History of the American Cinema

The American Film Industry in the Early 1950s

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The American Film Industry in the Early 1950s

Industry-Wide Problems
Major Studios
Minor Studios
Independent Production

Industry-Wide Problems

The Hollywood film industry of 1950 was threatened on several different fronts. Television broadcasting was rapidly becoming the dominant entertainment medium in the United States. The Paramount anti-trust consent decree requiring separate ownership for production companies and theater chains had gone into effect on 1 January 1950. Large numbers of young men and women were marrying, having children, and moving to the suburbs, which affected the viability of downtown first-run movie theaters. Foreign revenues were endangered by protectionist tactics including quota systems, high taxes, and blocked funds. Finally, the morality and patriotism of Hollywood films and filmmakers were under attack from government, religious, and citizens' groups.

One quick way to get a sense of the film industry's declining fortunes in the early 1950s is to consider box-office statistics. Unfortunately, all such data is approximate. Table 1 presents three versions of the average weekly motion-picture attendance in the United States. The most widely quoted source, the U.S. Census Bureau, shows that weekly attendance dropped from 80 million in 1940 and 90 million in 1946 to 60 million in 1950 and 40 million in 1960. Another, possibly more precise, set of figures comes from the Theatre Owners of America (TOA), and covers only 1946-1956. Here, the 1946 peak is lower at 82.4 million per week, but the drop-off starts sooner and is more severe. A third set of figures, derived from U.S. Department of Commerce and Bureau of Labor Statistics data, shows almost a bell curve for 1940—1950. Though the three versions differ, the general trend is the same. Admissions rose from 1940 to 1946, and then dropped fairly rapidly so that by 1956 attendance was down almost 50 percent from the 1946 peak.

The decline in motion-picture admissions from 1946 to 1960 can be most productively studied in two segments. First, in the late 1940s the drop-off was largely a readjustment after some unusual wartime and postwartime conditions. During and just after World War II, people had money to spend and relatively few ways to spend it. Gasoline was rationed, many commodities were reserved for the war effort, and the movies "enjoyed a virtual monopoly of the entertainment business."1 But with the end of wartime scarcities Americans turned to big-ticket purchases. Many bought new homes in the suburbs, which meant they were far away from the downtown movie theaters.

Television had not been a major factor in the 1940s. On 1 April 1948, only twenty commercial television stations were broadcasting in the United States. There was no television broadcasting in the southern states, and very little west of the Mississippi. Only 300,000 television sets had been sold. Fortune estimated that "90 per cent of the citizenry has not yet seen a television program."3

But television was, by all accounts, the key factor in the steady decline of American film audiences in the 1950s. By 1 January 1950 there were 98 commercial VHF television stations in the United States, by 1954 there were 233, by 1960 there were 440.4 In the early 1950s the Sunday editions of big-city papers were crammed with full-page ads pushing the sales of the various models of TV receivers. In 1950 more than 7.3 million TV sets were sold in the United States, and U.S. TV sales were never less than 5 million in the years 1950-1959.5 Poll results released by Paramount in 1950 revealed that families with television in the home decreased their film-going by 20-30 percent; Paramount assured the press that these figures were more accurate than a previous poll, which found a 46-74 percent drop.6 A Warner Bros. poll in 1951 found that television ownership was already responsible for a 3-4 percent drop in the overall U.S. film audience, with further declines on the way.7 Changes in living patterns (as in the trend toward suburbanization) and competition from other leisure activities (such as sports and travel) also affected film attendance in the 1950s.

The anti-trust case which ended vertical integration in the film industry did not directly hurt movie attendance, but it did have a profound effect on film industry stability and profitability. The case began when the government accused the eight largest Hollywood companies—Paramount, Metro-Goldwyn-Mayer (MGM), Twentieth Century-Fox, Warner Bros., RKO, Columbia, Universal, and United Artists—of monopolizing film distribution and exhibition through ownership of first-run theaters and of participating in a variety of collusive practices. Paramount, MGM, Fox, Warner, and RKO—often referred to as the "five major studios"—owned about 65 percent of the first-run theaters in the United States. In many cases, they did not compete head-to-head with one another. Instead, they offered each other favorable terms and divided up the major markets into stable configurations of first-run and subsequent-run theaters. MGM's parent company, Loew's, was very strong in New York, Paramount in Chicago, Fox on the West Coast, and so on. Columbia, Universal, and United Artists, the "three minors," did not own theater chains, but they did benefit from the nationwide cartel.8 Distribution and exhibition were structured so that films from the established Hollywood studios could count on a profitable release pattern, and well-connected theaters (usually first-run houses owned by the majors or by local chains) could count on a steady supply of good-quality films. However, producers outside the Hollywood system and independent exhibitors would have a difficult time breaking into the established release patterns.

The federal government won its case in the late 1940s and entered into a series of consent decrees with the eight affected studios. For the five majors, the government required the divorcement of production and distribution from exhibition; also, large stockholders would need to divest their holdings in one of the newly formed companies within two years of the divorce. The idea was that a breakup of the studios would end the cozy control of exhibition and lead to greater competition throughout the film industry. The government also required the sale of some theaters (in monopoly areas), the exhibition of a percentage of films from non-major companies, and a looser, more competitive approach to runs and exclusivities. Block booking, the licensing of films in "blocks or indivisible groups,"9 had been outlawed since 1946.

These changes did end a set of monopolistic practices. However, their effects on an already struggling film industry went well beyond encouraging competition. By cutting the link between production and exhibition, the consent decrees made film production a much less stable undertaking. Every film became a risk, for both producer and exhibitor. While in the past the risk had been cushioned by the activities of a large, integrated company (so that a loss in production, for example, could be compensated for by a profitable year in exhibition), after the anti-trust suit producer and exhibitor were no longer natural allies, and oversupply and undersupply became very real possibilities. Further, the FCC was skeptical about awarding television station licenses to companies found guilty of anti-trust violations. An absolute ban was not declared, but the FCC declared "a strong presumption" that monopolists would not be "qualified to operate a broadcast station in the public interest."10 This greatly limited the film industry's attempts to expand into television.

The uncertainty of foreign markets was of great concern to the Hollywood companies in the late 1940s. U.S. allies, such as Britain and France, and former enemies, such as Germany and Japan, were facing enormous rebuilding costs after World War II. American movies were popular in all of these countries, but Britain and France in particular were concerned about precious foreign exchange going to amusements rather than necessities. (Germany and Japan, as occupied nations, had less freedom of action.)11 They therefore imposed a series of restrictions on the American film industry, including tariffs, blocked funds, and quota systems. International commerce was potentially a growth sector for the Hollywood industry, because television was much slower to gain a foothold abroad than in the United States. But if currency was blocked from export, then foreign earnings could not be counted on to make up for a domestic slowdown. Through intensive negotiations and some creative deal-making, the Hollywood companies had managed to free up most foreign earnings by 1950.12 However, part of the dealmaking was to use blocked funds to produce an increasing number of films abroad, and this had the effect of decreasing jobs in Hollywood.

Yet another danger to Hollywood in the early 1950s was a set of assaults from Congress and various citizens' groups centering on patriotism and morality. The House Un-American Activities Committee (HUAC), investigating communism in the United States, had interviewed ten unfriendly witnesses from the film industry in 1947; "unfriendly" here means uncooperative and suspected of Communist activity. The Hollywood Ten refused to answer questions and were found guilty of Contempt of Congress; their appeals exhausted, all ten went to jail in 1950. In 1951, HUAC returned to Hollywood for lengthier hearings on communism in the film industry. At the same time, an industry-wide blacklist of suspected leftists meant that hundreds of people (many of them screenwriters) lost their jobs. HUAC's efforts were supplemented by the American Legion and other veterans' groups and by the state of California's Tenney Committee. Also in 1950, Senator Edwin C. Johnson of Colorado complained about Hollywood's morality and called for a Federal licensing of motion pictures.13

It is difficult to quantify the effect these highly publicized problems had on film industry earnings. Studio attorneys responding to civil suits brought by several of the Hollywood Ten (all of whom had been fired) were unable to prove that the release of any film had been injured by publicity about the Ten.'14 On the other hand, the 1952 U.S. release of Limelight, by actor-director Charlie Chaplin, was hurt by a pressure campaign led by the American Legion. (Chaplin had been accused of both immorality and Communist sympathies.)15 Sporadic picketing of other films in the early 1950s scared the studios, especially since the American Legion declared that local chapters could decide to picket on their own.16 However, such picketing remained small-scale and probably had a minimal effect on box-office returns. In broader terms, it is clear that the political uproar of the early 1950s—with Senator Joseph McCarthy brandishing lists of Communists in government and HUAC investigating communism in many aspects of American life—led to restrictions on subject matter in Hollywood studio films. Social issue films, concern for minorities, or criticism of big business were suspect; even sympathy for the underdog was problematic. Director Elia Kazan commented in 1952 that the studios were trying so hard not to offend that "Actors are afraid to act, writers are afraid to write, and producers are afraid to produce."17 Critic Robert Sklar (writing in 1975) concurred, saying that Hollywood in the late 1940s and the 1950s lost some of its appeal because of extreme caution.18 This new caution must have affected the box office, but it is impossible to know how much. …