down to the City Theatre. They have a different clientele, and may be [he could] do business there.” The salesman refused to budge. “No, it will run in a big house in this City,” responded the salesman. “It will run in this house.” The salesman proceeded to march over to the local newspaper, then to the closest chapter of the American Defense Society. He invited them to follow him to the Bishop Theatre so they could see firsthand the anti-American coward living in their midst: only a German sympathizer would refuse to book The Mothers of Liberty! 57 The FTC complained that Royal Cinema and Monopole’s actions had the tendency “to deceive the trade and motion-picture theatre going public,” defame motion picture exhibitors, and hinder inter-state trade. 58 The inter-state aspect of the case was important; the FTC’s authority over trade, like the U.S. Congress, was limited to inter-state commerce. If the salesman had simply traveled from Manhattan to Brooklyn, then it wouldn’t have been a case for the FTC. But once the salesman and re-titled film traversed the Hudson into New Jersey, the case became fair game for the FTC. The case against Royal Cinema only concerned one film, and the defendants chose not to invest the time or money on an elaborate defense. They begrudgingly participated in a one day public hearing, agreed to cease and desist, and moved on. The FTC’s complaint against W.H. Productions, however, concerned a much larger operation. W.H. Productions had entered into over twenty different contracts with exchanges across the country to carry the re-titled Hart films. Additionally, they had sold prints outright for dozens of Keystone one-reelers. A cease-and-desist order from the FTC could expose W.H. to contract termination, repayment demands, and litigation from the states rights 70 exchanges. Moreover, W.H. Productions was a piece of a larger fraudulent enterprise that would prove disastrous to the Aitkens if brought to light. For the sake of their money and reputations, W.H. Productions decided to fight the case. W.H. Productions unsuccessfully tried to have the complaint dismissed in the fall of 1918. The investigation moved forward, and the Commission set February 26, 1919 as the start date for the hearing. The location was the Woolworth Building, the world’s tallest skyscraper at that time. If there was any lingering doubt that Aitken was party to the W.H. Productions scheme, it was sucked away into the cold winter air when Walter Selisberg passed through the doors of the Woolworth Building. Selisberg had ostensibly come to represent Joseph Simmonds, but, as the general counsel of Triangle, he had more important interests to consider. A longtime associate of Aitken, Selisberg had served on the boards of directors for the New York Motion Picture Company and Mutual back when those companies initially produced and distributed the Hart two-reelers. Over four days in February and March 1919, FTC attorney Gaylord Hawkins presented the Commission’s case to the Examiner. Joseph Simmonds was on the witness stand for the most of the proceedings. Simmonds denied he had misled any exchanges or exhibitors. They all knew these films were reissues, he claimed, even if his trade advertisements did not acknowledge them as such. Hawkins clearly did not believe Simmonds on this point and, as the examination wore on, Simmonds appeared ridiculous to other spectators as well. Variety reported, with a hint of irony, that “Hyman Winik [sic], one of the officers of the Western Import Co., is the brother-in-law of Simmonds, and the latter gave that as his reason for doing business under the W.H. title, stating that 71 he had taken the initials of his brother-in-law and transposed them.” 59 Simmonds’ actual statement sounded only slightly less preposterous: “[I] could just as well call it A.B.C. Company,” but he added, “I thought it would be a happy combination to use the name W.H., because they were [Winik’s] initials, and I was selling Hart.” Simmonds also appeared foolish when asked whether Hart was a major movie star. “I suppose the public like him. He is a good actor,” Simmonds stated. When pressed further, he conceded “my opinion is that he comes about sixth or seventh on the list of stars that are famous.” Pressed to name the five or six higher-ranking stars, Simmonds could only name three: Chaplin, Pickford, and Fairbanks. 60 Hart’s attorney William Grossman also took the witness stand and described his meeting with the W.H. Productions representative, but the focus both in the courtroom and trade paper coverage remained on Simmonds’ deceptive trade practices. Although some of his answers made Simmonds look foolish, he carefully guarded the information he disclosed. When the FTC’s Hawkins asked a question about the Western Import Company, Selisberg objected: “There is a charge here that Joseph Simmonds, trading as W.H. Production Company, did certain things. The Western Import Company is not mentioned in the complaint and has nothing to do with the case.” 61 Joseph Simmonds ultimately identified Hyman Winik as an officer of Western Import, but he never disclosed that the two architects of Western Import were Harry and Roy Aitken. The Commission rested its side of the case on March 24, 1919. The hearings adjourned for three months, giving Simmonds and Selisberg time to regroup, select 72 witnesses, and prepare an argument for why the FTC’s case should be dismissed. Selisberg presented a scapegoat defense: the problem was not W.H. Productions, but the pirates who duped its films. When the hearings resumed in June, Selisberg argued: The respondent’s position is a very simple one, Mr. Examiner, and it is that such confusion as existed with respect to these Hart pictures was caused not by the respondent’s acts but by the exploitation of stolen, or converted, or infringing prints of Hart pictures; that people would go to one theatre and see a Hart picture, put out in some mysterious way by one of the number of concerns in this country, and then go to see a Hart picture put out by the respondent, and that that caused the confusion. In other words, the confusion was caused not by any act of the respondent, who is owner of the original negatives and of all the legal title to these pictures, but that the confusion was caused by the unlawful acts of others. 62 The “others” responsible for the duping and illegal distribution were not faceless and anonymous pirates. Instead, Selisberg subpoenaed and brought to court two dupers who he knew had peddled the re-titled Hart films: Joseph M. Goldstein and Jacob Weinberg. Selisberg became acquainted with Goldstein and Weinberg back in 1915, when he traced a glut of Keystone dupes back to the duo’s New York operation. 63 When the FTC first confronted W.H. Productions in the fall of 1918, Selisberg attempted to shift the blame to Goldstein and Weinberg. The FTC issued a complaint against Lasso Pictures Corp. (the trade name the duo were using at that time), and, in March 1919, Goldstein and Weinberg agreed to the terms of a cease and desist order rather than mounting a defense that might prove costly and self-incriminating. 64 Now, Selisberg sought to dismantle the Examiner’s case and a rogue competitor in one fell swoop. On the witness stand, Goldstein and Weinberg admitted to selling the Hart reissues across the country. They called the exchanges they dealt with “independent buyers,” since “states rights” implied exclusivity to certain territories, which, they never 73 guaranteed. 65 Nevertheless, they insisted the negatives were legally acquired. Mr. Morris, a Chicago businessman, offered to sell them an assortment negatives for a lump sum. “I asked whether they were copyrighted and he said no,” said Weinberg. “That is one of the questions I always ask; if it is copyrighted, I always want a copy of the copyright.” 66 Selisberg doubted that any such man existed and he tore into his two witnesses—asking them why they could not produce a bill or sale (they lost it) and why they no longer knew the whereabouts of Mr. Morris (their acquaintance who made the introduction had just died). By the end, Goldstein and Weinberg looked to everyone in the room like crooks, perjurers, and fools. W.H. Productions still lost the case. The FTC Examiner ultimately ruled “the entire line of defense, as being immaterial, not relevant. In other words, that you cannot, by proving that someone else has also, perhaps, competed unfairly with the W.S. Hart Productions Company, justify or excuse your competition.” 67 Selisberg had used a classic criminal defense tactic—calling a shady witness to the stand, trying to catch him in a lie, and creating doubt about the defendant’s guilt. But the FTC did not operate like a criminal court. Whether it was W.H. Productions or Lasso that created marketplace confusion was beside the point. In fact, the FTC was not required to prove that a single exhibitor or consumer had been harmed. All that mattered was that they engaged in practices that were likely to result in deception and harm. 74 Figure 3. W.H. Productions advertised the reissued Keystone two-reel comedies, which it “absolutely own[s] and control[s]”. Moving Picture World, 19 January 1918. Advertisement courtesy of the Media History Digital Library. 68 TO $TATE RIGHTf BUYER? « iWi WiCHAPUN CHIJTEUCONKUN FORD JTERUNG MABEl NORMASD CH\RU£ CHAPLIN MACK$ENN£Tt CHAfMURRAY MACK^WAlN fATTy ARBUC15J r 4 .> %* - A CO reel X--w^ SENNETT KEYSTONE COMEDIEJ TbatvPould n>aKe atSKULL gfrii)! "TJbe^Are the selected be$t of the entire output, ;t,claj;^3oftWlaro^CHARUE CHAPLIN5, AND THEY AWE COPYRIGHTED!!!* All Prloiy ft.of*> ORIGINAL NEGATIVES Wbicl> vCe abjoUitety- OWN at>d CONTROE Wotjclerfdl hobhy Tbifptecy of Pbotodrapb/V at>d ONE-THREE aod $I# Sbeet POSTER/ Communicate iroroedlatVy forjroar <juot& W-H- PRODUCTION* CO. jriWeftaV d ft Vhone Gtan,5027^^NEW YORK CITY* Jit 75 W.H. Productions and Lasso found this logic frustrating, to say the least. They were hardly alone. Defendants routinely complained that the FTC refused to present them with a bill of particulars, a legal document common in criminal and civil cases in which the prosecutor or plaintiff details the specific charges against the defendant. After Sears, Roebuck & Co. receiving a cease-and-desist order in early February 1918 for unfair trade practices in selling sugar and tea, the mail-order giant sued the FTC. Where was the evidence of actual harms? Where was the due process? And why did the FTC insist on using the term “unfair competition,” a vague charge that could be applied to countless practices. Sears, Roebuck did not simply demand the Federal Courts overturn its cease- and-desist order; the company challenged the entire validity of the FTC. In April 1919, the case reached the Seventh Circuit Court of Appeals. Writing for the majority, Judge Barker found the FTC’s conduct appropriate. He rejected the complaints of Sears, Roebuck: The commissioners are not required to aver and prove that any competitor has been damaged or that any purchaser has been deceived. The commissioners, representing the government as parens patria [“parent of the nation”], are to exercise their common sense, as informed by their knowledge of the general idea of unfair competition trade at common law, and stop all those trade practices that have a capacity or a tendency to injure competitors directly or through deception of purchasers, quite irrespective of whether the specific practices in question have yet been denounced in common law cases. 69 The ruling in Sears, Roebuck & Co. v. Federal Trade Commission was handed down during the interim between the FTC’s initial hearings against W.H. Productions and the subsequent hearing when W.H. Productions presented its defense. Selisberg’s duping defense, entirely dependent on creating doubt about the real culprit, was doomed before he entered the courtroom. All that mattered was that both W.H. and Lasso had a “capacity 76 or a tendency to injure competitors directly or through deception of purchasers.” As such, they were both ordered to cease-and-desist. Demand, Not Deception Sears, Roebuck & Co. v. Federal Trade Commission ensured the young Commission would have flexibility and speed in evaluating the trade practices of various industries, enabling the FTC to quash deceptive practices before they became major industry-wide problems. However, by relying on common sense to identify unfair practices with a “capacity” to harm competitors and purchasers, the FTC left unanswered many of the questions most interesting to a historian. We know the identities of W.H. Productions’ competitors—they were other film distributors, especially Artcraft, which controlled Hart’s new films and lost leverage over exhibitors because the marketplace was flooded with his old pictures. But what about the purchasers? Were they deceived? Answering this question requires reaching beyond the FTC transcript and triangulating numerous historical sources. Equally importantly, it requires us to broaden our understanding of the business of film libraries. The discourse surrounding studio libraries tends to focus on supply-side factors—the motivation of copyright owners to monetize their assets. Yet the demand from business buyers and audiences is just as important. By mapping out the context of film exhibition in the late-teens, we can better understand this demand and insert real exhibitors and audiences into the placeholders of the FTC’s hypothetical purchasers. 77 Demand of Small Exhibitors Film exhibitors in the mid-to-late-teens participated in a rapidly changing marketplace. The business had never been better for those exhibitors who invested in large theaters. Large theaters sat over one thousand patrons and more lavish “movie palaces” sat over two thousand, capacities that enabled their owners to harness economies of scale. Large theaters offered the best pictures, best music, best amenities. They charged more per ticket, but they didn’t have to charge much more, since they had more seats they could fill and more tickets to sell. For small exhibitors, however, the business had never been worse. In his excellent analysis of the “Crisis of the Small Exhibitor,” Ben Singer describes the “painful transition for many rank-and-file exhibitors” during the mid-to-late teens. “With their small capacities, low admissions, humble trappings, and modest socioeconomic demographics, many small theaters had great difficulty affording the expensive feature services.” 70 Singer identifies five options that small exhibitors had available to them: one, continue to play one- and two-reel variety programs, even though the public clearly showed a preference for feature films; two, upgrade certain theater amenities but still show variety programs; three, “try to put together feature programs culled from cheap state rights suppliers or discount national distributors and undercut the bigger theaters on price”; four, show feature films in their subsequent runs; and five, simply throw in the towel and go out of business. 71 Faced with this limited range of choices, some small exhibitors employed a variation on numbers one, three, and four— they showed a star’s old short or feature-length films and undercut the large theaters on price, but promoted the old films as if they were new. 78 Small exhibitors were the industry’s “snipers” and the primary buyers of the W.H. Productions. 72 Joseph Simmonds was not lying when he told the FTC Examiner that exhibitors knew the films were old. Although a few small exhibitors may have been deluded into believing they were booking new films, most knew what they were getting. The trade press covered which stars were affiliated with which producers and distributors; the dispute between Triangle and Artcraft over Hart’s services, in particular, received considerable publicity. Only an exhibitor ignorant about his own business could not know that the W.H. Productions were reissues—especially when they were being sold by corner-cutting states rights outfits, some peddling the licensed prints, others the outlaw dupes. Additionally, seventeen of the twenty-one re-titled Hart films on the market were two-reelers. Quite odd, really, considering that Hart had exclusively acted in five-reel features since late-1915. Small exhibitors knew this fact only too well—they had pleaded with producers to cast stars in more shorts that they could plug into their variety programs. 73 But the big stars valued the higher paychecks and artistic status that came with features running five reels or longer, and by 1917, comedians were the only stars consistently turning out two-reelers. Most small exhibitors, therefore, quickly recognized that the W.H. Productions pictures were old films. But they also recognized that W.H. Productions offered them something they needed: feature films and two-reelers, starring one of the world’s biggest movie stars, which they could afford. Let’s go beyond the hypothetical small exhibitors and consider one specific sniper. The Empress Theatre in Toledo, Ohio exemplified the type of small theater that, beset by competition from big houses, booked the W.H. Productions. The Empress was 79 one of four Toledo theaters managed by the Gardner Amusement Company, all seating less than 400 patrons. The Empress offered seating for 367, to be exact, a good size during the nickelodeon era when cheap hour-long variety programs ran continuously and audiences turned over rapidly. The Empress suffered, however, during the feature era. Features cost more to rent; the audience turned over more slowly. The Empress could sell fewer tickets in a given day but had to pay higher rental costs (that is, if they could obtain the desirable feature films at all). By 1918, the Empress was geographically doomed, sandwiched between the 750-seat Alhambra Theatre and the 772-seat Colonial Theatre on Summit Street in downtown Toledo. Worse yet, just blocks away were the 1,413-seat Valentine and 1,166-seat Temple. 74 These large theaters sold enough tickets to afford top grade pictures and the amenities—orchestral music, large foyers, ushers—that audiences came to expect from the downtown movie house. Meanwhile, the Empress carried on with variety programs. One week in 1918, the Empress offered a variety program consisting of the W.H. Productions two-reeler The Fugitive (originally Hart’s 1915 The Taking of Luke McVane) and The Scholar (1918), a two-reel comedy starring the Chaplin imitator Billy West. 75 Other small theaters across the country, from New Haven to San Diego, booked the W.H. Productions two-reelers and used them in their variety programs. 76 In hindsight, we can easily see that this strategy was unsustainable. By 1918, variety programs were already antiquated, and no number of Hart reissues and Chaplin knock-offs could change this perception. The Empress went out of business just a few months later. Exhibitors who booked the re-titled Hart five-reelers and promoted them like new features similarly embarked on an unsustainable path. The short-term surge of 80 ticket sales came at the expense of the theater’s long-term reputation. Audiences who left your theater today feeling cheated were unlikely to return tomorrow. Showing old star-driven movies under new titles may have been shortsighted, but it was a survival strategy for small theaters nonetheless. The bigger houses—with double, triple, or quadruple the seating capacity of small theaters—could afford to pay more for feature films without charging more for tickets. The big houses outbid the smaller ones for the best features with the biggest stars. Through booking a cheap reissue and emphasizing the star rather than the film’s age, small exhibitors gained competitive strength—offering the same star value as the big theaters for lower ticket prices. The trade press and large theaters labeled the practice “sniping,” but to the small exhibitor, the term “sniper” was more properly applied to the big theaters. After all, the small exhibitors were the incumbents. Built during and immediately following the nickelodeon boom, the small theaters had helped turn a novelty sideshow into a major business and leisure-time activity. Now, the large theaters chipped away at their business, destroying an entire exhibition model that had previously served them well. The FTC never acknowledged that the plight of small theaters, rather than mere deception, drove buyer demand for re-titled reissues. If it had, though, the Commission would have seen their plight as the price of progress. The Federal Trade Commissioners believed that creating greater efficiencies was the essence of “fair competition.” The large theaters had created more efficient systems; they delivered superior pictures and a superior experience. Middle-class audiences liked the big theaters and the posh amenities they offered. Finding ways to deliver this experience and keep down consumer prices was 81 the basis of fair competition. The competition became unfair when competitors resorted to means other than greater efficiencies to succeed. Demand of Audiences Film exhibitors were not deceived by the re-titled reissues. Ultimately, though, the FTC’s rhetoric about the dangers of re-titled issues hinged on W.H. Productions’ deception of the public. Can we situate real spectators into the position of the FTC’s hypothetical stand-ins? Who were the audiences that attended the screenings? Did they feel deceived? More broadly, what were the prevailing attitudes toward old movies in general? Excavating the experience of historical moviegoers is one of Film Studies’ most challenging tasks. 77 Their voices seldom appear in studio corporate files, trade papers, lawsuits, and the other places that a historian of the film business looks. Despite these challenges, it is important to take stock of the historical audience of film reissues for two reasons. First, audiences represented the final stage in cinema’s business cycle; they were the “end-users” in economic terms. The needs of buyers—exhibitors—generated demand for reissues, but the buyers still needed to appeal to the end-users. Secondly, throughout the history of film libraries, “the public” has been rhetorically invoked by the government, producers, and film artists. The need to protect the public generally means advancing one group’s particular agenda over another’s. In order to both better understand end-user demand and test the validity of consumer protectionist arguments, we must take stock of the historical audiences who attended new films and reissues. 82 We can begin reconstructing the audience experience by calling Bill Grossman on his bluff. Grossman, Hart’s attorney, told the W.H. Productions representative, “we are getting a large number of letters from fans all over the country, who are complaining about the practice which your company has initiated.” The documentary evidence simply does not support this claim. Hart supplied trade clippings, contracts, and correspondence to the Federal Trade Commission, but he did not turn over a single angry fan letter. Moreover, my search through hundreds of William S. Hart fan letters, preserved at the Seaver Center at the Los Angeles County Museum of Natural History, did not produce a single fan letter that complained about W.H. Productions. 78 On the contrary, several fans expressed their willingness to watch Hart’s same films over and over. Elizabeth Chadwick of New York City told Hart she watched his Triangle feature The Desert Man twice—first when it opened in New York, then again when it reached her neighborhood theater. 79 Birdie De Veer of Columbus, Ohio did not like to wait weeks between watching a Hart film. She confessed that she frequently bought one ticket, then stayed in the theater for back-to-back screenings of the same picture. 80 How many more fans like Elizabeth Chadwick and Birdie De Veer were out there? How many more fans saw films as renewable rather than distinguishable goods, worthy of making a second visit to the theater or slouching down in your seat between shows to avoid the usher’s gaze? Other fans re-watched their favorite star’s pictures with even greater devotion. Consider the following fan letter written in August of 1919 by Gaylord Davidson, an insurance agent in Roanoke, Virginia: I stopped before one of the local moviehouses this afternoon where “The Return of Draw Egan” was featured. I have seen it several times. I go to all of them, over 83 and over again. I had not intended to go until this evening, but a little wistful face looked up into mine, and I saw a ragged, sore toed little chap standing before me. “Mister, ef I had six cents I could see Bill Hart.” “Bill Hart,” I replied, “who is he?” “WHAT, haint youever heard of Bill Hart.” “YES, I’ve heard of him, but who is he?’ “Ge mister, he’s great. He kin draw a gun quicker n’ you can say it. He’s got a horse that jest loves him like a boy. He kin ride right straight down a mountain runnin’. Say, mister, I’ve got 5c. and if you have got 11 c and six cents we kin see him.” Did we see him? The little urchin took me right down into the third row where dozens of other little chaps, happy to the portals of paradise, were seated. Then the play opened. 81 Charles Dickens, if he’d survived long enough to go the movies, might have scripted this scene. The street urchin, colloquial speech, and paternal kindness all smell like the stuff of fiction or, at the very least, embellishment. Like many movie fans, the insurance agent aspired to write for the movies. Thomas Ince had declined his scenario about the early Mormon days—“he turned it down because he said it had a religious turn to it”—but the insurance agent hoped Hart would reconsider. Looking past whatever artistic liberties the writer may have taken in describing his afternoon at the movies, the letter still tells us a great deal. Let’s consider a detail that might not jump out to us as quickly as the “sore toed little chap”: the simple fact that a local theater was showing The Return of Draw Egan. Hart starred in and directed The Return of Draw Egan for Triangle in 1916. The insurance agent wrote his letter on August 12, 1919. Three years had passed, but the film 84 was still in circulation, where it had been long enough for the writer “to have seen it several times.” No title had been changed—The Return of Draw Egan was a Triangle “Good Ones Never Die” picture, not a New York Motion Picture Company movie re- titled into becoming a W.H. Production. Triangle’s extensive reissue campaigns gave this fan the opportunity to watch his favorite movies “over and over again.” In today’s home entertainment culture, it’s easy to take for granted our ability to repeatedly view our favorite films—we own them on disc, watch them on television, stream them online. But for Gaylord Davidson, living in 1919 in Roanoke, Virginia, a series of events had to fall into place for him to gain this opportunity. On a macro level, film negatives had to increase in value through the emergence of new laws, the star system, the feature film, and a new distribution system. On a micro level, Triangle had to lose its competitive edge; Stephen A. Lynch had to collateralize his debt in the troubled Triangle Distributing Corporation; Lynch had to auction the states rights to sub- distributors, one of which—Super-Film Attractions—purchased a three year license to distribute the Hart in Delaware, Maryland, Virginia, and the District of Columbia; and Super-Film Attractions finally had to rent The Return of Draw Egan to a theater in Davidson’s hometown. This was the industrial process necessary for Gaylord Davidson to pass by a theater in 1919 showing The Return of Draw Egan, irrespective of whether he indeed purchased a ticket for his street urchin companion. 82 Davidson actively chose to re-watch the film. He was neither deceived nor bored by the prospect of watching the same picture again. On the contrary, the picture touched him on a deep emotional level. “Why is it that whenever I see your pictures, the tears 85 rundown my face?” he asked. “I ain’t a talkin’ about women an’ girls. Its natural for them to cry over your stuff—but men. Well, why do we?” The writer went to see the same Hart films repeatedly due to an emotional bond to his favorite star, but the letter also tells us about another audience for reissues: young people who experienced an old film as new. Exhibitors liked reissues because they were cheap and gave them access to the biggest stars, that much is true. However, they clearly recognized there were audiences for reissues, and if they did their job well, the audience left feeling satisfied, even moved, not cheated. Reissues also had the potential to create Hart fans. Consider the following letter sent that same year from Liverpool by Thomas Coppell, an ex-private of the British Army: Dear “Big Bill Hart,” Excuse me for encroaching upon your valuable moments to offer you just a humble tribute from one of the vast army of admirers of your unequaled prowess upon the “silvers screen.” Following are the three pictures which gave me the great admiration for your rough and ready, unconventional work: “The Apostle of Vengeance” (which I witnessed in a peculiar sort of cinema hall planted in a little camp, while with the British troops in France since the armistice actually upon the battle line itself) “Branding Broadway” (which is perhaps the best) and “The Breed of Men.” These two latter I have seen since being demobilized. 83 Triangle released the five-reel The Apostle of Vengeance in the summer of 1916; Thomas Coppell viewed it sometime after the signing of the World War I armistice on November 11, 1918. He became a Hart fan through viewing a reissue. Rather than competing against Hart’s new pictures, this non-theatrical screening opened up new business for Hart. The Triangle reissue created a fan on the Western Front who later purchased tickets to two of 86 Hart’s Artcraft pictures, Branding Broadway and The Breed of Men (both pictures in which the star enjoyed a portion of the profits). These fan letters offer a sample of fan perspectives on reissues and repeat movie viewings. They should not be mistaken for a universal attitude toward old films. Audience members who take the time to write a letter to their favorite star are a self- selecting group, not representative of all moviegoers. None of these fan letters praised a W.H. Productions re-titled reissue, and it is certainly possible that there were audience members who attended re-titled pictures, felt cheated, and lost their affection for Hart as a result. But if some audience members felt cheated, they did not write letters to Hart about it. Hart and his legal team imagined an audience of embittered, letter-writing fans. The FTC did not need to listen to any actual members of the public, read their letters, or call them to the witness stand; the Commission routinely issued cease-and-desist orders based on the capacity of a particular enterprise to deceive an imagined public. The FTC’s rhetorical appeals about the public interest and Grossman’s spurious claims about bundles of angry fan mail washed the official record of the voices of any actual fans. We can never excavate all of the lost voices, but those that we can, using Hart’s own collection of fan mail, tell us a different story—the story of audience members whose affection for Hart grew, rather than diminished, through repeat viewings and reissue circulations of Hart films. Movie fans in the late-teens and early-1920s valued the opportunity to revisit old films, but they wanted to do so on their own terms. This meant having a voice in the film selection (one reason to write a letter) and being shown the respect of not having the title 87 switched (a counterproductive move anyway in the case of fans purposefully revisiting the same picture). Fans adapted to the marketplace and quickly developed the skill to spot a bait-and-switch reissue. A fan letter published in the Baltimore Sun in 1923 is quite telling: How many ardent movie fans have been tricked into seeing an old picture which they were led to believe was new? This happens when a newly risen star makes a big success and the public starts shouting for more of that star’s work. Some companies don’t care if the picture is five or seven years old or whether the story is bad or not—if it is one in which the new favorite appeared in a few scenes, the production is reissued for the sake of cashing in on the star’s name. No matter how many new art titles the reissue is dolled up, or how many scenes are rearranged, it is almost sure to be a disappointment. So many old pictures are being shown nowadays that the public has to shop wisely and carefully for its entertainment. From my point of view, the thing that is wrong is for the theater manager, who knows that the film is a reissue, to try to make his patrons think it is a new subject. This is breaking faith with his patrons. When the Rudolph Valentino craze came into full blast, companies started to dust off their ancient films in which Valentino had a small part. These same products were often put out as new products and in some cases Valentino was announced as star. 84 The writer recognized a pattern—that when an actor became famous, the star’s earlier films were put back into circulation. The fan was intelligent enough to hold the producer and exhibitor responsible, not the star. Before concluding, the fan offered an important addendum: “By the way, a lot of these are excellent pictures and quite worth while seeing. But people should not be misled into thinking that they are new.” This last point is important. Fans wanted their favorite old films to continue to circulate, but on whose terms would they circulate? Producers, distributors, and exhibitors acted in bad faith 88 when they tried to pass off old films as new. Even when acknowledging a picture was a reissue, studios and exhibitors frequently acted in bad faith by falsely attributing the film’s return due to overwhelming audience demand rather than, say, a shortage of new pictures or the opportunity to cash in on a new star. In the decades to follow, audiences would grow even more willing to watch old films. Some fans demanded the return of favorite titles. Yet audiences remained sensitive about the ways these old movies reached them. Studios had a duty to deliver old films in a forthright manner. They violated the public trust when they re-titled old films, pretended reissues were by demand and not driven by supply-side concerns, and carelessly chopped up an older film to fit a double- bill or accommodate television commercials. Film Critics: Minimal Demand Film critics did not share the fan enthusiasm for reissues. Critics played a minimal role in the demand for reissues, but they are important to take note of nevertheless because William S. Hart and other members of the industry appropriated their forward- looking orientation toward film—a belief that the medium’s past was inferior to the present, the preset inferior to the future. Critics of the teens and early-to-mid-1920s were more likely to talk audiences out of attending a reissue than encourage them to see it. Two months before the fan offered tips to the Baltimore Sun for spotting re-titled reissues, the same newspaper ran an article entitled, “Old Films are Compared with New by Critic: Views of Reissues Fail to Substantiate Movie Fan’s Claims That Former Successes were Better than those of Today.” The critic cautioned viewers not to allow 89 nostalgia to play tricks on their judgment. 85 Across the Atlantic the following year, the Manchester Guardian’s critic had a far more acerbic take. In an editorial entitled “Let Bygones be Bygones,” the critic warned, “Poor fools who catch at the past and try to re- create it are fair game for the businessman.” 86 The Guardian’s critic continued: “Let us face it squarely. The films are out of date, and our modern minds, coloured with yesterday’s experiences and to-day’s surroundings, find it hard to meet them on the level. Art may be timeless, but the kinema is only now hesitatingly on the threshold of art, and has barely yet glanced through the door.” 87 A few critics recognized film as an art and advocated for the reissue of old pictures they considered to be significant artistic achievements. Two hundred miles south of Manchester, London-based film critic Iris Barry lamented the “mutability” of films which made “it impossible for many of those people who would appreciate the most novel, interesting, original films, ever to see them.” In her 1926 book Let’s Go to the Pictures, Barry explained: “A film appears, say in the Charing Cross Road, for three days. One hears about it a day too late. Where can one look for it? There is no means of knowing. Those who know the ropes can, of course, by discovering the name of the company that owns it, ring them up and find out where it is to be seen. But the public doesn't know that trick, and in any case why should it?” 88 Barry wanted old films to be made more readily available, but it’s important to note her taste differed significantly from the fans writing to William S. Hart. Barry wanted the most artistically important films to circulate, not the old films of famous stars. In fact, Barry argued that the star system marked “the greatest possible benefit to the commercial development of the 90 movies,” but “the greatest possible handicap to its artistic development.” 89 The star system limited the types of stories films could tell and the types of roles actors could play. William S. Hart might have an incredible acting range, yet audiences were limited to watching him perform in westerns. Barry resented the consistent screen persona that made a star, such as Hart, popular with his public. She wanted specialized theaters that would show the great films, new and old. In the following decade, Barry would migrate to America and attempt to arrest film’s mutability through the creation of the Museum of Modern Art Film Library. 90 The best gauge of the attitude of mainstream American moviegoers toward old movies may be Photoplay Magazine. The magazine simultaneously targeted movie fans, catered to industry publicity needs, and reflected the voice of its opinionated editor, James Quirk. The fans that read Photoplay could engage with their favorite stars in ways beyond watching new or old movies; they could learn gossip about the star’s personal life, collect clippings of published photographs, and write letters to the stars. Occasionally, articles ran that compared a star’s current appearance to the way she looked before, emphasizing the star’s growth and improvement from an earlier age. James Quirk, who became Photoplay’s vice-president in 1915 and chief editor in 1920, similarly emphasized cinema’s growth. 91 His belief in film as an art form was entirely forward looking—a film was good or bad to the extent that it advanced or retarded the advancement of film art. Quirk’s values were reflected in the way he conceived of Photoplay’s award for the year’s best picture. Beginning in 1921, Quirk encouraged readers to mail in ballots for what they considered to be the best American 91 picture from the previous year. Film awards and critic “top ten” lists have came to perform canonical and commemorative functions, inscribing passing ephemera into the permanence of history. Quirk’s intention in creating the award, however, was “to encourage better pictures by giving proper recognition” to the best works. 92 The award was a referendum to the producers of America: This is the type of picture we want you to make! 93 When Photoplay’s critics reviewed film reissues, they employed a similar value system that emphasized cinema’s growth and the superiority of modern pictures to old ones. Photoplay mocked certain old films, finding humor in their self-seriousness. Reviewing the 1921 reissue of The Spirit of ’76 (1917), Photoplay found the picture “resembles nothing so much as a fourteen reel Ben Turpin comedy without the talented Ben. If this is a specimen of the real Spirit of ’76, how did we ever manage to win the Revolution?” 94 At other times, Photoplay praised an older film, but still noted its shortcomings compared to the present state of cinema. Photoplay offered the following analysis of Universal’s 1926 reissue of Outside the Law (1920): A RE-ISSUE of a crook drama that was released many years ago. It really has a splendid plot and cast—Lon Chaney, Priscilla Dean, and Ralph Lewis—but in these days of beautiful sets, gorgeous costumes and perfect lighting, one can’t feel as enthusiastic about it as if it were a modern picture. If you can overlook the old- fashioned dress, sets,, etc., you will find this an engrossing picture. 95 Photoplay reveals how some audiences and critics in the 1920s could be avid moviegoers, connoisseurs of stars, passionate about film as an art form, but still hold little interest in the reissue of old films. Film’s true promise lay in the future, not the past. Only in the subsequent decade, as many decried the introduction of sound as an artistic step 92 backward, did more audiences come to believe that viewing film’s past was an important step toward charting its future. William S. Hart: Profiting from the Critics William S. Hart was not blind to the critical judgment system that elevated the films of the present over the films of the past. Hart, Fairbanks, Chaplin, and Pickford became sensitive to the manner in which their older films circulated, but they also found ways to strategically use this value system to their advantage. 96 The re-titled Hart pictures continued to circulate after the FTC ruling. The Los Angeles-based Peerless Film Service and the San Francisco-based All Star Features Distribution, Inc. were two film exchanges, for instance, that acquired the W.H. Productions prints and continued to rent them out. During the fall of 1920, the Shamrock Theatre in downtown Los Angeles contracted with Peerless and offered weekly showings of the re-titled Hart two-reelers. Hart sought an injunction against both parties, using the FTC’s ruling as his chief ammunition. But Hart offered another argument as well, one that resonated with the forward-looking view of film as an artistic medium. Hart argued: that at the time said pictures were produced, the methods of making motion pictures had not been developed to their present standard of excellence, and the pictures in which the plaintiff then appeared were necessarily much inferior in point of clearness and general excellence to the pictures subsequently made and those now being made, produced and distributed, and in which the plaintiff plays the leading part. Hart appropriated the critical framework that valued films made only five or six years earlier as “much inferior” to “their present standard of excellence,” and he applied the value system toward achieving an objective beneficial to himself. 93 Hart’s campaign against the reissues had never been simply about protecting his reputation or guarding the American consumer. His Artcraft deal gave William S. Hart Productions a $200,000 minimum guarantee for each five-reel negative he delivered, against a fifty-fifty split of net profits. 97 Hart wanted to maximize the circulation of his Artcraft pictures and minimize the competition from his earlier films. In his complaint, Hart used this economic argument—he held no profit participation in the New York Motion Picture Company, whereas since leaving Triangle for Artcraft in July 1917 “he still retain[ed] an interest” in his pictures, granting him a “portion of the income received on account of the distribution and exhibition thereof.” 98 Hart claimed damages of $250,000 from Peerless and $25,000 from the Shamrock. In the face of these costly and virtually un-winnable lawsuits, Peerless and the Shamrock Theatre agreed to accept permanent restraining orders against ever distributing or exhibiting the re-titled films again; Hart, in turn, gave up his claims for damages. To discourage other exhibitors from booking the re-titled reissues, Hart published an advertisement in Exhibitor’s Trade Review, encouraging “any real exhibitor [to] read the following letter—and buckle on his six shooter.” He included the warning that “the bootleggers of the industry are at it again” and published a letter from his attorneys containing the terms of the permanent injunctions against Peerless and the Shamrock Theatre. It was this advertisement that prompted William C. McIntire, the Fayetteville exhibitor, to write to Hart, expressing his approval over the injunctive actions but concern that “STARS MAKE A MISTAKE NOT HAVING THE YEAR, STAMPED ON EVERY FOOT OF FILM, And include in CONTRACTS AFTER TWO YEARS ALL 94 OLD PRINTS MUST BE DESTROYED NOT RE ISSUED.” 99 Distributors commonly recycled old positive prints after two years in circulation, but the tenor of the Fayetteville exhibitor’s letter suggested a far more drastic solution—literally stamping a production date on the every foot of the film negative and destroying the film negative once it reached its two year expiration date. The Fayetteville exhibitor’s modest proposal overlooked an important consideration. Stars would only gain the leverage to demand such a contractual stipulation once they reached a significant success level. But by that point, they would be able to negotiate rich profit participation deals. Furthermore, the major stars owned the negatives of their films and only leased them to distributors. Under Hart’s Artcraft deal, his production company regained the distribution rights to his pictures after five years in circulation. He gained and exercised the right to broker licenses with sub-distributors. William S. Hart did not want to destroy his old films. He wanted to control them and profit from them. Financial Fraud and the Library Three years after the FTC enjoined W.H. Productions from selling the re-titled reissues, news emerged about another fraud at Triangle of an entirely different order. You will remember that Harry Aitken had transferred the twenty-one Hart negatives from Triangle to the Western Import Company, which then licensed them to Joseph Simmonds’ W.H. Productions. Triangle and Western Import were alike in many ways. Harry and Roy Aitken managed both firms. The two companies worked one floor apart in 95 the same New York office building. But there was one critical difference: Triangle was a publicly traded corporation owned by its stockholders; Western Import was owned outright by Harry Aitken, Roy Aitken, and Hyman Winik. The Aitkens were transferring assets from Triangle’s stockholders to their own private firm. Triangle and Western Import entered into numerous agreements; some of the executed contracts bore only two signatures: Harry Aitken, signing for Triangle, and Roy Aitken, signing for Western Import. Harry Aitken transferred the Hart negatives to Western Import for a pittance, selling fifteen of the two-reel negatives for a total of $16,000. 100 The Aitkens never turned over the Western Import financial data, but through triangulating the data we have, we can make a conservative estimate that places the W.H. Productions scheme as yielding at least $300,000. 101 Technically speaking, Western Import’s payments to Triangle were advances; Triangle was entitled to fifty per cent of all net profits. After expenses, the re-titled Harts might have left each side with $125,000. But that was assuming Western Import ever divided the profits. It didn’t—the Aitkens and Winik kept nearly all of the money. By the fall of 1917, Western Import had earned over a million dollars from selling foreign rights, but it had paid Triangle none of it. Instead, Harry and Roy cooked the books and made it appear like it was Triangle that owed Western Import money. The Aitkens ultimately had Triangle purchase Western Import for $400,000, a way to personally enrich themselves further and halt the transfer of wealth from their private company back to the publicly traded company, which, at that point, needed it badly. 102 96 Eventually, the directors and stockholders of Triangle caught on to the pattern of self-dealing. In early 1921, Triangle filed suit in New York County Supreme Court against Harry Aitken, Roy Aitken, Hyman Winik, and Joseph Simmonds, alleging that a conspiracy among the four men had defrauded the corporation of $3 million. In addition to the Western Import scheme, Triangle alleged other instances of fraud: a $40,000 payment to the Lothbury Syndicate, owned by the Aitkens, for no legitimate reason; the selling of Triangle stock to Lothbury at a small fraction of the security’s market value. And then there was the most symbolically egregious act of all. After Harry’s mismanagement and theft drove the company to the point of insolvency, he loaned Triangle money, through an intermediary, at the usurious interest rate of twenty-five per cent. 103 He personally profited from the failure of Triangle. The Aitkens ultimately settled the lawsuit for $1,375,000 ($100,000 in cash, the rest in stock), but they admitted no guilt. 104 They claimed not to remember the business activities of Western Import. Fortunately, primary sources available today at two archives—the New York County Supreme Court’s Record Center and the Aitken Collection at the Wisconsin Historical Society—clear up some of the Aitkens’ memory gaps and offer conclusive evidence of self-dealing. 105 The Aitkens’ fraud necessarily changes our understanding of the Triangle Film Corporation. As Kalton Lahue argues, the explanations of Triangle’s failure that place the blame on Harry’s mismanagement and bad talent deals are insufficient. The $100,000 Triangle spent on the acting services of Sir Herbert Beerbohm-Tree pales in comparison to the millions that Harry and Roy pilfered. Moreover, Harry’s management decisions take on a different color once we 97 consider the fraud. Would Harry have made the same deal with Sir Herbert if he had been spending the funds of a privately owned firm, such as Western Import, rather than a publicly traded firm, such as Triangle? Harry took ambitious risks with Triangle because they were risks he took with other people’s money. He offset his risks to the public company and kept the rewards for his private company. As a businessman of his time, he was hardly alone in doing this. Following the stock market crash of 1929, the U.S. government created new regulations, such as the Securities Act of 1933, the Glass- Steagal Act of 1933, and the Securities and Exchange Act of 1934, that restricted fiduciaries from self-dealing, insider trading, and other conflicts of interest. 106 For the purposes of this study, though, the most significant aspect of the Aitkens’ fraud was that it hinged on exploiting the uncertainty we explored at the beginning of the chapter—what was the value of a film negative? The shareholders claimed more than half of the $3 million in damages arose through selling negatives to Western Import at below market prices. The Hart and Keystone negatives that became the W.H. Productions’ fodder, the shareholders alleged, were worth at least $500,000 compared to the roughly the $100,000 Western Import paid. 107 There was always uncertainty about the market value of negatives. Conservative accounting practices demanded a producer capitalize the film’s negative cost as an asset, depreciating rapidly from the moment of release, rather than guessing out of thin air what the film would earn. If Harry Aitken could have listed the negatives as assets worth more than their costs, diminishing in slight increments over a ten-year period, then he very well may have done so. By inflating the assets on a balance sheet, a manager could pull off a different form of fraud, convincing investors 98 that a corporation was worth far more than its actual value. America’s great bubble of overvalued stocks burst on October 29, 1929 when the stock market crashed and countless investors, who had traded cash for the paper of worthless companies, lost their shirts. The Aitkens’ fraud exploited a different loophole, the flipside of this accounting rule. All of the old William S. Hart and Keystone pictures had already been fully depreciated from the New York Motion Picture Company’s books when Triangle acquired the company in early 1917. From an accounting standpoint, these films were worthless. Harry could easily sell brother Roy ten Hart negatives for $10,000 because, on the books, they were worth zero dollars. Triangle’s shareholders later claimed the negatives carried a fair market value of $500,000, but no major financial institution in 1917 would have loaned this sum against those assets. Stephen Lynch collateralized his loan through old negatives because he knew his organization could make back the money through reissues and brokering states rights, but what bank would take the risk of losing $500,000 with nothing to foreclose on except nitrate? The balance sheet recognized no accounting value in the old Hart negatives; banks wouldn’t acknowledge a market value in the form of a loan. No better assets could have existed for the Aitkens to steal without notice. If the Aitkens had limited their fraud to W.H. Productions, they probably would have gotten away with it. But their decision to reach beyond a clever library con into more common forms of embezzlement and securities fraud ultimately drew too much attention to itself. 99 The Triangle saga demonstrated that film libraries have financial applications that exceed the simple earning of revenue. If a bank recognizes a library as collateral, the owner gains a borrowing base to finance new ventures. But the peculiar financial properties of film negatives—assets that are worthless on the books after one year—make them ideal vessels for financial manipulation. Allegations of self-dealing followed film libraries into the television era, as we will see in Chapter Four through the case of Associated Artists Productions. The Triangle Legacy and the Studio System Neither consumer nor shareholder fraud stopped Triangle’s library machine. The Aitkens were behind the W.H. Productions scheme, but the continued distribution of Triangle’s old films was the result of Stephen Lynch, Percy Waters, and numerous intermediaries who, with or without licenses, circulated the films. Although hardly a paragon of business ethics, Stephen Lynch seems to have been as surprised as Triangle’s other shareholders and creditors about the Aitkens’ extensive fraud. He knew the company was in trouble long before, though, and he brilliantly protected himself by, first, converting his stock into debt and, second, collateralizing that debt through controlling the Triangle reissue rights. From that moment in September 1917 forward, Lynch pursued every opportunity possible to distribute the reissues widely—initially through national reissues through the Triangle Distributing Corporation, then brokering the states rights and keeping several Southern territories for himself. Shortly before selling back his reissue rights to Triangle for $110,000 in August 1919, Lynch entered into a contract 100 with United Projector Company to make miniature prints and circulate them to “Chautauquas, Schools, Clubs, Social Gatherings, Fraternal, Religious, Benevolent and Charitable Benefits and Entertainments.” 108 The agreement served as Triangle’s entry point into the United Safety Film Library, which rented films on a non-inflammable but expensive film stock to homes, schools, and other non-theatrical settings equipped with United’s 28mm film projector. 109 Percy Waters pushed the Triangle library even further. In May 1919, Waters took over management duties of both Triangle and Triangle Distributing Corporation and immediately set to work to pay down their debts. Waters knew the benefits reissues could offer distressed corporations; he had previously managed the General Film Company in 1915 during its surge of Kalem, Biograph, and Essanay reissues. In November 1919, Triangle contracted with the U.S. Navy Motion Picture Exchange to carry its reissues for a $10 payment per exhibition of a feature and $1.50 or $3.00 per showing of a one- or two-reeler. In selecting films for the Navy Exchange, Lt. Joseph O’Reilly was of the “opinion that rugged, outdoor pictures are preferable to the wishy-washy type of story. The Wm. S. Hart pictures are the best example of this kind.” 110 In 1920, Waters obtained a far larger deal by licensing the Triangle reissues for $877,000 to the Film Distributors League. 111 After the League’s two-year license expired, Waters licensed the Keystone comedies to none other than Harry Aitken, who, with Oscar Price, put them back on the market through a rights brokering company called Tri-Stone. 112 Aitken never fully exited Triangle, nor gave up on making money through the old films. 101 Triangle proved to the motion picture industry that film negatives, particularly those featuring stars, held long-term value that far outlasted the first cycle of distribution and the accountants’ depreciation schedules. Motion Picture News suggested that Triangle challenged the assumptions of “bankers who believe that a released negative has no asset value.” Although it had ceased active production of new films, Triangle managed to pay off nearly $4 million in debts through its library and “still has all its 4000 negatives with still a considerable potential value, for re-release or re-production.” Variety also credited Triangle as having “established [the] trade” of reissues,” but foresaw a dire future for other producers who followed in Triangle’s footsteps. “The business of reissue and new productions cannot go on at the same time,” warned Variety. When Famous Players considered reissuing some of its most successful productions in 1921, Variety predicted a race to the bottom was sure to occur. “If Famous Players offered reissues on the market at prices necessarily greatly reduced, exhibitors would not be so willing to pay the much higher prices for the new productions,” the trade paper warned. Producers would stop investing in high quality, high cost productions. Old, cheap films would flood the market. Like an animal species that drives itself to extinction by eating its young, the movie industry risked its own future by reissuing films from the library. The old would cannibalize the new. 113 Reissues never cannibalized the industry of the 1920s. Variety’s dire forecast never occurred, not because Famous Players did not reissue old productions—it did—but because, at the same moment Variety fretted over reissues, Famous Players undertook an aggressive business expansion that necessitated the subordination of reissues. The 102 Famous Players/Paramount business model, the blueprint for the Hollywood studio system, was for a highly capitalized, vertically integrated corporation that controlled the industry through the strategic ownership of important first-run theaters. Through issuing stock and taking on debt, Paramount financed an expansion that saw its total assets rise from $18,881,000 in 1918 to $306,269,000 in 1929. Accounting for nearly all this gain was Paramount’s aggressive acquisition of theater chains. 114 Paramount shared dominance over the industry with a cadre of other similarly structured companies: First National, Loew’s, Fox, and, by the late-1920s, Warner Bros. and RKO. The motion picture industry was an oligopoly of vertically integrated companies. This was not the industry structure the Federal Trade Commission had wanted. The FTC wanted the best and most efficient theaters and producers to succeed. Snipers practiced unfair competition because they cheaply booked and promoted old films as new, rather than upgrading the seating, amenities, and film quality they offered. In a truly competitive, free market, the best theaters should have won out and been able to afford the best pictures. But this isn’t what happened. Entrepreneurs built outstanding theaters, only to have a studio tell them that no matter what they paid, they would never be more than a third run theater—the first and second run going to the company’s own theaters or strategic business partners (other studios’ theaters and large exhibition chains, especially those that controlled the access into one-theater towns). Furthermore, most independent theater owners could only book a studio’s films in blocks, on an all-or-nothing basis. In 1921, the FTC issued a complaint against Paramount for monopolistic business practices, 103 beginning a decade’s worth of investigation and litigation in a case that the FTC ultimately lost. 115 Since their theater assets were worth far more than their film assets, the studios necessarily had to subordinate the business of selling film libraries to the business of producing new pictures, exhibiting them in their first-run theaters, and pushing them through the cycle of distribution. The Triangle model of exploiting a library had high profit margins but low revenues; it could never service the mortgages the studios took out on their theaters or offer shareholders a meaningful return on investment. For an inactive producer, exploiting film libraries made sense—each film negative was an asset in which the production costs were already fixed and the marginal costs of reissuing the film were low. But a vertically integrated studio had other fixed costs to consider—including theaters, exchanges, production facilities, and contract employees—that far exceeded the amount a film library could generate. Vertical integration, for its part, offered many benefits—guaranteed first-run exhibition outlets, high barriers to entry, and the leverage that comes from being a market leader. Although small exhibitors and movie fans continued generating demand for film reissues, the studio system structure ensured that, on the supply-side, reissues would never seriously threaten the business of new movie production, distribution, and exhibition. From the early-1920s to the mid-1940s, the studios primarily used reissues as a stop-gap measures to fill holes in their release slates, especially during the summer months when attendance levels were down and the industry turned its attention to the new season of productions beginning that fall. 104 Conclusion Between 1903 to 1915, the growth of motion picture copyright law, the rise of the feature film, the dominance of the star system, and the emergence of new distribution infrastructures all converged to greatly increase the value of a film negative and film libraries. By the early-1920s, the Federal Trade Commission, star lawsuits, critical indifference, and the dominance of the vertically integrated studios all contributed to limiting the ways in which negatives and libraries could be put to use. In the few years in between, however, Triangle launched the first major campaign of feature library exploitation and, in the process, established the major themes of film libraries across the decades to come: the struggle of stars and labor to profit from their work in reissue; financial applications of film libraries that exceed revenue streams; and the debate about the artistic merit of old works and whether their integrity should be protected. Importantly, Triangle succeeded in exploiting its library not through simple deception or supply-side actions, but because it satisfied the demand of two particular groups of buyers—small exhibitors and film fans. The rest of the industry paid attention to Triangle’s model and learned from it. Although the structure of the studio system demanded that the vertically integrated companies concentrate on maximizing revenue streams to cover high fixed costs, the major Hollywood studios never completely turned their backs on the highly profitable, low grossing business of film libraries. Fox, in particular, showed a willingness to employ some of Triangle’s most infamous methods of library exploitation. In 1920, Fox re-titled three 1917 productions and sent them to exhibitors that had block booked for a 105 full season of new productions. The FTC intervened on behalf of the exhibitors, who, unlike the case of W.H. Productions, genuinely were misled into believing the re-titled films were new. 116 And in 1927, Fox brought sniping to the first-run market. On the same week MGM opened Flesh and the Devil in Philadelphia’s Arcadia Theatre, Fox opened one of star John Gilbert’s earlier productions, The Count of Monte Cristo (1923), in its 2,400 seat Philly theater. Fox reissued six Gilbert pictures from its vaults before the end of the year, earning impressive grosses by reissue standards. The studio was wise to capitalize on the star’s popularity when it did. At the same moment Fox sniped movie- goers from Flesh and the Devil, Fox and Warner Bros. were both investing in a technology that would transform the motion picture experience, ruin Gilbert’s career, and forever change the value of silent film libraries. 117 106 Chapter One Notes Abbreviations AMPAS – Margaret Herrick Library, Academy of Motion Pictures Arts and Sciences DPC – David Pierce Collection LASC – Los Angeles County Superior Court Record Center NARA-CP – National Archives Records Administration, College Park, Maryland NYCC – New York County Clerk Records Center SCWHR – Seaver Center for Western History Research, Los Angeles County Museum of Natural History WHS – Wisconsin Historical Society, Madison, Wisconsin 1 Exhibitor Trade Review, William S. Hart Advertisement, 27 November 1920, 5. 2 William C. McIntyre (Rose Theatre, Fayetteville, N.C.) to William S. Hart, 9 December 9 1920, GC 1012, Box 113, Folder 12, SCWHR. 3 Max E. Prager, “Some Accounting Problems of the Motion Picture Industry,” Administration: The Journal of Business Analysis and Control 2, no. 1 (July 1921): 70— 73. A similar depreciation is schedule was advocated five years earlier in F.W. Thornton, Memorandum on Moving Picture Accounts, July 10, 1916 (New York: Price Waterhouse & Company, 1916), 7. 4 Frick, Saving Cinema, 64–65. 5 In August 1917, Motion Picture News reported that Germany’s demand for junk films to manufacture explosives sent the standard junk film prices of 18 cents or 22 cents per pound up to as much as 42 cents per pound. Motion Picture News, “Germany Buying Junk Films for Explosives—Irwin,” 4 August 1917, 869; Motion Picture News, “Government Stops Germany’s Film Shipments,” 11 August 1917, 970. 6 Variety, “System Sought to Control Reissues: Producers Canvass Possibility of Agreement to Prevent ‘Sniping,’” 19 May 1922, 44. 7 F.W. Thornton, Memorandum on Moving Picture Accounts, July 10, 1916 (New York: Price Waterhouse & Company, 1916), 7. Raymond Fielding discusses this accounting book in depth in Raymond Fielding, “Accounting Practices in the Early American Motion Picture Industry,” Historical Journal of Film, Radio and Television 12, no. 2 (1992): 115. 8 Jane M. Gaines, “Early Cinema’s Heyday of Copying: The Too Many Copies of L’Arroseur Arrosé (The Waterer Watered),” Cultural Studies 20, no. 2 (2006): 227. 107 9 Peter Decherney, “Copyright Dupes: Piracy and New Media in Edison V. Lubin (1903),” Film History 19, no. 2 (2007): 109. 10 Ibid., 113. 11 Ibid., 120. 12 Raymond Fielding, “Introduction,” in Motion Pictures From The Library of Congress Paper Print Collection 1894-1912, by Kemp R. Niver (Berkeley: University of California Press, 1967); Slide, Nitrate Won’t Wait, 36–44. 13 Siva Vaidhyanathan, Copyrights and Copywrongs: The Rise of Intellectual Property and How It Threatens Creativity (New York: New York University Press, 2001), 99–102. 14 Kalem Company v. Harper Brothers, 222 U.S. 55, 61 (U.S. 1911). Peter Decherney, Hollywood’s Copyright Wars, From Edison to the Internet, Chapter 2, forthcoming. My thanks go to Peter for generously sharing chapters from his book in manuscript form. 15 Eileen Bowser, The Transformation of Cinema, 1907-1915 (New York: Scribner, 1990), 106–119; Paul McDonald, The Star System: Hollywood’s Production of Popular Identities (London ; New York: Wallflower Press, 2000), 15–37. 16 Terry Ramsaye, A Million and One Nights; a History of the Motion Picture (New York: Simon and Schuster, 1926); Benjamin Bowles Hampton, A History of the Movies (New York: Covici, Friede, 1931); Lewis Jacobs, The Rise of the American Film: A Critical History (New York: Harcourt, Brace and Co., 1939). 17 Robert Anderson, “The Motion Picture Patents Company: A Reevaluation,” in The American Film Industry, ed. Tino Balio, Rev. ed. (Madison, Wisconsin: University of Wisconsin Press, 1985), 133–152; Scott Curtis, “A House Divided: The MPCC in Transition,” in American Cinema’s Transitional Era: Audiences, Institutions, Practices, ed. Charlie Keil and Shelley Stamp (Berkeley: University of California Press, 2004), 239–264; Quinn, “Early Feature Distribution and the Development of the Motion Picture Industry.” 18 Curtis, “A House Divided: The MPCC in Transition,” 242. 19 Bowser, The Transformation of Cinema, 1907-1915, 22. 20 Anderson, “The Motion Picture Patents Company: A Reevaluation,” 144. 108 21 Bowser, The Transformation of Cinema, 1907-1915, 33; Anderson, “The Motion Picture Patents Company: A Reevaluation,” 146. 22 Quinn, “Early Feature Distribution and the Development of the Motion Picture Industry,” 71. 23 Bowser, The Transformation of Cinema, 1907-1915, 28, 33. 24 For a recent discussion of the culture industries’ balance between repetition and difference, see Toby Miller, Television Studies: The Basics (New York: Routledge, 2010), 94. 25 Curtis, “A House Divided: The MPCC in Transition,” 252. 26 Kalem Kalendar, “Jean of the Jail” (May 1915): 24; Kalem Kalendar, “The Bell of Penance” (June 1915): 7; Kalem Kalendar, “The Suffragette Sheriff” (July 1915): 3. 27 Variety, “Reissue are Popular,” 18 August 1916, 20. 28 Motion Picture News, “Biograph Reissues Equal to Present Day Films,” 29 May 1915, 41. 29 Kalton C. Lahue, Dreams for Sale: The Rise and Fall of the Triangle Film Corporation (South Brunswick: A. S. Barnes, 1971), 19–31. 30 Koszarski, An Evening’s Entertainment, 64–69. 31 Ibid., 68. 32 Rob King, The Fun Factory: The Keystone Film Company and the Emergence of Mass Culture (Berkeley: University of California Press, 2009), 155–157. 33 Los Angeles Examiner, 5 October 1916, quoted in “Papers on Appeal from Order Denying Motion for Temporary Injunction,” Douglas Fairbanks v. Hyman Winik, 19 January 1923, 56, New York County Supreme Court, Index no. 31686—1922, NYCC. 34 Balio, United Artists, 18–21. 35 Ibid., 20. 36 David Bordwell, Janet Staiger, and Kristin Thompson, The Classical Hollywood Cinema: Film Style & Mode of Production to 1960 (New York: Columbia University Press, 1985), 129–141. 109 37 H.A. Spanuth (President, Commonwealth Pictures, Chicago) to Wm S. Hart, March 2, 1917, GC 1012, Box 113, Folder 1, SCWHR. 38 William Grossman provides a lengthy history of Hart’s relationship with Ince in his letter to Henry Wetherhorn, “Hart ads. Reed,” 29 August 1919, GC 1012, Box 113, Folder 11, SCWHR. See also Koszarski, An Evening’s Entertainment, 279–281. 39 William S. Hart telegram to Thomas H. Ince, 15 June 1917, GC 1012, Box 113, Folder 2, SCWHR; William Grossman to William S. Hart, 22 June 1917, GC 1012, Box 115, Folder 55, SCWHR; “Synopsis of William S. Hart Company Contract with Famous Players, Dated July 17, 1919,” GC 1012, Box 114, Folder 28, SCWHR. 40 The Moving Picture World, “The Good Ones Never Die” (Triangle Advertisement), 1 December 1917, 1267. 41 Lahue, Dreams for Sale: The Rise and Fall of the Triangle Film Corporation, 154– 161. 42 Agreement between Triangle Film Corporation, Triangle Distributing Corporation, and S.A. Lynch, 10 September 1917, 10-11, Aitken Collection, Box 15, WHS. 43 Agreement between Triangle Film Corporation, Triangle Distributing Corporation, and S.A. Lynch, 19 November 1917, Aitken Collection, Box 15, WHS. 44 “Memorandum Re: Hart – Fairbanks – Keenan & Talmadge Pictures,” Post 11 March 1918, Aitken Collection, Box 17, WHS. 45 The Moving Picture World, “To States Rights Buyers” [W.H. Productions Advertisement], 19 January 1918, 323, http://www.archive.org/stream/movingpicturewor35newy#page/n357/mode/2up (accessed 13 February 2012 through the Media History Digital Library). 46 Variety, “Trade Commission Closes Case in Reissue Investigation,” 4 April 1919, 73; FTC v. Joseph Simmonds, Stenographer’s Minutes, 29 February 1919, 65—66, Docket no. 210, FTC Docketed Case Files, RG 122, Box 96, NARA-CP. 47 FTC v. Joseph Simmonds, Stenographer’s Minutes, 29 February 1919, 200, Docket no. 210, FTC Docketed Case Files, RG 122, Box 96, NARA-CP. 48 Ibid., 200—202. 110 49 The Moving Picture World, “To States Rights Buyers” [W.H Productions Advertisement], 29 December 1917, 1891. 50 Lahue, Dreams for Sale: The Rise and Fall of the Triangle Film Corporation, 175. 51 Motion Picture News, “For the Welfare of the Industry” [W.H. Productions Advertisement], 1 December 1917, 3764. Emphasis original. 52 Motion Picture News, “Hart Officials Complain of Film Pirates,” 3843. 53 The Moving Picture World aggregated the editorials of the different trade papers in “Retitled Re-issues: The Trade Press has its say on a dangerous practice,” 20 July 1918, 294—296. 54 Marc Winerman, “The Origins of the FTC: Concentration, Cooperation, Control and Competition,” Antitrust Law Journal 71, no. 1 (2003): 91. 55 FTC v. Klesner, 280 U.S. 19 (1929); Richard H. Stern and Joel E. Hoffman, “Public Injury and the Public Interest: Secondary Meaning in the Law of Unfair Competition,” University of Pennsylvania Law Review 110, no. 7 (May 1, 1962): 935–971. 56 AFI Catalog, “The Ordeal” (1914); Royal’s acquisition of The Ordeal negative and some of the changes to the film are also described in FTC v. the Royal Cinema Corp., Mothers of Liberty Pictures Company, and Monopole Pictures Company, Stenographer’s Minutes, 3 September 1919, p. 8, Docket no. 208, FTC Auxiliary Case Files, RG 122, Box 94, NARA-CP. 57 FTC v. the Royal Cinema Corp., Mothers of Liberty Pictures Company, and Monopole Pictures Company, Stenographer’s Minutes, 3 September 1919, 11, 16, 22, Docket no. 208, FTC Auxiliary Case Files, RG 122, Box 94, NARA-CP. 58 FTC v. the Royal Cinema Corp., Mothers of Liberty Pictures Company, and Monopole Pictures Company, Complaint, 30 October 1918, Docket no. 208, FTC Docketed Case Files, RG 122, Box 96, NARA-CP. 59 Variety, “Trade Commission Closes Case in Reissue Investigation,” 4 April 1919, 73. 60 FTC v. Joseph Simmonds, Stenographer’s Minutes, 18 June 1919, 44-45, Docket no. 210, FTC Docketed Case Files, RG 122, Box 96, NARA-CP. 61 Ibid., 14. 62 Ibid., 301. 111 63 Ibid., 311. 64 FTC v. Lasso Pictures Corp., “Order to Cease and Desist,” Docket no. 222, FTC Auxiliary Case Files, RG 122, Box 106, NARA-CP. 65 FTC v. Joseph Simmonds, Stenographer’s Minutes, 18 June 1919, 345, Docket no. 210, FTC Docketed Case Files, RG 122, Box 96, NARA-CP. 66 Ibid., 341. 67 Ibid, 332. 68 The Moving Picture World, “To States Rights Buyers” [W.H. Productions Advertisement], 19 January 1918, 322, http://www.archive.org/stream/movingpicturewor35newy#page/n357/mode/2up (accessed 13 February 2012 through the Media History Digital Library). 69 Sears, Roebuck & Co. v. Federal Trade Commission, 258 F. 307, 311 (7 th Cir. 1919). FTC attorney Hawkins cited Judge Baker’s recent decision in Sears, Roebuck when he argued against W.H. Productions’ defense. FTC v. Joseph Simmonds, Stenographer’s Minutes, 18 June 1919, 321, Docket no. 210, FTC Docketed Case Files, RG 122, Box 96, NARA-CP. 70 Singer, “Feature Films, Variety Programs, and the Crisis of the Small Exhibitor,” 89. 71 Ibid. 72 Snipers were, by and large, small theaters, but there were exceptions. Whether because distributors denied them top tier product or they simply wanted to economize on rental costs, the occasional large theater booked a re-titled Hart film. 73 Singer, “Feature Films, Variety Programs, and the Crisis of the Small Exhibitor,” 94. 74 John Joseph Phelan, Motion Pictures as a Phase of Commercial Amusement in Toledo, Ohio (Toledo, OH: Little Book Press, 1919), 236–237, http://www.archive.org/details/motionpicturesa00phelgoog (accessed 21 January 2011). 75 Toledo Blade, “Empress,” 29 June 1918. 76 New Haven Register, “Park Theater,” 9 August 1918; San Diego Union, “The Plaza,” 9 May 1918. 112 77 Fortunately, several film historians have stepped up to the challenging task. For studies of audiences in the silent era specifically, see Kathryn H. Fuller, At the Picture Show: Small-Town Audiences and the Creation of Movie Fan Culture (Charlottesville; London: University Press of Virginia, 2001); Miriam Hansen, Babel and Babylon: Spectatorship in American Silent Film (Cambridge, Mass.: Harvard University Press, 1991); Shelley Stamp, Movie-Struck Girls: Women and Motion Picture Culture After the Nickelodeon (Princeton, N.J.: Princeton University Press, 2000). 78 I examined all three boxes in the Hart collection that are catalogued as containing fan letters: Boxes 7, 10, and 70, GC 1012, SCWHR. 79 Elizabeth Chadwick to William S. Hart, 18 May 1917, GC 1012, Box 70, Folder 5, SCWHR. 80 Birdie De Veer to William S. Hart, 13 May 13 1917, GC 1012, Box 70, Folder 2, SCWHR. 81 Gaylord Davidson to William S. Hart, 12 August 1919, GC 1012, Box 70, Folder 2, SCWHR. 82 The Super-Pictures Attractions states rights license is recorded in “Memorandum Re: Hart – Fairbanks – Keenan & Talmadge Pictures,” Post 11 March 1918, Aitken Collection, Box 16, WHS. 83 Thomas Coppell to William S. Hart, 18 December 1919, GC 1012, Box 70, Folder 2. 84 T.M.C., “Movie Fans Detect Frauds Quickly,” The Baltimore Sun, 21 October 1923, MP8. 85 The Baltimore Sun, “Old Films are Compared with New by Critic: Views of Reissues Fail to Substantiate Movie Fan’s Claims That Former Successes were Better than those of Today,” 12 August 1923, 65. 86 Manchester Guardian, “Let Bygones be Bygones,” 28 June 1924, 9. 87 Ibid., 9. 88 Iris Barry, Let’s Go to the Pictures (London: Chatto & Windus, 1926), 164–167. 89 Ibid., 106. 90 Ibid., 168–169. 113 91 Koszarski, An Evening’s Entertainment, 193. 92 Photoplay, “The Photoplay Medal of Honor for the Best Picture Released in 1924,” July 1925, 76. 93 Ibid. 94 Photoplay, “The Spirit of ’76,” October 1921, 93. 95 Photoplay, “Outside the Law,” July 1926, 143. 96 Due to limitations of space and the need to prioritize, I have focused on the most important case, which involved William S. Hart. For more on Chaplin and Pickford’s sensitivity to the circulation of their films, see Drew, The Last Silent Picture Show, xiii. The sniping of Fairbanks’ Three Musketeers was the subject of an FTC investigation in FTC v. Film Distributors League, Inc., et al., 9 FTC Dec. 1, 14 (1925). Fairbanks also filed noteworthy civil lawsuit is Fairbanks v. Winik, 206 A.D. 449, 451 (NY App Div 1923). In 1922, Hyman Winik acquired the rights to re-edit Fairbanks’ Triangle pictures into a string of two-reel serials. Fairbanks sued for an injunction to halt any distribution of the shortened films, arguing “they will be distributed before the American public in a deceptive manner, calculated to mislead the American people” and the “mutilated and distorted pictures will come in competition with the pictures I am now making and will inevitably have the effect of injuring my standing with the motion picture public.” The New York County Supreme Court denied Fairbanks’ petition for an injunction, but the star prevailed upon appeal. He won through using the same basis argument he used to break free of his Triangle contract: his contract guaranteed D.W. Griffith would supervise his productions; Hyman Winik’s two-reel reconstructions would not be supervised by Griffith; therefore, the alteration of the completed films by anyone except Griffith amounted to breach of contract. 97 William S. Hart Productions was jointly owned by William S. Hart and Thomas Ince. “Synopsis of William S. Hart Company Contract with Famous Players, Dated July 17, 1919,” GC 1012, Box 114, Folder 28, SCWHR; Henry Wetherhorn, “Hart ads. Reed,” 29 August 1919, GC 1012, Box 113, Folder 11, SCWHR. 98 William S. Hart v. Peerless Film Service, “Complaint for Injunction and Accounting and Damages,” undated, Case no. B-86839, LASC; William S. Hart v. L.F. O’Donnell, “Complaint for Injunction and Accounting and Damages,” undated, Case no. B-86838, LASC. 99 William C. McIntyre (Rose Theatre, Fayetteville, N.C.) to William S. Hart, 9 December 9 1920, GC 1012, Box 113, Folder 12, SCWHR. 114 100 Hyman Winik, Receipt of Delivery for Five Negatives from New York Motion Picture Company, 29 September 1917, Aitken Collection, Box 15, WHS; “Memorandum: Mr Selisberg,” 25 October 1917, Aitken Collection, Box 15, WHS; Selisberg (Legal) to Fetherston (Accounting), “Subject: Western Import Company Payments,” 6 December 1917, Aitken Collection, Box 16, WHS. 101 From a sample contract W.H Productions submitted to the FTC Examiner, we know W.H. Productions sold the three of the longer Hart negatives to the states rights distributor of Wisconsin for $3,500. More specifically, the Wisconsin Film Corporation paid $1,250 each for the two five-reelers and $1,000 for one four-reeler, indicating a per- reel price of $250. The population of Wisconsin in 1920 was roughly 2.6 million people, a number that falls into the lower half of U.S. territories that we know contracted for the W.H. Productions. The $250 per reel price therefore serves as a basis for a conservative estimate. How many reels did each territory obtain? Seventeen two-reelers makes thirty- four reels, plus two-five reelers makes forty-four, plus one four reeler puts us at forty- eight, and, finally, the five reel composite film Staking His Life gets us to a total of fifty- three reels. Fifty-three reels at $250 each amounts to $13,250 just for the state of Wisconsin. If we then multiply this across the twenty-four states rights distributors that we know contracted for the W.H. Productions—and there may have been others—we arrive at an estimated total haul of $318,000, a spectacular return on investment for Western Import’s $16,000 plus whatever sum it paid for the other five negatives. During this same time in fall 1917, Western Import paid Triangle $12,000 for twenty-five Keystone one-reel negatives, which undoubtedly enriched the Aitkens even further. Sources: Agreement between W.H. Productions Company and Wisconsin Film Corporation, 10 December 1917 was entered into evidence and recorded in FTC v. Joseph Simmonds, Stenographer’s Minutes, 29 February 1919, 235—239, Docket no. 210, FTC Docketed Case Files, RG 122, Box 96; Wisconsin population listed in U.S. Government Census, Statistical Abstract of the United States (1921), www2.census.gov/prod2/statcomp/documents/1921-02.pdf, (accessed 18 Mach 2011; Payments about the Keystone one-reelers in the letter from Selisberg (Legal) to Fetherston (Accounting), “Subject: Western Import Company Payments,” 6 December 1917, Aitken Collection, Box 16, WHS. 102 On September 10, 1917, Roy Aitken sent a letter to Triangle informing the company that Western Import’s “cash remittances to you have been excessive to the amount of approximately $142,741.65 and represents advances on future deliveries of negatives during the year 1918.” One week later, Harry had Triangle purchase Western Import for $400,000. The deal involved no cash and few meaningful assets changed hands. Western Import simply agreed to deduct the $400,000 purchase price from new monies received through the fifty-fifty profit split. R.E. Aitken (President, Western Import Company) to Triangle Film Corporation, 10 September 1917, Aitken Collection, Box 15, WHS. 103 Complaint, Triangle v. Aitken, 27 February 1921, New York County Supreme Court, Index no. 3141—1921 (note: the case extends into files 3142—1921 and 3143—1921), 115 NYCC. Using some of the same court records I viewed, Kalton Lahue provides a detailed description of the case in Lahue, Dreams for Sale: The Rise and Fall of the Triangle Film Corporation, 186–198. 104 Variety, “Triangle Benefits $1,375,000 by Settlement of Lawsuits,” 7 July 1922, 63. 105 The Aitken Collection includes documents on Western Import letterhead that list Roy Aitken as president, contracts in which Roy signs on behalf of Western Import, and agreements that transfer assets from Triangle to Western Import for artificially low prices. 106 Barrie A. Wigmore, The Crash and Its Aftermath: a History of Securities Markets in the United States, 1929-1933 (Westport, Connecticut: Greenwood Publishing Group, 1985), 336. 107 The shareholders claimed two other instances of underselling, alleging Mabel Normand’s feature Mickey was worth $500,000 domestically and abroad compared to the $175,000 Triangle received from Western Import; and Western Import paid $1 million below fair market prices for the foreign rights of hundreds of new Triangle productions. Complaint, Triangle v. Aitken, 27 February 1921, New York County Supreme Court, Index no. 3141—1921 (note: the case extends into files 3142—1921 and 3143—1921), NYCC. 108 Agreement between S.A. Lynch Enterprises and United Hardware and Supply Company (United Projector Company, Branch), 25 August 1919, Aitken Collection, Box 20, WHS. 109 David Pierce discusses United Safety’s 28mm gauge in David Pierce, “Silent Movies and the Kodascope Libraries,” American Cinematographer, January 1989, 37. 110 Lt. Joseph O’Reilly to Triangle Distributing Corp, 10 November 1919, Aitken Collection, Box 20, WHS. 111 Lahue, Dreams for Sale: The Rise and Fall of the Triangle Film Corporation, 196. 112 Variety, “Aitken’s Novel Scheme to Market 2,000 Old Triangles,” 12 January 1923, 39; Variety, “Triangle Reissues,” 14 June 1923, 23. 113 Variety, “Selznick Reissues Promise War in Film Rental,” 28 January 1921, 47. 114 The period between 1924 to 1931 was especially significant. Paramount bought the 62 theater New England-based Olympia Theatres chain in 1925, the important 35 theater Chicago Balaban & Katz chain in 1926, and 176 Southern theaters in Saenger circuit in 116 1929. Kuhn Loeb Report on Paramount Publix, 20 December 1934, 52-55, Vertical File Collection, 21, AMPAS, 115 FTC v. Famous Players-Lasky Corp., 11 FTC 17 (1927); FTC v. Paramount- Famous Players-Lasky Corp., 57 Fed. (2d) 152 (1932). 116 Fox Film Corporation v. Federal Trade Commission, 296 Fed. 353 (CCA 2, 1924). 117 Variety, “2,400 Capacity Fox Philly in $33,300 Week,” 16 March 1927, 8; Variety, “The John Gilbert Reissues” (Fox Advertisement), 28 September 1927, 15. 117 CHAPTER TWO: WARNER’S BACKLIST MELODY: DERIVATIVES, COPIES, AND SILENT FILM DESTRUCTION IN THE 1930s Warner Bros. entered the 1930s possessing the largest library of silent feature films in world history. Through a series of acquisitions, Warner Bros. had supplemented its library of roughly two hundred Warner features with hundreds more films from First National, Vitagraph, World, and Triangle. By the end of the same decade, most of those same films either no longer existed or were well on the path toward the same fate. Some of the negatives were claimed by fire, but many others were deliberately destroyed by Warner Bros. executives and staff. The story of the creation and destruction of the Warner Bros. film library is part of the larger stories of the transition to sound, structure of the studio system, and the unpredictable effects of copyright law. The transition to sound did not destroy the value of silent film libraries, but it did transform them—from works that could be profitably re- circulated as copies into collections of properties for the production of derivatives. As I argued in the Introduction, we can think about an owner’s potential uses for a film library as broadly falling into one of two categories: the copy and the derivative. If you own the copyright to a film, you exclusively control the right to circulate copies of the work for the duration of that copyright. The copy circulates through theatrical reissues, revival bookings, or distribution across non-theatrical formats. However, copyright owners also control the rights to create derivatives, works that use substantial portions of the copyrighted material. Derivative uses for film libraries include remakes and stock footage. 118 Although Warner Bros. and the other film studios of the 1930s valued their libraries primarily for the production of derivatives, opportunities still existed for exploiting the library copy. By 1934, the domestic market for film reissues rebounded, driven by exhibitor demand for cheap, dependable product to fill double features. The reissues that fared well during the 1930s were, by and large, the star-driven sound movies that a significant base of the audience had not yet seen. A handful of silent films fared well in the early-sound era, but on the whole, the opportunities for a silent film reissue were quite limited. Beyond the domestic reissue market, the studios weighed three other options for exploiting library copies: global reissues, 16mm distribution, and participation in the Museum of Modern Art’s Film Library. By exploring the markets for derivatives and copies in the 1930s, we can understand the decisions Warner Bros. made with its library—what to save, what to destroy, how to protect the derivative potential while reducing the costs and risks of storing nitrate films. Warner Bros. as an organization is the chief object of study for this chapter. However, other industry players receive discussion, and my analysis of Warner’s remake and reissue practices are broadly applicable to the other major studios as well. In one regard, though, Warner Bros.’ collection of copyrights was truly exceptional: Warner owned thousand of copyrights that were neither films nor stories intended to serve as the basis for films. The studio was a major player in the nation’s music publishing industry and, to a lesser extent, the book publishing industry. In 1929, Warner Bros. acquired several Tin Pan Alley music publishing houses, gaining so many song copyrights that, by 1935, the studio published between 25 to 40 percent of all music played over the radio. 1 119 M. Witmark & Sons, the most famous of the Tin Pan Alley firms acquired by Warners, also owned a textbook publishing subsidiary, which specialized in music education but published books for other subjects as well. In 1932, the same corporation that offered a hard-hitting exposé of the Southern penal system in I Am a Fugitive From a Chain Gang also examined “The Boy Problem” (puberty) in Problems in Public School Music (reprinted in 1941). 2 And in 1933, the conglomerate reissued both the 1929 film Disraeli and the sheet music of Bach and Schubert. 3 Warner’s extension across multiple copyright industries invites us to compare broadly the ways in which each industry operated—particularly in relation to their libraries. Before we can explore the derivative, the copy, and film destruction, we need to understand both the similarities and profound differences between film libraries and the backlists of book publishing and music publishing. Although Warner Bros. and the other studios were initially influenced by publishing and live theatre in how they selected films for reissue, the systemic differences between the vertically integrated motion picture industry and the retail-oriented book and music publishing businesses necessitated fundamentally different approaches to their old works. Comparing Industries: The Library vs. the Backlist Although film libraries were relatively new in the 1930s, the exploitation of old copyrights was not. Book publishers had long used their backlists as profit centers and barriers to entry against prospective competitors. Donaldson v. Beckett, the pivotal lawsuit in 18 th -century England that determined copyright was to be a limited monopoly 120 rather than perpetual right, was really a battle launched by London publishers to protect their valuable backlists against the threat of the public domain, or, more specifically, the threat of the public domain reprint. 4 The United States imported the British statutory approach to copyright, and ever since, American publishers have had temporary monopolies of their backlist titles before the copyrights expired and the works enter the public domain, where other publishers may reprint them. Just as Motion Picture News and Variety differed in their view of exploiting film libraries, the discourse in the publishing world about backlists has veered between dire warnings of cannibalism and equally harsh chastisements for neglecting its value. In 1897, the British trade paper Publisher’s Circular warned that “the dead are today taking the bread out of the mouths of the living at a rate unparalleled in the history of literature.” 5 In O.H. Cheney’s famous 1931 Economic Survey of the Book Industry, however, he complained that “backlists are naturally affected by the competition of and among new books. If the backlist is the most profitable part of a publisher’s business, why should it be made to struggle to survive?” 6 In a broad economic sense, film libraries and publishing backlists are similar because both industries involve high fixed costs yet low marginal costs of reproduction. The advance payment to an author, the postage of letters imploring the author to hurry up, and the cost of creating the printing plates—those are the fixed costs. Those costs were fixed whether the printer produced one copy or ten thousand. But after the fixed costs of producing the first copy, the cost of producing each additional unit (what economists refer to as the “marginal cost”) is quite low in comparison. Cinema shares this basic principle. Ever since 1908, the fixed cost of producing the negative has far 121 exceeded the low marginal cost of striking prints. Additionally, the practices of backlist publishing unquestionably influenced certain decisions made by the studios in selecting films for reissue. Influenced by the success of publishers of “classics,” major studios in the 1930s chose adaptations of Little Women, Treasure Island, and David Copperfield for reissue. The publishing industry shaped the copyright laws that the film studios operated within and clearly influenced assumptions (which turned out to be incorrect) about what type of film would be well suited for reissue. But when we analyze the way backlists and libraries have functioned within each given industry, clear differences emerge. 7 The two most important functions that backlists have historically played within the publishing industry have been as a low risk, low cost profit center and as a barrier to entry against competitors. The two functions are closely related—the dependable profits from the backlist offset some of the risk of publishing new books, thus providing a competitive advantage to incumbent publishing houses and a barrier to entry against would-be competitors. During the reissue boom of the late-1940s (which I examine in Chapter Three), film libraries came to serve similar functions for the major Hollywood studios. In the 1930s, however, film libraries served neither of these functions. Across the decade, MGM’s theatrical distribution of films turned an average annual profit of $6.9 million, only $170,000 or 2.5 percent of which annually came from reissues. Even RKO, a far less successful studio that spent most of the 1930s in receivership, annually earned an average of $672,500 in profits from its all films, only $51,200 or 7.6 percent came from reissues. Furthermore, these average profit figures are based only on the performance of films; they don’t include the studio’s 122 theaters and other businesses. The revenues and profits available through reissues were too small to provide a barrier to entry against competitors. 8 In the absence of dependable, profitable libraries, the Hollywood studios devised other means to serve the same economic functions. B-movies were the dependable, low cost productions that helped offset the risk of large budget A-movies. The studios further offset risk through block booking, compelling exhibitors to accept entire slates of A- and B-pictures in order to obtain the handful of desirable titles. Block booking essentially transferred the risk of failure from the studio to the exhibitor. Block booking was also a barrier to entry against independent producers and distributors who had a harder time obtaining screen space. Another barrier was the star system; the studios kept most of the movie stars under exclusive contract, loaning their services at times to one another but almost never to an outsider. The biggest barrier to entry, though, was the ownership of first run theaters, worth hundreds of millions of dollars and which the studios had taken on large debt to purchase. Any new competitor who wanted to join the poker game would have a very high buy-in. The first run theaters played a vital role in the distribution and profitability of a film. Theaters were assigned a particular run (first, second, third, etc.) in a specific geographical zone; the theater could exhibit the film once a pre-determined clearance period (perhaps 8-12 weeks) had passed since another theater in the zone had shown it. This system, known as run-zone-clearance, ensured the most money possible reached them as a film played across the country. The first run commanded the highest ticket price and, for this reason, the studios tended to grant their own theaters first run status. 123 Because of the large first run theaters incurred high fixed costs, the studios needed to attract the largest audiences by playing the most desirable films, regardless of which company produced them. Since most of the major studios owned theaters concentrated in a particular region, the studios traded first runs among themselves—Fox would give an MGM picture first run in Fox’s large West Coast movie theaters, for instance, in exchange for MGM’s parent company Loews playing a Fox picture in first run at one of its New York City theaters. The system made it difficult for either independent exhibitors or independent producers to compete. Independent exhibitors weren’t able to sell tickets at first run premium prices; independent producers, with a handful of notable exceptions, lacked access to the lucrative downtown first run theaters that were essential for a film’s promotion and successful release. The essential point to understand is that these same systems that functioned to stabilize profits, mitigate risk, and block competitor entry in the film business also limited the opportunities for library exploitation. Since their theater assets were worth far more than their film assets, the studios necessarily had to subordinate the business of selling film libraries to the business of producing new pictures, exhibiting them in first- run theaters, and pushing them through the cycle of distribution. The studios needed highly sought after pictures that would fill the 2,000 seat capacities of their first run theaters and compel independent exhibitors to block book an entire season. Old movies could not perform this task. Even when studios reissued a film, they sold it as a one-off and did not include it under a block booking contract, likely recognizing that forcing exhibitors to accept old films would look bad and provide ammunition for the exhibitors 124 and government in their antitrust lawsuits. Whereas backlist exploitation provided stability, profitability, and a barrier to entry in the publishing industry, library exploitation threatened to erode these same essential functions if practiced in the film industry on anything beyond a limited scale. There were additional differences between films and books as products that also explain why their respective industries organized their old copyrights differently. The end-uses of books and films differed. Whereas consumers throughout the 20 th century could buy books as gifts or buy books and never read them, these were not prevalent end- uses for films until the VCR boom of the 1970s and 80s. Yes, a collector’s market existed for buying, selling, and renting 8mm and 16mm film prints, but this market remained marginal due to limited supply, cumbersome technology, and costs prohibitively high to the general consumer. An old movie was a fundamentally different product than an old book. Consumers could not receive movies as gifts, impulsively buy them at the store, or use them as a shelf decoration. In order for exhibitors to continue wanting to rent old movies and the studio to make money, consumers had to actually buy tickets (which they would not do unless they intended to sit through all or part of the film program). The differences in end-uses helps explain why the film adaptations of literary classics reissued during the 1930s performed poorly at the box office. The studios looked at the impressive sales of “classic” series like the Little Red Library and selected films such as Little Women and David Copperfield from their vaults for reissue. But they failed to recognize that many, perhaps most, of those classic book sales came from gift-givers and the consumers desiring to build home libraries at low prices. When O.H. Cheney 125 surveyed American reading habits in 1930, he found that only three per cent of adult reading went toward consuming “world masterpieces” and the “standard authors.” 9 More people bought the classics than actually read them. Buying and reading could be distinguished as two different activities in the world of publishing, but no comparable distinction existed between the activities of buying movie tickets and viewing movies. There were also important differences in the sensitivity of end-users (readers and audiences) to old works. Although only three per cent of adult reading time went toward “world masterpieces” and the “standard authors,” adults in 1930 spent forty percent of reading time on books that were between one and one half to eight years old. 10 Movies between one and a half to eight years old, on the other hand, attracted nowhere close to forty percent of viewing time. By one and a half years after the average picture’s gala premiere, it had generally finished its cycle of run-zone-clearance exhibition and only returned to screens if the studio reissued it on a national basis or an exhibitor booked a “revival.” One New York Times commentator in 1935 went so far as to say that “women’s hats and automobiles change so much from season to season that a film three years old is practically a period or costume film.” 11 Films were always more sensitive to age than books, but the transition to sound exacerbated the effect. No change in the history of film form aged movies more than the transition to sound. Whereas a star-driven 1923 feature still held meaningful reissue value in 1927, a star’s 1927 film held little market value in 1931 after the complete transition to sound. Books contained less clear markers of age and never experienced a formal transformation in the 20 th century as dramatic as the coming of sound. 126 Films were more sensitive to age in the minds of consumers. But on a material level, cinema was also far more sensitive. The 1930s were still part of the nitrate era. All it took was the light of a match, the flick of a cigarette, or a very hot day to turn the highly flammable film stock into an explosive that could be highly destructive. “At its best, nitrate film has a relatively low ignition temperature,” film historian David Pierce explains. “Decomposition lowers the flash point so rotting nitrate film can spontaneously combust at temperatures as low as 106 degrees Fahrenheit, emitting toxic fumes while burning.” Films, buildings, and lives were lost forever due to nitrate fires in the teens, 20s, and 30s. Most of William Fox’s pre-1932 productions were ultimately destroyed in a 1937 fire that erupted in the vaults during 100 degree July weather. 12 Books, in contrast, were quite stable materials. The printing plates used at the press did not go up in flames at a low temperature. Nor did the paper in the resulting book, which could survive in a variety of climates and users could experience without the mediation of a projector. The book could survive and circulate far more easily than the film. We should recognize, however, that the instability and inaccessibility of film can provide one of cinema’s strongest drawing powers. In an advertisement for the 1933 reissue of Disraeli (1929), the illustration of a monocle-wearing, stiff upper-lipped George Arliss, appeared above an urgent call to viewers. “NO PICTURE IS IMMORTAL!,” warns the ad. “If it were possible, ‘Disraeli’ would certainly go on forever—but time inevitably dulls and destroys film negatives! Don’t fail to take advantage of this final opportunity to see the screen’s one great masterpiece in its perfect and original form!” 13 Here, a studio turned the instability of nitrate film into a marketing 127 tool. See the movie now or never. Although few press campaigns contained such acknowledgments of the fragile material conditions of film, the advertisement points to a broader tension that distinguished studio libraries from publishing backlists. Unlike readers who can access an out of print novel through personal copies, libraries, or used bookstores, film viewers in the early 1930s depended entirely on distributors and exhibitors for their access to an older work. And that access itself was fleeting. Aside from the limited number of collectors who had purchased 16mm films and projectors, most movie audiences only had the day or two when a revival played in town to see an old picture. Buried in small text in this advertisement, the studio touched on cinema’s tension between the everlasting and the ephemeral. A movie could simultaneously be “the screen classic of all time” and a mortal work destined for the dust pile. Despite cinema’s mechanical reproducibility, audiences could feel a sense of scarcity, urgency, and unique “aura” around a work. All of these feelings could be harnessed to sell more tickets. Disraeli was a reissue. The reissued film was also a remake of a silent picture, itself adapted from a stage play. As both a copy and derivative of the library, Disraeli was especially representative of the ways studios attempted to exploit old properties. We now turn to the remake, the reissue, and the studio behind Disraeli, Warner Bros. 128 Warner Bros., the Transition to Sound, and Industry Convergence The tale of how Warner Bros. Pictures used sound to rise from the status of minor exhibitor and producer into one of the major Hollywood studios has been oft told. According to the traditional narrative, told by Benjamin Hampton and rehashed by others, the brothers Warner were trapped in an inferior position within the film industry through the mid-1920s due to the market power of Famous Players, Loews, and First National. 14 In a last ditch effort to save the family business from going under, Harry, Abe, Sam, and Jack (listed here in descending order of birth) made the supreme gamble, investing everything they had into the speculative proposition of talking pictures. The Jazz Singer opened, talking pictures were a hit, and Warner Bros. transformed from industry also-ran to industry leader. Douglas Gomery demolished this myth, providing the revisionist account of Warner Bros. that most scholars accept today. Warner’s investment in sound was not a wild gamble, but instead part of a calculated strategy of industry expansion. In 1925, Warner Bros. obtained financing from Waddill Catchings of the investment bank Goldman Sachs. Warner Bros. immediately put the financing toward becoming a vertically integrated firm: purchasing first-run theaters to guarantee screen-time for its product; acquiring an international distribution network of film exchanges through the purchase of Vitagraph; and investing in sound synchronization experiments that, if successful, would differentiate Warner Bros. productions from those of its competitors. Sound proved highly successful and the industry’s first movers, Warner Bros. and Fox, benefited greatly. 15 By 1929, the initial success of sound allowed Warner Bros.—aided by Goldman Sachs, easy credit, and a robust stock market—to acquire several large 129 music publishing companies and the assets of First National Pictures, including theaters, exchanges, and film library. When the stock market crashed on October 29, 1929, Warner Bros. was a vertically integrated movie studio, a highly leveraged publicly traded company, and a diversified media conglomerate. As the studios adopted sound, the importance of music became far greater to the studios. Whereas during the silent era exhibitors were expected to pay ASCAP royalties for popular songs usage, these costs now transferred to the producers who filled their soundtracks with music. The transition to sound drove Warner Bros. to acquire M. Witmark & Sons and the several publishers belonging to the Music Publishers Holding Corporation. As music historian Russell Sanjek explains, “It had become obvious to Warner, as to others, that the film industry must get control of a sufficient number of music copyrights to make it independent of any combine of music publishers, songwriters, or copyright owners.” 16 Sanjek also notes, though, the extent to which Warner’s approach differed from the other studios: By buying control of copyrights, Warner was unique in the rush by movie companies to purchase music houses. Most were interested only in acquiring for hire the services of experienced songwriters, for which they were then paying sums far greater than the average annual income of most of them. Warner looked to the day when it might be freed of onerous and increasingly exorbitant synchronization fees. 17 Warner immediately put the music publishing companies to use. The new songs of the publisher were inserted into the movie; the movie then served to promote, or “plug,” the song. The audience for a nationally distributed motion picture was far larger than those who would hear a song plug through a vaudeville act, department store performance, or any of the other tried-and-tested Tin Pan Alley sales tactics. 18 Warner Bros. felt 130 something was wrong with a system where it paid top dollar for a song, gave it tons of publicity, and another walked off with all the sheet music sales revenue. The music publishing subsidiaries allowed Warner Bros. to profit from the success of the songs it made famous. 19 Warner Bros.’ high profile musicals of the period, such as 42 nd Street and Footlight Parade, primarily used new songs that it could simultaneously plug and sell, rather than drawing from old songs from the publishers’ extensive catalogues. Yet the Witmark and Music Publishers Holding Corp. catalogues played a vital role in the production of other films—period features, such as The Dawn Patrol (1930, remade 1938) in which the Tin Pan Alley songs conjured a sense of time and place, and B- movies that were unlikely to afford an original song by in-house song kings Harry Warren and Al Durbin. Of all the Warner Bros. films, though, it was the cartoons that most consistently exploited the old song catalogues. Cartoons relied heavily on music, with a seven-minute sound cartoon generally requiring sections of between five to fifteen separate musical compositions. To both control costs and plug the conglomerate’s feature films and sheet music, Warner Bros. executives exhorted Leon Schlesinger’s animation unit to use in-house music. As Scott Curtis explains: Having acquired the rights to any given song, producers were eager to get as much mileage out of the tune as possible. The four featured songs from Mervyn LeRoy’s hit musical 42 nd Street (1933), for example, were included in at least six cartoons of the same year. Two of the songs had their own Merrie Melodies: Young and Healthy and Shuffle Off to Buffalo, but both of these songs were also included in The Dish Ran Away with the Spoon and Bosko’s Knight-Mare. 20 131 One small detail worth clarifying—although Warner Bros. owned majority stock positions in Witmark and the Music Publishers Holding Company corporations, the studio could not simply use any song for free. Many songwriters and the original publishers retained royalty interests in the song catalogues. 21 What the music libraries gave Warner Bros., though, was dependable access to songs that had been pre-negotiated for usage at low, fixed rates. Clearly, the late-1920s and early-1930s marked a period of industry convergence. Warner Bros. Pictures became a music and textbook publisher; RCA, a radio and electronics giant, established a vertically integrated movie studio, RKO. Numerous film and media scholars have studied the convergence of media, including Hollywood’s engagements with the industries of music publishing 22 , radio 23 , recorded music, 24 television 25 , and new media. 26 It’s important, though, that “convergence” not become a lazy, all encompassing term. We need to be specific about which aspects of the industries are converging, which are not. As the earlier comparison between the film library and publishing backlist demonstrates, the elements of two different industries that appear similar may actually play entirely different functions in the context of those industries. Unlike publishing backlists, film libraries did not provide the studios with a key profit center and barrier to entry. Still, the studios in the 1930s valued their libraries, particularly as engines for the production of derivatives. 132 Producing Derivatives To understand the studios’ rampant reuse of stories and footage, we need to think about the practice in the larger context of the Hollywood production process. Doing so allows us to see the continuities between the reuse of film libraries and the reuse of other studio-controlled assets and inputs. Richard B. Jewell provides a succinct overview of the studio production process: Each company’s production year generally began in late spring or early summer to accommodate the release year which commenced in September… Earlier, often in January, top studio executives would meet to map out production plans. A target number of films would be agreed upon with an approximate budget for the year’s production activities. Other topics which the executives might discuss included the studio’s major talent and how best to utilize it, the literary properties owned by the company and their suitability for filming and the number of big- budget productions to be produced compared to less-expensive efforts. Each company’s head of production would then assume responsibility for implementing the overall plan. 27 The overall plan frequently called for the studio to produce fifty or more productions in a given year, an ambitious schedule that required the studio efficiently utilize its inputs (including labor, equipment, and studio space) to produce a steady set of outputs. What distinguished the great production heads, like Warner Bros.’s Darryl F. Zanuck and his successor, Hal Wallis, was their ability to creatively combine the same or similar sets of inputs yet produce unique outputs. Many of the essential inputs were human. The head of production delegated projects to a contract producer, who in turn, collaborated with a contract director, contract writers, contract actors, contract cameraman, contract set painter, and so on. The contract producer encouraged his department heads to reuse sets, costumes, and props from other productions. There were some inputs, like extras to fill a crowd scene, which would be inefficient to hire full-time under contract. Nevertheless, 133 the system encouraged the combination and recombination of inputs, and producing derivatives—which inherently involved the use of one or more copyrighted works to create another—fit perfectly within this model. Studios also utilized each other to combine and recombine inputs. The loan out of contract actors from one studio to another is a well-known practice of the studio system. Far less commented upon but equally prevalent, the studios bought and sold story properties from one another, remaking the films of their competitors. We can learn even more about derivatives by tracking the steps the studios took in creating them. Step One: Secure the Rights Before a studio could turn a silent film into a sound remake, that studio or another producer had to already have made the initial film. And that initial film usually began by the producer or studio Story Department purchasing the motion picture rights to a novel, play, article, or short story. Although original screenplays became more prevalent toward the mid-to-late-1930s, the vast majority of films from the transitional sound years were adapted from other works. 28 Technically speaking, then, most Hollywood features, even non-remakes, were “derivatives” because they were based on the derivative rights to a copyrighted play or work of literature. Studios acquired the motion picture rights from the owner of the literary copyright. The literary author or owner controlled the exclusive right to license derivative works, which could be a literary sequel, stage play adaptation, or—thanks to Kalem v. Harper Bros.—an authorized motion picture adaptation. Depending on the particular deal, the motion picture rights could extend for the duration 134 of the copyright or be as limited as a five-year license to produce one motion picture based on the novel. During the transitional sound years, Warner Bros.’ library of remake- able properties consisted of the patchwork of motion picture rights agreements for the studio’s own silent productions, plus those the studio inherited through acquiring Vitagraph in 1925 and First National in 1928. Step Two: Re-secure or Purchase the Rights When a Story Department staffer or studio executive wanted to remake a silent film from its library, the lawyers opened up the old contract file with a sense of dread. For most stage plays adapted into silent films, the studio had acquired the motion picture story rights but not the accompanying dialogue rights. If a studio wanted to copy direct passages of dialogue from the stage play into the sound film—and most did—then the studio had to re-negotiate with the playwright for the dialogue rights. 29 The studios encountered less rights problems with the novels, articles, and short stories they had licensed; dialogue seldom translated so directly from page to screen and, even in a western short story where it might, the literary author generally gave up more rights than his playwright counterpart. The re-negotiations for dialogue rights demonstrate that the use of film libraries for remakes was not merely about cost cutting. Studios had to fork over new money to remake plays from their film libraries, hardly an economizing move. The remake boom of the early sound years was driven by a perceived shortage of suitable screen stories. Although some remakes deliberately included as much footage from the original film as 135 possible to lessen the production budget, the studios turned to previously successful pictures just as often to control the risk of failure more than to control costs. The demand for tested story material created a lively market for the buying and selling of remake rights. Independent producers and defunct film companies marketed their re-makeable properties to the studios. In 1929, for instance, Warner Bros. paid $10,000 for World Film Corporation’s library (or what remained of the library after previous sales). The most recent film that Warners acquired in the deal had been produced in 1918. 30 Independent producers who had released silent features through United Artists or First National were also well positioned; they generally retained the underlying film copyright and, after the distributor’s exclusive distribution period had passed, they could sell off the remake rights. Harry Aitken, never one to miss an opportunity for library exploitation, became an active player in the rights trade. In 1928, Aitken compiled a catalogue of the story rights controlled by the Triangle, emphasizing their availability and desirability for sound remakes. 31 One year later, Warner Bros. snapped up 58 of the Triangle properties, mostly western stories that could be used as the basis for more of Warner’s low-budget “oaters.” 32 As further proof of the vibrancy of the remake rights market, the buying and selling attracted the interest of agents; the Warner Bros.-Triangle deal, for instance, was negotiated by R.L. Giffen, who developed a niche in rights brokering. The studios also bought, sold, and traded story rights among one another. The loan outs of contract actors from one studio to another is a well-known practice of the studio system. To obtain the two stars of It Happened One Night (1935), for instance, 136 Columbia had to contract with MGM for the services of Clark Gable and with Paramount for Claudette Colbert. Far less commented upon, though, is the sale and trade of story properties among the studios. Fox produced a silent version of If I Were King (1920), but Paramount remade the Justin Huntly McCarthy play in 1930 and again in 1938. Paramount, for its part, transferred the underlying rights to Fast Company (1929) to Warner Bros., which remade the film a mere four years later under its original stage title, Elmer, the Great (1933). 33 The seller generally had to agree not to reissue the original picture. Sometimes, the selling studio had to destroy all positive and negative prints of the original production; other times, the original studio was allowed to keep a print exclusively for reference purposes. Today, it is exceedingly rare for one studio to sell the rights to a previously produced film (or even to sell an unproduced project in “turnaround”) since if the remake is hugely successful for the other studio, the executive who decided to sell it and not produce it in-house will lose face and, probably, his job. During the 1920s and 1930s, however, no such conflict existed. The industry’s common sense belief was that trading story rights among studios was both necessary and advisable: necessary, because of the shortage in suitable screen stories; advisable, because the remake of another producer’s film would likely reach a slightly different, and hopefully bigger, audience. As Variety reported in 1931, “Remake tendency in the industry as a whole is to do three pictures previously done by rivals for every two originated by the studio. Thus if a similarity to the old silent is evident it is likely to play different theatres and reach a somewhat different public.” 34 As the decade continued, the ratio changed, skewing more toward 137 studios remaking their own properties. Still, studios continued to buy, sell, and trade story properties, indicating that derivative value lay both in the potential to re-use properties and sell them to other studios to re-use. Step Three: Producing the Derivative Although they had always been a part of commercial cinema, remake production spiked during the transition to sound. During the single season of 1928 to 1929, no less than 75 features were remade into sound. 35 The studios’ output of silent-to-sound remakes between 1928 to January 1931 demonstrates that the extent of the trend: Paramount produced 25 remakes; Fox 16; MGM 15; Columbia, 11; Universal, 10; United Artists, 8; RKO, 6. No studio embraced the remake so fully, however, as Warner Bros. Warner topped all other remake producers, churning out 35 remakes between 1928 to January 1931. 36 Warner Bros. remade all types of films, at all budget levels. Some remakes were composed entirely of new footage, such as Disraeli (1929) or The Millionaire (1931), both based on films and underlying properties previously released by United Artists in the early-1920s. As both starred George Arliss in the original film and theatrical productions, the remakes amounted to a form of restaging. Others remakes relied heavily on pre-shot footage, inserting a new star and sound into a silent film produced years ago. Critics attacked remakes, but the studios ignored the criticism and used the same properties again and again. In perhaps the most frequently cited example of a remake being vastly superior to the original, Warner Bros. produced two sound features based on 138 Dashiell Hammet’s The Maltese Falcon in 1931 and 1936 before arriving at “the stuff that dreams are made of” in the 1941 version, starring Humphrey Bogart and directed by John Huston. Warner Bros. excelled at reusing both stories and footage. Warner’s Captain Blood (1935) is best remembered as the picture that launched Errol Flynn into swashbuckling stardom, but the film is also a remake that utilized footage originally shot for other films. Warner Bros. obtained the rights to Rafael Sabatini’s novel Captain Blood through the studio’s 1925 acquisition of Vitagraph, which had produced a film version the previous year. When it came time for the 1935 sound remake, Warner Bros. inserted sea footage originally shot for First National’s The Sea Hawk (1924) and Divine Lady (1929).” 37 The reuse of film libraries did not always carry an economizing effect: even with the recycling of story rights and footage, Captain Blood still cost $995,000 to produce the negative. 38 However, the decision to reuse the Sabatini novel and earlier footage demonstrates the extent to which the recombination of studio asserts was ingrained into the Classical Hollywood production process. On the lower end of the budget spectrum, the reuse of assets served a more important cost controlling function. Out of the roughly fifty features Warner Bros. produced per year between 1932 to 1941, B-pictures comprised between one third to half of the annual output. With budgets capped around $150,000 (and frequently lower), the B-unit needed to economize on story properties and turned to the Warner Bros. film library for material. 39 Warner Bros. and independent producer Leon Schlesinger took extreme steps to control costs through the reuse of stories and footage in a series of B- 139 westerns for the 1932—1933 season that starred John Wayne. Haunted Gold, The Big Stampede, Somewhere in Sonora, and Ride ‘Em Cowboy were not only remakes of silent Ken Maynard films released by First National a few years earlier; the action scenes were reprints of the old footage. The climactic stampede in The Big Stampede (1933), for instance, cuts between medium shots of John Wayne and long shots of his same character herding cattle in First National’s 1927 silent film Land Beyond the Law. In the same sequence, The Big Stampede’s villain gets his comeuppance when he is trampled by stock footage of livestock (Figure 4). John Wayne later complained of having to “dress up to look like Ken Maynard because a lot of the old footage they inserted had shots of Maynard in the distance. I really hated that.” 40 Wayne may have resented imitating another on-screen cowboy, but the efficiencies of having story rights, screenplays, and pre-shot action footage meant that Schlesinger could deliver the six remakes to Warner Bros. for a fraction of the cost of even average B-movies of the period. The films were produced as “negative pick-ups”: Warner Bros. paid Schlesinger $28,000 upon delivery of each film, and Schlesinger presumably budgeted the pictures at an even lower level. 41 140 Figure 4. This compilation of video stills from The Big Stampede (1933) demonstrates the film’s intercutting between new footage—including a shot of John Wayne—and old footage of cattle from Land Beyond the Law (1927). The practice of reusing footage from other productions was even more common in the production of short films, which Warner Bros. cranked out at a high volume on miniscule budgets. Stock footage could blend into the short, help fill out the eight-minute running time, and provide a bit of production value. Alternatively, rather than trying to seamlessly blend the footage, the short films could make the older images jarringly stand out and serve as the main source of entertainment. Rival studio MGM perfected this practice in the production of Goofy Movies (1933—1934), a precursor of sorts to Mystery Science Theatre 3,000, in which narrator Pete Smith offered ironic commentary over 141 silent film footage. Old fashioned clothing and acting styles provided a dependable source of joke-fodder. So too did cutting between films from different genres—for instance, from the melodramatic scene of lovers quarreling to the slapstick image of a monkey driving an automobile. 42 Warner Bros.’ Vitaphone unit also turned to the past for entertainment, compiling Thrills of Yesterday (1931), The Movie Album (1932), Nicklette (1932), and Movie Memories (1933) with footage from its enormous silent library. Vitaphone editor Bert Frank unknowingly created an archive as he searched through the old prints in the Warner Bros. vaults that were ripe for gentle teasing; the Vitaphone shorts contain footage from silent features that later became lost, such as Vitagraph’s My Official Wife (1914). 43 Step Four: Safeguarding the Library for Future Copies and Derivatives Warner Bros. capitalized on its extensive silent film library to produce derivative features and shorts. The studio effectively harnessed the past to accommodate the needs of the present. But what future value did the studio believe these current productions would have? We cannot simply examine film libraries through how a studio exploits its past. Instead, we need to take into account the assumptions the studio makes at the moment of production, the assumptions about a film’s likely future value and uses. The decisions made during the production fundamentally shape the manner in which the library can or cannot be put to future use. Warner Bros. took some steps to protect the future value its current productions might enjoy. Warner Bros. was the sole copyright owner to all of its sound productions, 142 and the studio controlled all rights to theatrical reissues, the most lucrative aftermarket for old films until the mid-1950s. The studio also recognized that future opportunities for exploiting old films might lie beyond the movie theater. The studio’s lawyers stayed abreast of the technological development of television in the late-1920s and early-1930s. By 1931, Warner Bros. was reserving television as a distribution right in its standard talent contracts for actors, screenwriters, and directors. 44 But if Warner Bros. showed forward thinking in regards to its talent contracts and television, then the studio proved shortsighted in its acquisition of story rights and imagining of how television might be used. In the talent contracts with actors and directors, the studio could easily retrain “all rights whatsoever”; these were workers-for- hire employed for the purpose of building copyrights for the studios. When it came to Warner Bros. acquiring rights to successful plays and books, on the other hand, the author had already created a copyright that he owned. The author could separate the derivative rights (motion picture, radio, etc.) and license them individually. Additionally, due to the high demand for screen stories in the early sound years, a successful playwright had the leverage to negotiate a rich movie deal that would give away as few rights as possible. This was certainly the case for Spring is Here, the Rodgers & Hart musical that Warner Bros. turned into a film in 1929. Richard Rodgers, Lorenz Hart, and playwright Owen Davis gave up the motion picture rights to their musical, but they explicitly retained radio and television rights. Just as the studios had blundered in the silent era by not acquiring dialogue rights, they blundered in the early sound era by not insisting on television rights, a mistake caused by the assumption that television, like 143 radio, would essentially be “live” mediums. 45 Warner Bros. gradually curbed these mistakes and, by the mid-1930s, the lawyers made sure to reserve all television rights. But these earlier agreements reveal that the legal boilerplate—much like microphones, amplifiers, and acting styles—had to evolve in stages during the transition to sound. The general assumption within the industry was that short films had an even shorter lifespan. Warner Bros. instituted little rigor in the record keeping of short subject films, which required a fraction of the capital investment of features and for which vaudeville talent might work on only for a day or two. In the early years of Vitaphone short film production, from 1926 through 1930, the studio infrequently had the performers sign contracts and paid them for their work in cash, practices that resulted in a dearth of record keeping. 46 When Warner Bros. in 1956 set about clearing the rights to its film library for television, the studio could not find contracts for the majority of Vitaphone short films up through 1939. There was no sense that these shorts had long- term value at the time of production. Warner Bros. implemented one important organizational change, though, that greatly benefited the future value of its library. At some point in the late-1920s or early- 1930s (exact date unknown), Warner Bros. started the Trust Department, an institution borne from the need for a central filing system amidst the corporation’s rapid growth. New York City was the headquarters for Warner’s distribution, exhibition, and short film production operations. Rather than all sharing one large office building or studio lot, the studio’s executives, lawyers, lab technicians, and salesmen were spread out across the city and at least two boroughs. Additionally, they coordinated with “exchange men” and 144 exhibitors located in different cities across the country and globe. If every worker in this vast circuit simply filed contracts in his own cabinet, then documents would inevitably get lost, the studio would lose oversight, and Warner Bros. would lack access to essential documentation when faced it was faced with a lawsuit or wanted to file suit (both scenarios that occurred frequently). The Trust Department provided the infrastructural hub necessary to keep the system running smoothly. Because Warner Bros.’ Burbank lot handled the feature production side of the business and this lot had ample office space, the studio did not consider it necessary to create a West Coast Trust Department. 47 The studio’s West Coast lawyers believed that their Legal Department could sufficiently track all the talent contracts, rights acquisitions, and other legal documents generated through the production process. It was an assumption that, in multiple instances, proved false. The Trust Department also performed a valuable archival function. As one Warner Bros. lawyer explained years later, the Trust Department serves as a sort of ‘protection’ for us with respect to legal documents, i.e., the executed copies of documents which we send to the trust department are analogous to the fine grain dupe negative or protective master of a picture so that if we ever lose our copy (which is generally the original or ribbon copy) we know there is another signed copy in the trust department. 48 The analogy between the Trust Department and a film vault is telling. We tend to think about negative and positive films as the material basis for film libraries. However, the Trust Department reveals that paper legal documents were equally important as films for the commercial exploitation of old movies. 145 The Copy: The Domestic Reissue Market During the 1930s, the studios valued their film libraries primarily for the production of derivatives. A dynamic set of market forces, however, ensured that old films never left American screens. Theatrical presentations of old films took one of two forms: reissues or revivals. Reissues were national releases initiated by the studio, which struck new prints and created new marketing materials. The studios used reissues to fill gaps in their release schedules and generate a small but reliable profit stream. Revivals, on the other hand, were local in nature and initiated by the exhibitor. An exhibitor contacted a studio’s nearest exchange and inquired whether the exchange still possessed a print of a particular old film. If the exchange had it, they generally rented it to the exhibitor at a low, flat rate. Exhibitors were able to rent national reissues from studios for similarly low rates. Like the silent feature era, the demand for old movies was driven by the needs of independent exhibitors, who identified reissues and revivals as opportunities within a system that perpetually put them at a disadvantage. The intersection of supply and demand proved messy, and studying the messiness yields insight about both film libraries and distribution more generally during the 1930s. Reissues: Supply Side Considerations In the 1930s, the studios recognized film reissues were a profitable side-business, but maintaining control over the industry required they keep them just that—a side- business. Warner Bros. only reissued one or two features per season out of an output 146 frequently exceeding fifty films per season. Like the other studios, Warner Bros. tended to use reissues as a stopgap measure to fill holes in its release slate. It was especially common to see old movies on American screens during the summer. 49 Following the tradition of the legitimate stage, many movie houses closed for the summer (an understandable decision in the era before widespread air conditioning). Other movie houses remained open, but attendance levels were lower, resulting in a smaller box office pie to be divided up among whatever films were in release. If you were a studio, you would not want to open a major production in June. Your first run engagements—the opportunity to sell tickets at a premium—would suffer. Additionally, the film would enter its second run during July or August when the box office pie was similarly shriveled. Instead, you would want to fill the summer months releasing either “program pictures” (genre-fare produced on a budget) or reissues. But let’s say you fell two films short of your anticipated production output for that season. In that case, you would move the program pictures to fill out your spring release schedule and you would take two oldies out of the vault for the summer. The studios’ summertime reissue of films as a stopgap measure persisted from the early-1920s, through the transition to sound, and up to the mid-1940s. The early sound years witnessed a handful of high profile silent reissues that found success at the box office, including Phantom of the Opera (1925, re 1929), Birth of a Nation (1915, re 1930), Ben-Hur (1924, re 1931), and The Big Parade (1925, re 1931). These pictures benefited from their reputations for delivering quality and spectacle; the distributors emphasized their epic status and the newly prepared soundtracks they now featured. 50 147 During the transitional sound years, there was also a place on the opposite end of the spectrum for reissuing low-budget genre films, a type of picture that had slowed in production number. In the summer and fall of 1929, Universal reissued six silent westerns—three starring William Desmond, three starring Jack Hoxie. 51 The silent Universal oaters were rented by cost conscious exhibitors who hadn’t made the conversion to sound. But as unwired theaters all but disappeared by the early-to-mid- 1930s, the market for silent reissues shrank considerably. High profile reissues with new soundtracks also grew rare. While the profitable reissue of two Rudolph Valentino features in 1938 drew significant industry attention and comment, the reissue of William S. Hart’s biggest budget silent film in 1939 was far more indicative of the limited market for silent films by the decade’s end. 52 Hart’s picture earned only $9,300, failed to recoup its reissue costs, and the title, Tumbleweeds (1925), aptly described the deserted theaters showing the film. 53 As the market for silent films and silent reissues decreased by the mid-1930s, studios slowly began reissuing early and partially synced sound films. In one of the only secondary sources published on the history of theatrical reissues, John P. McElwee writes: In view of exhibitor hostility toward silent film, there was very little re-issue activity between 1929 and approximately 1938. This ten-year period was needed to create a backlog of talkies to allow for the passage of time from the initial release of a feature to its subsequent re-release. The standard practice called for a minimal period of seven years. Under this plan, the product would have been off screen long enough to stimulate the patron’s interest in its revival, but not so long a to render it completely out of date. 54 148 McElwee offers a perfectly plausible explanation, but it’s one that primary sources reveal to be inaccurate. No such “standard practice” for the selection of reissues existed during the period. According to MGM’s ledger of theatrical rentals, the studio reissued 11 films during the 1930s. As Table 1 shows, the selected films’ ages ranged from 2-years-old (the youngest) to 7-years-old (the oldest), and the median age was 4-years-old. McElwee is correct that MGM and the other studio increased their number of reissues toward the end of the 1930s. Even in 1937 and 1938, however, a studio was far more likely to put a film into re-release after four years than seven. 55 Rather than assuming the studios shared a uniform approach, we should recognize the 1930s as a time when the studios tested out multiple strategies of selecting and marketing reissues. Some of these strategies succeeded; other strategies failed. Season of Reissue Picture Picture's Original Season Age (Seasons Old) Reissue Domestic Rentals Reissue Profit 1931-1932 Ben Hur 1924-1925 7 199,000 779,000 1931-1932 The Big Parade 1925-1926 6 115,000 54,000 1936-1937 Manhattan Melodrama 1933-1934 3 234,000 158,000 1936-1937 Trader Horn 1930-1931 6 188,000 123,000 1936-1937 Naughty Marietta 1934-1935 2 113,000 92,000 1937-1938 Treasure Island 1933-1934 4 144,000 87,000 1937-1938 David Copperfield 1934-1935 3 95,000 48,000 1938-1939 The Champ 1933-1934 5 116,000 70,000 1938-1939 Mutiny on the Bounty 1934-1935 4 189,000 116,000 1938-1939 San Francisco 1935-1936 3 201,000 124,000 1938-1939 Rose Marie 1935-1936 3 131,000 54,000 Median 4 144,000 92,000 Table 1. MGM Theatrical Reissues, 1930-1939: Median age, rental revenue, and profit for the films. 149 The losing strategy, though a hard one to shake, was selecting and marketing reissues on their status as “classics.” The more successful strategy harkened back to the Hart and Fairbanks reissues: select star-powered films, market them like new, and seek out audiences who had missed them the first time around. Because of the FTC case against W.H. Productions, movie studios had to acknowledge reissues as such. But that didn’t mean they needed to overly emphasize the film’s age. They could market the film based on its stars, genre, or spectacle—just like a new picture—and simply mention “a re-release” at the bottom of the ad. As the 1930s wore on, the most successful reissues were star-drive pictures that truly were new movies for a large segment of the audience. Warner Bros. underwent this shift in reissue strategies during the 1930s. While MGM succeeded in selling Ben Hur (1925) and The Big Parade (1925) in 1931 as classic spectacles of the silent era, Warner Bros.’ reissue that same year of The Jazz Singer (1927), the partial-talkie already celebrated by that point as a key catalyst for the transition to sound, was a flop and the studio pulled it from its flagship New York theater after two days. 56 Warner Bros. also marketed Disraeli (1929, re 1933) as a classic; the advertising copy announced “Back by Popular Demand,” “No Picture is Immortal,” and “Now in Its 5 th Year”—all of which called attention to the fact that the picture was old. Although the Warner Bros. ledger does not include financial data on the Disraeli reissue, the trade press commented that the re-release performed poorly in its initial engagements. After Disraeli, Warner Bros. changed its reissue strategy, turning to star-powered and genre-oriented pictures that would click in small towns as well as the city. In 1935, Warner reissued Silver Dollar (1932) and The House on 56 th Street (1933). During the 150 1936—1937 season, the studio reissued the William Powell-Kay Francis melodrama One Way Passage, grossing $225,000 in domestic rentals, an impressive 66 per cent of its original release domestic haul of $342,000 (Figure 5). Warner Bros.’ reissue the following season of Bordertown (1934), starring the less popular Paul Muni and Bette Davis also performed well, generating $151,000 in domestic rentals, 33 per cent of its initial domestic take. And the studio ended the decade by reissuing all six of the 1932- 1933 season Leon Schlesinger westerns, which reused silent film scripts and footage and starred John Wayne, whose star was on the rise thanks to Stagecoach (1939). The studios transitioned away from marketing reissues as classics and back toward to the silent-era tactic of capitalizing on the old pictures of new stars. 57 Figure 5. Warner Bros.’ 1937 reissue of One Way Passage (1932) was the studio’s most successful reissue of the decade. Photo courtesy of USC Cinematic Arts Library. 151 MGM’s experience on the reissue market further demonstrates the importance of stars. Out of the eleven films the Lion nationally reissued during the 1930s, Manhattan Melodrama (1934, re 1937) earned the highest domestic rentals ($234,000), even though it had the lowest production budget ($355,000) and lowest initial release rentals ($735,000). MGM produced Manhattan Melodrama at a budget level that film historian Richard B. Jewell has called an “in-betweener”—less expensive than a typical “A” picture, but containing more star power and production value than a typical “B” picture. 58 When MGM released Manhattan Melodrama in spring 1934, the film had one bona fide star in Clark Gable. But the studio cast two actors who together would become one of the decade’s most popular on-screen couples: William Powell and Myrna Loy, whose iconic Thin Man performances as Nick and Nora Charles reached American screens a few weeks after the opening of Manhattan Melodrama. By 1937, Powell and Loy had joined Gable on the exhibitor’s list of most popular stars. MGM believed Manhattan Melodrama could draw back some die-hard fans and attract Powell and Loy’s new fan base that missed the picture the first time around. The studio was correct; the reissue contributed $158,000 in profits, more profitable than any other domestic reissues of that decade, including the spectacle-oriented Trader Horn (1931, re 1937, profits $123,000), Mutiny on the Bounty (1935, re 1939, profits $116,000), and San Francisco (1936, re 1939, profits $124,000). MGM’s lowest grossing picture of the decade was David Copperfield (1935, re 1938), earning domestic rentals of $95,000—not bad for a picture that had more than recouped its costs in original release but hardly impressive. RKO found success with the 152 1937 reissue of King Kong (1932, re 1937, domestic rentals $155,000), but chose less wisely in reissuing Little Women (1933, re 1937, domestic rentals $60,000) that same year. David Copperfield and Little Women seemed like natural choices for reissue. After all, publishers had long churned out reprints of Charles Dickens and Louisa May Alcott novels. Wouldn’t audiences spring at the opportunity to re-experience the film versions of these literary classics? Trouble was, just because a novel was considered to be a “classic,” it did not mean audiences would think the films they were based on to be classics. Moreover, as O.H. Cheney found through researching American reading habits, far more people bought cheap copies of the classics than actually took the time to read them. Treasure Island (1934, re 1938, rentals $144,000) fared better than the other classic adaptations—at least that one promised adventure and spectacle to viewers. Still, the star- driven reissues that reached out to new audiences generally outperformed the spectacle- oriented reissues and the literary classics. The studios learned how to reissue a sound film in the 1930s through trial and error. Reissues and the Production Code Administration The studios encountered a significant obstacle of their own making when plucking films from the early-30s for re-release in the mid-to-late 1930s: the Production Code Administration (PCA). The Production Code Administration emerged through the confluence of internal Hollywood business interests and external censorship pressures. After the transition to sound, the process of tailoring films to suit the requirements of local censorship became increasingly difficult. Chicago’s censors might cut a pivotal 153 scene or section of dialogue; Kansas might cut another; by the time the print reached Nebraska, the story might no longer make sense. The Motion Picture Association penned the Production Code in 1930, but after threats of boycott by Catholic interest groups, the industry finally gave the Code teeth in 1934 by creating the Production Code Administration and appointing the zealous workaholic Joseph Breen as its leader. 59 When MGM asked for permission to reissue Manhattan Melodrama (1933), Breen mandated multiple changes. The most significant changes occurred to the first reel, a prologue of sorts that establishes the Powell and Gable characters as orphaned childhood friends. For a scene in which their adoptive father attends a political rally, Breen required MGM to eliminate the “Socialist” lines of dialogue, “Revolution in this world is inevitable” and “not until the working people learn to act, not talk.” Breen also objected to the following suggestive exchange from reel 4: “It’s five o’clock in the morning, honey. Do you have to start this at five o’clock in the morning?” “Yes, it’s now or never. It’s got to be now before I let you drive tonight out of my mind.” MGM made the changes, reissued the film, and earned a handsome return. 60 But the changes remind us that MGM circulated a different film than the version released in 1933. The same holds true for the other studios. Audiences saw less violence and skin on screen when they purchased tickets for the national 1935 reissue of Dr. Jekyll and Mr. Hyde (Paramount, 1931) and 1937 reissue of King Kong (RKO, 1933) than they had upon those films’ initial release. 61 Many pre-1934 pictures would only exist in the coming 154 decades in their censored re-release form, a troublesome fact for a future generation of film critics and preservationists. Warner Bros. also encountered censorship difficulties in exploiting its library. During a single week of September 1936, Warner Bros. submitted one hundred films to the Production Code Administration for reissue seals. Warner Bros. may have also hoped that submitting their library titles in such bulk might overwhelm the PCA and allow some of the racier oldies to slip by the censors. Breen, however, exerted characteristic vigilance. Utilizing the files the PCA kept before the agency mandated compliance in the summer of 1934, Breen quickly ruled on most of the one hundred submissions. Forty- eight could be approved in their current form. Eighteen could be approved with minor alterations—for instance, the elimination of a suggestive line of dialogue or two. For twenty-one features, though, Breen took “the liberty of suggesting you withdraw your request for a certificate to permit their reissue.” These films, including Little Caesar (1931), Picture Snatcher (1933), and Convention City (1933), “contain[ed] so much objectionable matter that any attempt to re-edit them so as to bring them within the requirements of the Production Code would be extremely difficult.” 62 Movie audiences waited another two decades before Little Caesar returned to the big screen. Convention City disappeared forever. Upon receiving Warner Bros.’ one hundred film submission, the PCA’s New York officer H.J. McCord remarked to Breen that the 1936—1937 season “looks like a busy year on reissues.” 63 Yet a comparison of the list of PCA submissions and Warner’s actual distribution slate reveals that the studio only reissued one of the approved films, 155 One Way Passage, on a national basis with a new marketing campaign during the 1936— 1937 season. So why did the studio decide to submit one hundred films? The decision was about more than overwhelming Breen. The decision was about preparing for numerous requests they knew their regional exchanges would receive from exhibitors. The decision was not simply the sign of a busy reissue season; it was a sign of a busy revival season. Revivals and Reissue Demand From the mid-to-late-1930s, independent exhibitors demanded old movies to an extent that outpaced the supply of studio reissues. An independent exhibitor in 1938 could wait for RKO to mail him a press book, pitching him on the virtues of booking the studio’s national reissue of King Kong or Little Women in his theater. But an exhibitor could also seize the initiative, contacting his regional RKO exchange to book a “revival” of Flying Down to Rio (1933) or The Informer (1935). The exchange man might say no— generally because or the exchange had already shipped off the used prints for recycling, a common practice after two years in release. However, the exchanges frequently had the print and booked the revival. The practice grew so widespread that, by the summer of 1938, the Motion Picture Herald cited 245 “revivals” in circulation due to exhibitor demand. 64 Hungry for affordable films to fill double-feature programs, independent exhibitors embraced revival bookings. Prior to the 1930s, movie houses had occasionally shown two movies for the price of one. But as Tino Balio explains, it was the Depression 156 years that turned the double-feature into an American institution. In 1932, roughly 6,000 of the 14,000 theaters in the country regularly exhibited double-features and, as the decade went on, the number of double feature houses increased. Independent theaters lacking access to first-run movies found the double-bill essential to compete with one another for the quarters of a cost-conscious American public. The double-bill ratcheted up the demand for feature films to new levels. Just consider: if a double-bill house changed programs three times a week and remained open year-round, then it required 312 pictures per annum. Balio correctly explains that the major studios and Poverty Row producers increased the production of B pictures to fill this demand. 65 However, the revival of oldies also padded many a double-feature during the decade—a fact that has received little comment from film historians studying the 1930s. The beauty of revivals was they were tested A pictures that could be rented for the price of untested B pictures. Neighborhood and small town theater owners knew their audience’s tastes. They remembered which pictures their audience liked, and they knew which stars their audience loved. Revival pictures had been tested; they represented known entities. In contrast, exhibitors could only anticipate—but not truly know—the quality of a new B-picture, which at any rate was sure to feature lesser stars and lower production values. More importantly, revivals (and most reissues) could be booked for the price a B- picture. The real difference between an A-picture and B-picture had less to do with budget than with rental terms: the studios rented As for a percentage rate but sold Bs for a fixed rental. 66 Consider the Capitol Theatre in Paterson, New Jersey. In January 1937, the 157 Capitol agreed to pay Warner Bros. the fixed rental of $100, plus 50 percent of gross receipts over $475, for the privilege of booking a 2-to-3 day subsequent run of The Charge of the Light Brigade, a film that had opened in first run theaters over a full year earlier. 67 In contrast, the Capitol booked reissues of Warners’ Bordertown (1935, re 1938), Devil Dogs of the Air (1935, re 1941), and Here Comes the Navy (1934, re 1941) for a mere $17.50 or $20 per picture—no percentage terms attached—for 2-to-3 day runs. 68 Sure, more people in Paterson would leave their homes to see Errol Flynn charge his lancers into the “Valley of Death” than a Bette Davis or James Cagney reissue, but would five times more Patersonians come out for Flynn’s pageantry? The rental terms the Capitol negotiated for the Warner Bros. reissues were far better than the terms it obtained for subsequent run playdates. Further review of Warner Bros.’ exhibition records reveals that the Capitol Theatre was no exception: Warner rented reissues and revivals in the 1930s to subsequent run theaters for roughly 20 to 30 percent of what those theaters paid for newly released A pictures. 69 Best of all, from the exhibitors’ standpoint, the revival and reissue bookings were obtained at fixed rental rates. When these same theaters booked a subsequent run of an A picture, on the other hand, they paid a much higher rental fee, which the studio frequently treated as a minimum guarantee against a percentage of the box office. A highly successful three day run of new picture would be shared with the studio, whereas an equally successful three day run of a revival would stay entirely within the exhibitor’s coffers. 158 When exhibitors wanted to book a very recent revival, a picture that had finished its run within the past several months, the studios demanded higher rates than those for a three or four year oldie. Still, exhibitors received even these fairly new revivals at a discount. Variety reported in the summer of 1935 that exhibitors were booking the previous year’s hits for 50 to 75 percent of their previous rental costs. In 1937, the trade paper reported: “Indies finding they can buy a reissue or a revival of last year's socko 40% for 25%.” The translation from showbiz speak: if a studio charged an exhibitor 40 percent of the gross last year for its hit film, that same film was available this year for only 25 percent of the gross. Variety acknowledged that “While this in most cases won't burn up the b.o. [box office], it will provide a more certain reasonable net than a very ordinary program turkey.” 70 Exhibitors benefited from the availability of revivals more than the studios. Because of the flat rental fees and scattered bookings, studios earned a relatively small amount of revenue through revivals, though the exact amount is impossible to pinpoint. 71 Not all independent exhibitors, however, appreciated the availability of cheap revivals. Complaints of sniping resurfaced. In 1934, one exhibitor argued that the cheap revival rental fees enabled a shoestring competitor to book a Mae West oldie for a fraction of what his own theater paid Paramount for the Dirty Blonde’s latest picture. The sniper opened the old picture the same week as the new one, splashed Mae West’s name across the marquee, buried the old title in tiny font, and sold tickets for half-price. 72 Despite these complaints, though, most independent exhibitors appreciated the predictability and cost-efficiency that oldies offered. Independent exhibitors played in a 159 rigged casino; the vertically integrated studios set the odds and enforced the house rules. Inside this casino, exhibitors recognized revivals and reissues as a low-ante table where the odds tilted in their favor. Examining reissues alongside revivals also yields insights into the cultures of distribution and exhibition. The major studios successfully implemented tight control over the circulation of their prints, curbing the piracy and unauthorized showings that plagued the Triangle library and the states rights distribution model. Yet the studio’s regional exchanges enjoyed some flexibility in their loan of prints, and many exchanges serviced the demand of local exhibitors for “revivals” of old films that the exchanges continued to carry on their shelves. For every film that studios nationally reissued with new press campaigns, their exchanges loaned dozens of old films for “revival” screenings to exhibitors who were eager to fill double bills. Thanks to the flexibility of the exchanges, revivals of films made two, three, or four years earlier occurred throughout the nation during the mid-to-late-1930s. Once a film left the nearest exchange, however, it became very difficult to see. The cumulative effect of the studios’ tightly controlled distribution policies frequently meant that the studios controlled the only negative and positive prints in existence of a given older film, leading to the irrevocable loss of hundreds of film negatives when the studio decided it no longer needed them. Other Markets for the Copy Throughout the 1930s, U.S. theatrical reissues and revivals were, by far, the most financially significant uses for the copy in the studio libraries. However, these were not 160 the only markets. Three other markets for old films during the 1930s merit attention: international reissues, 16mm distribution, and the non-profit model of the Museum of Modern Art’s Film Library. Hollywood Reissues Abroad Old Hollywood movies circulated theatrically in the U.S. due to a specific set of market conditions—the demand of exhibitors for low-cost fare to fill continually changing double-bills. Hollywood reissues also played abroad during the 1930s, but different sets of market conditions, specific to each nation, determined the ways in which the films circulated. England, by far the most important foreign market, experienced its own ebb and flow of Hollywood reissues. In 1938, English exhibitors, like their American counterparts, found they could book old films at greatly discounted rates and seized the opportunity. 73 Overall, the studios considered reissues a domestic business and treated the foreign market reissue differently. There were exceptions. MGM scored a major international success during the 1931—1932 season when the studio reissued Ben Hur, the film that, seven years earlier, went wildly over-budget and nearly bankrupted the studio. The Ben Hur reissue, which earned a respectable $199,000 domestically, exploded on foreign screens, earning $1,153,000 in foreign rentals, a bigger foreign haul than any new MGM release that season excepting Tarzan, the Ape Man (1932). 74 The Ben Hur reissue, though, was an anomaly. Not until Disney and RKO’s 1944 reissue of Snow White did another Hollywood reissue score such huge revenues abroad. For the rest 161 of the 1930s, MGM put none of its domestic reissues into foreign release. Warner Bros. behaved similarly; none of the studio’s domestic reissues between the 1935—1936 to 1940—1941 seasons received re-release campaigns abroad. 75 RKO bucked this trend and found mixed results. In 1938, RKO’s King Kong left New York and clawed his way back around the world to $151,000 in rentals. But RKO’s other foreign reissues during the late-1930s all earned paltry sums: Little Women, The Lost Patrol, Lost Squadron, and Of Human Bondage each earned around $10,000 or less, hardly worth the cost of striking and shipping new prints and advertising. 76 The Hollywood studios recognized that only a special type of movie, a Ben Hur or King Kong, would be viable in re-release abroad. Moreover, the growth in quota laws meant that the studios were limited in the number of films they could release on foreign screens. Why use one of the valuable quota slots on a reissue, unlikely to achieve the grosses of a new picture? Yet if quota laws discouraged the reissue of Hollywood films for most of the 1930s, then global politics created an unexpected demand for reissues toward the end of the decade. Consider the case of two nations: Spain and Japan. Francoist Spain, for instance, cut off Hollywood imports in 1936. The American films that circulated in Spain for the next several years were a combination of old films already in the country and new films, brought in either through foreign intermediaries (a British distributor, for instance, handling the U.S. film) or smugglers. In 1938, Japan also closed its doors to Hollywood imports. Variety tried to give a positive spin to the development: Ban on imports has been a blessing in disguise for some of the American distribs because it has enabled them to clear their vaults of a lot of weakies, imported in the past, and which couldn't be sold at any price. Strange enough, some of these subjects, considered so weak by the exhibs, have proven b.o. smashes. Likewise, 162 reissues of picts which didn't do so well on release have been doing plenty on current bookings. 77 The industry publicists could crow to Variety all they wanted about Japanese reissue bookings, but one hard fact remained: there was no way for Hollywood to collect the revenues. The Japanese government had turned the Yen into a “blocked currency.” A reissue might be a box office smash, but no studio, nor any foreign business for that matter, was going to be able to leave the country with those revenues. 78 Not all of the old Hollywood films screened in Spain and Japan had been officially “booked” either. Unauthorized screenings of old Hollywood pictures took place in Madrid, Osaka, and Nazi occupied Paris. Audiences sat through ten-reel films than had become seven-reelers, not on account of government censors, but from the hands of projectionists—patching and repatching used prints, worn down to the point of destruction. 79 16mm Film Distribution During the 1930s, the technology of 16mm sound film improved and the infrastructure for 16mm production, distribution, and exhibition expanded. Although numerous Hollywood silent films were available on the small gauge, the specialty distributors of 16mm films knew their clients were more interested in renting Hollywood sound films. In the mid-1930s, Films, Inc. and other 16mm distributors sought to persuade the Hollywood studios that they would gain a new revenue source and lose nothing by licensing their sound pictures more than two years old. The studios split into camps: MGM, Warner Bros., Twentieth Century-Fox, and Columbia remained cautious and withheld their sound films; Paramount and Universal, on the other hand, entered into 163 16mm sub-distribution agreements with Films, Inc. And, in 1938, RKO began entering into multiple non-exclusive contracts with 16mm distributors. 80 The industry was split on the 16mm question. Donald Hyndman, president of the New York Division of the Society of Motion Picture Engineers, reminded his colleagues that 80 percent of the available 16mm films were educational or industrial shorts, shot on 16mm for the 16mm market, rather than 35mm features reduced for 16mm usage. Still, Hyndman, who also worked for 16mm film stock supplier Eastman, argued that Hollywood should take the small gauge seriously as a business opportunity. Engineers were improving 16mm’s sound and picture quality by leaps and bounds; within a year or two, Hyndman predicted, the quality would equal that of 35mm film. Moreover, Hyndman argued that 16mm possessed several advantages over 35mm film. If they more fully adopted the small gauge, the Hollywood studios would save on shipping (parcel post was acceptable for 16mm), fireproofing (the 16mm safety stock did not present the fire hazards of 35mm nitrate film), and labor (a low skilled workforce could replace the unionized projectionists). 81 The problem was that the very features of 16mm that Hyndman saw as advantageous—the film stock’s transportability and simplicity—also made it dangerous in the wrong hands. A school teacher might hide a rented print, claim the mailman lost it, and treat friends and students to numerous unlicensed viewings. Worse yet, sophisticated collectors and bootleggers found ways to temporarily access 35mm prints and make their own 16mm reductions. A new Hollywood release, theoretically unavailable on 16mm for at least a year, could light up the portable screen of an itinerant 16mm operator before the 164 film reached its second run theater. Even without the studios cutting deals, therefore, the manufacture of every new 16mm projector presented a risk. 82 Still, the theater owners reserved their harshest scorn for the studios actively supplying feature films to the small gauge market. Motion Picture Herald, a trade paper for exhibitors, warned that “the socalled ‘bootlegged’ 35mm and 16mm prints are not so great competition to the showman as the ‘legitimatized’ product, authorized by three large companies which allow their product to be transcribed into 16mm: RKO, Paramount, and Universal.” 83 The theater owners posed the greatest obstacle to a wider penetration of library titles on 16mm. And the Big Five studios themselves were, of course, theater owners. For these reasons reason, MGM, Warner Bros., and Twentieth Century-Fox abstained from the 16mm market during the 1930s. The studios that released to 16mm placed significant limitations on the types of sites permissible for 16mm screenings. Universal had the loosest policy, allowing “all locations, including homes, not in competition with 35mm theatres.” RKO had a more restrictive policy, forbidding home use but permitting screenings in schools, theaterless towns, and “shut-ins” (a handy term for prisons, insane asylums, convents, and other institutions with a truly captive audience). Beyond these general restrictions, the studios had to approve every individual school, shut-in, or other location before Films, Inc. could ship a 16mm print from the studio’s library there. Films, Inc.’s approval process and tight control over circulation were major reasons why the company became the premiere sub- distributor for studio films on 16mm. The Department of Justice later alleged Films, Inc. was at the heart of a conspiracy to destroy competition and limit the sites of 16mm 165 screenings, but in actuality, the company succeeded because it catered to the traditional concern of studio distribution departments in regards to film libraries—how to control the circulation of prints in a way that maximized revenues yet mitigated the risk of piracy and the threat of cannibalizing the core theatrical business? 84 The second reason why studios chose Films, Inc. was because the potential revenues from 16mm were too small to justify establishing an in-house business. Consider Universal’s first two years under contract with Films, Inc.: the studio earned only $39,932 in 1937 and $38,989 in 1938. 85 To put this in perspective, MGM realized a larger profit on its least successful theatrical reissue of the decade, David Copperfield (re 1938, profit: $48,000), than Universal earned that same year from licensing dozens of features to 16mm. Because of the paltry sums available, the studios that entered the 16mm field chose to externalize 16mm as a business. Not until the 16mm sound industry matured more would the studios consider establishing in-house departments and, even then, whatever actions those in-house departments took would necessarily be hamstrung by the need to protect the theatrical exhibition business. 86 Museum of Modern Art Film Library When it came to exploiting copies of their film libraries, the studios could choose among the domestic reissue market, overseas reissue market, and 16mm market. In 1935, the Museum of Modern Art approached the studios with a different offer: to deposit select films for preservation, non-profit exhibition, and the study of film art. John Hay 166 Whitney, president of MoMA’s Film Library, assured the studios that the Film Library was friend, not foe. Whitney wrote MPAA chief Will Hays: With so limited an audience in mind—students matriculated in college or museum classes—and restricting the picture presentation to those films which time has determined as classics of the screen, I feel sure that no one needs to be concerned lest the extending of the Museum’s exhibitions to include the film will ever result in a competition with commercial entertainment. 87 Whitney and Iris Barry, the director of the Film Library, eventually won over the Hollywood studios. The deals MoMA reached with MGM and Paramount in October 1935 became templates for the rest of the studios. In the scholarly literature on the MoMA Film Library, which is vast, Barry’s successful negotiations with the studios have correctly been praised as an important step for American film archives. 88 As Haidee Wasson persuasively argues, MoMA’s Film Library played a transformative role in shifting the cultural value of American film “from ephemeral entertainment to enduring cultural monument.” The traveling collection of films that played at museums and universities formed a canon of study for years to come. 89 What has received less attention in the MoMA literature is the perspective of the studios in reaching this agreement. Why did MGM, Paramount, and Warner Bros. think this was a good idea? Were they simply willing to hand over the keys to their vaults? A careful review of the original contract between Paramount and MoMA reveals that the studios gave up very little, retaining full control over the prints in circulation. The films remained “at all times the absolute property of the Licensor [studio], with only the non- exclusive, revocable right of possession” granted to MoMA. Paramount could withdraw prints from MoMA at any time without providing a cause. Paramount acknowledged that 167 remakes and reissues would be likely reasons for pulling prints, but ultimately the studio could seize its films back any time it wanted. MoMA paid the duplication and shipping costs for the prints they received, and Paramount’s lawyers had to approve any sub- licensee (i.e. universities, museums) that wanted to obtain its films from the Film Library. 90 In the eyes of most studio executives, they were working with a charity; they maintained control of their assets while their participation with MoMA earned them a small public relations boost. MoMA, for its part, was not interested in most of what lay in the Hollywood vaults. Due to both limited resources and taste considerations, the Museum of Modern Art was highly selective in choosing Hollywood films. The U.S. was ultimately only one nation—albeit an important one—represented in MoMA’s international Film Library, which included a great many European films. Moreover, the type of American film that interested MoMA most was the very type of film that had lost nearly all its reissue value to the studios by the mid-1930s: the silent picture. On the “Tentative List of Films Wanted by the Film Library of the Museum of Modern Art,” dated July 15, 1935, Barry and Whitney listed only ten sound features out of the more than one hundred American films they said they wanted. 91 Whether because of taste considerations, a desire to promote the circulation of the hardest to see type of films, or a savvy recognition that producers would be more willing to part with their silent films (perhaps a combination of all these reasons), MoMA prioritized the exact type of film that mattered least to the studios. The agreement, therefore, should not be interpreted as an admission by the studios that their libraries lacked financial value; it was only an acknowledgement that a 168 certain type of film had lost all reissue value. The studios fully understood the opportunities and limitations of the reissue, revival, and 16mm markets. And, should those market dynamics change, the studios had the option of taking back their films. MoMA’s Film Library holds significance, though, beyond the contractual deal terms, beyond any particular film approved or rejected. MoMA offered a compelling vision, both in theory and practice, of what a film library could be. Unlike the studios’ private and market-oriented film libraries, MoMA’s Film Library presented a public and non-commercial model. Admittedly, public access to the Film Library was limited. You couldn’t simply buy a ticket. Watching one of MoMA’s selections required enrolling in a college course or subscribing to a museum series. Additionally, you had to be living near enough a sponsoring institution for this to be a possibility at all. In terms of offering the largest number of Americans access to the largest number of old films, the for-profit marketplace of reissues, revivals, and 16mm distribution certainly outperformed MoMA’s non-profit library during the 1930s and 40s. Yet the access the free market offered was ephemeral. A revival was here today, gone tomorrow. By the time an exhibitor checked about booking a film for a second or third time, the exchange may have already shipped off the print for recycling. In contrast, MoMA offered a model of permanence. The studios always retained the right to pull their prints, but in practice, MoMA provided institutional access and preservation for the films in its collection. Iris Barry had finally built the Index to finding great films that she had dreamed of in the 1920s. 169 Silent Film Destruction As MoMA labored to obtain, preserve, and circulate specific pictures from the studio libraries, Warner Bros. actively worked in the opposite direction—seeking out and destroying most of the negatives and positives in its silent library. Fire and deterioration had already begun the process. A massive fire on the Burbank lot in December 1934 caused $2.5 million in damages and sent six vaults worth of films up in flames, including the only negatives and positives of many of the old Vitagraph, First National, and Warner Bros. films. 92 The studio recognized that its vaults in Brooklyn held the kindling for another potential blaze. Warner Bros. needed a process for deciding which films it would potentially need and which could be safely destroyed. Based on what we know about the value of film libraries during the 1930s, the chief considerations of this decision making process should come as no surprise. The value of a film library lay in the distribution of copies and the production of derivatives. The Warner Bros. team needed to create a sort of checklist to evaluate these possible uses. They never assembled any sort of formal questionnaire, but the questions they weighed are implicit in the more than seventy pages of documents in the “Destruction of Film” file, spanning the years 1936 to 1943, at USC’s Warner Bros. Archives. 93 First, Warner Bros. wanted to know, does the film have any value left as a copy? Does the film hold potential for the reissue and 16mm markets? These were the questions weighed by the Distribution Department. The Trust Department supplied Distribution with a list of film titles and asked if they objected to destroying all remaining negative and positive prints. For nearly all the silent films, the Distribution Department’s answer 170 was no. Commercial silent film exhibition had dwindled by the mid-1930s. Additionally, the silent films to receive national reissues—an increasingly rare practice as the decade wore on—were high profile films, containing at least some element (star, spectacle, enduring reputation) that made them extraordinary. In contrast, most of the movies reviewed by the Distribution Department between 1936 to 1943 contained none of these marketable features. They were old First National pictures, such as Behold this Woman (1924) and Beautiful & Damned (1922), titles that may arouse our curiosity today but, realistically, held little potential for reissue in the mid-1930s or our present moment. As for the 16mm market, Warner Bros. and First National had both licensed silent films to the Kodascope Library in the late-1920s. However, synchronous sound had caught up to the small gauge by 1936, and specialty 16mm distributors held little interest in the studio silent film libraries. One list prepared by the Brooklyn vault in 1938 contained dozens of early sound films as candidates for destruction, including The Singing Fool (1928), Disraeli (1929), and Moby Dick (1930), but either executives in the Distribution Department or Burbank production lot objected, reasoning these sound films still carried the potential for future revenues. 94 There was no belief, on the other hand, that the bulk of silent films held such potential. The Distribution Department decided that the silent films, which were taking up storage space and posing a fire risk, could be destroyed. But what about the derivative uses of the libraries? As we’ve seen, studios valued their libraries in the 1930s more for the ability to produce derivatives than to distribute the original films. The New York Trust Department sent its lists to Burbank to see if the studio’s production headquarters had cause to save the films. Few films were saved for 171 remake considerations. Remakes were the most important derivative use of the libraries, but they did not require access to the original film; the text of the screen scenario or underlying story material was generally considered sufficient. There were exceptions. In evaluating destruction of the First National film For Sale, W.G. Wallace of the Trust Department wrote, “I understand there is no copy of any story or script either here or on the West Coast, so that this should probably be preserved as our only record of the story and the type of material.” 95 For the most part, though, the story material existed in written form and the nitrate films could be junked. The second most important derivative usage was stock footage, and the Burbank production team also attempted to safeguard this facet of the library. Maintaining a stock footage library did not mean saving every film, every scene, every shot. Instead, it meant extracting the re-usable sequences out of a vast pool of mostly useless footage. During the 1942 to 1943 round of destruction, editor Bert Frank was tasked to “pick out some film for future use” from at least 61 different features scheduled for destruction. 96 Bert Frank previously compiled old footage for the Vitaphone shorts that blended comedy with nostalgia, such as The Movie Album (1932), Movie Memories (1933), and The Nicklette (1932), which include the only surviving footage of certain lost films. In presenting Frank with a new list of films to review, the Brooklyn vault encouraged Frank to act quickly so that the pictures could be destroyed. It’s possible that Bert Frank, looking for usable stock footage on his Movieola, was the last person to watch intact films such as Madonna of the Streets (1924) and My Lady’s Latchkey (1921). 97 After Frank took all the footage that he thought he and his fellow Warner Bros. editors would 172 have even “a remote chance of being able to use,” the Brooklyn vault disposed of both the negative and positive prints. 98 Before destroying all the negative and positive prints of a film, Warner Bros. needed to determine that the film had no reissue potential and all derivative value had been secured. However, there was one additional and very important question that still needed to be answered: did Warner Bros. actually own the film? The ownership question, more than any other factor, determined which silent films Warner Bros. saved and which it destroyed. Whereas the questions over reissue potential, remake material, and even stock footage were fairly straightforward, the ownership question presented a tangled web. The problem was that First National, from its inception in 1917 until around 1926, acquired feature films through independent producers, most of whom had contracts in which the distribution rights reverted back to the producer after 5 or 10 years. These producers, who included Sol Lesser and Louis B. Mayer, were supposed to receive all negative and positive prints of their pictures within three months after that distribution period had ended. Clearly, this had not happened. What should Warner Bros. do? Sending the prints back to the producers would expose the studio to risk by calling attention to its failure to abide by the terms of the distribution contracts. Destroying the prints, on the other hand, could also represent a breach of contract. What if a temperamental producer like Sol Lesser came out of the woodwork asking for his films back? To make matters more complicated, Warner Bros. only retained half ownership in some films, and other ownership agreements could not be found at all. 173 What should the studio do? In light of these considerations, the Trust Department and New York attorneys informed the vault: It is inadvisable to destroy any picture in which there is an outside interest. We checked the schedule again and we believe that we have advised you of all pictures in which we own all rights, and which can safely be destroyed. The other pictures on your list are pictures in which there is an outside interest and we do not believe it advisable to dispose of them. 99 In other words, destroy the films we own, keep the ones we don’t. Over and over, this logic governed Warner’s decisions about junking films during the documented 1936 to 1943 period of film destruction. Disposing of the First National films required tracking down the owners of production companies that, in some cases, were no longer in existence. The easiest thing to do in such a situation was, simply, to do nothing. Warner’s objective was to clear vault space and reduce fire risk. The most efficient way of achieving these objectives was to leave the First National films alone and clear out the Warner features (in which there were no messy legal obligations). The decisions to save or destroy films based on reissue potential, derivative usage, and ownership had long-term consequences for film preservation. When Warner Bros. sold its film library in 1956 to television syndicator AAP, the studio undertook an inventory of that revealed a mere 75 surviving silent and partially synced feature films still survived in its vaults (Table 2). In contrast, the studio compiled a 19-page list of 626 features, dating from the 1928-29 season back to 1920, as to which no film materials could be found. The 19-page document tracked only Warner Bros. and First National films; it would have run much longed had it listed the films the studio owned from Vitagraph, World, and Triangle. 100 174 Table 2. Lost Silent and Partially Synced Warner Bros. and First National Feature Films (as of 1956 inventory). The 75 surviving films include notable partially-synced features that Warner Bros. believed might have reissue value in the sound era, such as Noah’s Ark (1929), Weary River (1929), and The Singing Fool (1928). The list also includes Warner Bros.’ first feature film, My Four Years in Germany (1918), which the studio may have saved for historic and sentimental reasons. Yet what is most remarkable about the list is that 27 of the 75 surviving films were First National productions that Warner Bros. did not own (Table 3). The vault director had wanted to destroy these pictures, but the lawyers said no. While the silent features that Warner owned outright were removed for recycling, the First National films kept sitting on the shelf—too much of a legal liability to destroy, too 175 much effort and explaining required to return. Ironically, Warner Bros. took better care of the films they did not own the copyrights in, than the films in which they did. Table 3. Composition of Surviving Warner Bros. Silent Feature Library (as of 1956 inventory). Although some of the films on the inventory of 626 missing films, prepared in 1956, were later found and exist today, most are gone forever. Triangle also lost most of its negatives, but far more of its films still survive. As discussed in Chapter One, the piracy of the states rights market, Triangle’s decision to sell prints of the Keystone shorts outright, and Triangle’s licensing of its library to small gauge distributors meant that copies of the films circulated loosely, some becoming the possessions of exhibitors, teachers, and collectors. As David Pierce demonstrates in his survey of silent film 176 survival, roughly two-fifths of all surviving American silent feature films exist only as foreign 35mm prints or in small gauge versions, such as 16mm and 28mm. 101 Warner Bros., in contrast to Triangle, controlled the circulation of its films tightly. Like the other major studios, Warner Bros. used a national distribution system and closely tracked the movement of negative films and positive prints. When exhibitors claimed a print was “lost,” the matter was investigated and the exhibitor signed an affidavit attesting to the veracity of his claim. When the exchanges sent back old prints, the films were recycled in the studio’s own reclamation plant, further reducing the risk of theft. Try as it might, the studio exercised less control over the global circulation of its films, resulting in more errant prints becoming the possessions of collectors and never reaching the reclamation plant. But for a great many of the silent films in the Warner Bros. library, the studio sent the negative and the only known positive copy off for destruction. With the threat of fire, no reissue potential, derivative uses secured, and ownership of the copyright, Warner Bros. reached the decision that the films “could safely be destroyed.” Conclusion During the 1930s, the Hollywood studios consistently found uses for their libraries, though none functioned as the core profit centers and barriers to entry that they would ultimately become and that backlists already provided for the publishing industry. Warner Bros., characteristic of the other studios as well, valued its film library principally for its ability to produce derivatives—remakes, stock footage-heavy pictures, and other new works based on the underlying copyrights. As the 1930s progressed, Warner Bros. 177 profited through circulating copies of one or two old sound films per year and many more old films through exhibitors booking “revivals.” Silent films, however, became seen as worthless on the reissue market. These priorities structured Warner’s systematic destruction of its silent library at the end of the decade. The Warner Bros. case study shows that the basis for film libraries has always been more than just the negatives and prints. Paper was and remains as important as celluloid for monetizing old films. From a remake standpoint, paper scripts and stories made most silent film negatives superfluous. More importantly, paper provides the legal basis for film libraries. Incomplete, ambiguous, or missing contracts restricted the use of studio libraries. Studio lawyers had to renegotiate agreements to obtain “dialogue rights” omitted from earlier contracts. Additionally, the failure to secure the rights to distribution across all media limited later exploitation possibilities for some of Warner’s early sound films. The law, however, can influence us to behave in unpredictable ways. Warner Bros., ironically, chose to save films that it no longer owned the rights to and destroy films that it owned completely. This fact flies in the face of “tragedies of the commons” arguments that Hollywood successfully advanced in lobbying for the 1998 Sonny Bono Copyright Term Extension Act, which added 20 years of protection to all copyrighted works. Representatives of the studios warned that, according to the trans-historical laws of free market economics, only the copyright owner of a work would invest the time and money to preserve it. 102 Between 1936 to 1943, Warner Bros. behaved differently, keeping films in which it no longer held the rights, and destroying its own copyrighted 178 works. Today, the studios have far more incentives and avenues to exploit old works. Many have prioritized the preservation of their properties. But let’s not forget the other side of that coin too—that if you exclusively own a work of intellectual property, and if you effectively control its circulation, then you also possess the exclusive power to destroy it. 179 Chapter Two Notes Abbreviations AMPAS – Margaret Herrick Library, Academy of Motion Pictures Arts and Sciences DPC – David Pierce Collection RJC – Richard B. Jewell Collection NARA-R – National Archives Records Administration, Riverside, California SCWHR – Seaver Center for Western History Research, Los Angeles County Museum of Natural History USC SCA – School of Cinematic Arts Library Special Collections, University of Southern California WBA – Warner Bros. Archives, University of Southern California WHS – Wisconsin Historical Society, Madison, Wisconsin 1 New York Times, “11 Warner Units Quit Music Group,” November 27, 1935, 16; Katherine Spring, “Pop Go the Warner Bros., Et Al.: Marketing Film Songs During the Coming of Sound,” Cinema Journal 48, no. 1 (October 1, 2008): 74–76. 2 “The Boy Problem” is the title of Chapter 3 in Jacob Kwalwasser, Problems in Public School Music (New York: M. Witmark, 1932); Jacob Kwalwasser, Problems in Public School Music, Rev. ed. (New York: M. Witmark and Sons, 1941). 3 Johann Sebastian Bach and Antonio E. Cafarella, Fughetta (New York: M. Witmark & Sons, 1933); Franz Schubert and Antonio E. Cafarella, Minuet (New York: M. Witmark & Sons, 1933). 4 Paul Goldstein, Copyright’s Highway: From Gutenberg to the Celestial Jukebox, Rev. ed. (Stanford, Calif.: Stanford University Press, 2003), 31–40.; Mark Rose, “The Author as Proprietor: Donaldson V. Becket and the Genealogy of Modern Authorship,” Representations, no. 23 (Summer 1988): 53. 5 Publisher’s Circular, 19 June 1897, 725, quoted in Richard D. Altick, “From Aldine to Everyman: Cheap Reprint Series of the English Classics 1830-1906,” Studies in Bibliography 11 (1958): 3. 6 O.H. Cheney, Economic Survey of the Book Industry: 1930-1931 (New York: R.R. Bowker Company, 1949), 89. 7 My analysis of how these two different industries organized themselves is deeply influenced by two books: Caves, Creative Industries; Porter, Competitive Strategy. 8 Eddie Mannix Ledger, AMPAS; C.J. Tevlin Ledger, RJC. 180 9 Cheney, Economic Survey of the Book Industry, 84. 10 Ibid. 11 New York Times, “A Long Life for Dead Films,” 14 April 1935, X3. 12 Pierce, “The Legion of the Condemned - Why American Silent Films Perished.” 13 Disraeli Reissue Press Book (1933), “Disraeli – Fragile,” F002279, Box 680A, WBA. 14 Benjamin B. Hampton, History of the American Film Industry from Its Beginnings to 1931 (New York: Dover Publications, 1970), 379–387. Mae Huettig echoed Hampton’s same narrative in Mae Huettig, Economic Control of the Motion Picture Industry; a Study in Industrial Organization (Philadelphia: University of Pennsylvania Press, 1944), 40–41. 15 Gomery, The Coming of Sound, 23–62. 16 Russell Sanjek, American Popular Music and Its Business: The First Four Hundred Years, vol. 3 (New York: Oxford University Press, 1988), 55. 17 Ibid. 18 For a terrific description of the Tin Pan Alley sales strategies, see David Suisman, Selling Sounds: The Commercial Revolution in American Music (Cambridge, Mass.: Harvard University Press, 2009). 19 Spring, “Pop Go the Warner Bros., Et Al.,” 72. 20 Jewell, The Golden Age of Cinema, 65. Scott Curtis, “The Sound of the Early Warner Bros. Cartoons,” in Sound Theory, Sound Practice, ed. Rick Altman (New York: Routledge, 1992), 193. 21 The existence and continuance of these royalties are evident in the Agreement between Warner Bros. Pictures and Max Dreyfus, 23 December 1938, T.B. HARMS Final Agreement, F000959, WBA. 22 Spring, “Pop Go the Warner Bros., Et Al.” 23 Richard B. Jewell, “Hollywood and Radio: Competition and Partnership in the 1930s,” Historical Journal of Film, Radio and Television 4, no. 2 (1984): 125; Hilmes, Hollywood and Broadcasting; Ross Melnick, “Station R-O-X-Y: Roxy and the Radio,” Film History 17, no. 2/3 (January 1, 2005): 217–233. 181 24 Jeff Smith, The Sounds of Commerce: Marketing Popular Film Music (New York: Columbia University Press, 1998). 25 Anderson, Hollywood TV; Hilmes, Hollywood and Broadcasting. 26 Henry Jenkins, Convergence Culture: Where Old and New Media Collide (New York: New York University Press, 2006); Chuck Tryon, Reinventing Cinema: Movies in the Age of Media Convergence (Piscataway, NJ: Rutgers University Press, 2009). 27 Jewell, The Golden Age of Cinema, 65. 28 Donald Crafton accurately explains that “the ‘original screenplay’ was still a rarity” during the transitional sound years in Donald Crafton, The Talkies: American Cinema’s Transition to Sound, 1926-1931 (New York: Charles Scribner’s Sons, 1997), 379. Little scholarship exists on the rise of the original screenplay, but the Hollywood trade papers tracked this development throughout the 1930s. In 1938, Variety reported that original screen stories had surpassed adaptations for the first time in Variety, “H’Wood Favors Originals,” 13 April 1938, 3, 24. 29 Variety, “Inside Stuff—Pictures,” 24 September 1930, 56. 30 Agreement between the Note Holders’ Committee of World Film Corporation’s First Mortgage Six Percent Serial Gold Notes and Warner Bros. Pictures, Inc., 19 October 1928, Copyright Office Assignment Records, vol. 209, 10—20, DPC; Agreement between New York Trust Company, World Film Corporation and the Note Holders’ Committee of World Film Corporation’s First Mortgage Six Percent Serial Gold Notes and Warner Bros. Pictures, Inc., 15 January 1919, Copyright Office Assignment Records, DPC. 31 Harry E Aitken to Frank E. Woods, 12 January 1928, Harry Aitken Clippings File, AMPAS. 32 In true Triangle fashion, the 58 literary properties passed through multiple intermediaries—including R.L. Giffen, who specialized in brokering story rights—before Warner Bros. snapped them up in April 1929, Assignment of Copyright from Betlew, Inc. to Warner Bros., 30 April 1929, Box 125645B, F005366, WBA. 33 A list of Hollywood remakes is included in Variety’s Golden Jubilee 50 th Anniversary issue. See: Variety, “Remakes of Feature Films,” 4 January 1956, 72. 34 Variety, “Studios on the Remake,” 21 January 1931, 11, 26. 35 Variety, “Studios on the Remake,” 21 January 1931, 11, 26. 182 36 The 35 number includes both Warner Bros. and First National releases. Variety, “Studios on the Remake,” 21 January 1931, 11, 26. 37 Anderson, Hollywood TV, 181. 38 William Schaefer Ledger, Ledger #4, "Comparison on Negative Costs and Gross Income on Productions Released from August 31, 1936 to August 31, 1941, 5 Years, Typed Dec. 29, 1944,” USC SCA. 39 Anderson, Hollywood TV, 174, 181. 40 Michael Munn, John Wayne: The Man Behind the Myth (New York: New American Library, 2003), need this. 41 William Schaefer Ledger, Ledger #3: "Recapitulation of Income from Re-issues on Productions Originally Released from Sept. 4, 1931 to August 26, 1939, as at February 27, 1943,” 13, USC SCA. 42 As I wrote this dissertation in 2010 and 2011, Turner Classic Movies frequently aired the Goofy Movies shorts. William M. Drew also discusses MGM’s Goofy Movies in The Last Silent Picture Show: Silent Films on American Screens in the 1930s (Lanham, Md.: Scarecrow Press, 2010), 92–93. 43 Thrills of Yesterday (1931), The Movie Album (1932), Nicklette (1932), and Movie Memories (1933) are available in Vitaphone Calvalcade of Musical Comedy Shorts Collection, DVD, Disc 3, Warner Archive Collection (2010). The surviving excerpt of My Favorite Wife (1914) is available online at the Internet Archive, http://www.archive.org/details/MyOfficialWife1914 (accessed 11 June 2011). 44 Warner Bros., Inc. signed agreement with Michael Curtiz, 28 April 1931, Michael Curtiz Legal File, Folder 2485B, WBA. 45 When Warner Bros. sold its film library in 1956 to PRM, the Warner lawyers wanted to qualify this film and argued to PRM’s attorneys that at the time the contract was signed both parties understood radio and television exclusively as “live” mediums.” Therefore, Rodgers & Harts could stage a live television broadcast, but the recorded television rights were really part of the motion picture rights that Warner Bros. controlled. PRM’s lawyers rejected this logic and the film was not counted toward the deal. For those readers with archival inclinations, see: George Schiffer to Bernard Goodman, “SPRING IS HERE released 4/13/30,” 23 March 1956, TELEVISION DEAL – Correspondence between Berkowitz & Schiffer re various features and others, File F002230, Box 12707B, WBA. 183 See also: Harold Berkowitz to Sidney H. Levin, 31 May 1956, “Warner-P.R.M. Deal ‘Shadow at the Top of the Stairs’,” File F002240, Box 12707B, WBA. 46 Knecht to Schiffer, 29 March 1957, “Summary 9/57,” 366767 and 366768, Box 12707A, WBA. Attorney Pete Knecht writes, “In many instances there are no files whatsoever relating to a particular picture. You must remember that from 1918 to 1930 our business was conducted on a much more informal plane than is now done and people were frequently employed without a written contract of any kind and simply paid in cash.” 47 P.D. Knecht to Harold Berkowitz, Re: New York Trust Department Files, 9 September 1958, Trust Dept. Files – Disposition, File F000820, Box 12815A, WBA. 48 Ibid. 49 Daily Variety, “Pic Shortage Acute,” 15 May 1935, 1, 4. 50 Drew, The Last Silent Picture Show, 37–62. 51 Western production was down, making these silent reissues more desirable for booking. During this same time, however, Universal also reissued 26 silent short films onto an already crowded shorts market. The Film Daily, 4 August 1929, 3. 52 Drew, The Last Silent Picture Show, 189–208. 53 C.J. Tevlin to William S. Hart, 12 September 1940, GC 1012, Box 70, Folder 10, SCWHR. 54 John P. McElwee “Theatrical Re-Issues” (Part 1 of 3), Films in Review 40, no. 12 (December 1989): 596. 55 Between 1930 to 1939, MGM, RKO, and Warner Bros. reissued a combined total of at least 29 films. Out of this pool of 29 films, the median reissued film was 4-years-old. Data acquired from: Eddie Mannix Ledger, AMPAS; C.J. Tevlin Ledger; William Schaefer Ledger, USC SCA; Daily Variety, “Pic Shortage Acute,” 15 May 1935, 1, 4; Variety, “‘Scandals,’ Tab Big 23G Wash,” 19 December 1933, 11. 56 Crafton, The Talkies, 264. 57 Warner Bros. reissue revenue data from The William Schaefer Ledger, Book 3, "Recapitulation of Income from Re-issues on Productions Originally Released from Sept. 4, 1931 to August 26, 1939), as at February 27, 1943, 13, USC SCA. Unfortunately, the ledger book does not separate Disraeli’s reissue revenue from the revenue the picture 184 generated during its initial release. Disraeli’s 1929-1930 release and 1933-1934 reissue revenue are merged in the studio’s accounting from the mid-1940s that the film cost $318,000, earned $9240,000 domestically, and earned $574,000 foreign. 58 Jewell, The Golden Age of Cinema, 70. 59 Richard Maltby, “The Production Code and the Hays Office,” in Grand Design: Hollywood as a Modern Business Enterprise, 1930-1939, by Tino Balio (New York: Charles Scribner’s Sons, 1993), 37–72. 60 Al Block to Joseph I. Breen, 15 March 1937, Manhattan Melodrama, History of Cinema: Hollywood and the Production Code, microfilm reel 9, AMPAS. 61 For King Kong, Breen ordered RKO to “shorten scenes showing animals killing and eating human beings. Cut scenes showing monster undressing girl.” King Kong is listed alongside 28 other RKO films requiring alterations for reissue seal approval in Joseph I. Breen to B.B. Kahane (RKO), 5 September 1935, Life of Vergie Winters, History of Cinema: Hollywood and the Production Code, microfilm reel 9. For Jeckyll, see Joseph I. Breen to John Hammell (Paramount), 22 June 1935, Dr. Jeckyll and Mr. Hyde, History of Cinema: Hollywood and the Production Code, microfilm reel 3, AMPAS. 62 Joseph I. Breen to Jack L. Warner, 3 September 1936, Convention City, History of Cinema: Hollywood and the Production Code, microfilm reel 6, AMPAS. 63 H.J. McCord to Joseph I. Breen, 1 September 1936, Convention City, History of Cinema: Hollywood and the Production Code, microfilm reel 6, AMPAS; Joseph I. Breen to Jack L. Warner, 3 September 1936, Convention City, History of Cinema: Hollywood and the Production Code, microfilm reel 6, AMPAS; H.J. McCord to Joseph I. Breen, 3 September 1936, Little Caesar, History of Cinema: Hollywood and the Production Code, microfilm reel 3, AMPAS; Joseph I. Breen to Jack L. Warner, 8 September 1936, Little Caesar, History of Cinema: Hollywood and the Production Code, microfilm reel 3, AMPAS. 64 Sure enough, Flying Down to Rio (1933) and The Informer (1935) were both films the Motion Picture Herald cited as playing as revivals. See: Motion Picture Herald, “Exhibitors Turn to Trove of Pre-Proved Pictures,” 4 June 1938, 9. 65 Balio, Grand Design: Hollywood as a Modern Business Enterprise, 1930-1939, 28–29. 66 Jewell, The Golden Age of Cinema, 70. 185 67 Agreement between Warner Bros. and Capitol Amusement Co., Re: Charge of the Light Brigade, 15 February 1937, “Capitol Paterson N.J., 1935-36-to-1940-41,” F002452, 14309A, WBA. 68 Agreement between Warner Bros. and Capitol Amusement Co., Re: Bordertown (Re- release), 14 January 1938, “Capitol Paterson N.J., 1935-36-to-1940-41,” F002452, 14309A, WBA; Agreement between Vitagraph, Inc. and Capitol Amusement Co., Re: Devil Dogs of the Air (Re-issue), 20 May 1941, “Capitol Paterson N.J., 1935-36-to-1940- 41,” F002452, 14309A, WBA; Agreement between Vitagraph, Inc. and Capitol Amusement Co., Re: Here Comes the Navy, 14 January 1941, “Capitol Paterson N.J., 1935-36-to-1940-41,” F002452, 14309A, WBA 69 The Strand Theater in Red Bank, NJ paid $150 against a 50 percent split of the gross for The Other Man, Divorce Detective, and Honeymoon Hotel compared to $35 flat rental for the reissue of Disraeli. The Plaza Theater in Paterson, NJ paid $137, plus 50 percent of gross receipts over $600.00, for the initial release of Charge of the Light Brigade, but the Plaza only paid a $40 fixed rental for the Bordertown reissue. In 1938, the Plaza also paid $15 flat rentals for midnight revival screenings of I Am a Fugitive From a Chain Gang and The Petrified Forrest. Agreement between Warner Bros. and Strand, Re: The Other Man et al, 15 September 1931, “Strand, Red Bank, NJ,” F002451, 14309, WBA; Agreement between Warner Bros. Pictures and Strand Theater, “Strand Theater, Red Bank, NJ,” Re: Disraeli (Re-release), 17 February 1934, F002451, 14309, WBA; Agreement between Warner Bros. and Totowa Amusement Co., Re: Charge of the Light Brigade, 15 February 1937, “Plaza Paterson, NJ,” F002453, 14309A, WBA; Agreement between Warner Bros. and Totowa Amusement Co., Re: Bordertown (Re-Release), 14 January 1938, “Plaza Paterson, NJ,” F002453, 14309A, WBA; Agreement between Warner Bros. and Totowa Amusement Co., Re: Midnight Showings of I Am a Fugitive From a Chain Gang and The Petrified Forrest, 20 January 1938, “Plaza Paterson, NJ,” F002453, 14309A, WBA. 70 Weekly Variety, “Par Strike May Force Philly Duals; All Product Buys Slowed 20- 90%,” 22 September 1937, 4. See also: Daily Variety, “Pic Shortage Acute,” 15 May 1935, 1, 4. 71 The difficulty lies in the studios’ internal accounting practices, which record revenues for each picture on an accumulated basis. The available studio ledger books of MGM, RKO, and Warner Bros all account for film revenues on an accumulated basis. MGM, for instance, released The Thin Man during the 1933—1934 season, but the studio’s ledger lists the all accumulated revenue the picture earned up through 1949. How much the picture’s $818,000 in domestic rentals came from first year? How much from the second year? And how much came from all the years beyond those, the 14 years of revival showings? The question is impossible to determine from the available data with any certainty. But my best estimate is that theatrical revival revenue for most pictures was 186 very small, probably accounting for less than 3 per cent of a film’s lifetime revenue. The fact that revivals could be booked so cheaply contributed to the small revenues received after the initial release. 72 Variety, “Shoestring Exhibs Playing Oldie Revivals Have Everybody Squawking,” 25 December 1934, 21. 73 Aubrey Flanagan, “British Exhibitors Find Revivals Outgrossing Current Releases,” Motion Picture Herald, 4 June 1938, 78. 74 Eddie Mannix Ledger, AMPAS. Portions of the ledger are reproduced and discussed in H. Mark Glancy, “MGM - Film Grosses, 1924–1948: The Eddie Mannix Ledger,” Historical Journal of Film, Radio and Television 12, no. 2 (1992): 127–144. 75 Based on the available ledger data, it is unclear whether Warner Bros. reissued any features internationally before the 1940—1941 season. Old Warner Bros. movies circulated internationally during the period between 1935 to 1941, but none of them received studio reissue campaigns. The breakdown of Warner Bros. reissues for the period between the 1935-1936 to 1940-1941 seasons can be found in William Schaefer Ledger, Ledger #3: "Recapitulation of Income from Re-issues on Productions Originally Released from Sept. 4, 1931 to August 26, 1939, as at February 27, 1943,” 13, USC SCA. Portions of the William Schaffer Ledger, though not this reissue data, are reproduced and discussed in H. Mark Glancy, “Warner Bros Film Grosses, 1921–51: The William Schaefer Ledger,” Historical Journal of Film, Radio and Television 15, no. 1 (1995): 55– 73. 76 The RKO reissue data comes from the C.J. Tevlin Ledger, which Rick Jewell generously shared with me from his personal collection. Portions of the C.J. Tevlin Ledger, including many reissue figures, are reproduced and discussed in Richard B. Jewell, “RKO - Film Grosses, 1929–1951: The C. J. Tevlin Ledger,” Historical Journal of Film, Radio and Television 14, no. 1 (1994): 37–49. 77 Weekly Variety, “Japs Protest Pix Imports, 6 July 1938, 13. See also: The Baltimore Sun, “Reissues of Old Films Viewed by Japanese Fans,” 25 September 1938, SM13. 78 Maurice Jenks, Percival & Isitt to Warner Bros. Pictures Inc., July 30, 1938, Foreign Dept. Japan Audit Reports (1931-1941), Box No 17255, WBA. 79 Daily Variety, “Hollywood Inside,” 12 January 1942, 2. 80 Weekly Variety, “Extra Gravy from 16mm,” 13 March 1935, 23, 31; Answers to Certain Interrogatories,” Schedule C, 1 October 1953, U.S. v. Twentieth Century Fox et al., Civil Case File 14354, Box 400, 8/6/53-6/21/54, Folder: Vol. 2, 2 of 2, Records of the 187 District Court for the Southern District of California, Central Division 1938-1961, NARA-R. 81 Motion Picture Herald, “Industry Interest in 16mm Field Follows Technical Improvements,” 4 September 1937, 33. 82 Motion Picture Herald, “Films for 16mm Portable Shows Hinge on Avoiding Theatre Field,” 5 March 1938; Motion Picture Herald, “Stop Leakage of Unfair 16mm Film Shows, Exhibitors Demand,” 18 November 1939, 19. 83 Motion Picture Herald, “Stop Leakage of Unfair 16mm Film Shows, Exhibitors Demand,” 18 November 1939, 19. 84 Leonard R. Posner to Victor H. Kramer, “Factual Memorandum in Proposed Civil Action in the Sixteen Millimeter Motion Picture Industry,” 5 June 1952, 3-6, U.S. v. Twentieth Century-Fox, DOJ Case File 60-6-99, DPC. 85 Answer of Defendant Universal Pictures Company, Inc. to Plaintiff Interrogatories, 5 August 1953, U.S. v. Twentieth Century Fox et al., Civil Case File 14354, Box 399, Records of the District Court for the Southern District of California, Central Division 1938-1961, NARA-R. 86 Supplementary Argument for Defendants, RKO Radio Pictures, Inc., Columbia Pictures Corporation, and Screen Gems, Inc., 7 November 1955, U.S. v. Twentieth Century Fox et al., Civil Case File 14354, Box 402, Records of the District Court for the Southern District of California, Central Division 1938-1961, NARA-R. 87 John Hay Whitney to Will Hays, 5 June 1935, MPAA General Correspondence Files, microfilm reel #3, AMPAS. Thank you to Alison Trope for pointing me toward these materials. 88 Mary Lea Bandy, “The Movies at MOMA: The First Cinema Museum in the United States,” Museum International 46, no. 4 (April 2009): 26–31; Decherney, Hollywood and the Culture Elite, 97–160; Drew, The Last Silent Picture Show, 161–187; Bill Mikulak, “Mickey Meets Mondrian: Cartoons Enter the Museum of Modern Art,” Cinema Journal 36, no. 3 (April 1, 1997): 56–72; Slide, Nitrate Won’t Wait, 9–24; Trope, Stardust Monuments: The Saving and Selling of Hollywood. 89 Wasson, Museum Movies, 2. 90 Agreement between Paramount Pictures, Inc. and Museum of Modern Art Film Library Corporation, 1 October 1935, AMPTP File #200, “Hollywood Museum—Agreements,” AMPAS. 188 91 Tentative List of Films Wanted by the Film Library of the museum of Modern Art, 15 July 1935, MPAA General Correspondence Files, microfilm reel 3, AMPAS. 92 Pierce, “The Legion of the Condemned - Why American Silent Films Perished,” 12. 93 Destruction of Films, 12700B, F00372, WBA. 94 W.G. Wallace to George O’Keefe, 24 August 1938, Destruction of Films, 12700B, F00372, WBA. 95 W.G. Wallace to I. Levinson, 29 May 1936, Destruction of Films, 12700B, F00372, WBA. 96 S. Schneider to W.G. Wallace and Jos. H. Spray, 16 December 1942, Destruction of Films, 12700B, F00372, WBA. 97 W.G. Wallace to J.H. Spray, 6 November 1942, Destruction of Films, 12700B, F00372, WBA. 98 De Leon Anthony to Bert Frank, 16 February 1943, Destruction of Films, 12700B, F00372, WBA. 99 W.G. Wallace to George A. O’Keefe, 5 May 1939, Destruction of Films, 12700B, F00372, WBA. 100 One version of this list appears in Harold Berkowitz to T.J. Martin, re: SILENT FILM PROPERTY REPORT, 28 May 1956, TELEVISION DEAL – Correspondence between Berkowitz & Schiffer re various features and others, F002230, Box 12707B, WBA. A slightly different version of the list appears in “Summary 9/57,” Folder: 366767 and 366768, Box: 12707A. 101 Pierce determines that 71 percent of American silent features are lost, 14 percent survive in complete form in American 35mm prints, 10 percent survive in 35mm foreign release prints or small gauge prints, and 5 percent are incomplete—“a few reels in 35mm, a shortened Kodascope edition in 16mm, or cut to a third or less of the original in 9.5mm.” David Pierce, “Whom the Gods Would Destroy: A Survey of the Survival of American Silent Feature Films: 1912—1930,” unpublished draft of report shared by the author, 2011, 26. 102 For an example of this appeal to the trans-historical free market, see Scott M. Martin, “The Mythology of the Public Domain: Exploring the Myths Behind Attacks on the Duration of Copyright Protection,” Loyola of Los Angeles Law Review 36 (2002): 294. 189 CHAPTER THREE: THE POSTWAR REISSUE BOOM AND THE TURN TOWARD THE LIBRARY Fairy stories keep on going Even though the kids grow old. Little ''Snow White" keeps on snowing Great big flakes of gold. -- George E. Phair, Daily Variety, 1944 1 There is evidence in this revival that such a masterwork on the screen has the timeless and universal richness of classic music or lore. Its pleasures are forever diverting; their recapture is a refreshing delight. -- Bosley Crowther, New York Times, 1944 2 Our industry is one of the few in the world where talents and skills of its workers, preserved on strips of celluloid, can be used repeatedly without any remuneration to the possessors of those talents and skills. -- Lester Cole, Screen Writer’s Guild, 1947 3 Prologue: Snowing Gold The response was electrifying. Beginning with its sixty city rollout in the heartland states of Ohio, Indiana, West Virginia, and Kentucky, Disney’s reissue of Snow White in 1944 met with the applause of critics, audiences, and exhibitors. Domestically, the Snow White reissue generated over $1.4 million in rentals, more than Fantasia (1940), Dumbo (1940), or Bambi (1942) earned during their initial releases. Snow White played gangbusters abroad too. By the time the Seven Dwarves had finished their march around the globe, the re-release earned over $1.05 million in foreign rentals. 4 Observers in the industry took note. The era of the high grossing reissue had begun. Snow White was the first in a long line of feature-length Disney reissues. Within a decade, consumers became familiar with the Disney reissue as cultural event. Disney 190 waited seven years to bring one of its beloved pictures back, allowing a new crop of children to grow and creating a sense of urgency among adults to go to the theater and, later, buy the video or DVD. If you waited too long, you missed the chance to see this animated classic, “available for a limited time only.” Although the marketing campaigns celebrated the Disney films for their timelessness, Disney’s seven year reissue strategy was neither timeless nor inevitable. Only two years before Snow White’s successful reprise, Disney hinted he would reissue Pinocchio (1940) during the 1942—1943 season. The news would have made sense to anyone in the industry; Pinocchio would have aged three years, a common enough gap when it came to studio reissues. Variety explained that Snow White “created widest favorable comment when first released” of any Disney picture, but the film was “now considered technically obsolete and unsuitable for revival owing to seven league strides advance in cartoon production in past couple of years” [sic]. 5 The industry’s assumption expressed in Variety—that technological leaps forward made Snow White, a mere four years old, look more haggard than the Evil Queen in disguise—reminds us that both the reissue of Snow White and its huge success were not foregone conclusions. Disney’s own persistent rhetoric about his studio’s technological breakthroughs, particularly around Fantasia and Bambi, made his celebrated first feature feel like a family heirloom—rich in positive memories, poor in commercial market value. The audience and critical response to the reissue, though, disproved all of these assumptions. Reportedly, the number of adults outnumbered children at most wartime showings of Snow White. In some cities, adults topped youngsters by a two-to-one margin. 6 Clearly, Snow White’s reissue success did not depend on reaching a new 191 audience of children. The film’s appeal to adults lay in a blend of entertainment and nostalgia. “Its pleasures are forever diverting; their recapture is a refreshing delight,” wrote the New York Times’ Bosley Crowther, one of several critics who found wartime allegories in film. “There is even an elemental premium to be enjoyed at this particular time in seeing the Old Witch destroyed by a fortuitous but elemental device. And there is more than fictitious satisfaction in the evidence that the Prince finally returns. Call this a sentimental comment. So what? You know what we mean.” 7 Disney’s film offered a rich and even contradictory viewing experience—a diversion from unpleasant wartime realities, an encouraging wartime allegory, and, most of all, a chance to recapture a memory of the world, and themselves, now gone. Snow White had changed in the six years since its initial release; not because the animation looked dated, but because the people watching it had irrevocably changed, and they knew it. Snow White resonated poignantly with American audiences during World War II, but the reissue would have achieved a mere fraction of its box office success were it not for one critical factor: RKO sold the film to exhibitors like a new picture. Whereas subsequent run theaters in the 1930s might have booked a comparable reissue for a flat $20 or $30 rental, RKO demanded a percentage of the box office for Snow White and its other reissues in the mid-to-late 1940s. Snow White played in more first run theaters and for longer periods than any reissue of the 1930s. Even as Snow White wound its way through the second and subsequent run houses, RKO obtained highly favorable rental terms, the likes of which exhibitors would have considered ludicrous in the prewar years. Encouraged by the example of Snow White’s success and the seller’s market for movies, 192 the Hollywood studios embarked upon the most profitable film reissue campaign in the industry’s history. The boom in reissues began during the war years and reached greater heights in the postwar years of 1946—1949. The Hollywood studios, audiences, and critics celebrated the blockbuster reissue of Snow White, but one group felt left out of the party: those who worked on the film. For years, the film’s two lead voice actors had been arguing that they should be entitled to additional compensation. Adriana Caselotti received under $1,000 in recording fees for voicing the title character; Harry Stockwell, her Prince Charming, earned under $500. By late 1938, the film had generated RKO and Disney over $7 million in worldwide rentals, and the voices of Snow White and Prince Charming had been imprinted onto millions of soundtrack records, distributed by RKO’s sister company, R.C.A. Caselotti and Stockwell sued Disney and R.C.A., arguing that they had not agreed to grant soundtrack rights. 8 Technically, however, they had agreed—Disney’s contracts explicitly reserved the right to use their voices across all media—and a lower court judge in New York granted summary judgment to the defendants. 9 Caselotti and Stockwell appealed and managed to bring their case to trial. Following a hung jury in July 1943, the parties seem to have made amends. Although she received no residual checks, Disney and RKO paid Caselotti to participate in a 1944 personal appearance tour; the “Voice of Snow White” visited Midwestern theaters, schools, and war plants to promote the reissue. Snow White finally received additional compensation, but what about the workers who brought her to life—not the Seven Dwarves, nor Prince Charming, but the animators who realized Walt Disney’s vision across countless animation cells? Only three years 193 earlier, in 1941, the Disney animators had won the right to unionize. The striking animators had numerous grievances: among them, Walt’s empty promises to put some of the 1938 Snow White profits into a bonus pool, which would serve as delayed compensation for their many hours of unpaid overtime labor. 10 After nine weeks on the picket lines, the animators obtained the right to go back to work as members of the Screen Cartoonists Guild. They achieved better wages, hours, and work conditions, but they gained no system of residual payments. The reissue of Snow White, however, galvanized the Screen Cartoonists Guild to take back up the question of profit sharing. In Spring 1944, the Guild issued two demands: first, producers pay 20 percent of all 35mm or 16mm re-release revenues to cartoonists in the Armed Services (which included nearly everyone working at the Disney studio during the war years); second, and very forward looking, producers pay 20 percent of television revenues to all animators, not simply military personnel, who worked on a production. Under both demands, the Guild would perform the administrative functions of collecting the monies and distributing them to its members. 11 Walt Disney, who carried a chip on his shoulder from the ’41 strike, dismissed the Screen Cartoonists Guild’s latest set of demands. The Guild appealed to the War Labor Board, but the arbiters ultimately sided with Disney. 12 The same week the Cartoonists Guild lost its bid to obtain residuals, Wall Street analysts opened Disney’s newly released annual report. The animation studio finished the 30 September 1944 fiscal year $486,287 in the black—a net profit attributable almost entirely to the Snow White reissue. 13 194 Introduction The Snow White reissue influenced industry trends and foreshowed changes to come. Snow White’s reissue inspired other studios to ramp up their reissue businesses; distributors sold their oldies to exhibitors at the rate of new pictures and reaped the rewards. During Hollywood’s lucrative years of 1943, 1944, 1945, and 1946, the reissue income was mere “gravy” upon a slate of profitable new releases. As production costs increased and attendance declined in the late-1940s, however, the studios came to regard their libraries as critical profit centers, as important to the health of Universal in 1947 and MGM in 1948 as Snow White had been to Disney in 1944. The Screen Cartoonists Guild’s demands preceded campaigns in 1947, 1948, and 1949 by the Screen Writers Guild, Screen Actors Guild, and other unions for residual payments. Amidst growing unemployment, Hollywood’s labor force watched angrily as their old work generated new revenues and consumed valuable screen space. Meanwhile, audiences at home and abroad found more opportunities than ever before to watch old films in theaters and at home. The mid-to-late 1940s marked a turning point in the history of film libraries. This chapter begins by setting up the industrial and cultural contexts of the postwar reissue boom. As the movie industry entered a postwar period of decline, studios theatrically reissued films at an unprecedented rate. Old films also benefited from a turn toward the library in American culture—critics and audiences expressed both nostalgia for works of the pre-war years and a desire to reevaluate them. I briefly describe the different participants in the reissue marketplace, then compare how two different studios navigated 195 through this marketplace. Vertically integrated MGM adopted a conservative approach— using a handful of “quality” reissues each year to enhance its profitability, but never seeking revenue streams beyond theatrical distribution and exhibition. Universal, on the other hand, owned no theaters and employed far more aggressive tactics, exploiting its old films through reissues and a subsidiary responsible for 16mm and television distribution. Universal flooded the marketplace with its old films, angering theater owners, labor groups, and the other studios, and setting up the central question the industry has been wrestling with ever since: How to exploit libraries using alternative technologies in a way that creates new revenue streams without sacrificing traditional markets? The 1940s Industry in Context: Decline, War Boom, and Decline During the 1940s, the fortunes of the Hollywood studios shifted dramatically, first down, then up, and finally down again. Film historian Thomas Schatz argues in his seminal book on 1940s American cinema that “World War II marked an extended, dramatic, and most welcome interval in a decade-long period of industry decline.” 14 The studios entered the decade on precarious footing, facing diminishing returns from foreign markets and increased pressure from labor groups, independent theater owners, and the federal government. The U.S. government represented a particularly grave problem since it threatened to divorce the studios from their most valuable assets—the first run theaters. Although the Federal Trade Commission lost the antitrust case it waged against Paramount from 196 1921—1932, the Department of Justice in 1938 filed a new suit against Paramount, the other four “Big Five” Studios (Warner Bros., 20 th Century-Fox, RKO, and MGM parent company Loews) and the “Little Three” (Universal, Columbia, and United Artists). The Department of Justice charged that the vertically integrated Big Five studios used strategic first run theater ownership and unfair distribution practices—including block booking, blind selling, and price fixing—to control the U.S. movie market. The Little Three, the DOJ charged, colluded with the Big Five to subjugate independent producers and independent theater owners. In 1940, the eight studios signed a consent decree that limited blocks of films to five and guaranteed regional trade screenings of films offered for booking, but the decree did not satisfy independent theater owners who frequently could not attend the trade screenings and, even if they did, still had to book four less desirable films to get the one they wanted. Pressure from the DOJ, theater owners, and the growing number of Hollywood unions threatened to tear apart the production, distribution, and exhibition infrastructures that had served the studios well over the past twenty years. The attack on Pearl Harbor and U.S. declaration of war in December 1941 effectively suspended these domestic problems as the nation entered the fight against two great foreign powers, Japan and Germany. The U.S. government considered motion pictures to be an essential industry for building morale, communicating news, and entertaining Americans at home and abroad. Hollywood successfully adapted its production process to the new challenge, producing war-themed features for civilians and training films for military personnel. 15 Hundreds of Hollywood actors, producers, and 197 craftspeople enlisted in the armed forces. Those who remained at home had their salary levels frozen to prevent rampant inflation. Although the studios froze salary levels to comply with the government’s anti-inflation policies, this wartime measure yielded corporate side-benefits, curbing the power of stars and unions. The studios benefited from wartime conditions in other ways as well. Although they lost access to most foreign markets besides England and Latin America, the U.S. box office boomed like no time ever before or since. The build-up of the armed forces and defense industries marked an end to the Depression years of un- and under- employment. Americans on the home front had more money in their pockets, yet less goods available to buy, as automobiles, gasoline, foods, and materials were rationed. Movies provided both a welcome diversion and an acceptable site for consumer spending. Weekly attendance numbers rose modestly from 80 million in 1940 to 85 million through the war years. 16 More importantly for the studios, though, the attendance at the first run theaters they owned skyrocketed. Americans on the home front were willing to pay a premium to see a picture earlier in superior accommodations. As more moviegoers traveled downtown to see a picture in its first run rather than wait for the neighborhood theater to show it, the engagements at the first run theaters grew longer and longer. The studios retooled their production slates accordingly to accommodate the new release patterns and the war’s limitations on their production resources. The Big Five decreased their volume of productions dramatically, shifting from releasing an average of 47.6 pictures per studio in 1940, to 32.2 pictures in 1943, to 26.6 pictures in 1945. 17 The 198 biggest decrease occurred in the number of B-pictures, as studios shifted their priorities to making A-level pictures that could gross big in their first run engagements. The studios emerged out of the war years in far better shape than they had entered them. Briefly, it appeared as though the wave of prosperity would last, as the studios enjoyed their most profitable year ever in 1946. The profits of the studios declined rapidly, however, across the following years. 18 There were multiple causes for the decline. The postwar baby boom sent millions of Americans leaving the city and moving to the suburbs. Gone were the days of visiting the downtown movie house three nights a week; middle-class white Americans increasingly stayed at home where they embraced television, a form of entertainment that complemented the new suburban lifestyle and terrified theater-owners across the country. 19 Beyond television and suburbanization, however, the industry’s prewar troubles involving foreign markets, labor unions, and antitrust actions all resurfaced after the war. England and much of Western Europe, recovering from the war, established stricter screen quotas, tariffs, and exportable fund limits to bolster their national industries and avoid a flood of currency leaving the nation. As the war moved toward a close in 1945, Hollywood labor demanded a greater share of the immense profits the studios were reaping. Top actors and directors negotiated rich deals, establishing their own independent companies to gain greater creative control and retain more of their earnings after taxes. 20 Rank-and-file workers, meanwhile, achieved substantial gains through collective bargaining, including a 25 percent wage increase for most unionized workers in 1946. Nevertheless, problems abounded. During and following the war, the industry 199 suffered from jurisdictional disputes between IATSE and the CSU (Conference of Studio Unions) that eventually devolved into violent skirmishes and hysterical accusations of communism. The wage gains of 1945 and 1946 also increased production costs, which had already gone up during the war years. The high costs of production became a problem when attendance and revenues declined across 1947, 1948, and 1949. Employment in Hollywood diminished nearly as rapidly as the studios’ profits, going from 22,000 unionized workers in 1946 to 13,500 in 1949. 21 The un- and under- employment in postwar Hollywood factored heavily in the campaign waged by labor to receive residual payments for reissued films. After the war, the U.S. government also resumed its antitrust campaign against the studios. In October 1945, the Department of Justice brought the eight major studios to federal court in New York. The three-judge panel determined that the studios indeed colluded and violated antitrust laws in regards to distribution practices, such as block booking, price fixing, and non-competitive bidding. However, the federal judges did not believe that the Big Five restrained trade through their ownership of first run theaters. Distribution policies needed reform, but the studios could retain their theaters, at least temporarily. The Department of Justice attorneys appealed, and in 1948, the case reached the U.S. Supreme Court. In a landmark ruling, the Supreme Court handed down what has become known as the “Paramount Decision”—siding with the Department of Justice on nearly every point and forcing the studios to reform distribution practices and divest themselves of their lucrative first run theaters. The Paramount Decision marked the end of one era and the beginning of another. The studios lost the core distribution and 200 exhibition infrastructure that they had utilized for nearly three decades. To stay competitive and solvent, the studios needed to innovate new business models, revenue streams, and profit centers. As the studios pursued these objectives, the Department of Justice’s attorneys kept their eyes trained on Hollywood. The Paramount Decision emboldened the Department of Justice in its regulation over the motion picture industry; the highest court in the U.S. had validated the agency and its long running case against the major studios, passing a decision that one legal scholar considered “probably the Government's greatest economic victory in the sixty year history of antitrust enforcement.” 22 The Department of Justice scrutinized the behavior of the studios, fully expecting Hollywood to break the law again. As we’ll see in Chapter Four, the DOJ identified the libraries of film studios as likely tools for collusion, block booking, and other anticompetitive practices. The Wartime Growth of the Reissue Market At the beginning of the 1940s, however, film libraries seemed inconsequential to the Department of Justice and only moderately significant to the studios that owned them. The studios entered the decade holding the same assumptions about libraries that they held during the 1930s—the remake was more important than the reissue, the derivative more important than the copy. Most studios reissued one or two pictures per year to the domestic market, where they might earn between $80,000 in rentals on the low end to $350,000 on the high end. As war swept through Europe and Asia, old military-oriented pictures gained a new topicality. During the 1939—1940 season, Warner Bros. grossed 201 $324,000 on the James Cagney-Pat O’Brien features Devil Dogs of the Air (1934) and $336,000 on Here Comes the Navy (1933). 23 MGM scored $192,000 the following season on Navy, Blue and Gold (1938, re 1941), impressive for a film that had cost the studio only $458,000 to produce three years earlier. 24 These revenues were welcome income, but they made only minimal contributions to the studio’s yearly revenue and profitability. The studios continued to subordinate reissues as a business and value libraries primarily for the remake rights. The war years transformed the American movie marketplace in nearly every way, and the business of film libraries was no exception. During the 1941—1942 and 1942— 1943 seasons, the studios showed little interest in either the copy or derivative uses of their libraries. The prolonged first run engagements of A-pictures made the studios focus production on high profile, “presold” pictures—that is, films based on novels and plays that had immediate positive recognition among audiences. The Big Five studios trimmed the number of new productions, cutting down especially on remakes and B-movies. The studios also reduced the number of films they reissued. Paramount, RKO, and MGM did not reissue a single picture during the 1942—1943 season. 25 Screen time, executives assumed, should be reserved for A-level pictures that could gross the maximum amount as they slowly wound their way through booming box offices across the country. Why waste time with comparatively low grossing reissues in this context? The studios may not have veered from their no reissue or revival policy were it not for the persistent demand of exhibitors for old movies. Subsequent run theaters faced a shortage of product due to fewer pictures that played for longer periods at first run 202 theaters. Both to obtain movies and economize on rental fees, exhibitors turned to revivals. As explained in Chapter Two, a revival differed from a reissue in that exhibitors booked revivals on a cheap, one-off basis through an exchange that still carried the prints. A studio reissue, in contrast, came complete with new prints and marketing materials, though reissues could also be booked more cheaply than new A-pictures. During 1942, studios watched in frustration as exhibitors filled screen time with cheaply booked old pictures. They responded by eliminating revival bookings and, as Variety reported, stopped “permitting accounts to raid the vaults for any old pictures which they formerly bought for a few dollars.” 26 The supply of old movies, however, could not be completely cut off. Exhibitor demand benefited specialty reissue distributors, which acquired old films from independent producers and distributed them theatrically on a states rights basis. Astor Pictures was the most prominent specialty reissue distributor of the 1930s. Headed by Bob Savini, Astor Pictures acquired the rights to Howard Hughes’ film library after the temperamental producer sued his original distributor, United Artists. 27 Three of the Hughes productions—Hell’s Angels (1930), Sky Devils (1932), and Scarface (1932)— generated small but steady revenues every year from the mid-1930s into the late-1940s thanks to their relevant stars, sensational subject matter, and some clever repackaging. 28 Astor’s business expanded during the war years, and the company was soon joined in the reissue field by similar specialty distributors, most notably Film Classics. 29 These distributors served the intermediary function of connecting subsequent run theaters to the reissue product of independent producers. 203 By late-1943, the studios recognized they could not freeze old movies out of the marketplace altogether. They adopted a new strategy, continuing to deny exhibitors cheap revival bookings but selecting one or two films from their own libraries for a high profile, nation-wide reissue. The main differences from the 1930s were that these reissues played extended engagements at first run theaters and exhibitors paid rentals comparable to a new film. Snow White was the highest grossing and most important reissue of this period, but nearly all the studios enjoyed reissue grosses during the late-war years that, even accounting for inflation, dwarfed the pre-war reissue rentals. Warner Bros., for instance, obtained $552,921 in the fall of 1943 from reissuing the 1939 James Cagney western Oklahoma Kid. 30 That same fall, Paramount prepared Cecil B. DeMille’s 1932 Roman epic Sign of the Cross for the picture’s second reissue. When Paramount first reissued Sign of the Cross in 1938, the Production Code Administration mandated certain changes, including cutting a scene where a pagan dancer attempts to corrupt a Christian girl. 31 For the wartime reissue, DeMille and Paramount exacted one large change of their own, shooting a new prologue in March 1944 to give the film a sense of timeliness (Figure 6). 32 The roughly 10 minute prologue was set aboard a bomber plane flying over Rome. Arthur Shields, portraying a Catholic chaplain, tells the aircraft crew about the history of Rome—specifically, another time the city was aflame, torn between cruelty and goodness, persecution and hope. The prologue then transitions into the Production Code’s censored version of Sign of the Cross, withholding images of violence and sexuality that Americans were permitted to watch 12 years earlier during peacetime but could not watch in the midst of global warfare. 33 “Paramount presents the Modernized Production 204 of Cecil B. DeMille’s The Sign of the Cross,” trumpeted the newspaper advertisements. The supporting art followed the model of the newly modified film, splashing the silhouette of a B-17 and words “Modernized Production” across many of the same advertisements used to sell the film for the 1938 reissue. 34 Like Oklahoma Kid, Sign of the Cross performed well in reissue and attracted the attention of industry commentators. 35 In early-1944, Snow White provided the best indicator yet of the increased earning power of reissues, inspiring more film companies to reach into their vaults. For the 1944—1945 season, every studio besides RKO and United Artists tapped two or more old films for reissue, imitating the practices of the reissue specialty distributors, like Astor and Film Classics, by offering the films to exhibitors as either single features or pre-packaged double bills. 36 The studios’ strategy in offering these reissues was intended to serve a stop-gap function—providing product where there was a shortage of new films—and to wrest control of the reissue market away from the specialty distributors that would otherwise monopolize it. Aside from marketing and distribution expenses, the reissues represented sources of pure profit since the studios had fully depreciated the negative costs years before. Yet even as reissue revenues far surpassed what any reissues earned during the pre-war years, the studios still considered the reissue monies to be “gravy”—a welcome additional source of profits, but incidental compared to the large profits generated through the business of producing new A-pictures for first-run release. But as the film industry changed during the postwar years, the strategic importance of 205 reissues and film libraries changed too. No longer mere gravy, libraries became a vital profit center. Figure 6. Cecil B. DeMille added a topical prologue to his Roman epic, Sign of the Cross (1932), for the film’s 1944 reissue. Photo courtesy of USC Cinematic Arts Library. The Postwar Reissue Marketplace The potential wealth of the reissue market became evident during the industry’s prosperous wartime years, but it was during the industry’s postwar decline that studios and exhibitors pushed reissues to the limits and, in the eye of labor unions, beyond. All of the studios brought films from their vault to market. Thomas Schatz correctly identifies the “booming business for reissues” as “a major development in the postwar movie 206 industry.” 37 It was a development that the industry itself reported upon with a sense of surprise. “One in Every Five Pix Showing in NY a Reissue,” announced an October 1947 headline on the cover of Daily Variety. 38 As the decade continued, the quantity of reissues swelled, and the trades reported that each season had broken the record: 67 reissues in the 1946—1947 season; 105 in 1948; 102 or 136 in 1949; and 150 across the 1949—1950 season. 39 These numbers are only roughly accurate, but where they fail arithmetically, they succeed in capturing the growing sense that old movies were gobbling up the movie market. 40 As media scholar Nitin Govil argues, “data is discursive as well as enumerative.” The statistics on reissues became discursive tools, utilized by multiple groups within the industry toward strategic ends. 41 The reissue surge marked a turning point in the history of film libraries. The studios, for the first time, came to value their libraries as a profit centers, the same function that backlists had long served for book publishers. The case studies of MGM and Universal reveal two different sets of tactics, but the core strategy—to turn the library into a profit center—remained the same. Before we can understand the behavior of those studios, though, we need to briefly establish the other participants and stakeholders in the reissue marketplace. The business of film libraries is not a top-down, supply-side model. The library business has always hinged on an interrelated group of marketplace participants, including exhibitors, trade groups, audiences, critics, and labor groups. Across the mid-to-late 1940s, all of these groups turned toward the library more than ever before. 207 Trade Groups and the Children’s Film Library The studios embraced their libraries as low risk profit centers amidst industry recession, but in one cooperative venture, they applied their libraries toward a different end. Launched by the Motion Picture Association (MPA) at the beginning of the 1946— 1947 school year and film season, the Children’s Film Library was, first and foremost, a public relations move. The MPA member studios agreed to allow exhibitors to cheaply rent old films deemed appropriate for youngsters and show them on Saturday mornings. Exhibitors could pick from a list of 28 vintage studio films, including Warner Bros.’ A Midsummer Night’s Dream and MGM’s Adventures of Huckleberry Finn. 42 The Children’s Film Library was immediately well received. Parent groups liked the idea that their children would spend Saturday mornings absorbing adaptations of William Shakespeare and Mark Twain rather than Zane Grey. Exhibitors liked the plan because it gave them cheap product for Saturday morning shows, a programming slot that, due to children’s discount ticket prices and only exhibiting each film they rented once before returning the print, rarely netted much at the box office. For exhibitors, building habitual moviegoers and community goodwill were the chief rewards of the Saturday morning show. The Children’s Film Library caught on quickly and, within two years, 2,500 theaters across the country were playing the low cost Saturday morning oldies. The demand for prints by participating theaters required the Children’s Film Library to greatly expand its selection. To select new films and build alliances with influential community groups, the MPA established the National Children’s Film Library Council and a separate 208 Advisory Committee. Chaired by MPA Public Relations executive Marjorie G. Dawson, the Committee and Council consisted of one man (Richard Griffith of the National Board of Review) and twenty-nine women, including representatives of the Girl Scouts of America, Daughters of the American Revolution, United Daughters of the Confederacy, and multiple PTA and church groups. After the Committee and Council approved a film as appropriate, the picture moved to the next stage—the Wiggle Test. “Children enjoy most movies, judging by their comments,” said Dawson. “So the Wiggle Test, rather than children’s comments, is the best indication of interest. When children are bored, they wiggle. If there is ‘too much love,’ they wiggle. If a sequence is over their heads, they wiggle. But when their interest is held, they sit absorbed.” Two trained observers noted the quality and quantity of wiggles among a test audience of kids, then illustrated their findings on a graph in which the horizontal axis represented the film’s linear flow and the vertical access represented a wiggle scale, ranging from the best outcome, “Active Participation,” to the worst, “Open Revolt.” Once a film passed the Wiggle Test and, occasionally, had a scene or two censored, the picture officially entered the Children’s Film Library. Still, exhibitor demand exceeded the available number of CFL films and prints, causing the Committee to create lists of recent films they “Recommended” or deemed “Acceptable.” Exhibitors could get discount rates on these films once they played off all the films officially in the Library. 43 209 Figure 7. “The Wiggle Test” results of The Sea Hawk (1940), published in Motion Picture Association’s 1948 booklet The Children’s Film Library and Special Children’s Programs. Courtesy of the Margaret Herrick Library of the Academy of Motion Pictures Arts and Sciences. 44 The postwar theatrical reissue boom occasionally presented obstacles for the Children’s Film Library. MGM and Paramount pulled David Copperfield and Union Pacific, respectively, from the Library in the late-1940s when the studios decided to reissue the films nationally. Overall, though, the Children’s Film Library benefited from the reissue boom. On a cultural level, the CFL was more readily accepted by an American public who were accustomed to, and in some cases actively supported, the practice of screening old films in commercial cinemas. On a material level, the theatrical 210 reissues from previous seasons provided much needed 35mm prints to service the 2,500 CFL affiliated theaters. We should regard it as no coincidence, therefore, that The Sea Hawk (1940) entered the Children’s Film Library in 1948, one season after Warners theatrically reissued the Errol Flynn swashbuckling yarn. Still, The Sea Hawk had to pass the Wiggle Test; fortunately, the “Active Participation” of a test audience during the dueling scenes more than offset the “Boredom” and “Restlessness” caused by the romantic moments (Figure 7). The Wiggle Test may have had a playful name, but the Children’s Film Library’s research methods were taken seriously among child development psychologists. One child development researcher at Pennsylvania State University used the Wiggle Test scale in a study on “Film-Mediated Fantasy Aggression.” 45 But not all academics were sold on the CFL. Some experts in the fields of education and communication applauded the idea of a Children’s Film Library, but questioned why the Library should be composed entirely of old Hollywood movies intended for a mass audience, rather than films designed specifically for children. Marjorie Dawson defended the MPA’s position: “In the opinion of the National Children's Film Library Committee, it is not desirable that special films be produced for American children, eight to twelve.” 46 Dawson couched her defense in pseudo-science and the inherent difference between the mediums of film and print, but what educational experts suspected—and what any showman worth his salt knew—was that today’s kids were an easy market for yesterday’s attractions. The MPA correctly asserted that neither the studios nor exhibitors made much money on the Children’s Film Library, but neither did they invest significant funds. The studios and 211 exhibitors performed their public service through the recycling of old content rather than taking new production risks; it was the same basic strategy that was leading exhibitors to book reissues, beyond the matinee show, in record numbers. Exhibitors Since the 1910s, exhibitors had been the industry’s most important buyer and source of demand for old movies. The chief appeal lay in the deal terms—you could rent a star-driven reissue with high production values for a flat rental fee, rather than the box office percentage you paid for a newly released A-picture. Furthermore, a reissue or revival was a known entity; exhibitors could insure a level of quality control that they lacked over B-pictures available for similarly low rental rates. The appeal of low rentals and proven quality, matched by the need to fill frequently changing double-bills, drove exhibitors to book old movies from the mid-1930s to early-1940s. During the war years, however, the marketplace changed: first-run films played longer engagements; studios released fewer movies; studios first denied exhibitors access to low-cost “revivals,” then offered reissues at rates comparable to A-pictures. Exhibitors protested the newly expensive terms for reissues and, by mid-1947, a rough compromise was reached: studios sold top caliber reissues, like Snow White and Gone with the Wind, on the same terms as A-pictures, but offered lower rentals (a flat fee or a percentage split favoring the theater) on more ordinary reissues. 47 Specialty distributors Astor and Film Classics, meanwhile, never gained the leverage to charge anything more than flat rentals for their reissues. Old movies, once again, were one of the best deals available in the exhibition business. 212 As exhibitors regained favorable terms on reissues, the supply of new films remained low, production costs escalated, and attendance levels declined. Booking reissues was a conservative move—protect your downside, give up some upside, stay in business to fight another day. One Michigan exhibitor expressed the conservative position this way: “We have had too many flops with too high rental. Let’s play reissues and be able to pay our debts rather than play new pictures and fold up.” 48 A business plan designed to stay clear of bankruptcy court was hardly an enthusiastic endorsement of showing old films. But in an uncertain marketplace, where industry costs and admissions were moving in opposite directions, the conservative strategy made sense. Some voices within the industry criticized exhibitors’ embrace of reissues. Harry L. Thomas, head the Independent Motion Pictures Producers Association, complained that reissues cannibalized new productions “since re-issues take up the much-needed playing time necessary for the independent producer to gain revenues.” 49 He further argued: The exhibitor who uses [reissues] to excess—and most theatre operators are doing so today—is alienating the very public he cusses out for staying away from his theatre. True, he can buy reissues for lower rentals than new pictures, but he will find out when he examines his books that where he may have saved in film rentals, he has contributed to the creation of apathy on the part of the public. 50 The industry had backed itself into a self-fulfilling prophecy, claimed Thomas. Studios and exhibitors booked reissues to mitigate risk in a down marketplace, but the marketplace spiraled downward faster because of the reissues. Exhibitors firmly believed public apathy was developing less from excessive reissue play than from the competition of two growing mediums—16mm film and 213 television. Although exhibitor antagonism toward television has been well documented by historians, one overlooked source of the antipathy came from the fact that many theatrical reissues were also appearing on television. The problem lay with independent producers who licensed their old productions to specialty reissue distributors, then turned around and licensed the same films to 16mm and television distributors. In 1948, the candid exhibitor publication Harrison’s Reports reported that numerous Alexander Korda productions, initially released by United Artists and later reissued through Film Classics, had been sold to New York television station WPIX. Although Film Classics contractually guaranteed a clearance period before The Scarlet Pimpernel or any films reached local television, Harrison’s Reports considered this an unenforceable promise and warned, “the exhibitor who books such reissues may very well find himself in the embarrassing position of offering to his patrons a picture that they had seen on television only a few nights previously, or perhaps offering it to them on the same night when it can be seen as a telecast at no charge.” 51 The same problem also applied to 16mm screenings. “Believe me when I tell you that we have run many UA reissues and later on have found that these same pictures have run in our towns at no admission price on 16mm,” wrote a Midwestern leader of the Theatre Owners of America in 1948 to United Artists executive Paul N. Lazarus, Jr., who was helpless over the situation since United Artists’ distribution rights to the films in question had already expired. 52 The exhibitors who stood the most to lose from these 16mm and television presentations were the small but noteworthy group of “revival theaters,” which devoted all or most of their screen time to old films. The growth of the revival theater was most 214 evident in Los Angeles, where, in 1946, four neighborhood theaters grouped together under the name “the Academies of Proven Hits.” 53 By the following year, there were five “Academy” theaters and four similar L.A. movie houses operating under the name, “Encore Theatres.” 54 The revival theaters played the occasional new release in subsequent run, but the house specialty was the reissue double-feature. The five “Academies” simultaneously opened and played the same reissue bills, a measure designed to economize on advertising costs, which were further reduced through the distributor’s contribution to marketing. 55 The name choice, “the Academies of Proven Hits,” promoted a film’s age and “proven” status as virtues, while playfully riffing on the growing number of academic and cultural institutions promoting the serious study of film. The L.A revival theaters and others like them across the country should not be confused with university film societies and other non-theatrical film groups. Although they certainly serviced some of the same patrons, the revival houses were, first and foremost, commercial enterprises built upon classic business strategies—cost efficiency and specialization. Audiences Studios and exhibitors turned to reissues as a conservative strategy during the motion picture industry’s postwar recession. However, the abundance and longevity of the reissue boom cannot be explained by the interests of these sellers and buyers alone; we need to recognize the demand of the industry’s end-users: audiences. For the five “Academies of Proven Hits” to stay in business playing the same pairs of oldies, in the 215 same city, at the same time, through the end of the 1940s, audiences had to not simply accept old movies but actively desire to see them. The “Academies” and other successful revival theaters, in fact, built customer loyalty through encouraging participation, inviting audience members to cast votes for the old films they wanted to see return to the screen. 56 Art houses, specializing in foreign films, also experienced rapid growth during the same period. 57 Revival theaters and art houses generally lacked the plush accommodations of the first-run movie palaces, but they skillfully emphasized the cultural distinction of their programming over traditional amenities. For an audience that valued reflection, reevaluation, and access to a diverse pool of films, postwar movie culture contained a great irony—as the studios and exhibitors grew more impoverished, their own access to film culture grew richer. As explored in Chapter One, movie fans had long sought access to old films, even before the Hollywood studios rose to dominance. During the mid-to-late 1940s, however, the demand for old films shifted, moving from the fringes of fandom much more toward the mainstream. This shift was part of a turn toward the library in American culture that reached far beyond the movie industry. Postwar Americans turned to the past in other fields—evident in the booming sales of “classic edition” paperbacks, the increase in museum attendance, and the expansion of “middle-brow culture.” 58 College history lectures swelled with returning servicemen on the G.I. Bill, and those outside of higher education could read any number of nostalgic press accounts of past works of art, literature, and film. Even as Americans looked forward to the numerous challenges, opportunities, and perils that lay ahead in a postwar era, they nevertheless participated in 216 acts of personal and collective retrospection. To watch an old movie, read an old book, see an old image were acts of time travel—unlocking memories of where you were, who you were, who you were with when you first encountered the work. Even when encountered for the first time, an old work provided a capsule into past assumptions, aesthetics, and values. Since the 1910s, a contingent of movie fans has wanted access to old movies; in postwar America, these fans vastly expanded in number. Critics Critics provided some of the most important voices in the postwar turn toward the library and demand for reissues. From the immediate postwar era to today, film critics have been the most vocal advocates for the circulation of old films. We should remember, though, that critics were latecomers to this position. As discussed in Chapter One, fans desired access to old movies years before most critics, who believed that cinema was improving at such a pace that old movies were inherently inferior and admonished the “poor fools who catch at the past and try to re-create it.” 59 Throughout the 1930s, however, more critics came to regard the circulation of select old movies as a positive and important part of film culture. 60 It was not until the mid-to-late 1940s, however, that the celebration of old movies became a dominant position of film criticism. Critics lost their pre-war confidence that cinema followed an upward trajectory. They no longer believed that filmmaking necessarily improved over time. More ambivalence took hold, and some critics used reissues to argue that the quality of American cinema had declined since the 1930s and early-1940s. 61 In 1950, Life Magazine hailed Charles Chaplin’s 217 recently reissued City Lights (1931) as the best film of the year, a position that would have been unthinkable just a decade earlier due to the different critical standards and the shortage of 10-to-20-year-old movies in circulation. 62 What critic would have dared to call The Son of the Sheik (1926) the best film of 1938 or Tumbleweeds (1925) the best of 1939? Although critics celebrated the growing number of reissues, they were not naïve about the cause for the upturn of oldies. “One of the marginal consequences of post-war pressure in the film industry has been the impulsive reissue of a lot of comparatively old films,” wrote New York Times film critic Bosley Crowther in 1949. Crowther continued: Granted the crisis in the business has been a blow to a lot of Hollywood folks, this fast resurrection of some grand old pictures from the vaults has been a windfall for the fans. While making a little extra money, the movie people will also make some needed friends. Certainly the disinterment of a couple of the Marx Brothers’ old films, which was one of the most auspicious functions in motion picture commerce last year, was a triumph of liberation that virtually justified whatever financial embarrassment in the industry that brought it about. 63 Crowther informed readers about the industrial causes of the reissue boom, but ultimately presented the availability of more old films as a positive development—here was an opportunity to see old favorites, discover lost gems, and reevaluate film history. Although Crowther was the most important postwar critic to advocate for reissues, he was hardly alone in doing so. Consider the press coverage MGM’s Rage in Heaven (1941, re 1946) obtained as it played in reissue throughout the country. A critic for the Hartford Courant offered: “reissuing it might have been because of the popularity of both stars [Ingrid Bergman and Robert Montgomery] or because of scarcity in strike-torn Hollywood, but regardless of reason, it was a good move on Hollywood’s part. It stood up well.” 64 The 218 review is revealing. Hartford’s critic speculated the familiar reasons for reissuing the picture—the desire to cash in on a star’s under-seen early work and a stopgap measure for product shortage—but nevertheless accepted the reissue as a positive step for film culture. Other voices in popular culture were less enthusiastic about reissues. “Starting with an excellent idea—bringing outstanding old pictures back on the screen—the film industry is ruining it by not playing fair with movie-goers,” warned the February 1949 issue of American Legion Magazine. In his article “The Re-issue Racket,” Legionnaire R. Wilson Brown echoed the criticisms about reissues that plagued the industry three decades earlier—distributors and exhibitors were promoting old films like they were new and deceiving audience members. Brown offered a sampling of newspaper advertisements to prove his point. He also quoted extensively from the Screen Actors Guild and AFL Film Council’s resolution against the “abuse” of reissues that caused “disastrous unemployment for thousands of permanent workers who are the backbone of the motion picture production industry.” 65 The article likely came into being because of the public relations maneuvering of the AFL Film Council, which forged an alliance with the American Legion in the late-40s and early-50s based on a mutual loathing of communism. Even so, the “Re-issue Racket” is a noteworthy article, insisting that the steady revival of classic films exacts a cost on labor. 219 Labor The competing labor factions in postwar Hollywood did not agree on much. During and following the war, the labor movement suffered from jurisdictional disputes between the CSU (Conference of Studio Unions), on one side, and IATSE and the AFL, on the other side. The jurisdictional skirmishes eventually devolved into violence, redbaiting, and the blacklisting of hundreds of Hollywood workers. 66 On a July evening in 1947, though, the CSU and IATSE called a temporary détente to discuss a growing problem that posed a threat to all labor groups. The CSU-affiliated Screen Writer’s Guild hosted the meeting in its boardroom, but the Screen Actor’s Guild and numerous IATSE- affiliated guilds were in attendance. By the end of the evening, Hollywood’s writers, actors, directors, editors, plumbers, script clerks, carpenters, cartoonists, and others unanimously agreed to put together a multilateral steering committee to confront “the re- issue problem.” The meeting’s organizer, the Writer’s Guild, had been warning its own members about the reissue problem for months. “While all of us in the industry are pleased to have made pictures of such lasting quality that they merit revival, and in their own way may even become classics, it is none the less clear that it is money out of our pockets, which makes our pleasure less complete,” wryly wrote the editors of the Guild’s magazine, The Screen Writer, in February 1947. “For, each time a picture which was made in an earlier year is reissued, it replaces one unmade picture which will not be issued at all.” The Writer’s Guild believed the solution to the problem lay in the form of revenue sharing. Without an equitable sharing of revenue, the Guild leadership foresaw a dark future, one 220 in which the studios would flood the market with reissues anytime the guilds tried to exercise their collective bargaining rights. “We would find our own works used against us,” the editors warned. 67 As the call for sharing revenue on reissued pictures gained momentum, labor advocates argued that the growing mediums of 16mm film and television needed similar compensation schemes for the reuse of old films. We should recognize, therefore, that Hollywood labor’s postwar struggle for residual payments initially crystallized around the theatrical reissue of old films, then quickly attached itself to the television exhibition of films as well. Reissues galvanized Hollywood labor over the question of reuse. The Writer’s Guild had a reason to be optimistic about reaching a revenue-sharing agreement. The American Federation of Musicians (AFM) reached an agreement in 1946 with the studios that granted rights only for theatrical exhibition and mandated that all film scores had to be re-recorded for television exhibition. The contract may be one of the best that any labor union in Hollywood has ever negotiated, guaranteeing new jobs in the event of television exhibition, plus 5 per cent of all television revenues. The AFM was clearly forward-looking about television, and it had good cause. Musicians had earlier had found themselves in the unemployment lines when radio stations turned toward recorded music to save costs over hiring live performers. The AFM’s leadership ensured the same situation would not occur in television, and the union held sufficient leverage within the industry to pull off this deal. 68 Having negotiated a better deal than any other union in town, the AFM chose not to attend the Writer’s Guild meeting or interfere in the matter of reissues. 221 The studios almost immediately regretted the concessions they had given to the AFM. As the industry’s prosperity declined in the months and years following the contract, the studios vowed not to repeat the mistake of giving away any piece of their one consistently low cost, high profit business—the library. The studios flatly refused the revenue-sharing proposals of the multi-union committee on reissues. The Screen Actor’s Guild became the first union to test the studios’ resolve on the matter. As SAG’s contract with the producers neared its end date on August 1, 1948, SAG outlined eight demands, the first two of which concerned reuse: 1—Reasonable restrictions on reissues of old films to curb increasing unemployment of actors caused by such reissues. 2—Temporary ‘stopgap’ clause to preclude use in television of films made for theater exhibition until agreement is reached so that actors as well as producers may share in additional revenue from this new medium. 69 As the New York Times commented, “the reissue question is related to the television issue” because “the producers would like to establish the principle that once a foot of film is shot, they can exhibit it as they please.” 70 SAG’s proposal in 1948 to restrict the number of reissues rather than share revenues may have been a strategic choice. SAG, the WGA, and the other guilds had failed to gain any ground on the reissue revenue sharing proposals the previous year. Moreover, contractually defining a “reissue” was an exercise in frustration. All movies were first exhibited theatrically, where they remained in circulation for wildly different periods of time. Television, on the other hand, was clearly a different medium. SAG had explicitly relinquished television rights since the union’s earliest collective bargaining 222 agreement in the 1930s, but SAG hoped it could regain those rights or, at the very least, ensure residual payments on all films moving forward. The studios flatly refused to give SAG any piece of the television pie, precipitating the breakdown of negotiations and the anticipation of an actors’ strike. Three weeks before the deadline, however, SAG and the Motion Picture Producers compromised and reached a 29-month work agreement that allowed for “continued bargaining” on the matter of television broadcasts. 71 The 1948 SAG contract was intended as a temporary solution, but it drew a line in the sand that remained unchanged for the following twelve years. The studios owned the television rights to all pre-1948 films, but they could not televise any feature films produced after August 1, 1948 without the permission of SAG. After signing the interim contract, SAG continued to advocate for a cap on the number of reissues. In 1948, SAG passed a resolution, adopted by the AFL Hollywood Film Council, charging: “the practice of reissuing scores of old motion pictures has turned into an abuse which is (1) unfair to the public; (2) in the long range detrimental to the boxoffice, and (3) creates disastrous unemployment for thousands of permanent workers who are the backbone of the motion picture production industry.” 72 The solution proposed by the labor groups was to restrict reissues to “recognized masterpieces of the motion picture art” and limit the number to a small percentage of total releases in a given year. In a sweeping call that reached beyond reissues, labor implored the studios to “discard their fears and uncertainties regarding the future,” recognizing that reissues were a conservative move by studios and exhibitors during a period of change. 73 Discarding fear, however, was not a sane response to a postwar industry in which production costs 223 were high, attendance was low, and the Department of Justice was in the process of destroying the backbone of the vertically integrated studio system. The studios continued to reissue large numbers of pictures throughout the late-1940s. The AFL Film Council protested the practice into the following year, scoring a modest public relations victory with the February 1949 publication of the “Re-Issue Racket” in American Legion Magazine. The AFL Film Council rested its greatest hopes, though, on enlisting the involvement of the Motion Picture Industry Council, which represented 20,000 union workers and studio employees. After briefly reviewing the matter, the Motion Picture Industry Council declined to get involved and the AFL scaled down its campaign. The reason was the same problem that consistently dogged the 1940s Hollywood labor movement: a disagreement over jurisdiction. 74 If the AFL’s arguments about reissues deceiving the public recalled the FTC hearings of the late-1910s about re-titled films, then the postwar campaigns waged by stars to profit from reissues also resembled the earlier era (which I discuss in Chapter One). Once again, it was a cowboy who led the charge. John Wayne’s B-westerns and pictures for producer Walter Wanger had become staples of both the theatrical reissue market and the non-theatrical exhibition market. In a January 1949 article on reissues, the Motion Picture Herald included a photograph of a marquee promoting the double-feature of Stagecoach (1939) and The Long Voyage Home (1940), one of the circulating John Wayne double-bills that found popularity among both urban and small-town exhibitors. 75 Upset by the situation, John Wayne obtained a deal that insured he would profit from the reissue of his subsequent work. On April 12, 1949, Daily Variety’s lead story announced: 224 “Precedent-setting deal has been inked by John Wayne with Warners. Actor, who recently signed to do one picture a year for seven years with the studio, starting in November, will get 10 percent of the gross on the septet when and if they are reissued.” 76 A trip to USC’s Warner Bros. Archives reveals that Variety got the story wrong on two counts. First, a profit participation deal that included reissues in 1949 would not have been “precedent setting.” 77 Second, Wayne’s actual contract granted him a $50,000 bonus, not a percentage, for any of the seven productions that Warner Bros. reissued. 78 Nevertheless, the announcement in Daily Variety is noteworthy, as it highlights the postwar industry’s assumption that reissues were an economically important to the movie business. As the case studies of MGM and Universal will show, this was a completely justifiable assumption. Competitor Analysis: MGM and Universal In the years following the end of World War II, all of the studios strategically turned to their libraries as profit centers. However, the studios’ tactics in pursuing this strategy varied significantly. By comparing the tactics of the crème-de-la-crème of vertically integrated studios, MGM, to those of theaterless Universal, we see two models for how to monetize the library, both rooted in the company’s financial conditions and management’s attitude toward risk and innovation. MGM chose to keep its library business limited and internal—building an in-house unit devoted to reissues, carefully selecting and marketing a limited number of titles, prioritizing the theatrical market, and rejecting innovations in the 16mm and television markets. Universal, in contrast, 225 exploited its library expansively and non-uniformly. Universal chose to internalize certain library functions, but externalize others—decisions that relinquished tight distribution control for much needed cash advances and a dependable source of cash flow. The aggressiveness of Universal in exploiting its library and pursuing innovations in 16mm and television distribution caused frictions within the industry and within the corporation itself. The Shared Studio Strategy: Libraries as Profit Centers During the postwar years, film libraries became a vital profit center to the Hollywood studios. Although reissues yielded a relatively small amount of revenue, the profit margins on reissues were enormous. After all, the studio had already fully depreciated the negative cost of the film; all revenues beyond distribution and marketing costs were profits. The theatrical financial data of MGM powerfully illustrates the important function reissues played in postwar Hollywood as a low revenue, high profit business. Table 4 shows the small contributions of reissue revenues to the overall pool of theatrical rental revenues. Even during the reissue boom seasons of 1946—1947, 1947— 1948, and 1948—1949, the revenues from reissues never represented more than five percent of total rental revenues. In assessing the 1948—1949 season, MGM’s $3.5 million in domestic and foreign reissue rentals looks like a drop in the bucket compared to the studio’s $80 million total rental revenues for the season. 226 Table 4. Contribution of Reissue Revenue to MGM’s Total Seasonal Rental Revenue (includes both domestic and foreign rentals, 1939-1940 to 1949-1950). Note: Data does not include 1947 Gone with the Wind or Ninotchka reissues. Source: Eddie Mannix Ledger, AMPAS. In evaluating profitability, however, a different picture emerges. Let’s reconsider the 1948—1949 season, a season when MGM reached into its vault and reissued one of its biggest hits of the 1930s (San Francisco, 1935), one of its biggest flops (The Wizard of Oz, 1939), and a moderately successful comedy, A Night at the Opera (1936). Those three films in reissue together accounted for a profit of $2,282,000, a hefty contribution to the 1948—1949 season’s total rental profit of $3,047,000. Table 5 reveals that reissues continually contributed a disproportionate amount to the profit (or loss) of a given year across the four seasons from 1946—1947 to 1949—1950. !"# !$"%"""%"""# !&"%"""%"""# !'"%"""%"""# !("%"""%"""# !)""%"""%"""# !)$"%"""%"""# )*+*,&"# )*&",&)# )*&),&$# )*&$,&+# )*&+,&&# )*&&,&-# )*&-,&'# )*&',&.# )*&.,&(# )*&(,&*# )*&*,-"# !"!#$%&''(%#$%)%*(%'#+,-./0%1#2,#3,2/4#5%/',*#$%)%*(%'# 67,-%'8+#9#:,0%&;*#$%*2/4'<#=>?>@=>AB#2,#=>A>@=>CBD# /012230#/04567#/0804302# 9:567#/04567#/084302# 227 Table 5. MGM Reissue Profits compared to Total Profits (By Season, 1944-1945 to 1949-1950). Source: Eddie Mannix Ledger, AMPAS. !"##$#%& !"#%$#'& !"#'$#(& !"#($#)& !"#)$#"& !"#"$%*& +,-../,&01234.& #'!5***& *& 65(!65***& (#!5***& 656)65***& "#65***& 72489&01234.& 665)'%5***&& "5(!!5***&& #5#%65***&&:%5()#5***;& <5*#(5***&& #5#)%5***&& &=:!*5***5***;& &=:%5***5***;& &=$&& &=%5***5***&& &=!*5***5***&& &=!%5***5***&& &=6*5***5***&& &=6%5***5***&& !"!#$%&''(%#)*+,-'#.+/01*%2#-+#3+-14#)*+,-'# 567#8%1'+9:#;<==>;<=?#-+#;<=<>;<?@A# $%&''(%#)*+,-'# 3+-14#)*+,-'# 228 The financial data available for RKO, a less successful studio than MGM, confirms that reissues served as an important profit center during postwar years of production high costs and dwindling attendance. 79 The evidence is clear: From 1946 to 1950, studio libraries took on the strategic function they have continued to play ever since—as a low cost business yielding relatively small revenues but large profit margins. One caveat is important to note about library profitability, beyond the many challenges of interpreting available financial studio data (a topic discussed further in this footnote). 80 The revenues and profits charted above are based solely on film rentals, not the total corporate income and profit of Loew’s, Inc. Film rentals accounted for only about 40 percent of Loew’s, Inc.’s annually reported gross income (listed in Table 6). Loew’s derived most of the remaining 60 percent of its gross income from the first run theaters it owned. The income from theaters—along with accounting practices routinely used by corporations to stabilize the volatility of their reported earnings—explain why Loew’s, Inc. was able to report net income of $5,309,650 for the fiscal year ending August 31, 1948, even as MGM’s film rental ledger indicates a loss of $5,784,000 for the season of releases that ended on that same date. Despite being compelled to divest its theaters by the Supreme Court’s 1948 Paramount Decision, Loew’s continued owning its theaters until the late-1950s and received the additional income the theaters provided. The Big Five Studios could use their theater income to offset some of their losses from seasons when their film rentals were weak (the Big Five Studios played movies by other studios and not simply their own productions in the theaters they owned). The Little Three Studios, however, did not own theaters and lacked this source of revenue. As the 229 comparison between MGM/Loew’s and Universal reveals, the ownership of theaters influenced the tactics that studios undertook in turning their libraries into profit centers. Loew’s, Inc. Universal Fiscal Year Gross Income Net Income Gross Income Net Income 1945 $175,534,918 $12,912,369 $51,049,428 $3,910,928 1946 $165,353,086 $17,958,945 53,934,856 $4,565,218 1947 $161,759,232 $10,532,690 $64,958,405 $3,230,017 1948 $185,816,446 $5,309,659 $57,989,307 (3,162,812) 1949 $179,341,046 $6,744,761 $56,738,335 (1,125,851) 1950 $178,024,811 $7,854,454 $55,591,085 $1,355,886 Table 6. Annual Gross Income and Net Income of Loew’s Inc. and Universal, 1945-1950. Sources: Film Daily Yearbook, 1949, 949; Film Daily Yearbook, 1952, 937, 943. Loew’s, Inc. Annual Report, 1949; Loew’s, Inc. Annual Report, 1951. MGM: The Lion’s Cautious Tactics MGM’s film library was the envy of the postwar industry. Of all the studios, MGM had the most desirable movies, best brand recognition among audiences, and biggest stars (“more stars than there are in the heaven,” the studio claimed). In monetizing its library during the 1940s, MGM harnessed its unique set of assets toward a shifting strategic goal. Whereas the profits from reissues during the war years were mere “gravy” heaped atop the enormous profits from the new release market, reissues became an important profit center during the industry’s postwar recession. Yet MGM was never 230 tactically reckless in exploiting its library. Because it owned New York City’s best circuit of first run theaters, MGM parent company Loew’s had both an additional business to boost its profitability and a deterrent from undertaking any activity, such as 16mm film distribution, that might undercut its theater business. MGM settled upon a cautious approach toward library exploitation—selecting a limited number of “quality” films each season for reissue, carefully marketing them, and working within the studio’s existing model of theatrical distribution. MGM achieved some success during the 1944—1945 season by reissuing Naughty Marietta (1935) and Waterloo Bridge (1940), but it was the 1946—1947 season and, especially, the reissue of Rage in Heaven (1941) that marked a turning point in the way the studio thought about its library. MGM originally produced Rage in Heaven in 1941 at a budget of roughly half a million dollars, somewhere between an A- and B- picture. The melodrama-thriller starred Robert Montgomery and a Swedish actress with only one other Hollywood film to her credit. When the studio reissued Rage in Heaven in the fall of 1946, Ingrid Bergman was one of the biggest movie stars in the world (Figure 8). For the many who came to know Ingrid Bergman through her roles in later hits such as Casablanca (1943), Gaslight (1944), and The Bells of St. Mary’s (1944), MGM’s Rage in Heaven in 1946 was a new picture. Domestically, the reissue earned a staggering $1.3 million, more than three times the picture’s initial gross. For a producer to capitalize on the popularity of a star by reissuing her earlier films was, of course, nothing new. As discussed in Chapter One, the reissue of old William S. Hart and Douglas Fairbanks films resulted in numerous legal actions during 231 the late-teens and early 1920s. Yet what was different about 1946’s reissue of Rage in Heaven from these earlier reissues was that the American movie marketplace and taste culture had substantially changed. If it were not for the shortage of new product and the longer runs of reissues at first run theaters, then Rage in Heaven would have earned far less money. Additionally, the reissue benefited from the changes in American culture and critical taste. The Baltimore Sun commented that the psychological thriller had originally been dismissed by “exhibitors as being too highbrow for the film audience,” but that following the war and Ingrid Bergman’s box office success, “the film audience, presumably, has grown up to the picture.” 81 Figure 8. Ingrid Bergman and George Saunders in a publicity still from Rage in Heaven (1941). When reissued in the fall 1946, Rage in Heaven grossed three times the amount of its initial U.S. release. Photo courtesy of USC Cinematic Arts Library. 232 By the spring of 1947, MGM had established a small in-house division specializing in reissues, a move likely inspired by the success of Rage in Heaven. William Zoellner headed the unit, which included five field representatives who sold MGM reissues to exhibitors across the country. MGM was careful to distinguish its reissue department from specialty distributors, such as Astor and Film Classics. “We dignify our reissues by giving them the same attention and advertising treatment as current product,” said Henderson M. Richey, MGM’s director of exhibitor relations. MGM boasted that it created new marketing campaigns, press materials, and advertising art to promote its reissue. 82 In 1949, the studio assembled a 40-minute film produced for exhibitors called Some of the Best (1949), commemorating MGM’s 25 th anniversary and featuring memorable clips from MGM films. Produced 25 years before That’s Entertainment, Some of the Best was designed to stimulate demand for reissues and requests for specific titles. 83 Between the 1946—1947 to 1949—1950 seasons, MGM earned over $10 million in rental revenues and $6.7 million in profits from theatrical reissues (these totals do not include the unknown millions generated by the summer 1947 Gone with the Wind reissue and a few other smaller reissues). Although MGM consistently emphasized the popularity and quality of the films it reissued, the studio’s selections in fact varied considerably, ranging from popular and prestigious hits (Gone with the Wind, San Francisco, Boomtown), to the popular yet less highly esteemed Tarzan films, to box office misfires that the studio believed could find an audience in re-release (The Great Waltz, The 233 Women, The Wizard of Oz). In the case of the heavily fictionalized Johann Strauss biopic The Great Waltz (1938), MGM’s reissue campaign suggested that audiences both misunderstood the true nature of the film and actively demanded its re-release—a contradiction that apparently did not trouble the marketing department. The trailer for the spring 1947 reissue of The Great Waltz opened on the image of a picture album bearing the text: “A FRANK MESSAGE FROM THE MANAGEMENT!” As the pages turned, the following text appeared on screen: We are constantly receiving requests from our patrons to bring back to our screen various fine pictures of former years Two great American films –- “THE GREAT WALTZ” and “GONE WITH THE WIND” -- are the most asked-for productions We’re delighted to announce that arrangements have been made with Metro- Goldwyn-Mayer, the producers of “THE GREAT WALTZ,” to re-present this delightful musical love story. We know that very few of you saw this picture when it was originally shown. Obviously, it was one of those motion pictures ahead of its time. Some thought it was a foreign picture (at a time when foreign films weren’t popular), others, that it was merely a pretty Strauss operetta with no action and little love story. Neither is true! “THE GREAT WALTZ” is one of the most lavish and engaging musical romances ever to come out of the M-G-M Studios in Hollywood. 84 We cannot know whether any audience members accepted the subterfuge that the trailer was a “frank message” from their local theater’s manager or believed the more dubious claim that theater-goers wanted to bring back The Great Waltz as much as the highest 234 grossing movie of all time, Gone with the Wind, just months away from a MGM reissue. What is clear, though, is that MGM enjoyed substantial success from the reissue. The Great Waltz earned nearly as much domestically in its 1947 reissue as it had in its initial 1938 release, and the red ink from the film’s original $724,000 loss was erased by the reissue profits. MGM’s reissues consistently returned modest revenues and fat profit margins. Out of the roughly 30 films MGM released during the 1946—1947 season, for instance, the Boomtown, Great Waltz, and Rage in Heaven reissues all ranked in the bottom third on the basis of revenues. In terms of profitability, on the other hand, all three films ranked in the top third. Rage in Heaven, in fact, achieved reissue profits of $1,150,000 to tie the Esther Williams musical Fiesta (1947) as MGM’s most profitable picture of the season. 85 An anonymous studio executive was not exaggerating in April 1947 when he told the Motion Picture Herald that “the margin of profit from a reissue is sometimes even greater than that received from a new picture.” 86 MGM strategically utilized its library as a profit center during the postwar years of dwindling attendance and increasing production costs. At no point, however, did MGM allow the profit center of its library to overtake its core businesses—the production and theatrical exhibition of new movies. Of particular concern to MGM’s management were tactical decisions that might compete with theatrical film exhibition and alienate theater owners. Following World War II, MGM refused to release any films from its library to 16mm. Although Films, Inc. and other 16mm distributors officially only licensed 16mm films to churches, schools, and other 235 sites that would not directly compete with movie theaters, studio executives knew that bootleg markets existed where lost or stolen prints were bought, sold, rented, and illegally screened on the country’s rapidly growing number of 16mm projectors. Even the studios that released films to 16mm knew that its low rental fees made it a “penny business” compared to the “dollar business” of run-zone-clearance theatrical exhibition. 87 Moreover, the Hollywood distribution model depended upon tight control over film circulation; a studio inherently relinquished some of this control the moment it converted a 35mm film into an easily playable 16mm print or entered into a licensing agreement with an intermediary distributor. MGM’s anti-16mm stance went even further: when MGM loaned out its actors to other studios, MGM was known to include a clause prohibiting any footage featuring its actors reaching a 16mm print. 88 The studio similarly did not permit any of its films or actors to appear on broadcast television. MGM turned to its library as a profit center, but it did so in a controlled, conservative manner, never wavering from the basic assumptions about controlling circulation and the primacy of theatrical exhibition that had governed the industry since the 1920s. MGM would not allow ancillary library markets to compete with its theater business, which, along with reissues, kept Loew’s, Inc. profitable even during weak years for film rentals. Universal’s Library Machine MGM had its popular New York theaters to help offset the losses from underperforming films, and the studio refused to embark on any course for its library that might jeopardize the first run theatrical market. Paramount, Warner Bros., and Twentieth- 236 Century Fox all occupied similar positions. RKO was the studio out of the Big Five most willing to consider unorthodox markets due to the company’s unstable management structure and highly precarious financial condition. But what about those studios that owned no theaters at all? How did lack of theater ownership simultaneously restrict their sources of revenue and liberate their management tactically? Universal, Columbia, and United Artists all exploited their libraries as fully as possible during the postwar years. Columbia exploited its library widely, offering as many as 30 theatrical reissues per season in the late-1940s and releasing dozens of films to 16mm. 89 United Artists owned a miniscule library, but the distributor still found a way to monetize it. Although United Artists principally operated as a distributor for independent producers (who ultimately regained control of the rights to their films), United Artists had acquired 17 Walter Wanger productions through a settlement with the producer in the early-1940s. United Artists collateralized a bank loan with the reissue rights to the 17 pictures (valued at over $1 million), and, later, licensed those pictures to reissue specialty distributor Masterpiece Productions. 90 Of all the studios, Big or Little, though, Universal exploited its library the most aggressively, seeking the greatest reward and accepting the greatest risk. Initially, though, Universal’s library policies appeared consistent with the other studios. Nearing and immediately following the end of World War II, Universal reissued two films at a time as pre-packaged double-features, imitating the practice of specialty reissue distributors, such as Astor and Film Classics. Universal was not alone; by 1946, double-feature reissues gained enough traction among exhibitors that Warner Bros., Twentieth Century-Fox, and 237 Paramount had all released prepackaged combinations. 91 One of Universal’s first reissue pairings of the postwar era was Shadow of a Doubt (1942) and If I Had My Way (1940), a double-feature that some cheeky film programmer might want to consider reviving today for a midnight screening. The first film, one of Hitchcock’s best, centers on the relationship between a teenage girl (Teresa Wright) and her pathological murderer uncle (Joseph Cotten). The second feature is a sentimental yarn about a construction worker (Bing Crosby) who becomes the guardian of an orphaned girl (Gloria Jean) and takes her to New York to find her uncle. When seen immediately after Shadow of a Doubt, the guardian/uncle/girl dynamic of If I Had My Way takes on a perverse quality—aided, in no small part, by the film’s title. For Universal and its customer-base of exhibitors, however, the double-feature’s attractiveness lay in the two male stars whose profiles had risen since the initial releases. Universal’s internal correspondence reveals the pragmatic challenges involved in capitalizing on the old films of new stars. After Shadow of a Doubt and If I Had My Way had been selected for reissue, Universal marketing executive David Lipton reviewed the original promotional campaigns for each film. He considered both inadequate. “As far as trailers are concerned, we screened the old ones and feel it necessary to remake them completely,” wrote Lipton to a colleague. “On ‘If I Had My Way,’ Gloria Jean gets almost as much attention as Crosby and there are several references to Gloria that are totally out of date. On ‘Shadow of a Doubt’ emphasis in the trailer is mainly on Theresa Wright and there isn’t a single dialogue sequence for Joseph Cotten, who is much hotter box office at the moment.” 92 Lipton wanted to completely overhaul the marketing 238 campaigns for each film, but he found his arms tied by the pictures’ talent contracts. Teresa Wright’s contract stipulated that her name appear larger and before Cotten’s name on all billing. Gloria Jean contractually shared the same screen credit size as Bing Crosby, preventing Lipton from burying Jean’s name underneath the enormous lettering of Hollywood’s favorite crooner. Still, Lipton found ways to work around these obstacles. He obtained permission to make Cotten’s name equal in size to Wright’s, though still in second position. He informed his advertising designers and trailer editors to visually emphasize Cotten and Crosby over Wright and Jean. 93 Lipton successfully reworked the campaign to sell the bigger stars of that moment, and the studio booked playdates for the double-bill throughout the summer of ’46. During that same summer of 1946, Universal changed ownership. Leo Spitz and William Goetz’s International Pictures acquired Universal, and the new owners publicly promised that Universal-International would produce “top pictures” and eliminate the “program pictures”—westerns, serials, and B-movies—that had long been Universal’s bread and butter. 94 In practice, though, Universal-International continued to produce Abbott and Costello pictures, and the studio’s dependency on its library only increased. By January of 1947, Universal had tapped no fewer than twenty films for reissue over the coming spring and summer: four double-features, including Destry Rides Again (1939) with When the Daltons Rode (1939-1940) and Frankenstein (1932) with Dracula (1931), and twelve low-budget westerns—nine starring Johnny Mack Brown, three starring Tex Ritter. No longer generating the level of new product that would place its old movies in serious competition with its new ones, Universal tapped into its library to boost profits 239 and offer exhibitors reasonably priced double-bills and Saturday matinee fare. 95 Universal also sought to capitalize on its library abroad. In April of 1947, Universal granted Phillip and Sydney Hyams the British reissue rights for its feature library from the 1937-38 to 1941-42 seasons. The Hyams paid Universal an advance reported “in excess of $500,000” for a ten year license, and Universal retained a backend participation that allowed it to further profit if the reissues proved popular in the British marketplace. 96 Universal had opted to externalize rather than internalize the British reissue business. Although it would have earned more revenue by handling the reissues in-house, Universal’s decision to outsource the reissues benefited the studio through providing a mid-six-figure cash advance that it could apply toward its 1947 earnings. Two months later, Universal used this same basic template—outsourcing reissues for a minimum guarantee in cash against a share of the gross—in crafting a far more important deal for the American market. Universal sold the reissue rights to its film library from the 1933— 34 to 1945—46 seasons to Harris Broder Pictures, later renamed Realart, for a $3.25 million advance against 35 percent of the gross. When the fiscal year ended on August 31, 1947, the Universal-International management was able to report net income of $3,230,017. Without the UK and US reissue advances worth approximately $3.75 million, the studio would have ended the year half a million dollars in the red. The profits from Universal’s 1947 slate of 20 film reissues, along with some crafty deal-making, had turned a losing year into a winner. 240 Matty Fox: Universal’s Junk Gatherer The architect of Universal’s postwar library strategy, including the Realart and, most likely, the UK outsourcing deals, was Matty Fox, one of the most important figures in the history of film libraries. Matty Fox got his start in the movie business on the exhibition side, rising quickly to an executive-level position in the Skouras theater circuit. In 1938, Fox left Skouras to work for his brother-in-law Nate J. Blumberg, who had assumed presidency of the company. 97 Only 27-years-old, Matty Fox served as “vice- president in charge of reorganization.” Hollywood’s newest wunderkind participated in a wide range of studio activities, ranging from the financial restructuring of the company to the signing of creative talent. Following the attack on Pearl Harbor and America’s declaration of war in December 1941, Matty Fox, like millions of other Americans, left his peacetime occupation to join the war effort. Fox went to Washington to serve on the War Production Board, where he described his position as the “coordinator of gathering junk.” 98 By all accounts, Fox was a tremendous junk gatherer, and the skills he used to aggregate small bits of rubber, nylon, and aluminum into resources for war production served him well when he returned to Hollywood after the war. After the war, Matty Fox rejoined Universal, which at that time was reissuing double-features in a manner comparable to the other studios. Empowered by his new bosses at Universal-International, Matty Fox pushed Universal’s library business to another level entirely, devising tactics to aggregate and monetize old movies that no other major studio executive had considered or, perhaps, wanted to consider. 99 Whereas MGM rejected applying 16mm and television distribution technologies to film libraries, 241 Universal embraced these innovations. Matty Fox’s two great contributions to Universal’s library business, and the legacy of film libraries more broadly, were the Realart deal and the creation of United World Films. One was a major success; the other, a failure. Theatrical Reissues: The Realart Deal The basics of the Realart deal were fairly simple—a $3.25 million advance against 35 percent of the gross for the reissue rights to Universal’s library. But there was more to the deal than immediately met the eye. As David Pierce explains, Matty Fox helped line up the $3.25 million in financing that enabled Jack Broder and Paul Harris to purchase the reissue rights and go into business as Realart. 100 The loan came from Serge Semenenko’s First National Bank of Boston, which also financed the most important film-to-TV library deals of the next decade. Broder and Harris, for their part, were unequipped to handle the distribution of so many reissues themselves; Realart quickly signed sub-distribution agreements with PRC and Film Classics, which for years had been reissuing independent films and were happy to obtain studio product, even the product of a second-tier studio. 101 Realart, Film Classics, and PRC all essentially operated on the old states rights model, with independently operated exchanges licensing the rights to the Universal reissues for a particular territory. The specifics of the Realart deal also meant that Universal never had to abandon the remake or reissue business. Although Universal outsourced most of its sound film library to Realart, the studio retained enough films from the recent past that it continued 242 to go on reissuing films in-house. Universal embargoed Realart from reissuing films less than four years old—the 1944—1945 titles, for instance, were off limits until July 1, 1949. This allowed Universal in 1948 to reissue Canyon Passage (1946) and Frontier Gal (1945) as a double-feature. 102 Universal’s self-distributed reissues competed for the business of cost-conscious exhibitors with Realart’s catalogue of Universal oldies, many of which were similarly packaged as western double-bills. Additionally, Universal retained the right to withdraw films from Realart in the event that the studio decided to remake the property. Matty Fox’s savvy deal-making enabled Universal to profit from a hefty cash advance and a percentage of what Realart’s aggressive sales force earned while never sacrificing Universal’s in-house reissue and remake business. The Realart venture ultimately proved highly lucrative for all parties involved. By September 1952, Realart had “exceeded all expectations,” according to Variety, reissuing 300 films, averaging 5,000 to 8,000 bookings per film, and grossing $18 million. And although the $18 million number may sound inflated, separate court statements confirm that, by 1955, Realart grossed over $20 million and Universal netted $6.8 million from the deal. 103 The venture, however, was not without its costs. Industry observers blamed Realart and the other specialty distributors for flooding the market with mediocre oldies, giving reissues a bad name. Realart emphasized the genre and star power in marketing the films, generally downplaying the fact that these were reissues at all. Nor was Realart opposed to changing a title that lacked exploitability or simply smelled old—the company turned the oft remade and reissued The Black Cat (1934) into The Vanishing 243 Body. 104 Realart claimed to always indicate in their advertising when it had changed a title, but internally, Universal-International executives worried that Realart’s title changes “tend to mislead the public and can very well be the basis for action by the Federal Trade Commission.” 105 Universal exploited its library more aggressively than any studio since Triangle. Although it avoided the FTC hearings and financial frauds of the earlier company, Universal still found itself occupying a precarious position within the industry—due both to its over-saturation of the theatrical reissue market and, especially, its expansion into the non-theatrical and television markets. United World Films: The 16mm and Television Subsidiary The 16mm format had existed since 1923, but it exploded during the Second World War. The Armed Forces recognized 16mm films as an efficient way to train soldiers on topic ranging from small arms maintenance to venereal disease. Additionally Hollywood studios released their features on 16mm film to entertain the wartime troops. 106 The boom in demand for 16mm caused a dramatic upswing in the production of 16mm cameras, stock, and projectors—resulting in an Army and Navy surplus of 40,000 to 50,000 projectors after the war. 107 Equally important to the build-up in material infrastructure, 16mm and non-theatrical cinema gained mainstream validation during the war. Although advocates of educational film had long championed cinema’s pedagogical potential, mainstream educators and the public at large grew more familiar and accepting of non-theatrical films due to wartime usage. 108 244 For the studios, 16mm revenue represented a drop in the bucket. In 1945, Universal’s gross revenue derived from 16mm accounted for $773,363, a mere 1.5 per cent of the company’s annual gross. Yet this sum was not to be ignored. The profit margin was large, since Universal obtained the income in the form of royalties. Equally if not more importantly, Universal believed that 16mm represented one of the industry’s most promising growth areas. From 1938 to 1945, Universal’s 16mm earnings grew at a compound annual rate of 52 percent, an enormous increase. 109 If Universal maintained that level of growth, 16mm revenues would pass $6 million by the end of 1950. Even a more modest growth forecast—10 or 15 per cent per year—would provide healthy returns. Moreover, Universal could retain more of its revenues if it acted as its own distributor, rather than licensing its product to Films, Inc. or another sub-distributor. No other Hollywood studio had taken a major position in the non-theatrical market. Universal had the opportunity to seize the initiative, launching a subsidiary that would both monetize and expand its film library and turn the studio into the indisputable market leader of 16mm distribution. In November 1946, Universal announced the creation of United World Pictures, a wholly owned non-theatrical subsidiary headed by Matty Fox as chairman and James Franey as president. Universal also disclosed its acquisition of the Bell & Howell Film-o- sound Library, a collection of some 6,000 shorts, and Bell & Howell’s 16mm distribution network. 110 The terms of the deal revealed Matty at his most canny. The agreed purchase price was $640,000, but United World would pay the sum in $60,000 yearly installments over ten years. 111 United World transformed a film library into an arbitrage play. 245 Confident that the Bell & Howell Library would generate revenues greater than $60,000, United World could pay the purchase price out of earnings and pocket the difference. “We’ll pay for this cow out of its milk,” Matty boasted to Time Magazine about the deal. 112 That turn-of-phrase, along with the basic arbitrage model, would later resurface during the acquisitions of Hollywood libraries by TV syndicators in the 1950s and transnational conglomerates in the 1960s. United World’s next library acquisition, though, proved to be a costly mistake. In late-December 1946, United World paid $2.25 million to acquire control of Castle Films, a non-theatrical producer and distributor that specialized in compiling short films into “packages” and selling them to churches, schools, and home viewers. 113 The deal greatly expanded United World’s share of the market, making it the leader in U.S. non-theatrical film distribution. 114 However, United World’s hunger for market share caused it to overpay for Castle’s library, production facilities, and distribution network. The high purchase price sunk the young subsidiary more than $2 million in debt. Matty Fox and James Franey soon had to confront the fact that this cow was not going to pay for itself. However, in attempting to recoup the acquisition costs, the executives faced a problem. Castle Films’ niche laid in outright sales to home viewers and collectors, a method of distribution (sales, rather than rentals) to a market of non-theatrical end-users (home viewers) that the Hollywood studios had previously shunned. Films, Inc. had become the dominant 16mm distributor used by the studios precisely because it operated a tightly controlled rental market; the studios could approve or reject who rented their films and they all rejected home users. Amortizing the Castle Films purchase, then, meant adopting 246 a business model and pursuing a market that studios had previously considered off limits. Moreover, amortizing Castle and justifying the existence of Universal’s non-theatrical subsidiary required United World’s sales force to aggressively push its 16mm product. An inherent tension emerged between, on the one hand, parent Universal’s need to protect its core theatrical business and appease its theater owner customers, and on the other hand, United World’s need to maximize its earnings. The tensions between Universal’s theatrical and non-theatrical businesses quickly escalated. Universal and United World were both beset by complaints from their respective customer bases—35mm exhibitors, who believed the distribution policies were dangerously loose, and 16mm exchanges, which found the rental policies too restrictive. A member of Theatre Owners of America (TOA) summed up well the exhibitors’ position on Universal. In his presentation on the “16mm Situation” at the TOA’s Los Angeles Convention in March 1948, he indicated that RKO, Columbia, and Fox had all established controls on the circulation 16mm prints. He then called out the industry’s worst offender: The big problem along the line is Universal, or its subsidiary United World. They have a program that looks like it couldn’t be controlled. They are willing to put films into any camera shop, and they have a contract, it is true, and they are not supposed to compete with the theatres, but they have no control over that film. The camera shop agrees to give them two bookings a month at a certain figure. The way that it is worked out, they will get two bookings at $12.50 or $15.00, and then the camera shop assumes any additional on his own, terms, of $5.00 or $7.00, or whatever he can get. They are selling films outright, and if you are willing to take used prints they will cut that down by 50 or 60 per cent. We have not been able to do very much with Universal up to now. Our approach is to get Mr. Fabian and Ted Gamble to talk to the president of the companies. 247 The circumstances there are that United World is on the hook, as I understand it, for three million dollars for the purchase of Castle film and also Bell & Howell libraries. It looks very much as if they were going hog wild trying to get some substantial portion of that three million dollars back, and according to my best advices they haven’t been too successful in claiming that they have broken loose. But there is a question of whether or not they have been set up too big, that is, an organization for that particular industry, too big to pack… What we need, among other things, is for these exhibitors to undertake a campaign of bitching to the exchange managers about violation of fair practices. Exchange managers have no sympathy for 16mm., and if we can set up a barrage of this type, let’s do it. I am sure we could, as I suggest, bring enough pressure, that is what it requires, so that we could get rid of United World in one way or another. 115 The TOA member had accurately determined United World’s losing position in the Castle acquisition. The retaliatory “campaign of bitching,” for which he advocated, grew steadily over the next twelve months. When Florida theater owners complained their business was injured by 16mm screenings at Miami hotels, which used movies as a cheap substitute for live entertainment, the exhibitors’ biggest enemy was, again, Universal. In 1949, Universal’s outside legal counsel dispatched an investigator to examine these reports. The investigator found “that a substantial percentage of the exhibitions are Universal releases, the balance are independent. No other major product seems to be showing.” 116 The problem was an old one: print control. It was the same problem that led to the piracy of Triangle’s re-titled William S. Hart films in the teens, the same problem that Paramount, Warner Bros., and the other majors tried to remedy through new distribution infrastructures in the 1920s and 30s, and the same problem that the Theatre Owners of 248 America correctly foresaw for Universal and United World in the late-1940s. Technically, most of the Miami hotels had not been authorized by Universal or United World to show these films. Nevertheless, the hotels easily obtained prints through the many sub-distributors with whom United World rushed into business, many of who disregarded the official process of submitting clients for approval. Universal may have had an easier time countenancing the exhibitor backlash if United World’s 16mm business had lived up to the company’s high hopes. Instead, 16mm distribution proved to be a slow growth and low margin business. Yes, Universal had bought itself into the position of the non-theatrical market leader, but that market both grew less quickly than expected and grew in areas, such as industrial films and dramatic educational films, in which United World’s library of old product was lacking. Furthermore, across the five years following the creation of United World (1947—1951), Universal received less royalty revenue each year from releasing its feature films to 16mm than it had in the two years (1945, 1946) before creating the subsidiary (see Table 7). Some flattening of 16mm revenue was understandable since the shipment of new films on 16mm to the Armed Forces declined after World War II. Universal, though, would still have been better off simply outsourcing 16mm distribution through Films, Inc. and the other sub-licensees rather than internalizing the 16mm business. Granted, Universal’s royalty revenue was supplemented by the revenue United World earned as a distributor. Just as it had in its arrangement with Films, Inc., Universal split revenue, after costs, with United World on a fifty-fifty basis. Yet those costs were high—print and production expenses ate up more than half of any sale. What’s more, United World’s 249 overhead and bank debt absorbed most of the remaining revenue. In subsequent court documents, United World revealed, “the gross revenue received by this defendant from licenses of 16mm positive prints of the features handled by it for the period October 1946 to February 28, 1953 is $3,605,054.75.”117 For all of the 16mm sales efforts of United World, for all of the friction caused by distributing the Universal titles, the subsidiary’s gross averaged just slightly more than $500,000 per year, not enough to pull parent company Universal out of the red in 1948 or 1949.118 Universal and Matty Fox’s experiment in 16mm distribution was a failure. Table 7. Universal 16mm Gross Revenue, 1936-1952. Source: U.S. v. Twentieth Century Fox et al., National Archives and Records Administration. 119 Universal 16mm Gross Revenue, 1936-1952 $- $100,000 $200,000 $300,000 $400,000 $500,000 $600,000 $700,000 $800,000 $900,000 1936 1937 1938 1939 1940 1941 1942 1943 1944 1945 1946 1947 1948 1949 1950 1951 1952 250 Although 16mm never delivered as promised, United World enhanced its earnings by distributing films across another medium, one even more feared and reviled by exhibitors than the small gauge. It is unclear whether United World was intended from the beginning to covertly act as a television distributor, or whether the subsidiary only assumed this role after the misguided Castle acquisition, but this much is certain: by mid- 1947, United World was actively preparing a library of films for television use. “Matty Fox is anxious to build up an inventory of subjects that may be sold for television,” wrote a Universal lawyer to a colleague in June 1947. Matty Fox ordered the lawyers to perform a search through the contracts and reels of 94 westerns, 259 cartoons, 205 two- reelers, 62 serials, and 67 short subjects. His big concern, due to the AFM’s stringent contract, was in regards to the soundtrack. He needed to know if any story, music, or talent contracts prevented the televising of the film’s existing sound track. If such contractual obstacles did exist, Fox wanted to know whether it was legally and technically possible to strip out all the old music and effects, then insert new music and effects on top of the original dialogue. 120 Fox was again playing the role of the junk gatherer, collecting films that no longer carried theatrical reissue value and monetizing them through television. Junk also carried the benefit of being less easily identifiable than A and B feature films. Although Universal gladly accepted the television revenue from United World, the studio turned livid at the very suggestion that any of its films were reaching TV. Exhibitors wanted to know which studios released their films to TV, and trade publications, such as The Independent Film Journal and Harrison’s Reports, became sites for intelligence 251 gathering and public shaming. These trade papers issued lists of the films released to television, alongside the names of their distributors. When The Independent Film Journal in 1951 reported that five Universal Johnny Mack westerns were available for television, Universal sent a letter to the editor explaining the films were “no longer the property of Universal” and re-stating the studio’s position that “no Universal production had been released for television.” 121 In fact, though, The Independent Film Journal had accurately represented the essence of the situation. Universal, through its subsidiary United World, orchestrated a convoluted web of dummy companies, intermediaries, sale agreements, and repurchases in order to hide the fact that it was knowingly selling films to TV. Additionally, Universal removed its logo and name from the credits of all films before they reached air. 122 Nevertheless, The Independent Film Journal and other astute industry observers were able to see through the subterfuge, identifying studio films when they appeared and causing more public relations problems for the already troubled Universal. Universal was the first major studio to implement these schemes, but it was not alone. As David Pierce explains, “While repeatedly denying their actions to the trade press and exhibitors, Columbia, Paramount, Twentieth Century-Fox, United Artists and Universal did sell or license some of their features, Westerns, cartoons and serials to television distributors.” 123 On top of smuggling its own films onto the airwaves, United World acted as a distributor for independent producers—the most notable being J. Arthur Rank, the British producer whose films United World also distributed on 16mm. In 1948, United World packaged 200 Rank features, all at least four years old, for television syndication. 124 By the following year, hundreds of films that had once been shown in 252 theaters were appearing on American television. Universal and the other major studios, meanwhile, officially denied ownership of them, and it was not until the mid-1950s that the studios brought the bulk of their feature libraries to television (a topic explored in the next chapter). Nevertheless, as the studios strategically turned toward their libraries as profit centers, a new and important question emerged. It is a question that management has wrestled with ever since: How to exploit libraries using alternative technologies in a way that creates new revenue streams without sacrificing traditional markets? Conclusion As the movie industry entered a postwar period of decline, the domestic reissue market boomed and the studios re-conceptualized the role of a film library. From 1947 to 1950, the studios strategically used their libraries as a low-cost, low-risk profit center— an important industry function that the libraries have continued to play ever since. On the demand-side, exhibitors embraced reissues as a conservative business strategy, and audiences and critics expressed a desire to reevaluate films of the pre-war years. As the number of reissues swelled, Hollywood’s labor force became the trend’s most vocal opponent—calling for residual payments for the theatrical reissue of films and limits on the number of old films in circulation. The postwar reissue market changed the industry’s thinking about the value of film libraries. By revisiting this historical moment, I believe we can productively challenge ourselves to rethink our assumptions about film libraries and technology. As the contribution of theatrical reissues to the profitability of MGM and Universal 253 demonstrates, film libraries served an important industrial role prior to the wide scale distribution of old studio features to television. Technology did not cause the business of film libraries to emerge. Instead, the industry wrestled with how new technologies would impact both their core business of producing, distributing, and exhibiting new films and their profitable side-business of theatrical reissues. The case studies of MGM and Universal show how two different studios approached their libraries and technology. MGM was cautious and conservative, focusing all efforts on the theatrical reissue market. Universal, on the other hand, extended itself into the non-theatrical and television businesses, alienating its core market of business buyers (the exhibitors) in the process. By the mid-1950s, the television market for old movies surpassed the theatrical reissue market on the basis of potential revenue and profits. However, the reissue boom of the late-1940s was an essential prologue to the licensing of studio feature libraries to television, influencing the ways in which studios, labor groups, exhibitors, critics, and audiences all thought about the circulation of old movies. Additionally, we should recognize the theatrical reissue boom of the mid-to-late 1940s as significant moment in the development of post-World War II American film culture. In the early-2000s, film and media scholars have taken on the challenge of historicizing our discipline—to study, as it were, the study of film. Charles Acland, Peter Decherney, Dana Polan, and Haidee Wasson (among others) have excavated the institutional structures that enabled both the circulation of films and the circulation of ideas about film. 125 Although much of the work focuses on non-theatrical exhibition and non-Hollywood films, Wasson, Polan, and Decherney have all noted the importance of 254 the Hollywood studios to non-profit institutions interested in the study of cinema. The postwar reissue boom demonstrates that we need to more fully consider the for-profit theatrical marketplace within the study of film. The term “non-theatrical cinema” has been a handy umbrella term to categorize these scholarly works and a larger body of scholarship, but the term inadvertently carries a reductive effect—simplifying the diverse range of activities that commercial theaters perform. In the late-1940s, American exhibitors became sites for revival film screenings because they believed it was in their business interests to do so. Los Angeles’ Academies of Proven Hits encouraged audiences to participate in the programming and chose a name that playfully blurred the line between itself and an educational institution. Bosley Crowther and other film critics at the time celebrated the return of so many worthwhile old films, even as they acknowledged the underlying economic motives. Similarly, in reevaluating the postwar theatrical reissue boom, film and media scholars should recognize the contributions, limitations, and paradoxes of the commercial marketplace to the study of cinema. By following a conservative business strategy in the midst of an industry recession, the studios and exhibitors enabled greater access to old works of cinema and contributed to the vitality of American film culture. 255 Chapter Three Notes Abbreviations AMPAS – Margaret Herrick Library, Academy of Motion Pictures Arts and Sciences DPC – David Pierce Collection RJC – Richard B. Jewell Collection NARA-R – National Archives Records Administration, Riverside, California NYCC – New York County Clerk Records Center SCWHR – Seaver Center for Western History Research, Los Angeles County Museum of Natural History USC SCA – School of Cinematic Arts Library Special Collections, University of Southern California WBA – Warner Bros. Archives, University of Southern California WHS – Wisconsin Historical Society, Madison, Wisconsin 1 George E. Phair, “Retakes,” Daily Variety, 21 June 1944, 2. 2 Bosley Crowther, “Disney’s ‘Snow White.’ Reissued, Proves Itself Forever New— Other Films,” New York Times, 9 April 1944, X3. 3 Screen Writer, “Conference on Reissues,” August 1947, 42. 4 C.J. Tevlin Ledger, RJC. 5 Variety, “Disney Cartoons Remaining RKO; Reissue Plans,” 8 April 1942, 6. 6 Donald Kirkley, “Film Notes,” The Baltimore Sun, 14 May 1944, A7. 7 Bosley Crowther, “Disney’s ‘Snow White.’ Reissued, Proves Itself Forever New— Other Films,” New York Times, 9 April 1944, X3. 8 Los Angeles Times, “Snow White and Prince Sue Walt Disney for $300,000,” 20 October 1938, 11. 9 Caselotti v. Walt Disney Productions, Limited, et al., 21 N.Y.S. 2d 321 (N.Y. 1940). 10 Michael Denning, The Cultural Front: The Laboring of American Culture in the Twentieth-Century (London ; New York: Verso, 1996), 402–410. 11 Daily Variety, “Cartoonists Ask Profit Cut,” 30 March 1944, 1, 4. 12 Daily Variety, “Inkers Union Asking Disney for 20% Profit,” 20 September 1944, 24; Daily Variety, “Guild Refused Profit Bite,” 22 January 1945, 1, 8. 256 13 Daily Variety, “Disney Earnings $486,287; Increase for Year $54,751,” 16 January 1945, 2. 14 Schatz, Boom and Bust, 2. 15 For an excellent overview of the impact of World War II on American film production, see Thomas Doherty, Projections of War: Hollywood, American Culture, and World War II (New York: Columbia University Press, 1993). 16 Schatz, Boom and Bust, 462. 17 Averages achieved using data from The Film Daily Year Book, reprinted in Schatz, Boom and Bust, 463. Universal and Columbia both lacked theaters, continued producing B-pictures, and their production levels declined far less. 18 Richard B. Jewell, The Golden Age of Cinema: Hollywood, 1929-1945 (Malden, MA: Blackwell Pub., 2007), 209–301. 19 Douglas Gomery, Shared Pleasures: A History Of Movie Presentation In The United States (Madison, Wisconsin: University of Wisconsin Press, 1992), 83–88. 20 Eric Hoyt, “Hollywood and the Income Tax, 1929–1955,” Film History 22, no. 1 (Winter 2010): 15–16. 21 Schatz, Boom and Bust, 303–307. 22 Walter Adams, “Dissolution, Divorcement, Divestiture: The Pyrrhic Victories of Antitrust,” Indiana Law Journal 27 (1952 1951): 5; Michael Conant, Antitrust in the Motion Picture Industry (Berkeley: University of California Press, 1960), viii. 23 William Schaefer Ledger, Ledger #3: "Recapitulation of Income from Re-issues on Productions Originally Released from Sept. 4, 1931 to August 26, 1939, as at February 27, 1943,” 13, USC SCA. 24 Eddie Mannix Ledger, AMPAS. 25 C.J. Tevlin Ledger, RJC; Eddie Mannix Ledger, AMPAS; Paramount Pressbook Collection, 1942—1943 Season, AMPAS. 26 Roy Chartier, “Wartime Buying and Selling Faster Than Before,” Variety, 6 January 1943, 13. 257 27 Astor profiled in A.H. Weiler, “Life in the Old Ones Yet,” New York Times, 24 August 1941, 142; Hughes lawsuit and settlement in Tino Balio, United Artists: The Company Built by the Stars (Madison, Wisconsin: University of Wisconsin Press, 1976), 110-112. 28 Between 1935 to early-1948, the Astor grossed $271,912 from Hell’s Angels, $297,935 from Scarface, and $165,574 from Sky Devils. These reissue grosses are included within the massive archive of evidence the state of Texas gathered during its lawsuit against the Hughes estate. Thank you to David Pierce for sharing these documents and knowledge of this resource with both Rick Jewell and myself. “Astor Pictures (Savini), 1949 Gross Figures,” Newman #1, Drawer #3, 58, Howard Hughes Files, Texas State Archives. 29 Thomas M. Pryor, “Boom Market for Yesteryear’s Movies,” New York Times, 30 January 1944, X3. 30 The Oklahoma Kid’s reissue rentals cited in William Schaefer Ledger, Ledger #4, "Comparison on Negative Costs and Gross Income on Productions Released from August 31, 1936 to August 31, 1941, 5 Years, Typed Dec. 29, 1944,” USC SCA. The reissue is also mentioned in Variety, “Cycle of Reissues and Repeat Dates Due to Extended Runs of Newer Pix,” 1 September 1943, 11. 31 Joseph I. Breen to John Hammell, 30 August 1935, Sign of the Cross, History of Cinema: Hollywood and the Production Code, microfilm reel 9, AMPAS. 32 Agreement between Cecil B. DeMille Productions, Inc. and Paramount Pictures re: Oliver Thorndike (Actor), 18 March 1944, Sign of the Cross, Paramount Pictures Production Records, 187-f.3, AMPAS. 33 “Our recent reissue of the picture SIGN OF THE CROSS, to which we added a modern prologue showing American aviators leaving from North Africa to bomb Rome, in no way differs in its historical form from the reissue of this same picture which you approved and which took place in 1938.” Luigi Luraschi to Joseph I. Breen, 8 July 1944, Sign of the Cross, History of Cinema: Hollywood and the Production Code, microfilm reel 9, AMPAS. 34 Sign of the Cross (Reissue) Pressbook, 1943—1944 Season Group A3, Paramount Pressbook Collection, AMPAS. 35 Daily Variety, “Reissue Grosses Big Surprise to Distribs,” 27 December 1944, 1. 36 The offerings included: from MGM, Naughty Marietta and Waterloo Bridge; from Paramount, North West Mounted Police and This Gun for Hire; from Twentieth-Century 258 Fox, Springtime in the Rockies and Call of the Wild; from Warner Bros., Air Force and Manpower; from Universal, Imitation of Life and Eastside of Heaven; from Columbia, Here Comes Mr. Jordan; and several Gene Autry westerns from Republic. Nelson B. Bell, “Hollywood Meets an Emergency By Reissue of Its Earlier Hits,” The Washington Post, 1 July 1945, S6; Eddie Mannix Ledger, AMPAS; C.J. Tevlin Ledger, RJC. 37 Schatz, Boom and Bust, 292. 38 Daily Variety, “One in Every Five Pix Showing in NY a Reissue,” 1 October 1947, 1. 39 Motion Picture Herald, “Seven Majors Releasing 29 Reissues This Season,” 26 April 1947, 12; Hollywood Reporter, “Record Reissues,” 18 September 1950, 1; Thomas F. Brady, “Hollywood Reissues,” New York Times, 5 June 1949, X5; Variety, 16 November 1949, 7, cited in Schatz, Boom and Bust, 292. 40 The exact number of reissues is difficult, if not impossible, to pinpoint. Specialty distributors, such as Astor and Film Classics, kept the same reissues on the market for years on end, causing the same pictures to be recounted year after year. Moreover, the studios announced reissues that they never in fact released, perhaps using their press releases as barometers to gauge interest amongst their customer base of theater owners. Finally, the sheer number of reissues does not give one a sense of their true market share or circulation, since many of the lesser reissues were pre-packaged into double-bills and played at neighborhood theaters known to change programs multiple times each week. 41 Nitin Govil, “Size Matters,” Bio-Scope: South Asian Screen Studies 1, no. 2 (July 2010): 106. 42 Public Information Committee of the Motion Picture Industry, “Motion Picture Letter: The Children’s Film Library,” September 1946, Folder: National Children's Film Library, 1946-1954, 40-f.397, AMPAS. 43 Motion Picture Association, The Children’s Film Library and Special Children’s Programs [booklet], 1948, Folder: National Children's Film Library, 1946-1954, 40- f.397, AMPAS; Daily Variety, “Research Starts to Find Pic Taste of Juve Fans,” 28 June 1948, 12. 44 Motion Picture Association, The Children’s Film Library and Special Children’s Programs [booklet], 1948, Folder: National Children's Film Library, 1946-1954, 40- f.397, AMPAS. 45 Alberta Engvall Siegel, “Film-Mediated Fantasy Aggression and Strength of Aggressive Drive,” Child Development 27, no. 3 (1956): 368. 259 46 Dawson quoted in Robert W. Wagner, “Film: The Case for Children’s Films,” Audio Visual Communication Review 5, no. 2 (Spring 1957): 478. 47 Variety, “Exhibs Balk at Reissues,” 3 May 1944, 3; Motion Picture Herald, “Seven Majors Releasing 29 Reissues This Season,” 26 April 1947, 14; Daily Variety, “One in Every Five Pix Showing in NY a Reissue,” 1 October 1947, 1; Motion Picture Herald, “Reissues Vital Part of 1949 Sales Pattern,” 8 January 1949, 13. 48 Motion Picture Herald, “Reissues Vital Part of 1949 Sales Pattern,” 8 January 1949, 13. 49 Hollywood Reporter, “Thomas Flays Reissues, Heads Indie Prods’ Crackdown Group,” 6 April 1949, 7 50 Ibid. 51 Harrison’s Reports, “More About the Telecasting of Motion Pictures,” 3 July 1948, 108. 52 Myron N. Blank to Paul N. Lazarus, Jr., 28 September 1948, “Other 16mm Distributors,” DPC. 53 Los Angeles Times, “Four Houses Book Oldies,” 16 July 1946, A3. 54 Daily Variety, “One in Every Five Pix Showing in NY a Reissue,” 1 October 1947, 1. 55 “Film Classics spent $3,000 as their share of the local advertising campaign” for an Abbott and Costello double-feature that opened in five Los Angeles theaters in summer 1949. Herman Levy to Archie Herzoff, 22 June 1949, “Universal Grosses,” Box 410, Folder 11815, Universal Collection, USC SCA. 56 Los Angeles Times, “Four Houses Book Oldies,” 16 July 1946, A3. 57 Tino Balio, The Foreign Film Renaissance on American Screens, 1946-1973 (Madison, Wis.: University of Wisconsin Press, 2010); Barbara Wilinsky, Sure Seaters: The Emergence of Art House Cinema (Minneapolis: University of Minnesota Press, 2001). 58 Rebecca Rego Barry, “The Neo-Classics: (Re)Publishing the ‘Great Books’ in the United States in the 1990s,” Book History 6 (2003): 257. 59 Manchester Guardian, “Let Bygones be Bygones,” 28 June 1924, 9. 260 60 In the mid-1930s, Frank Nugent of the New York Times and Donald Kirkley of the Baltimore Sun both advocated for the revival of great films of the past. Donald Kirkley, Baltimore Sun, 26 July 1936, 10; Frank S. Nugent, “The Good Die Young,” 23 August 1936, X3. 61 Robert Joseph, “Cinema,” Arts & Architecture (October 1950), 42. 62 Charles J. Maland, City Lights (London: British Film Institute, 2007), 112. 63 Bosley Crowther, “Ring in the Old,” New York Times, 19 June 1949, X1. 64 M.O.C., “Rage in Heaven,” Hartford Courant, 5 December 1946, 11. 65 R. Wilson Brown, “The Reissue Racket,” The American Legion Magazine (Feb. 1949), 47. 66 For more on the rise and fall of the CSU, see Gerald Horne, Class Struggle in Hollywood, 1930-1950: Moguls, Mobsters, Stars, Reds, & Trade Unionists (Austin: University of Texas Press, 2001). 67 The Screen Writer, “Editorial,” February 1947, 44. 68 David Pierce, “Senile Celluloid,” 147. 69 Los Angeles Times, “Actors’ Strike in Hollywood Now Possibility,” 12 April 1948, 9. 70 Thomas F. Brady, “Actors Guild Pose Strike Threat,” New York Times, 18 April 1948, X5. 71 New York Times, “Movie Actors Agree to 29-Month Pact,” 9 July 1948, 10. 72 Los Angeles Times, “Film Union Asks Reissue Limit,” 19 October 1948, A8; R. Wilson Brown, “The Reissue Racket,” The American Legion Magazine (Feb. 1949), 47. 73 R. Wilson Brown, “The Reissue Racket,” The American Legion Magazine (Feb. 1949), 47. 74 Daily Variety, “AFL Film Council Asks MPIC to Curb Reissue ‘Abuse,’” 26 April 1949, 6. 261 75 Motion Picture Herald, “Reissues Vital Part of 1949 Sales Pattern,” 8 January 1949, 13. 76 Daily Variety, “Wayne Gets Reissue Bite,” 12 April 1949, 1, 6; Kemper, Hidden Talent. 77 A full decade earlier James Cagney obtained a gross participation deal from Warner Bros. that included all theatrical revenues, including reissues. Ralph Lewis to Roy Obringer, 26 May 1939, James Cagney Legal File, Folder 2825B. 78 The arrangement defined a reissue as a release that occurred four years after the first domestic release date. If a film was only reissued to foreign markets, then the definition changed to five years after the first release date. The $50,000 bonus was only payable on one occasion per picture. In other words, the maximum John Wayne would receive from Warner Bros. would be $350,000 in bonus money, no matter how many times in the future the studio reissued those seven pictures. Warner Bros. Pictures, Inc. to John Wayne, 2 May 1949, John Wayne Legal File (1949-1955), 12825A, F000620, WBA. 79 C.J. Tevlin Ledger, RJC. 80 The MGM film data is based on the Eddie Mannix Ledger, AMPAS. The Mannix Ledger offers a picture-by-picture accounting of costs, revenues, and profits. Like any primary document, the Mannix Ledger contains both rich insights and interpretive challenges. First, as noted in Chapter Two, the available studio ledgerbooks for MGM, Warner Bros., and RKO all account on an accumulated basis—meaning that the amounts attributed to the MGM’s theatrical slate of the 1947—1948 season, for instance, were actually booked all the way up through August 1957. Secondly, and following this same overall logic, all reissue profits are attributed to their original season of release, rather than their season of reissue. The Rage of Heaven reissue’s $1,664,000 in domestic and worldwide rentals, for instance, is booked under the 1940—1941 season totals rather than the 1946—1947 seasons. These points have received little comment from previous film historians, who, by and large, have compared MGM season totals as if they represented the monies that were actually earned during those seasons. These challenges in interpreting the data need to be acknowledged, but they by no means invalidate the Mannix Ledger as an important and useful source. The second problem can be addressed by re-allocating the reissue revenues from the seasons of original release to the seasons of reissue. I have made these re-allocations myself, and the new totals will be published in a forthcoming article, where they will be available for other scholars to use and hopefully refine further. As for the accumulated revenues and profits, we cannot completely “clean” this data and allocate it by what was earned in a given fiscal or calendar year. However, from what we do know, it’s clear that most films earned the vast majority of domestic rentals within the first nine months of release. Moreover, since my conclusions are built 262 more on overall trends than precise numbers, and since I consider the Mannix data alongside contemporaneous annual reports from parent company Loew’s (where film rentals only accounted for roughly 40 percent of earnings), I mitigate any gross misperceptions that might come from the Mannix Ledger. In the end, we have to do the best we can with the sources we have, acknowledging their shortcomings while fully harnessing the riches they offer. 81 The Baltimore Sun, “Rage in Heaven,” 8 November 1946, 18. 82 Motion Picture Herald, “Seven Majors Releasing 29 Reissues This Season,” 26 April 1947, 12 83 A.H. Weiler, “By Way of Report,” New York Times, 3 July 1949, X3. 84 The Great Waltz Trailer Re-release Dialogue Cutting Continuity, 14 August 1947, Turner/MGM scripts, Production files-Produced, 1132-f.G1136, AMPAS. 85 Eddie Mannix Ledger, AMPAS. 86 Motion Picture Herald, “Seven Majors Releasing 29 Reissues This Season,” 26 April 1947, 12. 87 “In comparison to the 35mm business where film rentals of thousands of dollars are usual, this is a penny business,” argued the attorneys of Columbia and RKO. “Trial Memorandum for Columbia Pictures Corporation, Screen Gems, Inc., and RKO Radio Pictures, Inc.,” 21 September 1955, 12, U.S. v. Twentieth Century-Fox et al., Civil Case File 14354, Box 401, Folder: 2 of 24, Records of the District Court for the Southern District of California, Central Division (1938-1961), NARA-R. 88 When MGM loaned out Philip Dorn to Warner Bros. for the film Passage to Marseille (1944), for example, MGM contractually prohibited Warner Bros. from reducing the picture to 16mm. Dorn’s loan out contract and similar prohibitions became an issue when PRM/AAP purchased the pre-1948 Warner Bros for television exhibition. See: Sidney H. Levin [Stillman & Stillman, attorney representing PRM] to George Schiffer [WB attorney], 3 April 1956, “RE: WARNER BROS. WITHR.M. ‘PASSAGE TO MARSEILLE’ – NO. 204,” TELEVISION DEAL –R.M., F002229, Box: 12707B, WBA. 89 “A total of about 30” Columbia reissues on the market during the 1948—1949 season is cited in Motion Picture Herald, “Reissues Vital Part of 1949 Sales Pattern,” 8 January 1949, 13. 263 90 Balio, United Artists: The Company Built by the Stars, 175, 188; Motion Picture Herald, “Reissues Vital Part of 1949 Sales Pattern,” 8 January 1949, 13. 91 David Lipton cited “combination re-issues” from Warner Bros. and Twentieth Century- Fox in David Lipton to A.J. (Andy) Sharick, 17 April 1946, “Shadow of a Doubt – Reissue Correspondence,” Box 410, 11814, Universal Collection, USC SCA. Paramount reissued North West Mounted Police (1940) and This Gun for Hire (1942) together during the 1944-1945 season. Paramount Pressbook Collection, 1944—1945 Season, Group A4, AMPAS 92 David Lipton to A.J. (Andy) Sharick, 10 April 1946, “Shadow of a Doubt – Reissue Correspondence,” Box 410, 11814, Universal Collection, USC SCA. 93 David Lipton to Maurice Bergman (Eastern Advertising Manager), April 17, 1946, “Shadow of a Doubt – Reissue Correspondence,” Box 410, 11814, Universal Collection, USC SCA. 94 Los Angeles Times, “Universal, International Enter New Film Merger,” 31 July 1946, A1. 95 The other two double-bills were organized around stars and demographics. One package skewed toward women, the Irene Dunne melodrama Magnificent Obsession (1934-1935) and Deanna Durbin musical 100 Men and a Girl (1937-1938); the other toward men, the W.C. Fields comedy You Can’t Cheat an Honest Man (1938-1939) and George Raft crime drama I Stole a Million (1938-1939). Unsigned studio memo titled “Reissues,” January 20, 1947, “Reissues” Folder, Box 410, 11813, Universal Collection, USC SCA. 96 Daily Variety, “Universal Reissues Sold,” 29 April 1947, 10. 97 Dates and durations of Universal executive employment is listed in “Answer of Defendant Universal Pictures Company, Inc. to Plaintiff’s Interrogatories dated March 4, 1953,” Schedule 2 – re: Interrogatory 18, U.S. v. Twentieth Century-Fox et al., Civil Case File 14354, Box 399, 7/22/52-8/5/53, Folder: Vol. 1, 2 of 2, Records of the District Court for the Southern District of California, Central Division 1938-1961, NARA-R. 98 Variety, “Inside Stuff—Pictures,” 8 April 1942, 26. 99 Daily Variety, “Showbiz Day by Day Record for Year from Daily Variety,” 1945— 1946, 325. 100 Pierce, “‘Senile Celluloid’,” 148. 264 101 Agreement between Harris-Broder Pictures Corp. and Producers Releasing Corp., 1 June 1947, DPC; Agreement between Realart and Film Classics, 18 August 1947, DPC. See also Daily Variety, “PRC will Handle U Reissues for Harris-Broder,” 7 July 1947, 12. 102 “Newspaper Advertisement Schedule Reissue ‘Canyon Passage’ and ‘Frontier Girl,’” 13 December 1948, “Reissues,” Box 410, 11813, Universal Collection, USC SCA. 103 “Findings of Fact and Conclusions of Law,” 10 January 1956, 14, U.S. v. Twentieth Century-Fox et al., Civil Case File 14354, Box 401, Folder: 1 of 24, Records of the District Court for the Southern District of California, Central Division (1938-1961), NARA-R. The exact revenues earned are reported as follows: “Between June, 1947, and 1955 the Realart Company, which distributes Universal reissues, received as film rentals for feature films the sum of $20,835,218.17. Of this amount Universal received as its net proceeds the sum of $6,816,429.84.” 104 American Film Institute Catalog, “The Black Cat (1934)”, www.afi.com (Accessed 8 August 2011). 105 David A. Lipton to J.J. O’Connor, 16 September 1949 and Budd Rogers to J.J. O’Connor, 20 September 1949 in “Reissues, ”Box 410, 11813, Universal Collection, USC SCA. 106 L.V. Burrows, “Film Big War Weapon,” Daily Variety, 16 October 1944, 15. 107 Educational Screen, “The Surplus Projector Problem,” June 1945, 310. 108 Walter Adams, “Can Our Schools Teach the G. I. Way?,” Better Homes and Gardens (Feb. 1944), 20—21; W.A. Cram, “The Schools Originated the G. I. Way,” The School Review 53 (1945): 281-85; Charles F. Hoban, Movies that Teach (New York: Dryden Press, 1946). 109 “Answer of Defendant Universal Pictures Company, Inc. to Plaintiff’s Interrogatories dated March 4, 1953,” 5 August 1953, 4, U.S. v. Twentieth Century-Fox et al., Civil Case File 14354, Box 399, 7/22/52-8/5/53, Folder: Vol. 1, 2 of 2, Records of the District Court for the Southern District of California, Central Division (1938-1961), NARA-R. 110 New York Times, “Universal Forms World-Wide Group,” 14 November 1946, 50. 265 111 Universal also paid an interest rate of 4 percent. Agreement between Bell & Howell Company and United World Films, 25 October 1946, 4, “Universal – Bell & Howell & Castle,” DPC. 112 Time, “Big Frog,” 13 January 1947, 83. 113 The New York Times reported that “the purchase price is understood to be in the neighborhood of $1,500,000,” but the actual contract reveals the price as $2,250,000. Agreement between United World Films, Inc. and Eugene W. Castle, 28 December 1946; New York Times, “United World, Inc. Buys Castle Films,” 2 January 1947, 22. 114 Motion Picture Herald, “Universal Unit Acquires Castle,” 4 January 1947, 13. 115 Theatre Owner’s of America, “Unofficial 16mm Report, TOA Meeting – Los Angeles, March 9 th & 10 th , 1948,” U.S. v. Twentieth Century-Fox et al, DPC. 116 R. Megaher to E.A. Sargoy & J.L. Stein, “Re: Unauthorized 16mm Exhibitions Miami and Miami Beach, Fla.,” 15 February 1949, U.S. v. Twentieth Century-Fox et al, DPC. 117 “Answer of Defendant United World Pictures, Inc. to Plaintiff’s Interrogatories dated March 4, 1953,”pg. 4, U.S. v. Twentieth Century-Fox et al., Civil Case File 14354, Box 399, 7/22/52-8/5/53, Folder: Vol. 1, 2 of 2, Records of the District Court for the Southern District of California, Central Division (1938-1961), NARA-R. 118 United World almost certainly earned more than $3.6 million from its 16mm distribution of all films (and not just features) across the 1946 to 1953 period. Yet, here too, the low profit margins of 16mm film distribution appear to have cut into the subsidiary’s profit contribution to the parent company. In February 1949, Variety reported: “United World Film wound fiscal year with total revenue of $6,200,000 from its 16m and television operations. UWF, subsid of Universal Pictures, had a 20 percent increase in biz during 12 months ended last October. While this year's UWF % gross is healthy, net profits on relative turnover of business is comparatively small, since 55 per cent of any sale is absorbed by print and production expenses alone. Subsid is now renting over 600 subjects, and has sold outright thousands of pix. Company, handling U. S. distribution of J. Arthur Rank product, has peddled 11 packages to TV stations. Video income, however, represents only very small portion of overall take.” Daily Variety, “16m Gets UW $6,200,000, 16 February 1949, 1. 266 119 “Answer of Defendant Universal Pictures Company, Inc. to Plaintiff’s Interrogatories dated March 4, 1953,” 5 August 1953, pg. 4, U.S. v. Twentieth Century Fox et al., Civil Case File 14354, Box 399, 7/22/52-8/5/53, Folder: Vol. 1, 2 of 2, Records of the District Court for the Southern District of California, Central Division (1938-1961), NARA-R. 120 Saul Friedberg to Morris Davis, 6 June 1947, United World, DPC; “Television,” 30 July 1947, United World, DPC. 121 Norman Gluck (United World Sales Manager) to Independent Film Journal, 1 February 1951, “United World,” DPC. 122 David Pierce, “Senile Celluloid,” 147-148. 123 David Pierce, “Senile Celluloid,” 147. 124 Daily Variety, “20 Rank Films in Vid Package,” 18 May 1948, 1. 125 Acland and Wasson, Useful Cinema; Decherney, Hollywood and the Culture Elite; Polan, Scenes of Instruction; Wasson, Museum Movies; Lee Grieveson and Haidee Wasson, eds., Inventing Film Studies (Durham, N.C.: Duke University Press Books, 2008). 267 CHAPTER FOUR: COMPETING (TELE)VISIONS OF THE LIBRARY: MATTY FOX, ELIOT HYMAN, AND THE BROADCASTING MARKETPLACE “[Matty] Fox thinks that all good old features can make millions via subscription television. Only poor pictures and formula Westerns will be shown on free television if channels are allotted by the FCC for subscription.” 1 -- Notes of DOJ attorney from meeting with Matty Fox, 1955 “The accumulated product in Hollywood’s vaults—most of it musty and outdated—would hit television with the impact of a tidal wave. The American viewing public would literally drown in a celluloid sea.” 2 -- Robert Sarnoff (NBC President), Statement to U.S. Senate Commerce Committee, 1956. “Nobody except the public likes movies on TV.” 3 -- Chicago Daily Tribune, 1957. In March of 1956, the two most important distributors of feature films to television arranged to meet in Miami. The two men, Matty Fox and Eliot Hyman, had gone from being rivals, to business partners, back to rivals, to now considering a second and much bigger partnership. In 1951, Matty Fox had persuaded both Eliot Hyman and Joseph Harris to pool their film libraries together with his, forming the basis for a company called Motion Pictures for Television (MPTV). On paper, the firm’s name sounded blandly descriptive. Motion Pictures for Television, Inc. acquired films from independent producers and rented them to television stations. From the mouths of the MPTV’s president, Matty Fox, and his team of aggressive salesmen, though, the phrase took on the sound of a political campaign. They were “Motion Pictures for Television,” like “Mothers for Eisenhower” or “Americans for Indonesian Independence” (as it 268 happened, Matty Fox was intimately involved in the Indonesian cause too). Boasting a catalog twice as deep as any competitor, MPTV quickly rose to become the market leader in the television distribution of feature films. Eliot Hyman, who withdrew from MPTV in 1953, asked Fox to meet with him in Miami because a unique opportunity had presented itself. Over the past few months, each man had accomplished a considerable coup, gaining possession of a major Hollywood studio library for television use. Matty controlled most of the rights to the RKO library; Hyman, the Warner Bros. library. By merging these two studio libraries, Fox and Hyman stood to create a distribution firm that would dwarf MPTV in scale. They each controlled more and higher quality films than they did back in the MPTV days, and they could offer them a market that had dramatically expanded. In the four years between the end of 1951 to the beginning of 1956, the amount of advertising revenues and the number of TV sets cumulatively sold had essentially tripled: $1 billion television advertising dollars now chased viewers tuned into 42.9 million TV sets, compared to 1951’s totals of $332.3 million dollars and 15.6 million TV sets cumulatively sold. 4 As the first firm to sell large packages of star-studded Hollywood studio films, the Fox-Hyman, RKO-Warner combine stood to dominate the features-to-television market, establishing the terms and business model that both buyers (television stations) and competitors (other studios and TV distributors) would follow. The trouble was, neither man could agree on what the terms and business model should be. Matty Fox and Eliot Hyman differed in both their long-term and short-term thinking about the most profitable uses of a film library. Matty Fox believed that pay television was the long-term solution. 269 He had hoped to maximize the RKO library’s profitability by essentially dividing the library in two—distributing the best films through the pay television service Skiatron TV, which he controlled, and selling whatever was left over to “free” television. The timing, however, had not worked out in his favor. In the mid-1950s, pay television erupted into a public controversy. The FCC acted slowly in licensing even the experimental testing of scrambled, over-the-air pay television frequencies (which required decoder boxes to unscramble the signals). Facing an uncertain timetable for pay television expansion, Matty Fox had announced a business plan designed to liquidate the RKO library and recoup his investment as quickly as possible—offering local stations the full 740 film RKO library in perpetuity on an all-or-nothing basis in exchange for a combination of cash and spot advertising time. The resulting profit could be reinvested into the expansion of pay television infrastructure and the acquisition of content for the new service. Hyman held a different view about the television marketplace and the value of film libraries. The growing number of television stations—and their rising advertising rate cards—meant that a long-term, profitable business existed for distributing films to “free” TV. The winners of this business would be the firms offering the best content and the best service, exactly the qualities that initially distinguished MPTV in the early-1950s from its competitors. Hyman’s vision of a studio library, though, did not end simply with television distribution. If properly harnessed, Hyman believed that a library’s cash flow and derivative rights could catapult a television distribution company into the ranks of the major Hollywood studios. Hyman planned to channel the money from television sales into new productions, many of which would be remakes of films from the library. The 270 new productions would play theatrically, then move to television, ensuring that the TV distribution side of the company always obtained a steady supply of fresh, high quality product. Hyman believed his old business partner was making a mistake by offering all- or-nothing, perpetual rights sales of the RKO library and little in the way of customer service. The RKO library could generate far more revenue through gradually releasing packages of 39 or 52 films, licensed for a set number of “runs.” Hyman wanted to combine the RKO and Warner Bros. libraries and lead the organization carrying out this plan. If Matty Fox didn’t agree to merge or change strategies, then Hyman realized he would need to reevaluate his own plans. Once a station had signed with Matty, absorbed several hundred films, and committed substantial amounts of cash and spot time, why would it want to pay top dollar for a package of 52 Warner Bros. films? In the end, Hyman and Fox’s visions for the future—and the personalities that propelled them—proved too different. The meeting in Miami ended without a merger. Industry reporters scrambled for the details of what had been said. In a fashion unusually circumspect for the gregarious Matty Fox, Matty merely said he had talked with Hyman about a “variety of subjects related to the tv industry.” 5 Although each distributor stuck stubbornly to his own plan, the libraries of RKO and Warner Bros. would, in an ironic turn, merge three years later. And each man’s vision of the library’s uses—the engine that could power a studio and the backbone for pay television—also eventually merged, forming the prototype of the contemporary media conglomerate. 271 This chapter tells the dramatic story of the intermediaries who first brought the Hollywood feature libraries to television. By focusing on the middlemen, we gain a new perspective on a history that may already feel familiar. During the years of 1955 and 1956, all of the studios—except the lone hold-out, Paramount—licensed or sold their pre- 1948 libraries to television. An outstanding body of scholarship exists chronicling the build up to this moment and the relationship between the Hollywood studios and the broadcasting industry. Readers can turn to the work of Michele Hilmes, Christopher Anderson, and William Boddy for in-depth analyses about the use of film on television during the 1940s and 50s. 6 The work of Blair Davis, Kevin Heffernan, David Pierce, Jennifer Porst, Amy Schnapper, and Kerry Segrave bring forth other threads in this complex history. 7 My decision to focus on the intermediaries comes neither from the graduate student quest to overturn existing accounts (which, in this case, include some of the best in the field), nor from a simple love for storytelling. Instead, I concentrate on the intermediaries because of what they can tell us about the business model of film libraries and the industry’s environment. Whereas Harry Aitken in the 1910s started with a well financed studio and kept a small business alive by reissuing and licensing old films, Eliot Hyman in the 1950s and 60s pioneered a method for inverting the process—beginning with a film library and using it as an engine to grow and power an entire studio. Throughout this dissertation, I argue for the importance of analyzing the full ecology of the media industries and not simply the most prominent players. In the case of television in the 1950s, neither the TV networks nor the studios wanted the wide release of old 272 feature films to “free television.” However, the competing interests of these major players, combined with the persistent and growing demand of TV stations and audiences, led to an outcome that all the major players initially considered undesirable. And in the midst of these conflicts and the dynamic marketplace, two tenacious intermediaries thrived and advanced their power within the industry. The chapter begins with an overview of the major dynamics between the motion picture and broadcasting industries. This overview is essential for understanding both the historical context and the ecosystem in which Matty Fox, Eliot Hyman, and other intermediary distributors were able to succeed. After establishing the marketplace’s suppliers and buyers, I turn my analysis to the middlemen that functioned between them. I discuss the formation of Motion Pictures for Television and offer case studies of the first two purchases of major Hollywood libraries for television. In acquiring the RKO and Warner Bros. backlogs, Matty Fox and Eliot Hyman both capitalized on the vulnerabilities of the studio’s owners and attempted to use the libraries to serve their immediate and long term strategic goals. Neither Matty Fox nor Eliot Hyman donated their business papers to an archive. However, through aggregating a small library of documentation dispersed across USC’s Warner Bros. Archives, the United Artists Collection at the Wisconsin State Historical Society, the Department of Justice files at the National Archives, and the film and television trade papers, we gain new perspectives on the movement of feature films to television and rise of the contemporary business model for harnessing content libraries. 273 Marketplace Context Today, it seems inevitable that old Hollywood movies would come to occupy a large portion of local television programming. Even to some observers in the 1940s and early-1950s, television’s reliance on old movies felt like a certainty. How else could stations plausibly fill all of their airtime? For the major media industry institutions, however, the saturation of old movies on advertising-supported local television was precisely the fate they wanted to avoid. None of the three institutions that fancied themselves architects of the budding television industry—government regulators, the electronics manufacturer and NBC owner, RCA, and the major Hollywood studios—wanted old movies to become staples of “free” programming. NBC and CBS exerted leverage over affiliates through their premium live productions; film libraries, composed of fully depreciated assets, were a threat to the networks’ bottom lines and model of control. The studios recognized the lucrative potential of television, but they wanted customers to pay for the movies they watched—either through pay television or theatre television. They certainly did not want an advertising supported TV model that broke audiences from the habit of paying for filmed entertainment. As for the U.S. government, the Federal Trade Commission (FCC) and Department of Justice (DOJ) were both dubious about Hollywood’s intentions for television. The FCC wanted to promote live, quality, and community-oriented programming, a vision that was threatened by an abundance of cheap features. The DOJ wanted Hollywood to open its film libraries to television, but it wanted stations to be able 274 to select films a la carte—not compelled to block book dozens of old films in order to obtain a handful of desirable titles. Beyond these powerful institutions, most American critics shared a hatred for the use of old films on television. The broadcasting critics felt that movies tampered with the artistic purity of a “live” medium. Film critics, on the other hand, cringed at the haphazard editing, poor image quality, and constant commercial interruptions of televised films. The fact that large numbers of people were tuning in—and, thus, encouraging more programming of movies on TV—led to numerous critics, network executives, and movie moguls to express bafflement, and occasionally contempt, about the poor taste of the “viewing public.” The Hollywood View of Television The Hollywood studios welcomed the development of television, however, they sought to shape the medium to suit their business model. As the Warner Bros. talent contracts discussed in Chapter Two revealed, the Hollywood studios showed interest in the emerging medium of television as early as 1931, a quarter of a century before they released their feature libraries to television. 8 Media historian Christopher Anderson has aptly described Hollywood’s relationship with broadcasting from the 1930s through the early-1950s to be “a chronicle of thwarted ambitions.” 9 The Hollywood studios wanted not simply to provide programming for television; they wanted to control the new industry and model it on the vertically integrated studio system. During television’s experimental stages in the 1930s and the wartime pause in development and 275 manufacturing, the Hollywood moguls imagined the dawn of a complimentary medium— one ideal for distributing certain types of productions and promoting the theatrical release of other films. In the critical post-World War II years of television’s growth, however, the studios failed to obtain their desired grasp over the television industry. Two interventions by the U.S. government derailed the studios’ plans. First, the years of antitrust litigation culminating in the Supreme Court’s Paramount Decision of 1948, which is discussed in Chapter Three, created a climate in which the Department of Justice would block any investments in television companies or stations that might be interpreted as monopolistic. Second, the FCC’s freeze in offering new station licenses from 1948 to 1952 prevented Warners and the other studios from obtaining the grip they wanted over the television industry. Instead, the radio networks of NBC and CBS used that four year FCC freeze to consolidate power over the television industry. 10 The established networks gained control over television, modeling the industry after the advertising-sponsored radio industry that they had fought hard to create. Failed Initiatives—Theatre Television and Pay TV The Hollywood studios promoted two uses of television in the early-1950s that they believed complemented their existing business model: theatre television and pay television. Unlike advertising-supported “free television,” both theatre television and pay television required the viewer to directly pay for his entertainment. Theatre television held the promise of delivering boxing matches, operas, and other live events to an 276 auditorium of paying spectators. The technology worked in one of two ways: one, the “instantaneous projection” method, developed by RCA, in which a receiver picked up the signal and projected it through a lens; or two, the film intermediary system, backed by Paramount, in which the incoming signal was transferred to 35mm film and then projected to a screen all within a matter of minutes. Although neither provided any image quality that could rival a 35mm feature, the motion picture industry held high hopes for theatre television. By 1952, more than one hundred American theatres had gone to the considerable expense of installing a television projection system. Yet, as Michele Hilmes points out, the FCC’s policies and patterns of consumer behavior quickly snuffed out the viability of theatre television. In 1953, the FCC refused Hollywood’s petition to reserve a portion of the UHF spectrum exclusively for theatre television use. More importantly, the number of television markets boomed after the FCC lifted the four-year freeze (1948— 1952) and began allocating frequencies again. The expansion of television markets and channels propelled millions of Americana consumers to purchase television sets. They chose the living rooms, not the local theatre, as the site of live television viewing. 11 Even if people stayed home for television, though, the Hollywood studios still believed they could profit through the introduction of pay television services (also known at the time as “subscription television”). Zenith’s Phonevision, Paramount’s Telemeter, and Skiatron’s Subscribervision all represented different variations on the same basic concept. To purchase home access to a movie, consumers inserted a Skiatron computer punch card into a slot atop the television, dropped coins into a step-top Telemeter box, or called a telephone operator. The set-top box then correctly interpreted a scrambled TV 277 signal and the movie appeared on-screen. 12 Zenith, Paramount, and Skiatron all obtained FCC permits in early-1950s to conduct limited, small scale tests of the technology. Independent producer and pay TV advocate Samuel Goldwyn, for instance, licensed Wuthering Heights (1939), The Little Foxes (1941), and three other films from his library to Zenith for a 1951 test in the city of Chicago. Walt Disney similarly licensed three past productions, including Song of the South (1946). 13 During these and other tests, problems related both to technology and cost structure became evident. Yet the biggest obstacle pay television faced was the same obstacle that continually blocked Hollywood from television’s control switch: government regulation. “Basically, the FCC has one big question to decide,” remarked industry commentator Hy Hollinger in 1952. “Is it in the public interest to allow the coding of TV signals and the charging of fees to decode signals?” 14 The FCC delayed answering this question, insisting it was necessary to conduct more testing, which in turn required testing permits for which the FCC did not readily grant. 15 Matty Fox, who became involved with Skiatron in 1954, was one of the pay television boosters caught in limbo as the FCC deliberated the right course and the networks and movie exhibitors launched a public relations campaign against pay television. Production Trends and Derivative Library Uses Producer Samuel Goldwyn argued in 1949 that, in order to compete with television, Hollywood producers needed to produce “truly superior” pictures that could prompt audiences “not only to leave their homes to be entertained, but to pay for that 278 entertainment.” 16 However, Goldwyn also anticipated a convergence between motion pictures and television. He advocated for the adoption of Zenith’s Phonevision service; he believed that filmmakers would and should adjust their techniques to make films especially for television. Although Goldwyn’s immediate hopes for nation-wide national pay television service were dashed by the FCC, his call for a Hollywood capable of thinking both very big and very small—creating entertainment tailored especially for the site, theaters or the home—quickly materialized. 17 Between the early-to-mid-1950s, the Hollywood studios attempted to deliver a theatrical experience that made it worth leaving the house. Television was small, squarish, and black and white. To distinguish its product from TV, the Hollywood studios increased the use of color filmmaking and introduced new technologies, such as 3D cinema and CinemaScope. Since audiences no longer went to the pictures but, instead, went to see a particular picture, the studios produced stories that promised action, quality, and, above all, name recognition. The studios paid top dollar to adapt the novels and Broadway shows that had struck chords in American culture and they hoped would translate into box office gold. Granted, the era of “presold,” color, widescreen movie did not mark an unprecedented industry change. A decade earlier, during World War II, the studios reduced their output of films and focused on producing A-pictures. Producers in the 1950s also still churned out B-movies, increasingly oriented toward the youth market niche. However, the discourse surrounding the new cinema experience reached new heights around 1953 as a wave of color, widescreen films entered production. Hollywood sought to convince the public that a new era of movie-going was on its way. Paramount, 279 Warner Bros., and Twentieth Century Fox, in particular, emerged as leaders both in the discourse about blockbusters and producing movies that could live up to the hype. If film’s future belonged to glorious Technicolor, breathtaking CinemaScope, and stereophonic sound, then what did this mean for the old black and white film libraries, which lacked such adornment? In 1953, Twentieth Century-Fox President Spyros Skouras hinted that it might mean the time had come to start sell old movies to TV. “With the advent of CinemaScope and other new techniques, it is anticipated that the theater demand will generally be for pictures of the new types,” Skouras explained to stockholders. “The demand for the older pictures will greatly decrease for theaters. Therefore, it is likely these older pictures will then be made available for television.” Skouras’s comment attracted newspaper attention and led to an increase in Twentieth Century-Fox’s stock price, which may have been Skouras’ intention all along. 18 Twentieth Century-Fox waited another three years before licensing any of its A-list library films to television. Meanwhile, over the next year and a half, Twentieth Century- Fox theatrically reissued no less than fourteen films—filling the demand of exhibitors, especially drive-ins, which still wanted the bargain rental prices of “older pictures.” 19 In 1955, Twentieth Century Fox, Warner Bros., and MGM also ventured into television production. Hoping to duplicate the success of Walt Disney’s ABC program, Disneyland, launched the previous year, the three studios created series intended first and foremost to promote their expensive theatrical productions. In a press release announcing Warner Bros. Presents on ABC, for instance, Jack Warner promised the program “will exploit to the fullest extent the value of the television medium in the marketing of the 280 motion picture.” 20 The press release, and similar statements, represented an effort to assure exhibitors that Warner Bros. Presents would not compete with the theatrical market but rather promote it. Each episode concluded with a “Behind the Cameras” segment that publicized an upcoming Warner release. Both to economize on production costs and further promote their wares, Warner Bros., MGM, and Twentieth Century-Fox all heavily utilized their libraries in producing series for television. As discussed in the Introduction, a studio’s uses of a film library can be separated into two broad categories: the copy and the derivative. These studios resisted releasing copies of library films to television, but used derivatives of old films as the basis of their television series. Twentieth Century-Fox produced two series for CBS: the half hour western series My Friend Flicka, based on the feature film of the same name, and Twentieth Century-Fox Theatre, which adapted a different old Twentieth Century- Fox picture into an hour-long, stand-alone TV drama each week. Warner Bros. Presents (ABC) rotated each week between three series—King’s Row, Cheyenne, and Casablanca—all based on old Warner Bros. films. MGM took an even more drastic cost- cutting approach in producing The MGM Parade for ABC. Rather than remaking old MGM films for television, the studio simply cut together footage of memorable musical sequences and other set pieces. This 30-minute program of derivative entertainment generally began and ended with a plug for an upcoming MGM theatrical release. 21 The studios’ half-hearted entry into television and limited understanding about what TV audiences found compelling ultimately hindered their promotional ambitions. Twentieth Century-Fox and Warner Bros. both went over-budget on their derivative 281 series and initially lost money. As Christopher Anderson explains in Hollywood TV, Warner Bros. proved more successful in television once it focused on western dramas and found ways to further economize by using idle sound stages, backlots, and contracted talent. 22 As for MGM, The MGM Parade only lasted one season. American viewers in 1955 to 1956 expected MGM and ABC to deliver more each week than a couple of old film clips and a promotion for an upcoming release. When ABC canceled the series, however, no one expected that MGM’s 30-minute medleys of library footage would themselves one day become valuable library assets. Today, Turner Classic Movies regularly replays the old MGM Parade installments. During the first month of 2012, the cable channel aired four episodes of the program, which today looks ahead of its time, a proto-That’s Entertainment. 23 Studio Resistance to Sell Libraries to Television While the studios raided their vaults to create inexpensive derivatives for television, they continued to resist licensing their old features to television. Some of the studios’ hesitation resulted from the opposition of theatre owners, who worried that audiences would stop going out to pay and watch a movie when they could stay home and watch a movie for free. The studios also risked angering the Hollywood labor unions, which demanded payment for reuse. (Lengthier discussions of the perspectives of exhibitors and labor unions can be found in Chapter Three.) As David Pierce has argued, though, the biggest reason the studios waited to sell was because they wanted a bigger payday. The same patterns of adoption that spelled the doom for theatre television meant 282 that a larger and larger market was growing for home viewing. In 1952, Paramount executive Y. Frank Freeman told the FCC that the studio would sell its films to television “if the price is in the best interests of Paramount.” 24 An analysis of the markets for old films in the late-1940s and early-1950s confirms that Paramount was wise to wait on selling its library to TV. In 1949, television syndicators paid independent producers as little as $2,000 to acquire the rights in perpetuity to a feature film. 25 The rates that local stations paid to syndicators was similarly low: New York stations paid roughly $250 per picture for multi-year licenses to Eagle-Lion westerns and features; Chicago and Cleveland stations paid roughly $150 per picture for the same films. 26 That same year, the postwar theatrical reissue boom was at its height. MGM’s lowest grossing reissue of 1949 earned $633,000 domestically; RKO’s lowest grossing reissue that year earned $220,000 domestically. 27 As discussed in Chapter Three, the studios in the mid-to-late-1940s came to strategically utilize their libraries as profit centers. For the studios to sell to their backlogs to TV, the price for television rights needed to surpass what the reissue market could yield—plus pay a premium. Television’s Appetite for and Aversion to Hollywood Features Audiences expressed demand for certain old movies from the mid-1910s through the 1940s, but reissues and revivals reached American theaters because of the demand of the business buyer, the motion picture exhibitor. As explored in Chapters One, Two, and Three, exhibitors liked reissues and revivals because they knew the film’s quality in advance and, 283 more importantly, they could rent them for a fraction of the price of a new film, usually at a flat rental. The programming and advertising needs of local television stations in the late- 1940s and early-1950s led to the development of a similar marketplace for old films. Unlike exhibitors, however, stations had a very limited selection of old films to choose from. As station managers and Late Show viewers quickly learned, there was little certainty about the quality of an old movie selected for television broadcast. With the Hollywood studios holding back their A-list titles from television, local stations only had access to the old productions of independent producers, which generally lacked in star power and production value. The stations were served by two groups of middlemen—film-to-tv distributors (discussed at length later in this chapter) and station representatives. Station representatives sold spot advertising time on behalf of stations, creating conflicts between the networks and affiliate stations when the spot revenues far exceeded the affiliate’s split of network ad revenues. Stations as a Source of Demand Local stations needed to fill dozens of hours of airtime each week. Even if they were affiliated with a network, the station was still responsible for filling the bulk of these hours. Filling these hours with live local television productions was an unaffordable proposition. Syndicated first-run film programs, from telefilm syndicators such as Frederick Ziv, offered one alternative to live programming. However, the business model for first-run syndicated telefilms required production budgets to remain minimal but set rental prices high enough for the producer to recoup the budget and turn a profit. In 284 contrast, old theatrical features boasted higher production values and the potential for more flexible pricing, since the producer has already fully depreciated the picture as an asset. By 1952—still three years away from any Hollywood studio releasing its A-list features for television—a television executive could accurately remark, “in terms of air- hours, feature films originally produced for theatrical distribution constitute the bulk of film used on television today.” 28 Throughout the 1950s, the trade papers and mainstream newspapers alike were filled with success stories about stations that transformed their ratings through the savvy programming of feature films. In March 1952, Pittsburgh’s WDTV took out a full-page advertisement in Broadcasting heralding the success of its “Swing Shift Theatre,” which offered “the more than 200,000 workers in the Tri-State District, who finish work at midnight”—and anyone else willing to stay up late enough—feature film programming from 1:00 am to 7:00 am. Like many other stations, WDTV already programmed movies during television’s “fringe time”—the industry term for the two or three hour blocks of time before and after the “prime time” hours of 8:00 to 11:00 p.m. The late fringe hours of 11:00 pm to 1:00 am became the temporal real estate for numerous “Late Shows,” supplemented in some instances by a “Late, Late Show.” WDTV, however, pushed the envelope considerably further, staying on the air for 24 hours during the workweek through programming feature films rented from Motion Pictures for Television. 29 The cumulative effect of WDTV’s all night film programming, as well as countless “Late Shows,” became a lasting cultural association between old movies and late night television. 285 The fringe model assumed the station was a network affiliate and carried network programming during the primetime hours. WDTV, for instance, was an affiliate of television’s short-lived DuMont Network. For independent stations lacking network affiliation, however, old movies frequently became the primetime programming. The most famous example of a movie-oriented independent station was New York’s WOR-TV, owned by General Teleradio, a subsidiary of the General Tire & Rubber Company. In the fall of 1954, WOR-TV unveiled its flagship program, “The Million Dollar Movie.” Modeling its schedule on the local movie house, WOR-TV showed the same picture for an entire week—twice every night at 7:30 pm and 10:00 pm, plus weekend matinees. In a given week, WOR-TV offered New Yorkers sixteen occasions to watch the same “Million Dollar Movie,” using the cumulative ratings from all sixteen shows for selling advertising time. 30 These repeat viewings, within the concentrated span of a week, became formative experiences for a new generation of critics and filmmakers, including Martin Scorsese, who remembers watching Black Narcissus (1947) five times on his family’s Manhattan television screen over the course of a few days. 31 The success of “The Million Dollar Movie” hinged on offering audiences quality— pictures good enough and new enough (good and new were terms used synonymously in much of the cultural discourse about movies on television) that prime time viewers would switch channels from the networks at least once during a given week. In a splashy deal completed a few months before the “Million Dollar Movie” premiered, General Teleradio paid Bank of America $1.25 million for the four-year national broadcast rights to 30 films, independently produced between 1946 to 1949. For the most part, the films had been box 286 office failures; the producers couldn’t pay back their loans and the bank foreclosed on the assets. These films, including Magic Town (1947) and Arch of Triumph (1948), were rich in star-power, production value, and freshness (both new to television and more recently produced than most other films available for television). Commentators snickered that Bank of America had fleeced General Teleradio’s young leader Thomas O’Neil, the son of the General Tire’s founder and chairman. Never before had a distributor or station paid such high fees, which averaged $42,000 per picture. 32 Within a year of their broadcast, however, each of the thirty Bank of America pictures had more than recouped their cost, turning an average profit of $28,000 per picture. The success of the “Million Dollar Movie’s” first season and General Teleradio’s demand for more quality product to service its growing number of stations contributed to a far larger acquisition—the July 1955 purchase of RKO for $25 million, discussed in detail later in this chapter. 33 Networks Resistance and Spot Advertising Incentives In 1956, NBC President Robert Sarnoff in 1956 offered a disaster warning to the U.S. Senate Commerce Committee. If the Committee did not act in the network’s interest, “the accumulated product in Hollywood’s vaults—most of it musty and outdated—would hit television with the impact of a tidal wave. The American viewing public would literally drown in a celluloid sea.” 34 Refusing to succumb to the celluloid tsunami, Sarnoff proudly declared, “We [at NBC] shall continue our emphasis in live television, on fresh new programs designed for the medium, and on the development of color.” 35 As William Boddy incisively points out, though, Sarnoff’s emphasis on live 287 television presented a false impression of the direction that the networks were already taking. 36 By the mid-1950s, network programs filmed in Hollywood, such as CBS’s I Love Lucy, proved that a hit filmed TV program could continue generating handsome revenues in rerun broadcasts. NBC’s stated emphasis on “live” programming was a rhetorical strategy, designed to paint itself as a champion of the public interest and good taste while simultaneously deflecting the scrutiny of the DOJ and FCC. Sarnoff’s real concern was about control, not aesthetics. Beyond protecting the network from new government regulations, Sarnoff feared that film libraries would make affiliates less dependent on the networks. Indeed, some affiliates had already bypassed the network feed to show films they had licensed. 37 The key to understanding the tension between networks and affiliates over showing films is spot advertising, which offered incentives to stations, advertisers, and station representatives that diverged in key ways from the networks’ interests. Since the early-1930s, American broadcasting has been chiefly supported by three forms of advertising: network, local, and spot. 38 Network advertising, on a network such as NBC or CBS, offered sponsors the ability to reach the national audience that tuned in to listen (and later to watch) a network program. Local advertising, on the other hand, was airtime sold directly by an individual station to a sponsor. Spot advertising represented a third model—a method for national advertisers to reach audiences on a market-by-market basis. 39 Sponsors chose spot advertising for a variety of considerations, including the desire to customize a message for a particular audience or build market share in a particular region. From the stations’ perspective, spot buying was crucial to their bottom 288 lines. Whereas the stations received a mere 30 percent of the revenue from network advertising, the station retained all of the money from spot purchases. 40 Stations historically maintained their affiliations to attract wide audiences, but their core profit center lay in reselling that wide audience to spot buyers. 41 Estimated Volume of Television Advertising in U.S. (In Millions of Dollars) 1950 1951 1952 1953 1954 1955 Network 85.0 180.8 256.4 319.9 422.2 540.2 Spot 30.8 69.9 93.8 145.5 206.8 260.4 Local 55.0 81.6 103.7 140.7 180.2 224.7 Total 170.8 332.3 453.9 606.1 809.2 1,025.3 Table 8. Estimated Volume of Television Advertising in U.S. (In Millions of Dollars). Source: International Television Almanac. 42 The spot model connected national advertisers to local stations on a mass scale. The grease that kept the wheels of spot advertising turning were station representatives, intermediaries who represented local stations in negotiating with national advertisers who purchased spot time. Station representatives and the spot advertising model, which they created, benefited in the early-to-mid-1950s from broader shifts in American consumption and corporate marketing strategies. Whereas Ford Motors sponsored the classy anthology series Ford Theater once a week on NBC to promote its broad corporate image, Procter and Gamble and other inexpensive consumer products sellers wanted airtime, and lots of it, to make impressions of particular product brands onto consumers. William Boddy observes that 289 for makers of inexpensive consumer goods of low product differentiation, television sponsorship was useful not for corporate identification, but solely for product advertising. Large advertisers favored telefilm series for their consistency and purchased programs on the basis of their ratings history in "formula" buying patterns. In 1952 Procter and Gamble led other large manufacturers of inexpensive consumer products into national advertising in daytime and other fringe hours. 43 Although more money was spent on network advertising than spot, the growth rate of spot advertising outpaced network advertising’s during the period of 1950 to 1956 (see Table 8). Network advertising was useful for reaching the mass audience of primetime viewers, but spot advertising in daytime and afternoon fringe hours could reach the specific consumers—homemakers and children—most likely to buy a specific product. Procter and Gamble and comparable consumer product spot buyers liked the dependable ratings and demographics of fringe hour syndicated telefilms and reruns, which played at the same time across an entire week (a scheduling pattern the television industry calls “stripping”). 44 Old theatrical films, if properly packaged and selected, could perform this same function, perhaps drawing in even more viewers. In the early-1950s, some advertising agencies and station reps expressed disappointment at the lack of star power and production value in the films available for TV. 45 Nevertheless, sponsors still bought spot time on bad features. If libraries of Hollywood’s best films became available, then stations and station representatives stood to make a fortune—at the network’s expense. Critics In their struggle to prevent advertising dollars defecting toward Hollywood features, the networks found key allies among the nation’s film and television critics. The New York Times’ television critic Jack Gould warned that “television is and must remain far more than 290 a revision in the method of distributing Hollywood wares…. It is the spontaneity and reality of a live performance that excites and arouses the viewer whether it is in art, in politics, or in education.” Gould believed in medium specificity. He considered liveness to be television’s defining quality. Filmed programming, in contrast, deviated from the television medium’s aesthetic purity. Gould’s critical standard also happened to validate NBC’s opposition to Hollywood films on television; Sarnoff quoted Gould in his 1956 testimony to the U.S. Senate. 46 Jack Gould’s colleague at the New York Times, film critic Bosley Crowther, similarly detested the presentation of old films on television. As noted in the previous chapter, Crowther praised the theatrical reissue and revival of old films throughout the 1940s and 1950s. In 1954, Crowther proposed a systematic policy of revivals as an alternative to feature film presentation on television: Something big and intelligent should be done setting up regular facilities for the steady release and exhibition of fine old films. One theatre in every good-sized city, devoted solely to the showing of classic films which would be freed on guaranteed schedule by the owners might be an approach. Some system, designed through careful study, could enhance the prestige of the screen, bring money into the coffers and scotch the eventual release of the great ones to TV. 47 Crowther admitted his proposal was an “idealistic notion” unlikely to find commercial traction, but he continued to advocate both that the public should have regular opportunities to watch old films and that these opportunities should occur at theaters, not at home. “What's wrong with permitting the public to see the old films on TV?” wrote Crowther in 1956. “Why isn't this a valid outlet and a profitable solution, you may inquire? The answer is that the quality of the best of them will be watered down (at least, this has so far been the 291 experience) and their theatrical potential lost.” Crowther believed that cinema’s integrity was violated when films were shown outside of their intended sites of exhibition and presented in “mutilated form.” 48 Unlike the New York Times critics, the Los Angeles-based broadcasting critic Hal Humphrey felt no philosophical opposition to the presentation of old movies on TV. 49 As the broadcasting critic of the Los Angeles Mirror, and later the Los Angeles Times, Humphrey supported the broadcasting of films but sought to influence their selection and presentation. In a satirical 1951 column entitled, “Hey, The British Are Coming,” Hal Humphrey reimagined Paul Revere riding through contemporary Hollywood and warning studio executives that British films were flooding American TV stations and “worst of all, [the audience] seem to like what they are seeing.” Humphrey continued, “If Paul’s warning were heeded, these gentlemen in their lush studio offices would spring into action and rush reinforcements to the TV stations. They could snow under Mr. Rank and his colleagues with thousands of feet of Grable, Lamarr, Goddard, Bogart, Cooper, and Gable.” 50 In 1953, though, Humphrey echoed Jack Gould’s concern that too many old Hollywood movies on TV would mean that television “loses its own identity and becomes simply a system of relaying the film industry’s product into the home.” 51 Yet it was eclecticism, rather than liveness, that Humphrey understood as television’s core identity. Humphrey continually criticized the commercial interruption of films and the presentation of bad movies, but he never denied that old movies occupied a legitimate space in the aesthetic melting pot that was television. 52 292 We should remember, though, the critics of movies on television extended beyond the major newspapers. For journalists and advocacy groups representing minorities marginalized in American society, there were more important priorities than television’s aesthetic integrity. African American organizations and critics denounced television’s reissue of racist media content. 53 In 1954, The Washington Afro-American columnist Al Sweeney criticized the Hal Roach Our Gang serials from the 1920s and 30s that had resurfaced on television. “Among the ‘Little Rascals’ is a fellow named Farina,” wrote Sweeney. “It’s the type of role that should have stayed buried.” 54 Japanese Americans also objected to the television presentation of racist stereotypes from the World War II era. After the RKO and Warner Bros. libraries reached television, the Japanese American Citizens League called for the ban of seven RKO and Warners films that hatefully depicted the Japanese. RKO’s Betrayal From the East (1945), for example, depicted a Japanese cheerleader at Stanford who covertly served the Japanese Navy. In fact, as the League’s National Director pointed out in 1957, “the only person of Japanese ancestry to become a cheer leader at a west coast university was Hitoshi Yonemura,” a UCLA student who “was killed in action with the U.S. 442 nd Japanese American Combat Team in Italy, after volunteering for active duty from behind the barbed wires of a government relocation camp.” Moreover, the Japanese American Citizens League explained, “the files of every Federal intelligence agency show there was not a single case of espionage or sabotage committed by a resident person of Japanese ancestry.” 55 Worst of all, the distributor had left in the film’s opening statement, which assured viewers they were 293 watching a true story! For minorities seeking greater equality, the revival of old movies on television threatened to stall American society in the past. Audiences In lamenting the proliferation of old movies on television, critics discussed “the viewing public” in a condescending tone that sometimes shifted into outright contempt. Wearing the dual hats of movie producer and critic for a 1954 nationally syndicated column, David O. Selznick offered his own assessment of television’s audience: One of the extraordinary phenomena of television has been the extent to which millions of Americans are willing to sit through, and seemingly enjoy, the oldest and for the most part the worst productions of the motion picture business. Weary wives, tired office workers, jaded tycoons sit fascinated into the small hours of the morning, before TV screens, looking at bad prints from shrunken negatives of films from which they stayed away in droves when they were first offered. 56 Selznick’s analysis of the audience fit into a broader postwar cultural discourse. Critics routinely condemned both the “low brow” tastes of TV viewers and television’s tendency to drive people away from activities assumed to be more important, such as reading and theatre-going. 57 Still, the critical discourse was particularly harsh about audiences who watched movies on television and who adapted their lives to fit the broadcast schedule. At times, the critical discourse of contempt and condemnation spread into journalistic reporting. The Chicago Daily Tribune, for instance, sympathetically reported the plight of a husband of “an addict of late TV movies,” who “watch[ed] as late as 2 a.m.” Disturbed by the loud volume and required to wake up at 6 am for work, the man “landed a few punches” against his wife 294 and found himself hauled into divorce court. Rather than admonishing the workman, the judge scolded his battered wife. “If I were you… I would give up my TV set entirely—get rid of it entirely for the sake of my husband. Isn’t a husband worth more to you than your TV and your late movies?” With a sense of amusement, The Chicago Daily Tribune reported that the wife “answered quietly, but firmly, ‘No!’” 58 The news story stands out, first and foremost, for its misogyny and insensitivity to domestic violence. Yet there are aspects of the article completely congruent with coverage of male television fans. Like the housewife, the dupe “who spends some 20 hours a week chained to his rocking chair” encourages the televising of more garbage and—to use the clichéd remark about TV viewers—gets what he deserves. 59 The real people that watched the “Late Show” were more complicated than the passive dupes that critics and journalists imagined. Loyal viewers tried to influence the process of televised film presentation—calling for less commercials, more variety, better films, and better scheduling. Mrs. Pat Vasey of Urbana, Illinois, for instance, sought to enlist the federal government in her effort to improve television programming: “We’ve had pictures that I know must be over 25 years old. Some are good yes, but there are ones that are beyond repair. I’m all for TV and there’s nothing I enjoy more. But after I’ve waited up till 12:00 for the midnight movie and have only one channel to watch I believe I have a right to see at least a different one each night.” 60 Mrs. Vasey’s call for reform entered the historical record because the Department of Justice filed her letter as part of its investigation into block booking on television. Millions of other Americans stayed up for the Late Show, but their voices never entered the archive. 295 It is far easier today to excavate the Selznicks than the Vaseys, the condescending newspaper descriptions of late night viewers rather than letters in which TV fans describe their own pleasures and frustrations. Nevertheless, through aggregating the available audience data, we gain a least some perspective into the priorities of viewers. The biggest audience complaints concerned the old age and poor quality of the movies on TV. 61 Yet it is also clear that many audience members, sometimes the same ones that complained, found pleasure in watching these “bad, old” movies. The same attributes that marked an old movie as bad—dated fashions, stilted dialogue, abundant clichés—were ideal fodder for parody. In 1964, Susan Sontag declared “the ultimate Camp statement” is “it’s good because it’s awful.” 62 Sontag went on to complicate that statement (and many critics since have attempted to complicate Sontag’s “Notes on Camp”) but the “it’s good because it’s awful” criteria succinctly describes the ironic sensibility that many viewers brought to the movies playing on the Late Show. 63 Audiences in the 1920s and 1930s had laughed at the conventions of the past when short compilations of old film footage played in theaters (see Chapters One and Two). Television served up these flickers from the past in far greater abundance and they reached an audience even more inclined to watch them with a sense of irony. Balancing the ironic sensibility of Late Show viewers, audiences for old movies on TV (sometimes the same camp viewers) demonstrated an openness toward encountering popular culture in its many forms. Critics, like Jack Gould and Hal Humphrey, wanted the audience to be more discriminating and not submit to content of the “lowest common denominator.” Humphrey and Gould would have approved of Ruth Vasey’s letter and her 296 attempt to improve the movie selection and scheduling process. However, there were other viewers who, in contrast to Vasey, embraced the seeming randomness of what movies appeared on television. In a July 1957 Associated Press column, an unnamed columnist offered a his own fannish interpretive strategy for encountering old movies on TV: Perhaps the best thing about an old movie on television is that you don’t expect much good in it. You suspend hope before you turn it on and so you suspend your faculties. (And, next to your feet, there’s nothing more pleasant to suspend on a Summer evening than your critical faculties.) Thus, whatever good you find in an old movie comes as a pleasant surprise. Whether or not you’ve seen it before doesn’t much matter. In fact, I seldom can remember whether I’ve seen it before. 64 From the standpoint of 1950s cultural critics, the column proved exactly what was wrong with the American television audience—a willingness to settle for poor quality entertainment, a suspension of intellectual and critical judgment, a complete amnesia for what’s come before. Viewed in a different light, though, the column—which also satirizes the hokey conventions of bad movies—represents a remarkably open and adaptive approach to popular media. No, we don’t realistically expect that what we watch will be great, but we’ll give it a try anyway. If it’s good, we can appreciate the movie for its strengths. If it’s bad, we can still laugh and enjoy it. The viewer derives pleasure either way. Government Regulation and Intervention Critics and fans weren’t the only ones watching movies on television. The U.S. Department of Justice (DOJ) attempted to influence the course of how and when Hollywood features would reach TV. As the studios resisted selling or licensing their features to television, the DOJ intervened and accused the motion picture industry of conspiring to 297 restrain trade of 16mm film prints to non-theatrical customers and television stations. Dubbed “the 16mm Case” in the press, the U.S. v. Twentieth Century-Fox dragged on from 1952 to 1955. All together, ten companies were named as defendants: six studios (Twentieth Century-Fox, Warner Bros., RKO, Universal, Columbia, and Republic) and four 16mm distributors (Films, Inc., Pictorial Films, the Columbia-owned Screen Gems, and Universal subsidiary United World). 65 Ironically, the two most conservative studios, MGM and Paramount, were spared because they did not release their features for 16mm use in the U.S. market and, therefore, they could not restrain the trade of such films. Meanwhile, Universal’s subsidiary United World, which had aggressively released features to 16mm, was accused of malfeasance. The government presented a weak case from start to finish, failing to acknowledge the very real differences among the defendant companies’ policies toward 16mm film and television distribution. The Department of Justice probably would have never prosecuted the suit were it not for two factors: one, the agency’s validation by the Supreme Court in the 1948 Paramount Decision; and two, the fervor of Leonard Posner, a DOJ attorney who had worked on the Paramount Decision and believed, given the chance, the motion picture industry would resort to similar anticompetitive tactics again and again. After hearing testimonies in the Fall of 1955, the District Court Chief Judge ruled in favor of the Hollywood studios and small gauge distributors, finding no basis for the claim that the defendants had conspired to restrain the interstate trade of 16mm films. 66 The Department of Justice was interested not simply in whether the studios would sell their libraries for television use but in how the films would reach television. In 1953, 298 a source at the National Association of Radio and Television Broadcasters told Posner that while “while no reports of block booking of motion picture films in TV Industry has yet come to his attention, he thought that the conditions—great scarcity of films plus tremendous demand—were ripe for it, and he wouldn’t be surprised if it existed.” 67 Another source that year confirmed the existence of block booking and singled out the worst culprit: Matty Fox, head of Motion Pictures for Television. 68 The Department of Justice chose not to investigate Matty Fox while it concentrated the 16mm Case, but Matty must have already known that he was going to have a tightrope to walk. He wanted to stay in the good graces of the DOJ, protect his reputation in Hollywood, and continue selling large blocks of films to TV stations. By 1955, Matty hired a former member of the DOJ’s Antitrust Division to work for him as his assistant. The assistant helped facilitate a meeting in August 1955 between Matty and a current DOJ attorney, Samuel Flatow. They met in Matty Fox’s penthouse suite, the top floor of the Universal building in New York City. Flatow recorded in his notes that “Mr. Fox stated that he would be completely ruined in the motion picture business if he were to appear as a witness for the Government in this case. ‘Off the record’ he agreed to talk freely and to furnish the Government with any information within his knowledge.” Matty talked with Flatow about the feature library he had aggregated for MPTV. He explained he only became involved with Skiatron, but he hoped the studios chose to release their libraries to subscription TV. “Fox thinks that all good old features can make millions via subscription television. Only poor pictures and formula Westerns will be shown on free television if channels are allotted by the FCC for subscription,” noted Flatow. 299 Within the course of the conversation, Matty described his fruitless attempts to buy or lease the Hollywood studio libraries for television. He explained he never physically traveled to Hollywood on these attempts; all of the studio chief executives worked a short distance away in New York, not Southern California. Flatow wrote: “Confidentially, he stated that Eliot Hyman of Associated Artists, also tried to get films from all the majors. Should we contact Hyman, Fox asked that we keep his name undisclosed.” 69 Matty was walking the tightrope, subtly encouraging the DOJ to subpoena his old business partner. If the government called Hyman to testify against the studios, Fox benefited in multiple ways—advancing the government’s case to pry the film libraries from the Hollywood studios and, at the same time, turning the fury of Hollywood’s studio executives against his most capable competitor. Two weeks after Matty Fox brought up Eliot Hyman’s name to the investigator, the DOJ called Hyman as a witness for the prosecution in the 16mm Case. 70 Hyman appears to have narrowly avoided testifying in court, thus protecting his reputation among studio executives. 71 The meeting is telling. In the midst of playing the government and Hollywood studios off one another, Matty maintained his focus on the only rival who might beat him in the chase for a studio library. The Intermediaries: Matty Fox and Eliot Hyman As explored in Chapter Three, Matty Fox was the architect of Universal’s library business in the years immediately following World War II. Applying wartime strategies of “gathering junk” toward the film industry, Matty Fox monetized Universal’s dormant film assets by licensing the theatrical reissue rights to specialty distributor Realart and 300 creating an in-house 16mm and television division called United World Films. Although Realart’s $3.25 million advance provided Universal with much needed cash, United World proved disappointing due to the expensive acquisitions of 16mm film libraries, the low profit margins of 16mm distribution, and the industry backlash that United World’s actions triggered. Matty Fox remained the nominal chairman of United World until the end of 1950; starting in 1948, though, Matty shifted most of his attention away from the movie industry. 72 Instead, he concentrated on an independent business venture that allowed him put his old War Production Board skills and political connections to use. Matty pitched his financing and trade prowess to representatives of the newly formed Republic of Indonesia, which was in the process of freeing itself from Dutch colonial rule. 73 The Indonesian trade commissioner agreed to make Fox the exclusive trade agent between the U.S. and Indonesian government. 74 The U.S. State Department gave its blessing to the arrangement, though conditioned its approval on the removal of a handful of provisions from the contract that would have given Matty a near monopoly over all U.S.-Indonesian trade, services, and financing. 75 Although Indonesia’s political instability prevented Matty from fully capitalizing on the arrangement, the episode revealed Matty’s characteristic desire for market leadership and knack for spotting business opportunities that others missed. 76 Through acquiring Bell & Howell and Castle, Matty Fox turned United World into the market leader in 16mm distribution. Through his pact with the Republic of Indonesia, Matty Fox became the exclusive U.S. trade agent to the emerging nation’s government. Ultimately, neither United World’s 16mm business nor the 301 American-Indonesian Corporation turned out to be home runs. The point is that they could have been enormous successes if the markets had grown at the pace he expected. Matty’s desire to dominate a growth market drove his post-Indonesia reentry into the motion picture industry. The distribution of feature libraries to television was a growing market, yes, but more importantly it was one that Matty believed he could control. He held the advantage of knowing the major players in this business and having already organized sales staffs for United World’s 16mm and television businesses. If Matty could organize these different libraries, executives, and salesmen into one umbrella organization, then he could exert maximum control over the market. He could package blocks of films together and time their release to ensure largest possible revenues. True market dominance would require the leverage of controlling at least one studio’s library, but that could come later. In the meantime, Matty Fox aggregated whatever feature films he could. In April 1951, he negotiated a three-way deal between United Artists, Eagle- Lion Classics, and his company in which he obtained the television rights to over forty films, including Walter Wanger productions such as Stagecoach (1939) and Foreign Correspondent (1940). 77 A few months later, Matty Fox persuaded television distributors Eliot Hyman and Joseph Harris to pool their libraries with his collection; Motion Pictures for Television was born. 78 Matty Fox’s only true equal in the business of bringing film libraries to television was his MPTV partner, Eliot Hyman. Fox and Hyman were a study in contrasts: Fox, round, gregarious, and a Hollywood insider; Hyman, thin, secretive, and an outsider. Eliot Hyman began his career on the East Coast working in the wholesale tire business. 302 He spent the war years in Norwalk, Connecticut leading government-funded projects involving the engineering uses of microfilm. After the war, Hyman turned his sights on television syndication, which he correctly predicted would be a major area of growth. In 1948, at the age of forty-four, Hyman struck his first major film acquisition, purchasing the rights to 199 mostly low-budget films from Monogram Pictures. To finance the acquisition and enter the TV syndication business, Hyman enlisted multiple partners and formed the company Associated Artists Productions (AAP). By 1950, though, Hyman had bought out his partners and owned AAP outright. Hyman made investments in other areas of the film industry; he co-financed John Huston’s feature film Moulin Rouge (1952). He had ambitions to form a studio that could compete with the majors, producing and theatrically releasing feature films. His wisdom—and where he differed from most Hollywood executives in the early-to-mid1950s—lay in the recognition that the cash flow from syndicating films to television could serve as an engine for theatrical productions and a studio’s other activities. 79 303 Motion Pictures for Television and the Pursuit of RKO Motion Pictures for Television quickly became the market leader in the movies- to-television syndication business. MPTV’s greatest strength was its deep catalog of feature films. By combining the films he controlled with those of Eliot Hyman’s AAP, Joseph Harris’ Flamingo Films, and new acquisitions, Matty Fox formed a collection of over 1,000 titles that, according to The Billboard, was “reputed to be greater than those of the next two or even three largest distributors put together.” Yet MPTV’s success cannot be attributed to its catalog alone. “Aside from sheer number, the MPTV operation is marked by aggressive selling and meticulous print handling,” reported The Billboard in a March 1953 article in which stations had voted MPTV the industry’s best feature syndicator. MPTV’s network of well-stocked offices—with branches in New York, Boston, Dallas, Chicago, Detroit, and Los Angeles—allowed for the fast and efficient movement of 16mm film prints. Matty Fox was an architect of this network, but his talented staff deserves the credit for MPTV’s reputation for salesmanship and service. 80 Dick Feiner was a salesman working out of MPTV’s Los Angeles branch office. The L.A. division manager, David Wolper (who later emerged as one of the most prolific producers in television history), dispatched Feiner to visit the television stations in his sales regions, which stretched from Southern California to Tacoma, Washington. In the anthology Fridays with Art: Insiders’ Accounts of the Early Days of the TV Biz by Some of the Guys who Made It Work, Feiner recalls how he won over the mangers of stations who had only recently obtained licenses from the FCC. Feiner explains: 304 I knew that some of my newly-licensed prospects had not even constructed their facilities yet and probably had no knowledge of what they would need to properly handle the films they would be airing. So I softened up the owners of the stations by telling them I had started in television for MPTV by inspecting, cleaning, and editing 16mm film, servicing two dozen stations. I carried along with me a blueprint, which I unfurled with great flourish, and which demonstrated how I set up my film room, including film racks, film benches, editing and splicing equipment, and information as to where my prospect could order the same for his station. Additionally, I carried samples of letterhead from existing TV stations so the new owner could get ideas of how to design his own. All in all, it was an impressive kit. 81 As Feiner’s account reveals, Motion Pictures for Television positioned itself to clients as a service that went beyond accepting orders and shipping prints. Feiner showed station managers a blueprint, quite literally, for how they could use films in a way that would be mutually profitable for the stations and MPTV. As the MPTV salesmen in 1952 struck deal after deal with young television stations hungry for product, Matty Fox and Eliot Hyman went after the big fish: a library of a major Hollywood studio. Nearly everyone in film, television, and show business in the early-1950s assumed that RKO would be the first studio to release its library to television. Their assumption proved correct, and, in retrospect, the only surprise is that the sale did not occur earlier. From its formation in 1929 to sale in 1955, RKO always struggled to keep apace with the other four vertically integrated Hollywood studios. But even though RKO lacked stable management, the studio enjoyed flashes of brilliance and profitability throughout the 1930s and until the mid-1940s. The studio had major stars under contract, (Fred Astaire, Ginger Rogers), produced one of the biggest hits in film history (King Kong), and the picture that many people considered the best (Citizen Kane). 305 All of RKO’s future potential came toppling down, however, after Howard Hughes acquired ownership in 1948. In a scathing 1953 article, Fortune surmised, “There are two ways of running a motion picture studio: either you run it yourself or you delegate real authority to someone else. The sad story of RKO is that Howard Hughes, who took over a strong company from Floyd Odlum, has done neither.” 82 Hughes either alienated or fired most of the talented people at the studio who could have helped RKO succeed in the postwar years. His erratic meddling into productions slowed the studio’s output and needlessly drove films over-budget. “It is almost impossible to estimate the damage done RKO by Howard Hughes,” concluded Fortune. 83 “Where is the accountant who can set a figure on the intangible losses that came from Hughes’s inability to produce enough movies?” In October 1952, a syndicate led by Ralph Stolkin purchased Howard Hughes’ RKO stock, which represented 29 percent of the corporation’s shares. The Stolkin syndicate agreed to pay $7 million, though in an unusual arrangement, they only had to pay $1.5 million down in cash with the balance to be paid over the next two years. The deal came under scrutiny when the Wall Street Journal published a series of front-page exposes about the organized crime connections of “RKO’s New Owners.” 84 Just weeks after paying Hughes a non-refundable $1.5 million, Ralph Stolkin and his co-purchasers faced the likely event that federal regulators or other RKO shareholders would block their management of the company. As the RKO scandal unfolded, Matty Fox and Eliot Hyman saw an opportunity to purchase a major studio film library. With Matty leading negotiations and Hyman providing financing, Matty offered Stolkin the chance to walk away financially whole. Matty’s 306 syndicate would repurchase the stock for the same $7 million that Stolkin paid. 85 But to many in Hollywood, gangsters were preferable studio owners than TV syndicators. In an effort to have his bid taken seriously, Matty Fox suggested he would serve as “insurance” that RKO’s library would not reach television. Variety described the complex logic of this theory: For one thing, any major dumping of strong competitive product on the TV market would undermine MPTV, whose prime value comes from the fact that it has some competent but now quite old features for which it gets a certain standard of rentals. Any influx of superior or strongly competitive pix would perforce knock down MPTV's potentials. Therefore, unless overriding interests of the other stockholders would influence to the contrary, Fox's entry into RKO figures as insurance that the company stays in the normal distribution-for-theatre-exhibition business. 86 While Matty Fox certainly wanted to control the movies-to-television business, his history of exploiting Universal’s library across 35mm, 16mm, and television makes it unlikely that he would have allowed RKO’s nitrate to sit dormant for long. Hughes ultimately kept his stock and the $1.5 million when the Stolkin syndicate walked away from the deal. Hughes came away from the debacle richer than before; meanwhile, the rest of RKO’s shareholders watched their stock plunge further in value. Eliot Hyman Departs MPTV Less than a year after the failed RKO bid, Eliot Hyman pulled out of MPTV and rebooted Associated Artists Productions as an autonomous entity. Hyman sought to distinguish the new AAP through offering superior films and service. He approached major studios about licensing their films, but his offers met with universal rejection for 307 the reasons outlined earlier in this chapter. Rather than waiting for a large library to go for sale, Hyman snapped up whatever recently produced or star studded pictures that he could. After entering into numerous purchasing and licensing agreements—sometimes just to buy a single picture—Hyman unveiled a package of 52 features just in time for the start of the fall 1954 television season. Hyman’s package offered a year’s worth of above average film programming (stations and advertisers liked to buy film packages in increments representing quarters of the year—13, 26, 39, 52), though he temporarily embargoed thirteen of the films for potential theatrical release. Variety declared the grouping, which included films as recent as A Christmas Carol (1951) and Park Row (1952), to be the “biggest new feature film package to be lined up since the Bank of America sale of 32 features to General Teleradio.” 87 Indeed, General Teleradio thought enough of the AAP package to purchase the rights to show them on WOR’s “Million Dollar Movie.” 88 Hyman rapidly scaled up AAP’s entertainment activities, producing the anthology series Douglas Fairbanks, Jr. Presents. The company’s bread and butter, however, remained television film distribution. Hungry for content, Hyman acquired over one hundred Spanish and German language films for dubbing. He also made another run at the RKO library. To raise the necessary financing, he partnered with Serge Semenenko of the First National Bank of Boston and three theatre chains, Stanley Warner, United Paramount, and National Theatres. 89 Absent from the negotiations was Matty Fox. If Hyman had brought Matty into the deal, Hyman would have had to give up a significant amount of control and the financial upside, but his offer might have been taken more seriously. Matty 308 was a Hollywood insider. He had spent nearly a decade working for Universal Pictures, and his brother-in-law, Nate J. Blumberg, was Universal’s president from 1936 to 1952. 90 Matty had a relationship with Howard Hughes, which meant accepting the fact that Hughes might return his calls in the middle of the night, but hey, at least Hughes returned his calls at all. No matter how many press releases Hyman churned out announcing AAP’s expansion into theatrical production and distribution, he could not change the fact that Hollywood viewed him as an outsider—an East Coast syndicator and money man, not a connected industry player like Matty Fox. Matty Fox, meanwhile, was also gradually shifting his attention away from MPTV. In 1953, MPTV expanded its television production activities, ordering three 39-episode seasons worth of Duffy’s Tavern from producer Hal Roach, Jr. 91 Always on the hunt for the next big thing, though, Matty showed more interest in the pay television company Skiatron. In early-1954, Matty Fox obtained a large ownership position in Skiatron and formed the company’s subsidiary, Skiatron TV. 92 In February 1955, he sold MPTV’s film library to Guild Films, a rival distributor that had surprised the industry (and country) with the runaway success of its syndicated music virtuoso, Liberace. 93 And just months later, the moment Matty Fox had been waiting for finally arrived. The RKO Library Sale In the summer of 1955, the General Tire & Rubber Company accomplished a feat that had eluded both Matty Fox and Eliot Hyman: General Tire bought RKO. Thomas O’Neil, president of General Teleradio, arranged to purchase the studio from Howard 309 Hughes for $25 million. According to O’Neil’s family, the negotiations were a cross- country affair—taking place in New York City, Las Vegas, and the cockpit of Hughes’ private airplane, and finally concluding in the men’s restroom of the Beverly Hills Hotel. According to Matty Fox’s nephew Lew Blumberg, on the other hand, Matty brought O’Neil into the RKO purchase and essentially brokered the deal in order to obtain access to RKO’s library (Blumberg says that Matty Fox met O’Neil during his service at the War Production Board). 94 Regardless of whether Fox or O’Neil initiated the deal, O’Neil wanted RKO for its Hollywood production facilities, distribution infrastructure, and library of films, which he could play as the “Million Dollar Movie” on his six television stations, located in New York, Los Angeles, Boston, Hartford, Memphis, and West Palm Beach. 95 O’Neil thought the best hundred or so films in the library had national network value, but he was not interested in syndicating the entire library of 740 RKO films across the country. Matty Fox may have helped broker the purchase from Hughes, but even if he wasn’t serving in an advisory capacity, Matty recognized an opportunity when he saw one. In late-1955, Matty raised $15.2 million in bank financing and purchased most of the RKO library’s television rights. General Teleradio kept the rights to the library for the six markets it owned and retained for two years the ability to sell national telecasting rights to 150 of the best films in the library; Matty took the rights to the rest of the country and the rest of the library. 96 310 Bartering and Liquidating the RKO Library Matty Fox had finally obtained a Hollywood studio library—what would he do with it? The industry’s assumption about Matty’s next steps shifted dramatically across the few weeks from mid-December 1955 to late-January 1956. “Although plans for the use of the library were not disclosed, it was speculated that Mr. Fox might turn over 200 of the better films and shorts for pay-as-you-see television,” wrote Broadcasting on December 19, 1955. 97 The speculation was highly plausible—Matty Fox had invested considerable time and money in Skiatron TV and voiced his confidence about the pay television model. The problem with the pay TV approach, though, was that Matty had borrowed large sums of money to acquire the library. The schedule of his interest payments could not wait for the FCC to make a decision on pay television. Instead of the long-term, dual tier strategy of distributing the best films to pay television and syndicating the mediocre productions to stations—the plan that Matty knew had the potential to gross the most amount of money—Matty Fox adopted a plan that was solely focused on the short-term and recouping his investment as quickly as possible. On January 20, 1956, just one month after the Broadcasting article, Matty Fox held a press conference in New York and announced a sales plan for the RKO library that Variety called “a radical departure from orthodox feature-selling techniques.” Matty Fox offered stations the ability to purchase, as a single package, the perpetual rights and 16mm prints to all 740 films in the RKO library. Fox called the distribution venture C&C Television, structuring the company as a subsidiary of C&C Super Corp., a soft drink 311 corporation that Matty Fox had bought into in the previous year by assigning his television assets to the corporation. 98 C&C Television was a company intended to go out of business as quickly as possible. The entire sales structure—one market, one deal—was designed for speed and efficiency. At its height, MPTV employed 180 people involved in the servicing of films to stations; there were the salesmen who cut the deals, the bookers who tracked film orders and shipments, the print inspectors who examined all returned prints. In contrast, C&C TV employed little more than a handful of salesmen, led by general manager and former MPTV executive Erwin “Buzz” Ezzes. Under the MPTV sales model, stations licensed a package of films for a finite number of “runs” on television. The MPTV salesmen would follow up regularly to gauge the station’s interest in licensing another package of films for another set number of runs. Matty Fox had no intention of letting his salesmen fall into the traditional routine of paying regular sales calls or mailing out Christmas presents to station owners at the end of each year. The entire C&C business model was one giant liquidation sale, disposing of all the licensing rights, one market at a time, until there were no leftovers. Matty Fox wanted to quickly amortize the purchase, pay off the debt, and pocket the profits. C&C faced a practical obstacle to executing the one market, one deal plan: few stations could afford to buy the full library. C&C’s asking price for a small or midsize market could exceed the costs of the station’s entire facilities. To remedy the cost problem and, equally importantly, insure speedy amortization for C&C, Matty Fox asked stations to pay through a combination of cash and barter time. Under the barter plan, the 312 station got unlimited plays of RKO films in perpetuity (later revised, in most but not all cases, to ten years). In return, Matty obtained ten 60-second advertisements every day for five years. Rather than reselling the barter time to a variety of advertisers, Matty Fox arranged for all the barter time to go to one client: International Latex, a manufacturer of brassieres, girdles, and other women’s accessories. International Latex agreed to purchase a minimum of $4 million worth of advertising over five years, so long as C&C TV obtained spot time on stations equivalent or greater to 75 percent of television homes (counted on the basis of the top 100 markets). If C&C TV exceeded the minimum and also obtained barter time in markets beyond the top 100, International Latex agreed to purchase up to $20 million in advertising. Before entering into a single station contract, Matty Fox had arranged a way to fully recoup his investment and turn a profit. 99 Later that year, Matty Fox published an open letter in the Hollywood Reporter addressed to “Mr. TV Station Owner.” Fox explained the trade of spot time for the RKO library and wrote, “we don’t believe you can afford to pass up investigating what we consider to be the single most profitable deal you’ve ever been offered to date.” 100 Some station owners liked the arrangement and struck up deals relatively quickly with Fox. Westinghouse President Donald McGannon preferred buying entire libraries to 52 film packages. Westinghouse’s purchase of the RKO library for its stations in Pittsburgh, San Francisco, and Cleveland was the second deal C&C closed (C&C’s first sale was to Walter Annenberg’s five Triangle stations in the Northeast). The multi-station deals reveal one of the ironies of the television syndication business—the amount that stations paid for films had to with the competitiveness of a market, not the number of television 313 set households. Despite the fact that Boston encompassed slightly more television households than San Francisco, that market rate for film licenses in San Francisco was double the prices of Boston. 101 Many more station owners, however, believed they could pass on Matty’s deal. Chicago’s WGN, the top film buyer in the biggest market C&C had available to sell, rejected outright the idea of purchasing a 740 film library. “Our present usage of feature film can be supported adequately with smaller and more flexible packages,” wrote WGN’s film director Elizabeth Bain to Matty Fox. Plus, because General Teleradio was withholding 150 of the best films for a national sale, WGN would lose out on exactly the quality product it most wanted. 102 Even after C&C TV responded to the station complaints in April 1956 by offering a “split” library deal—only 370 films, not the full 740—many stations still rejected the size of the package as too big. And those stations that did purchase the entire or split library found some unwelcome surprises; the RKO library included five Spanish language films that most stations considered unplayable in their markets. 103 Stations and, especially, station representatives found the barter provisions of the C&C contract even more pernicious. In a June 1956 memo to Matty Fox, Erwin Ezzes had to explain why his salesmen were not closing as many deals as expected. Ezzes explained: Stations refuse to commit six or ten spots a day five years in advance. They generally feel that their rate cards will increase over the next five years With one or two exceptions, every station has been converting the number of spots we are asking into their dollar value and then comparing that dollar value with their estimate of the dollar value of the film. 104 314 Spots generated a far larger profit margin for affiliates than network advertising. Although ten minutes of advertising time per day may seem small, Matty Fox was in fact asking stations for the most golden advertising time they could sell—and asking them to give it away at a value that was sure to increase in the years ahead. Nor did it help that the traditional sellers of spots, station representatives, were completely against the plan. Matty Fox was encroaching on their business, taking away commissions on spot sales that they believed should belong to them. The Station Representatives Association mailed literature to stations across the country telling them they were being offered a bad deal. 105 There was someone else who thought Matty was making the wrong deal: Eliot Hyman. And it’s here we return to the story that began this chapter—Fox and Hyman’s March 1956 meeting in Miami, Florida. Hyman had more to offer Fox, though, than an earful of criticism. Hyman had just negotiated one of the greatest deals in Hollywood history, purchasing the Warner Bros. film library. The Warner Bros. Library Sale The Hollywood community had anticipated the sale of the RKO library to television. RKO suffered from unstable management and an erratic owner; by the early- 1950s, the studio barely resembled its earlier productive self. Warner Bros., in contrast, had a legacy of stable family ownership and skillful leadership by Harry Warner, who ran the company from New York and left the production management to his younger brother Jack. Unlike RKO, Warner Bros. had also proven nimble at adapting to the changing 315 production trends—financing and distributing big budget pictures, based on hit novels and Broadway shows, like Mister Roberts (1955). For these reasons, the industry community acted with some surprise when Warner Bros. announced in February 1956 that it would sell its pre-1948 film library to television (the deal was later expanded to include feature films from 1948 and 1949, though the cut off date for short films remained August 1948). 106 The Motion Picture Herald called “the family’s sale of its whopping motion picture library… a strikingly uncharacteristic action, running totally contrary to the Warner tradition of rock-solid resistance to competition of any and all kinds.” 107 If the fact that Warner Bros. sold its library surprised contemporaries, then the price that Eliot Hyman paid may be an even greater surprise to us today: $21 million. Understanding the Warners’ Decision to Sell Why did Warner Bros. part with its library for $21 million, a sum that, in hindsight, appears a pittance for a collection that included 42 nd Street (1932), Yankee Doodle Dandy (1942), and Casablanca (1943)? By selling rather than leasing its library to television, Warner Bros. sacrificed the upside to what became the most lucrative aftermarket that the movie industry has ever known. The studio also relinquished its remake rights to all but a handful of films included in the deal. Commentators have pointed to Paramount’s 1958 sale of its pre-1948 library to MCA as one of the worst decisions in Hollywood history, but the terms of Warner’s deal were worse. Paramount sold its library of 700 pre-1948 features for $50 million; Warner Bros., in contrast, parted with 750 of its sound films and its pre-August 1948 shorts for a mere $21 million. 316 The question of why can only be answered by understanding the specific circumstances of the Warner family at the time of the sale. In February 1956, Harry, Jack, and Abe Warner were considering retirement and selling their stock to Serge Semenenko, head of the First National Bank of Boston. The brothers believed the sale of the library would increase the value of their stock. Thanks to the IRS’s favorable treatment of film library sales as capital gains (25 percent tax rate) rather than earned income (52 percent tax rate), the sale of the library would result in roughly $15 million after fees and taxes. 108 Few, if any, investors really knew what a studio library was worth. All investors, however, knew what $15 million dollars was worth: $15 million dollars. The Warners assumed this added liquidity would drive up the corporation’s stock price (the assumption ultimately proved false—leaving “observers in New York puzzled.”) 109 Nevertheless, less than three months after the library sale, Harry, Jack, and Abe Warner announced their plans to retire and sold their majority stock positions to Serge Semenenko’s syndicate. 110 Semenenko then allowed Jack Warner to buy back in and run the company, a move that caused a personal rift between Harry and Jack for the rest of their lives. 111 Warner Bros. was also willing to sell its library, rather than license it or create an in-house syndication division, because it substantially saved in taxes from an outright sale. After taxes and expenses, Warner Bros. netted $15,295,000 in profits from the sale of its library. 112 Taxes would have chipped away at even more of that $15,295,000 profit were it not for IRS’s favorable assessment of the sale. In July 1955, the Department of Treasury ruled that if a company “sells a quantity of its own fully depreciated films in one unusual and isolated transaction, the gain realized from the sale is taxable as a long- 317 term capital gain,” explained the Treasury Department in July 1955. 113 Far from being a trivial technicality, the capital gains distinction held a great deal of financial significance. The profits studios realized from renting films to exhibitors was ordinary income, taxable at the corporate rate of 52 percent. In contrast, capital gains—profits from the sale of a capital asset, such as a stock or piece of real estate—was taxable at a rate of 25 percent. 114 The math suddenly changed. Whereas a studio, after taxes, kept 4.8 million dollars of a 10 million profit earned from theatrical reissues, a studio kept 7.5 million dollars of a 10 million profit earned from a library sale. The studios gained an incentive to bring their film libraries to television—and to do so through an outright sale. Despite the Treasury’s 1955 ruling, Warner Bros. insisted that, prior to the agreement’s execution, the IRS review the sale and confirm Warners would receive the capital gains treatment. In June 1956, the IRS provided the desired confirmation: the studio’s sale of old celluloid qualified for capital gains treatment. 115 Thus, Warner Bros. was willing to sell its library to pump $21 million of lightly taxed income into the corporation, raise the company’s Wall Street valuation, and serve the immediate priorities of its founders. For Eliot Hyman, this represented an opportunity. Hyman, who had a working relationship with Serge Semenenko, acted quickly to capitalize upon the circumstances and achieve his goal of controlling a major Hollywood studio library. 318 Making the Deal When it came to financing an acquisition, Eliot Hyman and Matty Fox both excelled at locating unusual equity sources. Eliot Hyman financed the acquisition of the Warner Bros. library through leveraging the equity of a Canadian-based investment company called PRM. PRM was itself a corporate shell, all that remained after the liquidation of auto parts manufacturer Pressed Metals of America. PRM’s chairman, Louis Chesler, was in the words of Time Magazine, “an up-from-the-sidewalks Canadian financier and promoter” who became rich from bankrolling Canadian mining ventures. 116 Rumors circulated at the time—and continue to circulate—that Chesler had strong ties to organized crime and Meyer Lansky. It is not the place of this dissertation to confirm or deny these rumors, though I hope that the next person to take on the task of chronicling Chesler will avoid the abundant factual errors that litter the contemporary “true crime” histories addressing Hollywood, the mob, and Chesler. 117 No one denies, however, that Chesler was an imposing figure—a man who stood six foot, two inches tall, weighed over 250 pounds, and expected a handsome return on his investments. In 1956, Hyman, with the financial backing of Chesler, reached an agreement with Warner Bros. on the key terms of the deal. In exchange for $21 million, Warner would transfer to PRM its entire library of films released up through December 31, 1949. This would include all features, shorts, and some cartoons. In specific contractual terms, though, Warner Bros. was obligated to deliver 750 sound films. For a film to count toward that 750 threshold, Warner had to provide PRM with all of the talent contracts, 319 literary rights, and music clearances pertaining to the work. Although the Warner library included shorts and cartoons, PRM valued the feature films most highly. The agreement between PRM and Warner’s Brooklyn film lab provides a good sense of the comparative worth the companies assigned to these assets. For insurance purposes, the library was valued at “$25,000 per feature unprotected negative; $5,000 per cartoon unprotected negative; and $1,000 per short subject unprotected negative.” 118 These valuations, when multiplied by the estimated number of qualifying films, produce the library’s $21 million price tag. Selling the Library, Creating the Archive The sale of the library required Warner Bros. to undertake a massive internal coordination effort. 119 East Coast lawyers, West Coast lawyers, the Trust Department, and the studio’s Brooklyn laboratory had to centralize and catalogue materials in a way they had never done before. Ultimately, the sale of the Warner Bros. library required the creation of an archive. The studio enabled the possibility of this archive through the standardized practices of the Trust Department, which as discussed in Chapter Two, kept duplicate copies of legal agreements and attempted to solve the problem of dispersed materials getting lost across the studio’s offices spread out across New York City. Still, even with the New York Trust Department in place, the 1956 sale to P.R.M. forced Warner Bros. to centralize these materials in a new way. Warner Bros. ultimately delivered an archive that was an engine for making money through the exploitation of old movies. 320 Warner Bros.’ lawyers quickly encountered problems as they worked toward the 750 “qualifying” film threshold. Many contracts were missing. While the studio’s Legal and Trust Departments maintained excellent records of actors who had been under long- term contracts, the short-term contracts for loan-out or freelance performers proved harder to locate. Warner’s Burbank offices had no record of Kay Francis and Basil Rathbone’s loan-out contracts for the 1930 feature Notorious Affair. 120 The Trust Department similarly scrambled to locate actor Garry Beresford’s contract for Page Miss Glory (1935) so that the film could be included in the deal. 121 Eliot Hyman was particularly keen to obtain the full clearances for the early John Wayne westerns produced by Leon Schlesinger as negative pickups for Warner Bros. As discussed in Chapter Two, Schlesinger produced the six westerns, including Ride ‘Em Cowboy (1932) and The Big Stampede (1932), through combining action footage from silent Ken Maynard films with new sound footage of John Wayne, who was dressed to look like Maynard. This economizing move allowed Schlesinger to deliver the westerns to Warner Bros. for budgets under $28,000 per picture. After Wayne’s success in Stagecoach (1939), Warner Bros. reissued the six earlier B-westerns in 1939 and 1940 and charged rental fees nearly identical to when the films were first released. 122 Despite the profitability of the Schlesinger-Wayne reissues, despite John Wayne’s growing star power, the studio lost all the talent contracts related to this film. Schlesinger maintained the contracts in his own office, never depositing copies with the Legal Department. When Schlesinger died in 1949, the person who cleaned out his office threw the contract files into the garbage. 123 321 The process of “qualifying” and delivering all the features, cartoons, and shorts dragged on for years. In March 1958, two full years after the initial deal, Eliot Hyman met with Warner Bros. President Benjamin Kalmenson to discuss “various problems that have arisen under the Agreement of Sale.” Hyman expressed frustration about the numerous features and cartoons that Warner had never cleared or delivered. He also wanted the library of stock footage that Warner had created out of the movies that now belonged to him. 124 Despite Hyman’s long list of grievances, he had lost no time in exploiting the library of films that Warners had fully cleared and delivered. By the time of the March 1958 meeting, AAP had recorded over $35 million in TV contracts. Associated Artists—Packaging and Selling the Warner Bros. Library Through PRM’s financing, Eliot Hyman had succeeded in acquiring a major Hollywood studio library. For years, Hyman had been preparing for this moment, developing the necessary infrastructure and strategy to fully capitalize on a large library. If properly harnessed, Hyman believed the Warner library could provide the cash flow and derivative rights needed to catapult Associated Artists Productions into the ranks of the major Hollywood studios. The money from television sales would be channeled into new productions, many of which would be remakes of films from the library. The new productions would play theatrically, then move to television, insuring that AAP’s Television Department obtained a steady supply of fresh, high quality product. Something had happened, though, that Hyman had not anticipated—his old business partner, Matty Fox, was saturating the market with the all-or-nothing, perpetual rights 322 sales of the RKO library. Hyman was losing potential customers as stations signed with C&C TV, absorbed several hundred films, and committed substantial amounts of cash and spot time to C&C. Although no primary documents from the March 1956 Miami meeting are known to exist, the trade press accounts indicate that Hyman initiated the meeting with Matty Fox, who suspended the activities C&C’s salesmen as he listened to what his old partner had to offer. The reports suggest that Hyman proposed a merger of the RKO and Warner Bros. libraries; it would be a reprise of the Motion Pictures for Television arrangement, except this time with far more valuable collections of films and with Hyman, not Fox, retaining top executive control. The potential merger held clear benefits for Hyman, who stood to become the gateway for Hollywood libraries on television, allowing him to control supply and pace the release of film packages in a way that would drive up prices. But the merger contained benefits for Matty Fox too: the Warner Bros. library featured better stars and a better collection of films than RKO; plus, the rights to many of the best RKO films remained with General Teleradio until late-1957. The major disagreement was over control and sales plan. As The Billboard surmised, “Hyman seems to take a long-range view of feature film sales. Fox, on the other hand, seems to believe in the quick sell off as per his perpetual sales plan. This disparity in their viewpoints, it is said, is likely to make any merger attempt quite rocky.” 125 Once the negotiations in Miami reached an impasse and it became clear that Matty Fox would not veer from his “quick sell off” strategy, Hyman implemented a marketing plan designed to distinguish AAP from C&C on the basis of service and 323 flexibility. In a move timed to coincide with the April 1956 National Association of Broadcasters Convention in Chicago, AAP published a two-page advertisement in Broadcasting. The advertisement promised, “We at AAP feel that our job has only begun when we've sold you our product,” clearly differentiating the AAP customer experience from that of C&C, which considered a deal complete once C&C had delivered the 16mm print library and obtained the spot time for International Latex. AAP’s advertisement continued to emphasize premium service, describing the hospitality, strategic consultation, and promotional kits available to customers who “step[ped] through the doorway into the AAP suite” at the Conrad Hilton (See Figure 9). 126 Hyman’s attempts to distinguish AAP from C&C extended further. In contrast to Matty Fox’s all-or-nothing offer to stations for the full 740 film RKO library, Hyman divided the Warner Bros. library into 13 packages of 58 films each. Stations could buy just one package, all thirteen, or any number in between. Hyman claimed that each group of 58 films represented “balanced packages” containing “blockbuster pictures, good pictures, and program pictures” and films of every genre. 127 324 Figure 9. Eliot Hyman promoted Associated Artists Productions as offering stations the best movies and service of any television distributor. Broadcasting, 1956. 128 325 Whereas Matty Fox alienated station representatives through his bartering arrangement, Hyman deliberately courted station representatives as customers and allies. Hyman and his sales team, supervised by Bob Rich, understood that station representatives held considerable influence over both stations and sponsors. Alexander Russo argues that “station representatives functioned as ‘audience intellectuals’ who generated, explained, and translated knowledge about local stations to national agencies and sponsors.” 129 In their role as intermediaries, however, I would argue that station representatives also functioned as sponsor intellectuals, translating knowledge about the preferences of advertisers to local television stations, who were much more inclined to buy a film package if their station rep told them it contained the type of classy pictures that advertisers wanted. Salesman Donald Klauber, who traveled with Hyman from AAP to UAA and ultimately to Seven Arts, explained it this way to his sales team: “There are many deals that are made and lost at the rep level. Station management wants to know ‘Can we get the national business?’” Klauber emphasized “the impact that can be created from the rep side to reassure the station that they must have our package to maintain rating and commercial success.” 130 Since station reps generally represented a number of stations, Hyman’s sales team understood that winning over a station rep could lead to several station contracts in one fell swoop. Despite Hyman’s trumpeting of AAP’s superior service and flexibility, AAP’s Warner Bros. packages found detractors, particularly among station managers who 326 felt AAP forced them to accept pictures they did not want. For example, an AAP salesman approached the film director of Huntington, West Virginia’s WSAZ-TV with the offer to buy all 13 film packages for a price the director considered “fantastic” and “unrealistic.” The station director countered that he would be willing to buy a package of “42 or so” Humphrey Bogart films. The AAP salesman replied, “There are four or five Bogarts in each of the 13 groups, and you can have them all by buying all 13 of the groups.” AAP refused to break up a package or license the Bogart films individually. 131 Recognizing the possibility of additional revenues from the reissue market, Hyman established a theatrical subsidiary, Dominant Pictures Corp., and withheld some of the best Warner Bros. films from the television market. In fact, AAP intentionally grouped films into TV packages of 58 films so that it could withdraw as many as six films in each package for theatrical reissue yet always deliver a minimum of 52 films (a familiar number to stations and sponsors). In the second half of 1956 and throughout 1957, Dominant reissued old Warner Bros. pictures using the same basic model of states rights distribution (granting licenses to exchanges that act as sub-distributors) that W.H. Productions used in the 1910s and Realart used in the 1940s. Through reissuing The Adventures of Robin Hood (1938), King’s Row (1942), and dozens more films, AAP collected roughly $1 million in income by the end of 1957 (see Table 9). 132 327 Year Television Theatrical Reissue Income 1956 $ 13,872,059 $ 260,897 1957 $ 21,190,301 $ 763,537 1958 $ 10,202,793 $ 186,122 1959 $ 5,164,354 $ 133,554 1960 $ 4,862,093 $ 38,226 1961 $ 2,242,153 $ 12,473 Total $ 57,533,753 $ 1,394,809 Table 9. Warner Bros. Library Earnings Comparison: Television vs. Theatrical Income. Source: United Artists Collection. 133 When compared alongside AAP’s television revenue, though, the $1 million from reissues serves primarily as a sign of how dramatically the television syndication market had surpassed theatrical reissues. Within the first eight months of syndicating the Warner Bros. packages, AAP had entered into television contracts amounting to $21,782,465— more than the purchase price of the entire library. 134 By the end of 1957, AAP’s billings reached $35 million. Only select films could succeed on the theatrical reissue market, and, even then, the films generally played for low rentals at drive-in theaters showing double features. The rise of drive-ins created demand for low cost programming that resembled the reissue market during the 1930s, when Depression-era exhibitors turned to old movies as dependable, cheap content for double features. Eliot Hyman and Matty Fox recognized that the television market enabled a new method for monetizing libraries in aggregate form—not simply reissuing A-quality pictures from the vault but exploiting the entire vault. The major studios quickly raced to catch up. 328 The Studios, DOJ, and Unions follow Fox and Hyman into Television After Matty Fox and Eliot Hyman announced the availability of two of the best Hollywood studio libraries for television, the remaining studios quickly followed one another in leasing or selling their features to television. In early-1956, prior to the Warner Bros. sale, Columbia released 104 features through its television and 16mm distribution subsidiary, Screen Gems. 135 In May 1956, Twentieth-Century Fox licensed 52 features to National Television Associates (NTA) for $2.3 million, then closed a far bigger deal six months later, licensing 390 films to NTA for a $30 million minimum guarantee, plus a 50 percent ownership stake in the NTA Film Network. 136 As discussed earlier in the chapter, the Hollywood studios had long sought to control the television medium. Rather than bartering for advertising time, Fox chose to barter its library for ownership stakes in a new network and select television stations. MGM also traded library rights for ownership in television stations, though not before substantial industry speculation about what direction the studio would take. MGM owned the best library and was historically the studio with the most conservative approach to television. In March 1956, the Hollywood Reporter wrote that MGM might lease a portion of its library to ABC, home of the half hour MGM Parade series. The trade paper also noted that “reports have been circulating that deals for MGM product for TV are imminent for anywhere from $100,000,000 to $150,000,000. PRM, Inc., the firm that just acquired the Warners backlog, is also said to be interested in all or part of the MGM catalogue.” 137 Although Eliot Hyman and Louis Chesler had ambitions to merge the MGM and Warner Bros. libraries, they never appear to have considered making an 329 offer above $50 million. 138 Ultimately, MGM decided to keep television distribution in- house, adopting the C&C strategy of selling the entire 700 plus film library on an all-or- nothing basis as one package. Loew’s, parent company of MGM, sought ownership interests in stations across the country that were willing to give up equity in exchange for access to the MGM vault. 139 The last two studios to bring their libraries to television were Universal and Paramount. In August 1957, Universal granted Screen Gems a seven year license to its pre-1948 library for a $20 million guarantee. 140 And in 1958, a cash-hungry Paramount finally reached an agreement, selling rather than leasing its pre-1948 library for $50 million to the talent agency and television production powerhouse MCA. 141 Some commentators at the time considered the price tag excessive; thousands of pre-1948 Hollywood features had already reached the market and TV stations had entered into long-term contracts. However, MCA quickly proved the skeptic wrong, contracting for $8.9 million in 1958 from New York City television stations alone. Within two years, MCA had fully amortized its investment. 142 Before Universal and Paramount sold their feature libraries, though, the Department of Justice had already decided to turn its investigation into television block booking into a federal court case. In April 1957, nearly exactly one year after Hyman welcomed buyers to his company’s suite at the Conrad Hilton, the DOJ filed suit against AAP, C&C, Loew’s, National Television Associates, Screen Gems, and United Artists. 143 Although the DOJ saw block booking in black-and-white terms, we should remember that the marketplace reality was complex. Stations did not object to buying films in 330 packages; they needed packages, in fact, in order to efficiently buy programming and sell advertising. What stations resented was being forced to “eat the dogs,” a phrase they used to describe the accepting of poor or unusable films as part of a package. The syndicators counter-argued, complaining that the stations wanted to “cream” them—select packages of only the best films, leaving the rest behind and unsellable. Station representative Herb Jacobs recalled that New York station WCBS “creamed” AAP in 1956 by purchasing around 160 of the best pictures, leaving behind the “dregs” of the library that AAP had a difficult time selling. After AAP lost the chance to fully exploit its library in the nation’s most lucrative television market, the company resolved to hold firm and not break up the balanced packages. 144 Other distributors abandoned large-scale block booking as an unwinnable strategy. When C&C and Loew’s both chose to break up their libraries of over 700 films into smaller packages for certain markets, the decisions resulted from the demands of television stations, not because of the DOJ. In 1960, U.S. v. Loew’s, Inc. et al. reached the District Court of the Southern District of New York. Judge Archie Dawson ruled that the defendants had indeed run afoul of the Sherman Antitrust Act, noting that some, though not all, of the 68 station contracts submitted into evidence were examples of illegal block booking. In 1962, the case reached the U.S. Supreme Court, which upheld the District Court’s decision and mandated that television distributors price films individually and not simply offer entire libraries for lump sums. 145 By that time, though, the film-to-television marketplace had transformed. 331 One of the biggest changes arrived on April 18, 1960, the day the fortunes of Hollywood labor unions became irrevocably joined to film libraries. That day, the Screen Actors Guild ended a six-week strike against the major Hollywood studios. The Guild’s President, Ronald Reagan, and Executive Secretary, Jack Dales, reached an agreement with majors guaranteeing residual payments for movies shown on television. For the previous twelve years, SAG and most of the other Hollywood unions had been locked in a stalemate with the studios over the issue of compensation for films shown on television. The studios contended that they owned the copyrights to the films and could use them any way they like; the unions argued they deserved fair compensation for reuse on television. “Neither party has receded from its position,” noted the SAG Basic Agreement of 1952, a hundred page contract that enabled actors to continue working but forced the studios to withhold from television any film produced after August 1, 1948. 146 In 1960, Reagan and Dales reached a new agreement on behalf of SAG’s membership. SAG surrendered all residual claims for pre-1960 movies aired on television. In exchange, the studios contributed $2.65 million to the creation of a SAG pension and welfare fund and guaranteed SAG six percent of all future revenues from theatrical features shown on television. The agreement infuriated Mickey Rooney, Bob Hope, and other stars whose careers had peaked during the heyday of the studio system in the 1930s and 40s. Actors critical of the deal still call it “the Great Giveaway,” and considering the fact that Bob Hope comedies and Mickey Rooney musicals continue to play on television, there is no question that Reagan and Dales gave up a tremendous amount of possible income. 147 Yet for all current and future film actors, Reagan and 332 Dales obtained residual compensation for television usage (an objective that had eluded other union leaders for more than a decade) and received a relatively high percentage of television’s gross revenue (more than triple the royalty that actors receive from video and DVD sales). Equally importantly, the administrative challenges of managing a pension and welfare fund and dispersing residual payments fundamentally changed the structure of Hollywood unions. 148 SAG necessarily grew heavy in bureaucracy—a term which, along with unions more generally, became Reagan’s enemy in his subsequent political career. IATSE, the WGA, and the DGA all obtained similar residual arrangements and similarly adapted their infrastructures toward administering payments and benefits, services that keep the unions vital even in the absence of effective collective bargaining. Hollywood labor finally obtained compensation from the business of film libraries, irrevocably altering their long-term structures and, more immediately, opening the door for the studios to release all post-1948 feature films to television. Library Convergence Ironically, the joining of the Warner Bros. and RKO libraries, which nearly occurred in Miami in 1956, took place three years later in New York. United Artists acquired both the AAP and C&C libraries, turning itself from the studio that owned the smallest library in Hollywood to the studio with the largest. Although both C&C and AAP’s libraries ended up in the same hands, Hyman and Fox’s reason for selling out to United Artists differed. Each sale occurred as a natural progression of its leader’s 333 strategic vision. We should look at the United Artists purchases not simply as a convergence of film collections, but as a convergence of visions of the library business. Although the C&C sale to United Artists occurred after the AAP sale, the C&C sale is far easier to understand. Matty Fox’s entire business plan was to liquidate the RKO library and quickly recoup his investment. By entering into the International Latex agreement for up to $20 million in spot time, Fox mitigated his risk exposure and nearly guaranteed a profit. The one market, one deal approach of selling licenses and prints of the full 740 film RKO library was designed to minimize expenses incurred along the way. As an investor of Skiatron, Fox thought that good, desirable library films could earn significant money on pay television. But pay television’s wide scale infrastructure was stunted for most of the 1950s, and Fox needed to immediately start repaying his loans for the RKO acquisition. In 1959, United Artists purchased the C&C TV’s ownership stake in the RKO library for $6 million ($1.25 million in cash with the remainder to be paid out of incoming revenues). Even at this low purchase price, United Artists had a difficult time earning anything beyond its 25 percent distribution fee for the first several years it owned the RKO films. Because General Teleradio controlled the rights in New York City, LA, and four other markets, and because stations across the country still possessed 10-year licenses, unlimited runs, and cabinets filled with 16mm prints, there was a limited amount of fresh business that United Artists could push through. 149 Eliot Hyman’s motivation in selling the Warner Bros. library to United Artists was different. Granted, he recognized that the same Warner films would earn diminishing returns in subsequent sales, due to the availability of competing film packages that were 334 new to television. Nevertheless, Hyman’s personal ambition, more than any other factor, led him to sell the library to United Artists. For Hyman, the money from the library was never an end in itself. Instead, the library business was an engine through which he could expand his production operations and grow his company into a major Hollywood studio. Hyman envisioned the library playing key roles both in the company’s financing (cash flow and borrowing base) and productions (remakes based on the underlying rights). And with a steady diet of new productions, the library would replenish itself and Hyman would not be dependent on chasing the television rights to other producers’ films. Hyman envisioned the modern content library and the function libraries would play within media corporations. His biggest obstacle in achieving this vision was himself. Eliot Hyman was a Hollywood outsider. This fact did not hurt him within the television distribution business. He and his salesmen had cultivated relationships throughout the country among station owners, managers, and representatives. He was the best film-to- television distributor in the business, and even his enemies respected him for it. When it came to production, though, Hyman’s social network and skill set fell short. He lacked the relationships of Matty Fox, who came up through the movie business. He lacked access to the best talent and story material. Hyman tried to compensate for his weaknesses by hiring talent agent Ray Stark in October 1956 to run AAP’s West Coast offices. As a vice president at the Famous Artists Corporation, Stark excelled at packaging star clients, such as Kirk Douglas, with hot literary material. 150 He was a quintessential Hollywood insider with a reputation for good taste and relationships that reached beyond the movie colony into Broadway and the publishing business. 335 Even with Stark’s packaging skills and the revenue from television, though, AAP still lacked the financing power and theatrical distribution infrastructure of a major studio. AAP had two options. It could follow the path of other independent producers and set up productions at various studios on a one-off basis. But if Stark and Hyman set up an overall deal at one studio, then they could obtain consistent financing, better distribution terms, and a commitment to produce a minimum number of films annually. Hyman considered United Artists an attractive buyer for AAP because he knew he could leverage the library to obtain a favorable production arrangement. United Artists, for its part, was buying not just the library but also the team that had proven so capable in exploiting it, including Hyman and sales executive Bob Rich. In the summer of 1957, Hyman began discussing the potential sale of AAP with Robert Benjamin of United Artists. 151 By November 1957, the parties had reached an initial agreement, though it took another full year for the entire transaction to close. United Artists purchased AAP for $25,750,000 and used its assets (which included films, offices, and existing station contracts) and personnel to form a new subsidiary company, United Artists Associated, Inc. (UAA). Meanwhile, in a technically separate deal, Hyman, Stark, and silent partner Louis Chesler established an overall deal at United Artists for their newly formed production company called Seven Arts, which produced both Ray Stark packages of big name talent and classy literary material (The Misfits, 1961) and derivatives of old Warner Bros. movies (The Gun Runners, 1958, a remake of Howard Hawks’ To Have and Have Not, 1944). 152 Hyman succeeded in using the Warner Bros. library as a foundation to expand his grasp of the entertainment industry. 336 Conclusion Matty Fox and Eliot Hyman met in Miami in 1956 with two different visions of the business of film libraries. Within three years, both men sold the studio libraries they controlled to United Artists in order to advance those visions. In the decade that followed, Hyman’s strategy fared the best. Matty Fox wanted to amortize his purchase of the RKO library and turn a profit as quickly as possible so that he could reinvest his resources into pay television, the distribution platform he believed held tremendous promise for old movies, new movies, and sports. Beginning in 1955, he pitched his vision of viewers across the country paying one dollar per baseball game to the owners of the New York Giants and Brooklyn Dodgers, helping persuade both franchises to relocate to the West Coast. 153 Matty met frequently with Dodgers owner Walter O’Malley, who loaned over $120,000 to Skiatron TV. 154 In fact, many people lent money to Fox, who pledged stock in parent company Skiatron Electronics as collateral. When Matty Fox proved unable to deliver on his pay TV vision and pay back his debts, his lenders attempted to sell the stock, which, it turned out, had never been registered with the SEC. The SEC investigated and discovered additional financial fraud at Skiatron, along with the fact that Fox owed creditors over $3 million. 155 After the stock scandal, Fox never fully regained his prominence in the film or television industries, though he continued to promote the development of pay television until 1964 when a heart attack claimed his life at the age of 53. 156 Hyman, on the hand, briefly realized his ambition of using the business of film libraries as an engine to power a full-fledged studio. The years immediately following 337 AAP’s sale were rockier than expected. Hyman’s relationship with United Artists proved disappointing for both parties and they terminated the agreement after two years. Furthermore, two lawsuits challenged the legitimacy of the sale of AAP to United Artists: one, brought by a minority AAP shareholder, carried the plausible accusation that Hyman ignored his fiduciary duty by undervaluing the library in exchange for obtaining a personal production deal at United Artists; the second lawsuit, brought by National Telefilm Associates, claimed that it controlled AAP as a result of stock it purchased from another shareholder (AAP paid NTA $2 million to settle the case). 157 Ray Stark left Seven Arts in 1959, then rejoined two years later, establishing a pattern of partial commitment to the firm that extended throughout the Seven Arts’ existence. 158 Stark was one of the shrewdest and most talented film producers of his era. A born negotiator, Stark always negotiated the best deal for himself—charging Seven Arts dearly in cash and stock for his services, but reserving the right to produce some of the best projects independently of Seven Arts. When Stark fully resigned from the company in 1966, the top production duties fell to Eliot Hyman’s son, Kenneth Hyman, who was a capable producer but lacked Stark’s effectiveness, intuitiveness, and network of connections. Although Seven Arts had a mixed record as a producer, the company dominated the field of film-to-television distribution. After breaking away from United Artists, which retained ownership of the pre-1950 Warner Bros. library, Eliot Hyman reached agreements with Warner Bros. in 1960 and 1962 to distribute packages of its post-1950 films to television. 159 In 1963, Universal and Twentieth-Century Fox selected Seven Arts to distribute a combined total of 443 post-1948 features. 160 In 1960, some of the studios, 338 such as MGM and Columbia, ran subsidiary film-to-TV distribution divisions; the others chose to license films to a TV syndicator, though they no longer considered outright sales (as RKO, Warner Bros., and Paramount had all done earlier). By 1965, however, all of the studios had in-house TV distribution divisions. Television viewership had expanded and sales practices had simplified (the most lucrative deals were now with one of three national networks, which showed Hollywood movies regularly), eliminating the studios’ need for intermediary distributors. Hyman realized that Seven Arts’ access to studio library films was ending. The company could grow or it could die, but it could not remain on the same course. 161 Finally, in late-1966, Eliot Hyman, made the leap of which he had long dreamed, leveraging the television revenues and assets of Seven Arts to purchase Jack Warner’s holdings of Warner Bros. stock. In 1967, Seven Arts paid $178 million to acquire control of the entire Warner Bros. corporation, which was renamed Warner Bros.-Seven Arts Ltd. 162 Eliot Hyman now finally controlled a studio. Hollywood and Wall Street responded differently to the formation of Warner Bros.-Seven Arts. As Robert Gustafson notes in his essay on Warner Communications Inc. and media conglomeration, the Hollywood community perceived Seven Arts as an outsider. However, Seven Arts’ outsider status had far less to do with the reasons Gustafson cites—Seven Arts earned its money from television and was technically a Canadian corporation—than it did with the management team assembled to run Warner Bros.-Seven Arts. Eliot Hyman chose his son, Kenneth Hyman, to replace Jack Warner as the studio’s new head of production. The Hollywood community collectively scoffed at the idea that the 38-year-old Kenneth Hyman, who had produced several independent 339 films in England, could fill the seat occupied by the legendary Jack Warner. 163 If Ray Stark had remained with Seven Arts and assumed the top production duties, then the new Warner Bros. would have been run by an insider and perceived as more competitive. Wall Street did not place much more faith in Kenneth Hyman than Hollywood did, but the financial community still regarded the Warner Bros.-Seven Arts takeover as a triumph of television distribution and film libraries. Gustafson notes that the increasing amounts paid by the national networks for broadcasting Hollywood features increased “the book value of the film libraries of most motion picture companies… to two or three times the market price of their stock. This unequal relationship was widely recognized as a strong lure for attempted takeovers by other organizations.” Equally importantly, investors regarded the televising of film libraries as a dependable revenue stream—an important factor from the standpoint of paying off the debt from a leveraged buyout, funding a studio’s overhead, and delivering stable quarterly earnings. 164 A mere thirteen months after closing the Warner Bros. acquisition, Warner Bros.- Seven Arts itself became a candidate for conglomerate takeover. In August 1968, Warner Bros.-Seven Arts announced plans to merge with National General Corporation, but the Department of Justice rejected the merger due to the NGC’s theater holdings and likelihood that such a vertically integrated firm would violate the Sherman Antitrust Act. Immediately following the DOJ’s decision in December 1968, two different conglomerates announced their intention to acquire Warner Bros.-Seven Arts, prompting a short bidding war. In February 1969, Eliot Hyman and the Warner Bros.-Seven Arts board accepted Kinney National’s offer to the acquire the firm in a deal valued at $400 340 million. 165 Although Kinney National’s core businesses of parking lots and funeral homes positioned it as even more of a Hollywood outsider than Seven Arts, the conglomerate had recently purchased the Ashley Famous Agency and wanted to expand its presence in the entertainment and leisure industries. By appointing talent agent Ted Ashley as chairman and CEO of Warner Bros. (which dropped the Seven Arts name), Kinney National placed an experienced and effective Hollywood insider at the helm. 166 Why did Eliot Hyman sell Warner Bros.-Seven Arts so quickly after acquiring Warner Bros.? We can interpret the sale in one of two ways: one, an unqualified success; or two, a success for the shareholders of Warner Bros.-Seven Arts tinged with failure on the part of Hyman’s management team. National Kinney’s takeover was clearly a victory for the shareholders of Warner Bros.-Seven Arts; Kinney’s $400 million purchase price marked a significant premium over the $254 million in corporate assets that the newly formed Warner Bros.-Seven Arts had reported just eighteen months earlier. 167 Eliot Hyman, one of largest shareholders of Warner Bros.-Seven Arts, may have simply wanted to flip the corporation for a quick profit. If that was the case, the sale was an unqualified success. In the second scenario, National Kinney’s acquisition of Warner Bros.-Seven Arts happened so quickly precisely because of Eliot Hyman and Kenneth Hyman’s difficulties in managing a full-fledged studio. Companies that possess an attractive portfolio of assets but weak management teams are prime targets for corporate takeovers. If viewed under this light, Hyman’s sale of Warner Bros.-Seven Arts still earned substantial profits for him and his fellow owners (unlike Hyman’s sale of AAP to United Artists, no Seven Arts 341 shareholder could plausibly accuse Hyman of neglecting his fiduciary duty in the sale to National Kinney), yet the buyout was also an acknowledgement of Eliot Hyman’s limitations. In the early-1950s, Eliot Hyman believed that if he could purchase a film library, then he could use it as the foundation to build an entire studio. As the film-to- television distribution marketplace grew more lucrative from the mid-1950s into the 1960s, Hyman’s belief became a reality. Hyman used library television revenues to build up Seven Arts and acquire Warner Bros. Wall Street came to share Hyman’s vision of the library as an engine that powered an entertainment firm. However, neither Wall Street nor Hollywood believed that the Hymans should sit behind the managerial controls of that engine. Warner Bros.’ subsequent history reveals the ways in which libraries continued to gain value in the conglomerate era. In the early-1970s, Steven Ross expanded the reach of Warner Communications Inc. (the name selected when Kinney National split off its media companies from the rest of the corporation) by acquiring music, publishing, and cable companies. The cable acquisitions were particularly critical for the conglomerate’s future and subsequent mergers. Commentators portrayed the 1989 merger of Warner Communications with Time, Inc. as a marriage between film and publishing, but as Jennifer Holt has argued, it was the convergence of cable multi-system operators and pay cable services, like HBO, that really gave the new firm its strength. 168 Time Warner’s 1996 acquisition of Turner Broadcasting Systems added more cable systems, channels, and a tremendous film and television library to the conglomerate. Fittingly, the Turner assets included both the pre-1949 Warner Bros. and RKO libraries, which Ted Turner 342 had acquired when he purchased the MGM library from Kirk Kerkorian. Warner Bros., which owned Hollywood’s largest library of silent films at the dawn of the sound era, entered the new millennium with Hollywood’s largest collection of sound features. Although Eliot Hyman and Matty Fox did not manage studio libraries in Hollywood’s post-1970 conglomerate era, the future played out much as they had imagined. Matty Fox was correct that a fortune could be made showing film libraries on pay television. In the early-2000s, Hollywood movies account for most of the programming of numerous basic cable channels, such as TCM and AMC, and premium cable channels, such as HBO, Showtime, and Starz. Hollywood film libraries have also tapped a global market through sales to international satellite and cable systems. Matty Fox’s Skiatron TV was an early model of pay-per-view, which after decades of primarily serving the entertainment needs of hotel guests and professional wrestling fans has gained far wider adoption, thanks to the improved user interface, content offerings, and time- shifting features of video on demand (VOD). Both Matty Fox and Eliot Hyman recognized that libraries could serve as foundations for expanding an entertainment corporation’s reach, rather than simply using a library defensively (the MGM strategy of the late-1940s). The acquisition and exploitation of libraries has been central to the growth in the 1990s and early-2000s of Lionsgate, a young studio that annually earns roughly $250 million from its 8,000 film library. Containing Terminator 2, the Saw franchise, and scores of exercise videos, Lionsgate’s library provides the studio with a steady source of cash flow and borrowing base (collateral that banks will lend against). 169 343 The studios continue to defensively use the distribution of copies from the library as a profit center and barrier to entry against competitors. However, the studios have today embraced the aggressive uses for library derivatives on a scale comparable to the early sound film era. From 2005 to 2012, global multiplexes have been filled with Hollywood “reboots”—a term used to describe not simply the remake of or sequel to a film, but the launch of an entire franchise based on an existing library property. Warner Bros.’ enormous success in rebooting Batman, for instance, has led to an entire family of derivatives—beginning with the film Batman Begins (2005) and growing to two more features, The Dark Knight (2008) and The Dark Knight Rises (2012), the best-selling Arkham videogames, and enhanced sales of comic books, animated series, toys, and other licensed merchandise. Eliot Hyman and Matty Fox were intermediaries within a specific marketplace context. They served as middlemen between producers who owned films and the television stations that need content. When the owners of RKO and Warner Bros. proved willing to sell their libraries because of both professional and personal reasons, Fox and Hyman seized the opportunity, bringing the first two major Hollywood studio libraries to television. Yet Fox and Hyman were intermediaries in two additional ways. First, they mediated a transition in the studio system’s uses of film libraries: modeling the organizational and exploitation strategies that studios employed as they shifted from strategically subordinating reissues in the 1920s and 30s, to using libraries defensively as profit centers in the 1940s and 50s, to finally aggressively harnessing libraries as foundations for cross-media expansion in the 1960s and beyond. 344 Finally, Hyman and Fox mediated a new generation’s access to artistic and cultural history. In a 1968 essay entitled “The Late Show as History,” Time Magazine editorialized, “Old movies have become America's National Museum of Pop Art, the biggest repository of cultural artifacts outside the Smithsonian Institution…. Ghosts of America's past, they evoke the naivete, exuberance—and problems of a simpler society.” 170 Old movies on television were time machines, transporting viewers to an earlier culture’s aesthetic, moral, and social codes. To viewers of the Late Show, the time machine seemed randomly programmed—equally likely, on a given night, to call forth the 1930s, 40s, 50s, or even a foreign country in which, mysteriously, people spoke English through lips that moved out of sync with the words. The programming, however, was far less random than it appeared. The films that were shown came from packages, which the studios or intermediary distributors had licensed to stations for a fixed period of time and number of runs. By aggregating and selling “balanced packages,” the distributors forced stations to amortize their purchases by showing the full breadth of licensed material, ranging from great to terrible. Both in the 1950s and today, it is the films themselves that command our attention—moving us, entertaining us, disappointing us, surprising us. But it takes an industry to power the time machine, and only by studying that industry can we understand how and why we encounter certain ghosts of our shared cultural past. 345 Chapter Four Notes Abbreviations AMPAS – Margaret Herrick Library, Academy of Motion Pictures Arts and Sciences DPC – David Pierce Collection RJC – Richard B. Jewell Collection NARA-CP – National Archives Records Administration, College Park, Maryland NARA-NY – National Archives Records Administration, New York City NARA-R – National Archives Records Administration, Riverside, California USC SCA – School of Cinematic Arts Library Special Collections, University of Southern California WBA – Warner Bros. Archives, University of Southern California WHS – Wisconsin Historical Society, Madison, Wisconsin 1 Samuel Flatow, “Interview with Matthew Fox, United States v. Twentieth Century-Fox Film Corp., et al.,” 11 August 1955, DOJ Case File 60-211-76, Box 1137, Folder 1, NARA-CP. 2 New York Times, “NBC Calls Old Movies Peril to Network TV,” 28 May 1956, B6. 3 Richard Blakesley. “Good Old Movies View Like New!,” Chicago Daily Tribune, 14 September 1957, C7. 4 International Television Almanac of 1958 (New York: Quigley Publications, 1957), 12A, 14A. 5 Broadcasting, “PRM, C&C Tv May Merge Motion Picture Libraries,” 19 March 1956, 9. 6 Anderson, Hollywood TV; Boddy, Fifties Television; Hilmes, Hollywood and Broadcasting. 7 Blair Davis, “Small Screen, Smaller Pictures: Television Broadcasting And B-Movies In The Early 1950s,” Historical Journal of Film, Radio and Television 28, no. 2 (2008): 219–238; Blair Davis, “Made-From-TV Movies: Turning 1950s Television into Films,” Historical Journal of Film, Radio and Television 29, no. 2 (2009): 197–218; Gomery, Shared Pleasures; Kevin Heffernan, Ghouls, Gimmicks, and Gold: Horror Films and the American Movie Business, 1953-1968 (Durham, N.C.: Duke University Press, 2004); Pierce, “‘Senile Celluloid’”; Jennifer Porst, “The 16mm Case: Hollywood’s Feature Films and Early Television” (unpublished paper, 2010); Amy Schnapper, “The Distribution of Theatrical Feature Films to Television” (Ph.D. Dissertation, The University of Wisconsin - Madison, 1975); Segrave, Movies at Home. 346 8 Warner Bros., Inc. signed agreement with Michael Curtiz, 28 April 1931, Michael Curtiz Legal File, 2485B, WBA; Warner Bros. Annual Report (1951), 31 August 1951, WBA. 9 Christopher Anderson, Hollywood TV: The Studio System in the Fifties (Austin: University of Texas Press, 1994), 45. 10 William Boddy, Fifties Television: The Industry and Its Critics (Urbana and Chicago: University of Illinois Press, 1990), 42—62. 11 Hilmes, Hollywood and Broadcasting, 120–125. 12 Ibid., 125–130. 13 “Answers to Certain Interrogatories,” 1 October 1953, U.S. v. Twentieth Century Fox et al., Civil Case File 14354, Box 400, 8/6/53-6/21/54, Folder: Vol. 2, 2 of 2, Records of the District Court for the Southern District of California, Central Division 1938-1961, NARA-R. New York Times, “Movies at Home TV at $1 Fee Started,” 2 January 1951, 1. 14 Hy Hollinger, “Pay - See TV,” Challenge 3, no. 11/12 (1955): 14. 15 As Michele Hilmes argues, “the FCC’s perception of its duty to protect the existing system of ‘free’ broadcasting from outside innovation or competition, testifies to the success of the broadcasting industry in equating the public interest with its own.” Hilmes, Hollywood and Broadcasting, 131. 16 Samuel Goldwyn, “Hollywood in the Television Age,” Hollywood Quarterly 4, no. 2 (December 1, 1949): 145. 17 Ibid. 18 Daily Variety, “20 th ‘Likely to Sell Pix to TV,” 14 April 1953; Hal Humphrey, “Skouras, No Santa Claus,” The Mirror, 21 April 1953, 35; 19 Hollywood Reporter, “Lush Days Ahead for Reissues,” 24 February 1953, 1, 11; Hollywood Reporter, “Re-issue Record Set in 1953-54,” 22 July 1954, 1, 9. 20 Jack Warner quoted in Christopher Anderson, Hollywood TV: The Studio System in the Fifties (Austin: University of Texas Press, 1994), 165. 21 Anderson, Hollywood TV, 187–190. 347 22 Ibid., 156—254. 23 Turner Classic Movies, “TCM Monthly Schedule – January 2012,” http://www.tcm.com//schedule/monthly.html (accessed on 5 January 2012). 24 David Pierce, “'Senile Celluloid': Independent Exhibitors, the Major Studios and the Fight over Feature Films on Television, 1939-1956,” Film History 10, no. 2 (1998): 145. 25 “Findings of Fact and Conclusions of Law,” 10, U.S. v. Twentieth Century Fox et al., Civil Case File 14354, Box 402, Folder 7 of 24, Records of the District Court for the Southern District of California, Central Division 1938-1961, NARA-R. 26 “Television Report, Period Ended 26 March 1949,” Television Data, Eagle-Lion Legal Collection, Box 15, Folder 5, US MSS 99AN/1G, WHS. 27 Eddie Mannix Ledger, AMPAS; C.J. Tevlin Ledger, Rick Jewell Collection. 28 David Savage, Manager of WCBS-TV’s Film Department, “Film: TV’s Celluloid Celebrity,” Broadcasting, 15 September 1952, 82, 113. 29 Broadcasting, WDTV Advertisement, 24 March 1952, 62 30 Sidney Lohman, “News of TV and Radio,” New York Times, 19 September 1954, X15. 31 Roger Ebert, Roger Ebert’s Movie Yearbook 2009 (Kansas City, Missouri: Andrews McMeel Publishing, 2009), 831. 32 Wall Street Journal, “Movies for TV: Forty Recent Flickers Mat Soon be Seen on Your Set,” 24 March 1954, 1. 33 Jack Gould, New York Times, “TV: $25,000,000 Bargain,” New York Times, 21 July 1955, 47. 34 New York Times, “NBC Calls Old Movies Peril to Network TV,” 28 May 1956, B6. 35 Ibid.; Sarnoff’s speech reproduced in Telefilm, “An Independent Station Manager Answers a Network President,” November-December 1956, 14—15. 36 Boddy writes: “striking about such stirring network defenses of live television in 1955 and 1956 is how misleading Sarnoff's color-coded signposts are as markers to paths the networks were already following. The proportion of live primetime programming on all 348 three networks fell from 50 to 30 percent in 1955—56, and the number of live drama programs in prime time on the three networks fell from fourteen in 1955 to seven in 1957 to one in 1959. The precipitous decline of the New York live anthology drama programs and their replacement by Hollywood telefilms were not the results of a single network's strategy… but represented a fundamental re-calculation by the networks of their relations with affiliates, program producers, and advertisers.” William Boddy, “The Studios Move into Prime Time: Hollywood and the Television Industry in the 1950s,” Cinema Journal 24, no. 4 (July 1, 1985): 29. 37 Hilmes, Hollywood and Broadcasting, 148—149. 38 Harvey J. Levin, “Economic Structure and the Regulation of Television,” The Quarterly Journal of Economics 72, no. 3 (1958): 424–428. 39 The term “TV spot” is sometimes used as a synonym for any TV commercial. However, spot advertising as an economic and marketing model is something different and should not be confused with commercials or the “magazine” format of advertising. Over the course of the 1950s, the television industry underwent a major shift in advertising structure, moving from radio’s model of single sponsored programs to the model with which we are now familiar—programs interrupted by spots from multiple advertisers. NBC’s head of programming, Sylvester “Pat” Weaver, has generally been credited with originating the “magazine concept” of advertising. By having multiple sponsors buy into a single program, networks gained creative power both over the production of the program and its scheduling. A popular program could lead-in to another program targeting a similar audiences, rather than abruptly transitioning to whatever the sponsor who had purchased that hour of airtime decided to present. Commercial interruptions by multiple sponsors became more common in the spot advertising model, just as it did in the network advertising model. 40 Hilmes, Hollywood and Broadcasting, 148—149. 41 My understanding of the spot advertising model is indebted to Russo, Points on the Dial, 19–46, 115–150. 42 International Television Almanac of 1958 (New York: Quigley Publications, 1957), 14A. 43 Boddy, “The Studios Move into Prime Time,” 29–30. 44 Ibid. 45 Ibid., 28. 349 46 Telefilm, “An Independent Station Manager Answers a Network President,” November-December 1956, 14—15; Ibid., 29. 47 Bosley Crowther, “Remember This One?,” New York Times, 14 March 1954, X1. 48 Bosley Crowther, “Sale of Birthrights,” New York Times, 11 March 1956, 129. 49 Thank you to Ned Comstock for calling my attention to the Hal Humphrey Collection in the USC Cinematic Arts Library’s Special Collections. My discussion of Humphrey, and this entire chapter, benefited from reading the columns Humphrey wrote about movies on television and the clippings file he kept on this same topic. 50 Hal Humphrey, “Hey, the British are Coming,” The Mirror, 28 June 1951, 43. 51 Hal Humphrey, “Skouras, No Santa Claus,” The Mirror, 21 April 1953, 35. 52 Hal Humphrey, “Some Tips for TV’s Chief,” The Mirror. 24 September 1951, 23. 53 As an example of a protest against a new television program based on racial stereotypes, the NAACP protested CBS’s adaptation of the radio series. Amos n’ Andy for television. Broadcasting, “Amos n’ Andy: NAACP Denounces Show,” 9 July 1951, 30. 54 Al Sweeney, “Show Business,” The Washington Afro-American, 13 April 1954, 7. 55 Masso W. Satow (National Director of the Japanese American Citizens League) to unnamed recipient, 22 March 1957, DOJ Case File 60-211-76, Box 1138, NARA-CP. 56 David O. Selznick, “Old Movies and TV,” Daily Boston Globe, 2 May 1954, B32. 57 Richard Butsch, The Making of American Audiences: From Stage to Television, 1750- 1990 (Cambridge, UK and New York: Cambridge University Press, 2000), 235–266. 58 Chicago Daily Tribune, “Wife Enjoys Late TV Shows, Despite Wallop They Pack,” 21 October 1955, 9. 59 Larry Wolters, “New TV Cities Will Receive Many Surprises,” Chicago Daily Tribune, 28 September 1952, A12. 60 Mrs. Pat Vasey to Justice Department, 25 May 1956, DOJ Case File 60-211-76, Box 1137, NARA-CP. 350 61 The Baltimore Sun, “TV Film Shows Popular,” 3 December 1950, C28; The Hartford Courant, “Are All TV Movies More Than Thirty Years Old?” 16 June 1952, 8. 62 Susan Sontag, “Notes on Camp,” in Against Interpretation and Other Essays (New York: Picador, 2001), 292. 63 For reappraisals of Sontag and camp, see Moe Meyer, ed., The Politics and Poetics of Camp (London; New York: Routledge, 1994). 64 Daytona Beach Morning Journal, “Old Movies are Boon to Inveterate TV Viewers,” 22 June 1957, 2. 65 Complaint, 22 July 1952, U.S. v. Twentieth Century Fox et al., Civil Case File 14354, Box 399, 8/6/53-6/21/54, Folder: Vol. 1, 1 of 2, Records of the District Court for the Southern District of California, Central Division 1938-1961, NARA-R. 66 District Court Chief Judge Yankwich, “Opinion,” 3 December 1955; District Court Chief Judge Yankwich, “Judgment,” 23 December 1955, U.S. v. Twentieth Century Fox et al., Civil Case File 14354, Box 402, Folder 6 of 24, Records of the District Court for the Southern District of California, Central Division 1938-1961, NARA-R. 67 Leonard R. Posner to Victor H. Kramer, “Film Block Booking – TV Industry,” 4 November 1953, Folder 1, DOJ Case File 60-211-76, Box 1137, NARA-CP. 68 Daniel H. Margolis to Victor H. Kramer, “‘Block-booking’ in the Television Industry – Interview with Mark Hawley,” 30 October 1953, DOJ Case File 60-211-76, Box 1137, Folder 1, NARA-CP. 69 Samuel Flatow, “Interview with Matthew Fox, United States v. Twentieth Century-Fox Film Corp., et al.,” 11 August 1955, DOJ Case File 60-211-76, Box 1137, Folder 1, NARA-CP. 70 “Plaintiff’s Witness List,” 25 August 1955, U.S. v. Twentieth Century Fox et al., Civil Case File 14354, Box 402, Folder 4 of 24, Records of the District Court for the Southern District of California, Central Division 1938-1961, NARA-R. 71 Hyman’s name is absent from the “List of Witnesses,” undated, which includes dates and names of all witness appearances from Oct. 4 through Nov. 3, 1955, U.S. v. Twentieth Century Fox et al., Civil Case File 14354, Box 402, Folder 6 of 24, Records of the District Court for the Southern District of California, Central Division 1938-1961, NARA-R. 351 72 Daily Variety, “Matty Fox Resigns UI Post,” 22 December 1950, 1. 73 Bill Davidson, “Fox of the Indies,” Collier’s, April 23 1949, 63-66. 74 Time, “Foreign Trade: We Like Matty,” 19 July 1948, 87. 75 Confidential Memo re: “Fox-Indonesian Contract,” 10 November 1949, Folder: “Economic Development – Indonesia – 1948-1950,” RG 59 General Records of the Department of State, Subject Files, 1944-1952, Box 38, NARA-CP. 76 The U.S. State Department emphasized that Matty Fox’s agreement was limited to trade with the government of Indonesia and did not extend to all trade with the nation. Confidential Memo re: “Fox-Indonesian Contract,” 10 November 1949, Folder: “Economic Development – Indonesia – 1948-1950,” RG 59 General Records of the Department of State, Subject Files, 1944-1952, Box 38, NARA-CP. 77 David Pierce, “'Senile Celluloid': Independent Exhibitors, the Major Studios and the Fight over Feature Films on Television, 1939-1956,” Film History 10, no. 2 (1998): 150. 78 Broadcasting, “Madden Made MPTV Programming V.P..” 24 August 1953, 35. 79 Variety, “Eliot Hyman, Pioneer in TV and Syndie Fields, Dies at 75,” 30 July 1980, 52, 66; Warner Bros.-Seven Arts, “Biography of Eliot Hyman,” Biographical Clippings File of Eliot Hyman, AMPAS; Associated Artists Productions Corp., Annual Report 1956, 11 April 1957, 15. 80 The Billboard, “Motion Pictures for Television is Standout First-Place Winner,” 1953 March 21, 12. 81 Feiner, Dick, “Just Don’t Schedule It on Sunday Afternoon… Everybody’s Playing Polo!,” in Fridays With Art: Insiders’ Accounts of the Early Days of the TV Biz by Some of the Guys Who Made It Work, ed. Dick Woollen (Burbank, California: Parrot Communications International, Inc., 2003), 211. 82 Fortune, “RKO: It’s Only Money,” May 1953, 123-127. 83 Ibid. 84 Wall Street Journal, “RKO’s New Owners,” 16 October 1952, 1; Wall Street Journal, “More Background on RKO’s New Owners: Saga of the Oilman,” 16 October 1952, 1. 85 Daily Variety, “Matty Fox Bids for RKO Control,” 12 November 1952, 1, 9. 352 86 Variety, “Matty Fox as RKO Insurance?,” 19 November 1952, 5. 87 Variety, “Major Releases Now Moving Into TV; AA’s Big Bundle of 52,” 29 September 1954, 44. 88 Broadcasting, “AAP Television-Theatre Plans Told by Hyman,” 15 November 1954, 56. 89 Variety, “Eliot Hyman (This Time) is Bidder for RKO Old Film Inventory but Grainger Flatly Denies any Sale,” 6 October 1954, 4; Daily Variety , “Boston’s 1 st Nat’l Bank, Eliot Hyman Dickering with Hughes for RKO,” 8 December 1954,1, 4; Daily Variety, “Report 4 Theatre Chains, 2 Banks Trying Buy RKO, but NT’s Prexy Enters Denial,” 28 December 1954, 1. 90 Dates and durations of Universal executive employment is listed in “Answer of Defendant Universal Pictures Company, Inc. to Plaintiff’s Interrogatories dated March 4, 1953,” Schedule 2 – re: Interrogatory 18, U.S. v. Twentieth Century Fox et al., Civil Case File 14354, Box 399, 7/22/52-8/5/53, Folder: Vol. 1, 2 of 2, Records of the District Court for the Southern District of California, Central Division 1938-1961, NARA-R. 91 Broadcasting, “Roach to Make Three-Year TV Series,” 10 August 1953, 35. 92 Daily Variety, “Matty Fox 2d Biggest in Skiatron,” 31 March 1954, 4, 20. 93 Daily Variety, “Guild to Distrib 700 Old Pix for Matty Fox,” 1 February 1955, 1, 14. 94 Lew Blumberg, “Total Recall,” in Fridays With Art: Insiders’ Accounts of the Early Days of the TV Biz by Some of the Guys Who Made It Work, ed. Dick Woollen (Burbank, California: Parrot Communications International, Inc., 2003), 358. 95 Iver Peterson, “Thomas F. O’Neil, 82, Ex-Chief of RKO Dies,” New York Times, 17 March 1998. 96 General Tire & Rubber Company, Annual Report for Year Ended November 30, 1955, 22. 97 Broadcasting, “Deal by Fox for RKO Films Seen Closed by Year’s End,” 19 December 1955, 40. 98 Variety, “All 740 RKO Pix Being Released Simultaneously with Buyers Getting Perpetual Rights; Pay-as-You-Play,” 25 January 1956, 29; Barron’s National Business 353 and Financial Weekly, “Films for Television: New Distributing Firms Vie to Feed the One-Eyed Monster,” 18 June 1956, 5. 99 Variety, “All 740 RKO Pix Being Released Simultaneously with Buyers Getting Perpetual Rights; Pay-as-You-Play,” 25 January 1956, 29; Barron’s National Business and Financial Weekly, “Films for Television: New Distributing Firms Vie to Feed the One-Eyed Monster,” 18 June 1956, 5. 100 Matthew Fox, “An Open Letter to TV Station Owners and Managers” [Advertisement], Hollywood Reporter, September 14, 1956, 5-8. 101 Leonard R. Posner, “Interview with Officials of Westinghouse Broadcasting Company—The Block Booking Cases,” 6 May 1957, DOJ Case File 60-211-76, Box 1137, NARA-CP; Schedule of C&C Contracts, undated, U.S. v. Loew’s Inc., et al., Case 119-24, Box 410, C&C Super Corp. Documents, Records of the District Court of the Southern District of New York, NARA-NY. David Pierce makes a similar point in Pierce, “‘Senile Celluloid’,” 145. 102 Elizabeth Bain to Matty Fox, 27 January 1956 and 15 February 1956, U.S. v. Loew’s Inc., et al., Case 119-24, Box 410, C&C Super Corp. Documents, Records of the District Court of the Southern District of New York, NARA-NY. 103 Leonard R. Posner, “Interview with Officials of Westinghouse Broadcasting Company—The Block Booking Cases,” 6 May 1957, DOJ Case File 60-211-76, Box 1137, NARA-CP. 104 E.H. Ezzes to Matthew Fox, 19 June 1956, U.S. v. Loew’s Inc., et al., Case 119-24, Box 410, C&C Super Corp. Documents, Records of the District Court of the Southern District of New York, NARA-NY. 105 Variety, “Reps Rap Matty’s ‘Barter’ System,” 25 January 1956, 29. 106 Daily Variety, “Eliot Hyman Combine Sews Up TV Rights To Old Warner Pix,” 29 February 1956, 10; “AGREEMENT OF SALE,” 20 June 1956, Warner – PRM Closing Papers, Sale Agreement, F002183, Box 12707A, WBA. 107 William R. Weaver, “Hollywood Guessing the Warner Future,” Motion Picture Herald, 19 May 1956, 36. 108 The capital gains tax treatment was a potential deal-breaker for the library sale. Despite the Treasury Department’s 1955 ruling that established library sales as capital gains, Warner Bros. insisted that the IRS issue a ruling specific to its company that the 354 profits represented capital gains rather than ordinary income. Otherwise, Warner Bros.’ contract with P.R.M. would be considered void and Warner Bros. would retain its library. In June 1956, the IRS provided the ruling that Warner Bros. and PRM/AAP had hoped for and treated the old films as assets that generated capital gains when sold. Each dollar of the $21 million sale price was, in a sense, worth more to Warner Bros. because taxes would have higher on the ordinary income from syndicating films to television. Warner Bros. Annual Report (1956), August 31, 1951, 2. WBA; Wall Street Journal, “P.R.M. Reports ‘Favorable’ Tax Ruling on Film Purchase, June 14, 1956, 26. 109 Variety reported: “Failure of Warner Bros. stock to rise in the wake of the $21,000,000 tv deal for its library, has observers in New York puzzled. Stock closed at 21 Friday (23) after reaching a year’s high of 23 ¾ in the wake of the deal. On the basis of 2,000,000 shares outstanding (including the 600,000 held by Warner brothers), the $21,000,000 cash works out to $10 a share and, sooner or later, should show up. Some insiders are wondering whether the price of WB stock is being deliberately kept down while a group is purchasing shares in anticipation of a later rise.” Variety, “WB Stock Status After Video Deal Surprises Trade,” March 28, 1956, 26. 110 When the brothers Warner sold out to Semenenko, the Motion Picture Herald reported: “Professional Hollywood took the news of the Warner sale calmly. There had been some conditioning for it. The family’s sale of its whopping motion picture library had been a strikingly uncharacteristic action, running totally contrary to the Warner tradition of rock-solid resistance to competition of any and all kinds.” William R. Weaver, “Hollywood Guessing the Warner Future,” Motion Picture Herald, May 19, 1956, 36. 111 Anderson, Hollywood TV, 222–223. 112 Warner Bros. Annual Report (1956), August 31, 1951, 2. WBA. 113 Rev. Rul. 55-706; 1955-2 C.B. 300 (July 1955). 114 W.R. Wilkerson, “TradeViews,” Hollywood Reporter, February 13, 1956, 1 115 Warner Bros. Annual Report (1956), August 31, 1951, 2, WBA; Wall Street Journal, “P.R.M. Reports ‘Favorable’ Tax Ruling on Film Purchase, June 14, 1956, 26. 116 Time, “Tycoons: A Fast $70 Million,” 30 March 1959, 84. 117 Lazy factual errors litter the stories of Chesler’s connections to the mob. In Tim Adler’s recent true crime eBook Hollywood and the Mob: Movies, Mafia, Sex and Death (London: Bloomsbury, 2011), for instance, Chapter 8 begins with an account of Eliot 355 Hyman that credits him with purchasing RKO in July 1955 and selling the studio three years later—an error that apparently conflates Eliot Hyman with both Matty Fox and Thomas O’Neil of General Teleradio. Another example can be found in Alan A. Block, Masters of Paradise: Organized Crime and the Internal Revenue Service in the Bahamas (Piscataway, New Jersey: Transaction Publishers, 1991), 36. Block writes: “Because of an antitrust action three years earlier [in 1953], Warner Brothers had been split, with part of it becoming the Stanely Warner Corporation (Stanley and Jack Warner were, of course, the Warner brothers), a movie theater operating company.” None of the brothers was named “Stanley.” Warner Bros. acquired the Stanley Corporation exhibition chain decades earlier. 118 LABORATORY PLEDGEHOLDER’S AGREEMENT, 23 November 1956, ACE Pledge Termination 9/57, 366780, Box 12707A, WBA; “AGREEMENT OF SALE,” 20 June 1956, Warner – PRM Closing Papers, Sale Agreement, F002183, Box 12707A, WBA. 119 For another discussion of the Warner Bros. library sale and the studio’s internal coordination effort, see Frick, Saving Cinema, 72–74. 120 Harold Berkowitz to Trust Dept., 14 March 1956, AAP Correspondence (formerly P.R.M.), 16062B (Folder 1 of 4), WBA. 121 Ibid. 122 The Strand Theater in Red Bank, New Jersey, for instance rented the original cycle of Schlesinger-Wayne westerns in 1933 under the terms of $20 per picture and then booked the same films in 1940 for $17.50 per picture. See: Exhibition Contracts for Schlesinger- Wayne westerns in “Strand Theater, Red Bank, NJ,” F002451, Box 14309A, WBA 123 George Schiffer to N.H. Moray, Re: SCHLESINGER PRODUCTIONS, 12 April 1956, “TELEVISION DEAL P.R.M. – WARNER, Correspondence bet. Everyone re var. properties,” F002246, Box 12707B, WBA. 124 Eliot Hyman to Benjamin Kalmenson, 26 March 1958, Excluded Photoplays, F000822, Box 12707A, WBA. 125 The Billboard, “Talks in Wind for a Merger of Warner, RKO Libraries,” 24 March 1956, 4. 126 Broadcasting, AAP Advertisement, 16 April 1956, 60—61. 356 127 Eliot Hyman – Direct Examination, Stenographer’s Minutes, 25 April 1960, 5583, U.S. v. Loew’s Inc. at el.,Case 119-24, Box 412, Records of the District Court of the Southern District of New York, NARA-NY. 128 Ibid. 129 Russo, Points on the Dial, 36. 130 Because Seven Arts acquired Warner Bros. in 1967, some of Seven Arts’ corporate documents are housed in USC’s Warner Bros. Archive. The Seven Arts letter regarding station reps comes from Donald Klauber to All Salesmen, 22 March 1961, TV DISTRIBUTION: “FILMS OF THE FIFTIES”, F002381, Box 14866, WBA. 131 Leonard R. Posner, 21 May 1957, “Interview with Lawrence (‘Bud’) Rogers, General Manager, and Joseph Ferguson, Film Director, WSAZ-TV, Huntington, West Virginia,” Case 60-211-76, RG 60 General Records of the Department of Justice, Antitrust Division, Classified Subject Files, 1930-1987, Class 60 Litigation Case Files, Box 1137, File 3, NARA-CP. 132 Motion Picture Herald, “To Reissue 104 Warner Films,” 21 April 1956, 24; Henry J. Zittau to Herbert T. Schottenfeld, 23 January 1962, “Re: ALCOTT V. ELIOT HYMAN,” Eliot Hyman-Ray Stark Deals, Box 4, File 15, MCHC82-046, United Artists Collection, WHS. 133 Henry J. Zittau to Herbert T. Schottenfeld, 23 January 1962, “Re: ALCOTT V. ELIOT HYMAN,” Eliot Hyman-Ray Stark Deals, Box 4, File 15, MCHC82-046, United Artists Collection, WHS. 134 Month-by-month contract accounting for 1956 is listed in Associated Artists Productions Corp., Annual Report 1956, 11 April 1957, 4. 135 Pierce, “‘Senile Celluloid’,” 158. 136 The Washington Post, “20 th Century Fox Lease,” 17 May 1956, 32; Wall Street Journal, “Twentieth Century-Fox Leases 390 Films, Gets 50% TV Network Share,” 2 November 1956, 5. 137 Hollywood Reporter, “RKO, Warners Only Majors Not Negotiating Sale of Backlog Pix,” March 6, 1956, 1. 357 138 Hollywood Reporter, “Huge MGM TV Backlog Deal Set: Chesler Group Reported Paying $50-75 Million for Features, Shorts Backlog,” May 14, 1956, 1; Variety, “Canada’s Chesler Brand on Metro Vaulties Today?,” 16 May 1956, 3. 139 Kerry Segrave, Movies at Home (Jefferson, NC: McFarland & Company, Inc., 1999), 46—47. 140 Wall Street Journal, “Screen Gems Gets TV Rights to 600 Universal Features,” 5 August 1957, 6. 141 Douglas Gomery, The Studio System: A History (London: BFI, 2005), 95. 142 Douglas Gomery, Shared Pleasures: A History of Movie Exhibition in the United States (Madison, Wisconsin: University of Wisconsin Press, 1992), 247—249. 143 The other defendants were Loew’s, C&C, National Television Associates, Screen Gems, and United Artists. Wall Street Journal, “Firms Hit Charges,”19 April 1957, 12; U.S. v. Loew’s Incorporated et al., 371 U.S. 38, 38 (U.S. 1962). 144 Leonard R. Posner, 15 July 1957, “Interview with Herb Jacobs, TV, Inc.,” 6, Case 60- 211-76, RG 60 General Records of the Department of Justice, Antitrust Division, Classified Subject Files, 1930-1987, Class 60 Litigation Case Files, Box 1137, File 3, NARA-CP. 145 U.S. v. Loew’s Inc. et al., 371 U.S. 38, 41 (U.S. 1962); Wall Street Journal, “High Court Bars Movie Distributors’ Block Sales of Films to TV Stations,” 6 November 1962, 26. 146 “Producer – Screen Actors Guild Codified Basic Agreement of 1952,” Tom Kemper Collection. 147 The circumstances surrounding “the Great Giveaway” are described in Marc Eliot, Reagan: The Hollywood Years (New York: Three Rivers Press, 2008); Dan E. Moldea, Dark Victory: Ronald Reagan, the MCA, and the Mob (New York: Viking Adult, 1986). 142. 148 Thank you to Nina O’Brien for several helpful conversations about Hollywood unions as administrators of benefits and intermediary services. For a discussion how residuals have increased interdependency between Hollywood labor and management, see Alan Paul and Archie Kleingartner, “Flexible Production and the Transformation of Industrial Relations in the Motion Picture and Television Industry,” Industrial and Labor Relations Review 47, no. 4 (July 1, 1994): 663–678. 358 149 Vincent E. Giovinco to Leon Goldberg, 1 February 1962, “Re: RKO Library” and Seymour M. Peyser et al to Arthur B. Krim, Undated Draft, “Re: Eliot Hyman,” in Eliot Hyman-Ray Stark Deals, Box 4, File 15, MCHC82-046, United Artists Collection, WHS. 150 Associated Artists Productions Corp., Annual Report 1956, 11 April 1957, 16; Thomas M. Pryor, The New York Times, “New Movie Firm Formed on Coast,” October 23, 1956, 39. 151 “Draft – AAP,” 31 January 1958, Eliot Hyman-Ray Stark Deals, Box 4, File 15, MCHC82-046, United Artists Collection, WHS. 152 Although UAA and Seven Arts Productions were technically separate, the two entities are discussed within individual United Artists documents. Seymour M. Peyser et al to Arthur B. Krim, Undated Draft, “Re: Eliot Hyman,” Eliot Hyman-Ray Stark Deals, Box 4, File 15, MCHC82-046, United Artists Collection, WHS. 153 Los Angeles Times, “Skiatron Chief Tells How Pay TV Will Work in L.A.,” 31 July 1957, 5. 154 Michael D’Antonio, Forever Blue: The True Story of Walter O’Malley, Baseball’s Most Controversial Owner, and the Dodgers of Brooklyn and Los Angeles (New York: Riverhead Books, 2009), 256. 155 J.A. Livingston, “Skiatron’s Record Called Gullible’s Travels,” Washington Post, 13 May 1960, C10. 156 Variety, “Matty Fox” (Obituary), 3 June 1964, 87. 157 Henry J. Zittau to Herbert T. Schottenfeld, 23 January 1962, “Re: ALCOTT V. ELIOT HYMAN,” Eliot Hyman-Ray Stark Deals, Box 4, File 15, MCHC82-046, United Artists Collection, WHS. 158 The initial Hyman-Stark split is discussed in Thomas M. Pryor, “Dorothy M’Guire to Star in Movie,” New York Times, 12 February 1959, 24; Hyman and Stark’s reunion in Seven Arts discussed in Variety, “Hyman Absorbs Stark on Stock: Terms Carry ‘Suzie Wong,’ Services,” 29 March 1961, 5. 159 In 1960, Warner Bros. licensed Seven Arts the distribution rights to 122 post-1949 films in exchange for a $11 million minimum guarantee. In October 1962, Warner Bros. licensed Seven Arts another 48 films to Seven Arts for a of $5,525,000 minimum 359 guarantee. Seven Arts charged a 30 percent distribution fee, and once the minimum guarantee had been recouped, the two firms divided net profits on a 50-50 basis. “DIGEST – TELEVISION EXHIBITION LICENSE AGREEMENT, 13 July 1960, between Warner Bros. Pictures, Inc. and Creative Telefilm & Artists, Ltd. – Distributor,” File: POST 1949 PHOTOPLAYS, JULY 13, 1960 AGREEMENT, F002390, 12817B, WBA; Agreement between Warner Bros. Pictures, Inc. and Seven Arts Associated Corp., 4 October 1962, TELEVISION LICENSE 48 Photoplays October 4, 1962, F002256, 12817B, WBA. 160 Wall Street Journal, “Fox Film and MCA Unit Release 443 Movies to Seven Arts for TV,” 17 July 1963, 12. Although MCA, which acquired Universal in 1962, had its own successful television distribution division, the Department of Justice mandated it release its films to television through an independent company. Thank you to Tom Kemper for bringing this fact to my attention. 161 In 1967, Variety columnist A.D. Murphy analyzed a Warner Bros.-Seven Arts proxy to explain Seven Arts’ need for acquiring a studio or losing its leadership position as a film- to-TV distributor: “Proxy notes that ‘the prospect of Seven Arts hereafter obtaining film libraries or groups of films, especially produced in the United States, is limited.’ Later, observing that ‘all’ major producers now sell pix-to-tv directly, ‘there is no assurance that rights which Seven Arts now holds in many films can be renewed on the same basis as in the past’…. As a matter of fact, in the next six years, 684 films, now in the Seven Arts library on license from owners for U.S. tv will revert, unless renewals can be effected. The above quote puts a downbeat light on this, however. This 684-pix block amounts to just half of the 1,296 films which Seven Arts may sell to U.S. tv… Proxy also notes that direct theatrical distribution has been ‘disappointing,’ and that consideration was being given to scrapping it.” A.D. Murphy, “One of 7 Arts Company Evinced was Knowledge of When to Acquire WB,” Daily Variety, 22 June 1967. 162 Variety, “7-Arts Buying Out Warner,” 16 November 1966, 5; Ronald Gold, “Will Cost 7 Arts $178,122,000 to Complete WB Purchase,” Daily Variety, 21 June 1967, 1, 4. 163 Daily Variety, “Ken Hyman WB-7A Prod’n Chief,” 25 July 1967, 1; Wall Street Journal, “M.K. Hyman is named Warner Bros.-Seven Arts Production Chief,” 25 July 1967. 164 Gustafson, Robert, “‘What’s Happening to Our Pix Biz?’ From Warner Bros. to Warner Communications Inc.,” in The American Film Industry, ed. Tino Balio, Rev. ed. (Madison, Wis.: University of Wisconsin Press, 1985), 575–576. 165 Robert J. Cole, “Warner Backing Bid from Kinney,” New York Times, 26 February 1969, 61. 360 166 New York Times, “Warner Picks New Chief Officer and Head of Board,” 5 August 1969, 41. 167 Ronald Gold, “WB-7A Assets Total $254-Mil,” Variety, 21 June 1967, 1. 168 Holt, Empires of Entertainment, 122–126. 169 Lionsgate, Annual Report—Fiscal Year 2009, 17 August 2009, http://investors.lionsgate.com/FileDownload.asp?AnnualReportId=4 (accessed October 30, 2009). 170 Time, “The Late Show as History,” 28 June 1968, 32-33. 361 CONCLUSION In the decades following the release of studio features to television, film libraries continued to grow in importance. The studios’ steady cash flow from televising feature films prompted a string a conglomerate takeovers. 1 Cable television, domestically and abroad, generated a hungry new group of business buyers. The growth of the VHS and, later, DVD markets allowed mainstream consumers to build libraries of their own through recording programs off-air and purchasing cassettes or discs. 2 The studios, in conjunction with the music and publishing industries, successfully lobbied for the redrafting of copyright laws, extending the duration of old and new copyrights and enhancing the value of film libraries. 3 Hollywood labor unions demanded compensation as old films reached these new distribution platforms, and film directors went to court to try to protect the integrity of films from television editing and colorization. 4 Ted Turner’s expensive 1986 purchase of the MGM library and subsequent decision to colorize hundreds of black and white films thrust film libraries into the national news. After Turner’s impressive feat of recouping his $1.1 billion purchase, the industry perception became that the diffusion of new technologies would continue to enhance the value of content libraries. Ted Turner’s purchase marked a high profile moment in a business that emerged long before the licensing of films to television. The marketplace for film libraries first developed in the mid-1910s when the star system, feature film, new distribution infrastructures, and copyright law enhanced the value of film negatives. Triangle’s re-titling of William S. Hart films turned film libraries into an industry problem, prompting the intervention of the Federal Trade Commission. As the vertically integrated studio system 362 emerged in the early-1920s, the top studios subordinated the reissue of films in order to concentrate on maximizing revenue and market share. The transition to sound changed the value of film libraries: the derivative became more important than the copy, a fact that, in the late-1930s, influenced Warner Bros.’ decision-making process about what silent films to save and what to destroy. The post-World War II reissue boom changed the studio’s perception; film libraries became as a vital profit center in the midst of industry decline. In the 1950s, television syndicators Matty Fox and Elion Hyman developed business models for aggressively harnessing film libraries that continue to be relevant today. In tracing the shifting business of film libraries, I have analyzed the total ecology of the media industry. We cannot view the business of film libraries simply as a top-down attempt by copyright holders to exploit old assets. Instead, we need to recognize the existence of a dynamic marketplace of producers, intermediaries, labor, business buyers, and audiences. In each chapter, I have sought to combine a macro description of this dynamic marketplace with case studies that examine the market’s most important participants. Nevertheless, the full history of film libraries prior to 1960 is too rich to fit into any single dissertation. Each chapter contains necessarily succinct descriptions of subjects that could be expanded into lengthy essays—for instance, the 16mm collectors who saved silent films (Chapter One), the circulation of old Hollywood films in fascist Spain (Chapter Two), the relationship between film libraries and children (Chapter Three), or the stations that presented and audiences who watched “Late Show” movies (Chapter Four). In writing this history, I have sometimes felt like a public library curator—showcasing and reading 363 from the books I consider most significant to my topic, but pointing out more books in the stacks that contain treasures of their own. What does the business history of film libraries tell us about our present moment digital library distribution? I opened Hollywood Vault by suggesting that the architects of the 2004 leveraged buyout of MGM, which resulted in bankruptcy six years later, could have benefited from studying the historical business of film libraries. As this dissertation has shown, the simple combination of a film library and technology cannot guarantee a profitable outcome. Success in the business of film libraries depends on both a focused strategy and continual adaptation to a dynamic marketplace. Even Matty Fox, one of the visionaries of the library business, misstepped by overpaying for the Castle Film Library. As the chairman of Universal’s subsidiary United World, Matty Fox mistakenly assumed that the growth of the 16mm market would enable the fast recoupment of Castle’s acquisition cost. Similarly, the MGM consortium assumed that the growth of DVD and new home video revenue steams would—in the words of Matty Fox—“pay for this cow out of its milk.” The MGM consortium also failed to understand that desirable new productions are essential for libraries to stay competitive in mature markets, such as television. Contemporary film libraries still earn the bulk of their revenues not from video or DVD but through being licensed as TV packages to broadcasters worldwide. 5 Studios need fresh titles to drive these package sales and gain leverage in negotiations with television broadcasters. Eliot Hyman borrowed heavily to finance the acquisition of libraries, but he profited by servicing the needs of business buyers (television stations) and using the library’s assets to acquire and produce new films, ensuring the television distribution side 364 of the company always obtained fresh, high quality product. In contrast, MGM’s owners allowed the studio’s production, acquisitions, and theatrical distribution sides to stall. In 2009 and 2010, MGM released only one movie each year: Fame (2009) and Hot Tub Time Machine (2010). Despite their modest budgets, both films were box office disappointments; even if they had been hits, two movies over two years could hardly justify the high overhead costs the studio was incurring from a theatrical distribution division as well as production and legal departments staffed at levels appropriate for a far more active studio. In 2007 and 2008, MGM’s library brought in a cash flow of over $500 million, enough money to cover its annual $300 million interest payments and overhead, even if it didn’t leave much funding for new productions. 6 In 2009 and 2010, however, annual library revenues plunged to as low as $228 million. MGM no longer was able to service its debt payments. Time Warner, News Corp., and Lionsgate all considered acquiring the financially distressed MGM, but none made bids acceptable to MGM’s creditors. In late-2010, the studio once known for having “more stars than there are in heaven” filed for Chapter 11 bankruptcy. 7 As I conclude this dissertation in February 2012, there is reason to hope that the leadership of post-bankruptcy MGM will steer a more effective course. The studio is now managed by co-CEOs Gary Barber and Roger Birnbaum, founders of the financier- production company Spyglass. Barber and Birnbaum have reduced the studio’s staff size by a third, eliminated the theatrical distribution division, and relocated to less expensive office space. Importantly, Barber and Birnbaum still believe MGM’s library can provide the engine to power the studio, but they are utilizing the library in a manner far more 365 similar to Hyman than their predecessors at MGM. On the production side, the studio is co-financing large films, such as the next two James Bond pictures, in arrangements that limit the box office risk (and reward) but ensure a supply of new desirable films for television distribution. MGM’s production executives are also developing a number of library properties into derivatives, such as the remakes of Red Dawn (2012) and Poltergeist (2013) and possible television series based on The Silence of the Lambs (1991) and Fargo (1996). Granted, the production of derivatives and “reboots” has become widespread in contemporary Hollywood, and consortium-owned MGM produced the remake of Fame, initiated the reboot of Red Dawn, and developed numerous derivative projects that never reached the screen. What distinguishes Barber and Birnbaum’s MGM, however, is the studio’s clear focus on worldwide television distribution as “the core of [its] business.” 8 Like Eliot Hyman, they understand that securing the television rights to desirable, new content is essential for successfully selling packages of older content at an advantageous price. Unlike Hyman, however, the new MGM focuses on the global television marketplace, rather than the domestic marketplace. Moreover, the very word “television marketplace” has expanded past TV stations and networks to now encompass cable, satellite, pay television, and video-on- demand. In February 2012, the Wall Street investment bank JP Morgan expressed its confidence in the new MGM business model by refinancing $500 million of the studio’s debt. 9 In all fairness, the failed MGM was partly a victim of bad marketplace timing. The consortium forecast future DVD revenues based on what later turned out to be the 366 height of consumer DVD spending. (Several hedge funds in 2004 and 2005 agreed to co- financed slates of theatrical feature films based on similar revenue projections and left Hollywood similarly disappointed.). The global recession of 2008 reduced MGM’s refinancing opportunities and tightened the credit available to other studios that might have otherwise acquired it. Additionally, the market for online streaming libraries increased significantly in 2011, the year after MGM’s declaration of bankruptcy. In the eighteen months since Colony Capital ‘s July 2010 acquisition of Miramax Films from Disney, the new Miramax has entered into several digital distribution agreements and, as a result, appears likely to recoup its $660 million purchase price for a library that includes such films as Pulp Fiction (1994), Good Will Hunting (1997), and Cold Mountain (2003). Miramax has no plans to produce new content, but the company has benefited from its first-mover advantage as an aggressive licensor of content in a rapidly growing digital marketplace (in contrast to the mature marketplace of domestic and global television). Additionally, unlike the consortium-owned MGM, Miramax lacks expensive production and theatrical distribution infrastructures that generate high overhead costs without producing anything meaningful in return. Miramax was once known as a “specialty distributor” because it released “specialized,” awards season films, like The Crying Game (1992) and Shakespeare in Love (1998). Under its new owners, Miramax is a “specialty” company in that it is following the business strategy of specialization. Like Matty Fox’s C&C TV, Colony Capital’s Miramax is focused on recouping its investment as quickly as possible through maximizing the value of digital licensing contracts and minimizing overhead costs. 367 It is noteworthy that Miramax’s most lucrative digital arrangements have come from business buyers, such as the subscription-based services Netflix, Hulu, and Brazil’s NetMovies. 10 If this trend and the significant fees that subscription-based services paid for exclusive content in 2011 and early-2012 are indicators of the future, then the economics of the digital marketplace for libraries will resemble television much more than home video—in other words, a business oriented toward package sales to business buyers rather than direct downloads to individual consumers. 11 Yes, consumers will order up library content “on demand,” but rather than paying a-la-carte as they do for a recent film in its first cycle VOD window, they pay a monthly subscription fee that grants unlimited access to a library of film and television content. As the studios license content to streaming services, they are simultaneously attempting to transplant the DVD sales model into the digital environment. The studios have placed much of their hopes on the development of UltraViolet, a “digital locker” that offers content owners strong rights management protections and gives consumers the ability to purchase digital copies of movies that they can access through multiple devices. The system is backed by a consortium of 75 technology companies, retailers, and content owners (including all of the major of studios with the exception of Disney, which is developing its own digital locker system). 12 According to its website, “UltraViolet is the online digital library that frees you to choose how and where you want to enjoy your movies and TV shows. It’s so easy to use.” In actuality, four years after the project’s development and four months after its official launch, UltraViolet’s impact has been as minimal as its selection of purchasable films (less than 100 titles). Furthermore, the small 368 audience to have used UltraViolet have expressed frustration about buying Ultraviolet access codes that do not work, confusion about what gadgets can play purchased content, and other problems that make the system not “so easy to use.” 13 On February 28, 2012, the Wall Street Journal reported the UltraViolet consortium’s solution to easing the user experience: send audiences to Wal-Mart. You can bring DVDs you already own to Wal- Mart, which will scan them and see if they are part of the Ultraviolet system. If they are, then Wal-Mart will grant you access to stream or download to those titles—for a fee. 14 People walking through the Wal-Mart parking lot, a half dozen DVDs clasped under their arms, and then passing through the entrance doors—it’s an image I cannot get out of my head. If UltraViolet and Wal-Mart’s plan works, then the spectacle will look like a security monitor rewinding footage from a Saturday afternoon in 2002 when customers exited Wal-Mart, Best Buy, and Target, having just purchased DVDs of a couple of discounted new Hollywood releases and older titles. So many of our encounters with film libraries are attempts to materialize the ephemeral, to bring back emotions and memories through a film we watched years ago. The transaction at the Wal-Mart electronics counter, on the other hand, exchanges the material for the ephemeral, trading a disc for access to digital files that will probably become obsolete in even shorter time than DVDs become unplayable. The Wal-Mart transaction, like the story of film libraries, occurs at the juncture between the personal and the aggregate. Wal-Mart, the world’s largest retailer, is famous for driving down prices by leveraging its aggregate purchasing power and dictating terms to suppliers. When a customer walks into Wal-Mart to add a film to her digital locker, she 369 has a personal history with the DVD she carries. The personal history extends, most likely, both to the film and to the physical disc that it is etched into. To receive a DVD as a gift, to purchase a box set that, years later, you realize you never actually watched, these are personal acts in our lives. But in the aggregate, the personal actions carry significant economic weight: contributing profit centers to the existing media conglomerates; creating opportunities and risks for other marketplace participants; and influencing the future means through which audiences will again access those films. 370 Conclusion Notes 1 Gulf & Western purchased Paramount in 1966, and Transamerica acquired United Artists the following year. In 1967, Seven Arts, Eliot Hyman’s company that used the profits from distributing film libraries to fund the production of feature films, acquired Warner Bros., then sold the company two years later for a profit to National Kinney. Tino Balio, United Artists: The Company That Changed the Film Industry (Madison, Wisconsin: University of Wisconsin Press, 1987), 302–304; Robert Gustafson, “‘What’s Happening to Our Pix Biz?’ From Warner Bros. to Warner Communications Inc.,” 575– 577. 2 Joshua M. Greenberg, From Betamax to Blockbuster: Video Stores and the Invention of Movies on Video (The MIT Press, 2008); Lucas Hilderbrand, Inherent Vice: Bootleg Histories of Videotape and Copyright (Durham, N.C.: Duke University Press, 2009); Paul McDonald, Video and DVD Industries (London: British Film Institute, 2007); Frederick Wasser, Veni, Vidi, Video: The Hollywood Empire and the VCR (University of Texas Press, 2002). 3 Jessica Litman, Digital Copyright (Amherst, NY: Prometheus Books, 2001), 35–69. 4 Decherney, “Auteurism on Trial: Moral Rights and Films on Television.” 5 Edward Jay Epstein, “Hollywood's Profits, Demystified,” Slate Magazine, 8 August 2005, http://www.slate.com/id/2124078/ (accessed 7 February 2012). 6 Claudia Eller, “MGM Passes Audit, Says It’s in ‘Full Compliance’ with Debt Requirements,” Los Angeles Times, 16 July 2009, http://articles.latimes.com/2009/jul/16/business/fi-ct-mgm16 (accessed October 20, 2009). 7 Mike Spector and Lauren A.E. Schuker, “Auction Alone Unlikely to Resolve MGM Woes,” Wall Street Journal, 22 January 2010, B3; Mike Spector and Lauren A.E. Schuker, “MGM Debt Drama Nears a Climax,” Wall Street Journal, 28 October 2010, A1; Ben Fritz and Claudia Eller, “MGM, in Deal, Files for Chap. 11,” Los Angeles Times, 4 November 2010, B1; Erica Orden, “For MGM, a Tighter Focus,” Wall Street Journal, 27 December 2011, B1. 8 Erica Orden, “For MGM, a Tighter Focus,” Wall Street Journal, 27 December 2011, B1. 9 The studio will use the refinanced $500 million as a revolving credit facility. MGM will use its television contracts and library assets as the borrowing base to draw from the 371 facility. Rachel Abrams, “Financiers Bank on Healthier Lion,” Daily Variety, 2 February 2012, 1, 19. 10 Lauren A.E. Schuker, “Hollywood Outsiders to Buy Miramax,” Wall Street Journal, 31 July 2010, B1; Rachel Abrams, “Mining Digital Gold,” Daily Variety, 22 November 2011, 1. 11 March Graser, “Cyber-Bidding War,” Variety, 5 December 2011, 1, 35. 12 Ethan Tussey, “5 Things to Know About Content Libraries,” Media Industries Project, 5 August 2011, http://www.carseywolf.ucsb.edu/mip/blog/5-things-know-about-content- libraries (accessed 29 February 2012); Marc Graser, “Small Crowd for UV Cloud,” Daily Variety, 10 October 2011, 1, 13. 13 UltraViolet (Website Homepage), http://www.uvvu.com/ (accessed 29 February 2012). 14 Michelle Kung and Michael Bustillo, “Wal-Mart to Give Hollywood a Hand,” Wall Street Journal, 28 February 2012, B10. 372 BIBLIOGRAPHY (ARRANGED BY GENRE) Archival Collections David Pierce Collection Los Angeles County Superior Court Record Center Margaret Herrick Library, Academy of Motion Picture Arts and Sciences, Los Angeles National Archives and Records Administration, College Park, Maryland National Archives and Records Administration, Northeast Region, New York City National Archives and Records Administration, Pacific Region, Riverside, California New York County Clerk Records Center Richard B. 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Altick, Richard D. “From Aldine to Everyman: Cheap Reprint Series of the English Classics 1830-1906.” Studies in Bibliography 11 (1958): 3–24. American Legion Anderson, Chris. The Long Tail: Why the Future of Business Is Selling Less of More. New York: Hyperion, 2008. Anderson, Christopher. Hollywood TV: The Studio System in the Fifties. Austin: University of Texas Press, 1994. Anderson, Robert. “The Motion Picture Patents Company: A Reevaluation.” In The American Film Industry, edited by Tino Balio, 133–152. Rev. ed. Madison, Wisconsin: University of Wisconsin Press, 1985. Bach, Johann Sebastian, and Antonio E. Cafarella. Fughetta. New York: M. Witmark & Sons, 1933. Balio, Tino. Grand Design: Hollywood as a Modern Business Enterprise, 1930-1939. New York: Charles Scribner’s Sons, 1993. ———. The Foreign Film Renaissance on American Screens, 1946-1973. Madison, Wisconsin: University of Wisconsin Press, 2010. ———. United Artists: The Company Built by the Stars. Madison, Wisconsin: University of Wisconsin Press, 1976. ———. United Artists: The Company That Changed the Film Industry. Madison, Wisconsin: University of Wisconsin Press, 1987. Baltimore Sun, The Bandy, Mary Lea. “The Movies at MOMA: The First Cinema Museum in the United States.” Museum International 46, no. 4 (April 2009): 26–31. 388 Barron’s National Business and Financial Weekly Barry, Iris. Let’s Go to the Pictures. London: Chatto & Windus, 1926. Barry, Rebecca Rego. “The Neo-Classics: (Re)Publishing the ‘Great Books’ in the United States in the 1990s.” Book History 6 (2003): 251–275. Billboard, The Block, Alan A. Masters of Paradise: Organized Crime and the Internal Revenue Service in the Bahamas. Piscataway, NJ: Transaction Publishers, 1991. Blumberg, Lew. “Total Recall.” In Fridays With Art: Insiders’ Accounts of the Early Days of the TV Biz by Some of the Guys Who Made It Work, edited by Dick Woollen. Burbank, California: Parrot Communications International, Inc., 2003. Boddy, William. Fifties Television: The Industry and Its Critics. Urbana and Chicago: University of Illinois Press, 1992. ———. “The Studios Move into Prime Time: Hollywood and the Television Industry in the 1950s.” Cinema Journal 24, no. 4 (July 1, 1985): 23–37. Bordwell, David, Janet Staiger, and Kristin Thompson. The Classical Hollywood Cinema: Film Style & Mode of Production to 1960. New York: Columbia University Press, 1985. Boston Globe Bowser, Eileen. The Transformation of Cinema, 1907-1915. New York: Scribner, 1990. Broadcasting Butsch, Richard. The Making of American Audiences: From Stage to Television, 1750- 1990. Cambridge, UK and New York: Cambridge University Press, 2000. Callmann, Rudolf. “He Who Reaps Where He Has Not Sown: Unjust Enrichment in the Law of Unfair Competition.” Harvard Law Review 55, no. 4 (February 1, 1942): 595–614. Caselotti v. Walt Disney Productions, Limited, et al., 21 N.Y.S. 2d 321 (N.Y. 1940). Caves, Richard E. 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Abstract (if available)

Abstract This dissertation examines the history of how old movies became valuable and how the marketplace for film libraries emerged and evolved, spanning from the silent feature era to the sale of feature libraries to television. Film libraries—the collections of films that have completed the first distribution cycle but remain under copyright protection—gained value not because of the introduction of new technologies but because of the emergence and growth of specific markets. The marketplace for film libraries first developed in the mid-1910s when the star system, feature film, new distribution infrastructures, and copyright law enhanced the value of film negatives. Triangle’s re-titling of William S. Hart films turned film libraries into an industry problem, prompting the intervention of the Federal Trade Commission. As the vertically integrated studio system emerged in the early-1920s, the top studios subordinated the reissue of films in order to concentrate on maximizing revenue and market share. The transition to sound changed the value of film libraries: the derivative became more important than the copy, a fact that, in the late-1930s, influenced Warner Bros.’ decision-making process about what silent films to save and what to destroy. The post-World War II reissue boom changed the studio’s perception

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