Hollywood and Television in the 1950s: The Roots of Diversification

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Hollywood and Television in the 1950s: The Roots of Diversification

Early Interactions Between the Film Industry and Television
Strategies for Coexistence with Television
The New Diversification

Janet Wasko

The film and broadcasting industries have shared a "symbiotic relationship" since the 1920s, with the major Hollywood companies attempting to develop and control television as a new distribution outlet. In the 1950s, the film companies produced programming for much of the prime-time TV schedule, and they also experimented with alternatives to broadcast television. By the end of the 1950s diversification was well under way—the Hollywood film companies were becoming media companies.

The importance of television for the film industry during the 1950s cannot be overstated. It has been argued that television was the primary factor affecting the dramatic plunge in ticket sales, box-office receipts, and company profits in Hollywood between 1947 and 1957 (see Chapter 1).1 However, the film industry's relationship with television in the fifties must be understood in the context of social and economic changes (suburbanization, changes in demographics, and consumer spending habits) and political tensions (McCarthyism and HUAC). In addition, Hollywood was experiencing structural changes due to the Paramount decrees, the growth of independent production, trade barriers in foreign markets, and the demise of the Production Code, as well as changes in movie-viewing habits. While these developments are discussed more fully elsewhere in this volume, the current chapter focuses on the connections between the film industry and the television industry during this critical decade.2

Early Interactions Between the Film Industry and Television

Many historians have discussed the majors' involvement with broadcasting as early as the 1920s. For instance, Christopher Anderson argued that "the studios wanted not merely to participate in electronic communication but to control the radio and television industries"3 (emphasis in the original). During this early period, the major studios were involved in radio in numerous ways. A few of their activities included the ownership of stations (Warner Bros. opened two radio stations, KFWB, Los Angeles, and WBPI, New York); investments in networks (Paramount was involved with CBS in the late 1920s); and relationships with radio interests (RKO was a subsidiary of RCA). While the Depression limited the studios' direct interests, Hollywood still utilized the airwaves for promotion as well as providing talent and programming.4

A few of the Hollywood studio executives demonstrated keen interest in television experiments during the 1930s. For instance, the Warner brothers followed the technological evolution of television quite closely, even attempting to attract Vladimir Zworykin away from RCA in the late 1930s. Meanwhile, David Selznick, a successful independent Hollywood producer, became involved with the early television inventor Philo T. Farnsworth.5

There is further evidence that the industry as a whole was not only watching the development of television technology, but saw opportunities in the new technology. As early as the 1920s the Motion Picture Producers and Distributors Association (MPPDA), the industry's trade organization, was preparing reports on television, followed by investigations in the 1930s of the film industry's role in the forthcoming television business.6 Mortimer Prall, son of the FCC chairman, was hired by the MPPDA to prepare one report, in which he noted that "the motion picture industry has its greatest opportunity for expansion knocking on its door."7

In 1938, the Academy of Motion Picture Arts and Sciences requested its research council to study the film industry's preparation for the inevitable introduction of television, while numerous articles appeared that discussed the subject. One of the recommendations from the Academy was for the industry to pursue theater television, which will be discussed below.8 Furthermore, both the MPPDA and the Academy formed ongoing committees to monitor television developments.

After World War II, there was a good deal of attention to the potential for the film industry to provide programming for the emerging television business, especially in light of the declining box office. Hollywood film producers and labor organizations, in particular, anticipated a new market for filmed products and employment opportunities in television production.9

Beyond the general industry interest in television, a few of the major studios had grand plans to control television through the ownership of distribution outlets, both individual stations and networks. Paramount was especially active in the evolution of television through its ownership of television properties, and, as outlined in the following sections, through attempts to innovate alternative television systems. In 1938, Paramount purchased substantial ownership interests in the Alan B. DuMont Laboratories Company. Over the next ten years, DuMont operated two experimental television stations in New York and Washington.10 Paramount also was involved in another experimental license in Chicago around 1940 through its theater subsidiary, Balaban and Katz, as well as forming a subsidiary called Television Productions, Inc.

By 1948, Paramount owned four out of the first nine TV stations in the United States and had applied for licenses in six additional cities. Paramount owned KTLA, Los Angeles's first television station, and WBKB in Chicago, while DuMont owned and operated WABD in New York, WTTG in Washington, D.C., and WDTV in Pittsburgh. By the end of the 1940s, Paramount was distributing filmed television programs to a few stations through its Paramount Television Network, with plans to develop a full-fledged network. Although additional station ownership was planned, the FCC denied Paramount and DuMont's claim that they were separate companies and they were forced to adhere to the FCC limit of five stations.11

But Paramount wasn't the only film studio interested in television outlets.12 MGM, Warners, Disney, and Twentieth Century-Fox actively vied for early TV outlets. Several of these companies applied for licenses in the Los Angeles area, but lost out to Paramount, probably because of the Paramount-DuMont connection.

Interestingly, some theater exhibitors in addition to Balaban and Katz also were interested in station ownership. Several theater chains applied for licenses in 1945, and the majority of stations owned by film interests in 1956 were held by theater owners.13 Mitchell Wolfson, for example, owned a chain of South Florida theaters and the first TV station in Miami. He apparently felt that TV was not a threat and told fellow exhibitors that closed theaters should be converted to TV studios.14

However, Hollywood's bid to own television outlets mostly failed at this point, impeded chiefly by forces outside the film industry, especially the U.S. government. The government's hostility towards the film industry was apparent as early as 1940, when the FCC held hearings on technical standards for television. Another example of the government's attitude was evident at a meeting held in spring 1945, when the chairman of the FCC warned a group of Hollywood executives not to count on control or extensive ownership in the developing television business.15 Furthermore, the FCC freeze on licensing new television stations (September 1948 to April 1952) for the announced purpose of establishing allocation policies and technical standards had the additional effect of preventing ownership of television stations by the Hollywood studios.

But most importantly, many of the studios' applications (especially Paramount's) were denied or withdrawn after the government's successful anti-trust suit against the majors. The FCC's policy was established in the Communications Act of 1934, which authorized the agency to refuse licenses to individuals or companies convicted of monopolistic activities. In addition, numerous statements by the agency confirmed a hostile attitude towards applicants with connections to the film industry.

Although the Hollywood studios most often were thwarted in their attempts to own broadcast outlets at this time, some companies still managed to own a few stations or align with networks. Several decades later, corporations associated with the film industry gained full control over television networks, as well as numerous cable channels and systems.

Meanwhile, during the 1940s and 1950s Hollywood also was trying to influence television's development through the innovation of two alternatives to TV broadcasting: theater televison and subscription television.

Theater Television

Theater television was one of the ways that Hollywood tried to "fight television with television."16 The process involved screening television programming in motion picture theaters using two different systems: direct projection (television transmission projected onto screens) or "instantaneous projection" using a film intermediary (in other words, television signals transferred to film in less than a minute and then projected).

All of the major Hollywood companies were interested and active in developing theater television during the late 1940s and early 1950s; however, Paramount (again) was the most heavily involved. Hollywood's enthusiasm over theater TV was not surprising, since the Big Five studios owned extensive theater chains at the time. But theater television also provided the opportunity to control distribution, as well as offering a way to differentiate Hollywood's products from broadcast television. Theater TV could feature more costly programming and a larger format than provided by "free" television viewed in homes.17 In addition, exhibitors were interested in theater television, feeling that it might compete well with home television systems. In 1946, Film Daily reported that over half of the 350 theater owners participating in a survey were anticipating using theater television.18

Theater television can be traced back to the 1930s when RCA developed a large screen system utilizing a tube similar to those in home receivers, but with greater light output. The company demonstrated the system in 1930 at RKO-Proctor's 58th Street Theater in New York City.19 By 1941, RCA's system had been installed in a few test theaters at a cost of $15,800 per theater.

Paramount and Fox invested in theater television as early as 1941, using an intermediary film system produced by Scophony, a company owned by Paramount. The Scophony system involved the use of 35 mm. film and an installation cost of $25,000. According to film historian Douglas Gomery, Scophony Ltd. (as well as Baird Television) had experimented with theater television technology in Great Britain, but without too much success. Paramount helped organize the Scophony Corporation of America in 1943 to "protect its position vis-a-vis RCA."20 However, in 1945, an anti-trust suit claimed that Paramount and Fox, through control of Scophony patents, were conspiring to prevent the development of television technology.21 From this point on, then, Paramount focused on its Paramount Intermediate Film System, an expensive system (around $35,000) that produced a 35 mm. print that could be edited and reused.22

After World War II, Warner and Fox aligned with RCA and arranged several demonstrations in 1948 and 1949. The relationship turned out to be short-lived, but Fox later became involved with several other systems. General Precision Laboratories, one of Fox's main stockholders, developed a method that used 16 mm. film and cost $33,000 to install. Fox also was associated with direct projection systems, including one produced by General Precision for $15,600, as well as a Swiss system called Eidophor that used carbon arc lights to project color images and cost around $25,000 to install. In 1951, Fox arranged with General Electric to produce equipment for use with the Eidophor system. Although the system could not compete with RCA's lower-price equipment, Fox did not give up on theater TV until the late 1950s.23

While theater television technologies attracted the interest of many production companies and theater chains before World War II, there was little development during the war. As noted above, activities continued in the late 1940s. The time seemed right: few television sets were in homes, the FCC freeze prevented expansion of television stations, and the studios were withholding films from television.

Paramount introduced its system in New York at the Paramount Theater in 1948 and continued to feature political news coverage, prizefights, and other sporting events through 1951. Paramount introduced theater TV in Chicago and Los Angeles in 1948 and 1949. In Chicago, Paramount's Balaban and Katz experimented with live programming at its theaters in Chicago in 1949 and 1950, but found that it was too expensive. Although Balaban and Katz had given up on theater television by mid-1951, other theaters were still adding the technology.

By the end of 1952, over one hundred theaters nationwide had installed or were installing theater television, with RCA controlling 75 percent of the market. A network called the Theater Television Network had formed, featuring sports events (such as boxing and collegiate games), public affairs, and entertainment events. During 1952, the Walcott-Marciano prizefight was presented in fifty theaters in thirty cities, with revenues totaling more than $400,000.24

However, by 1953, the high hopes for theater TV had faded. Paramount finally abandoned the project that year with losses at many of the theaters that had been equipped with its system.25 Theater television's ultimate failure involves many interrelated factors that were identified by some industry sources at the time and have been discussed more recently by film and broadcast historians.

First, there were ongoing issues involved in securing effective and cost-efficient methods of transmission. Both telephone wires and the broadcast spectrum were used, but there were problems with both approaches. Initially some systems used telephone wires, or more specifically, intercity links from AT&T. However, the wire transmission system proved to be too expensive and insufficient for video transmission. Theater owners requested a hearing from the FCC in 1948 to review the issue of costs, but the petition was denied. Meanwhile, requests had been made to the FCC for radio frequencies to use for theater TV experimentation. In 1944, the Society of Motion Picture Engineers applied for space, and, though some frequencies were provided in 1945, they were deleted by 1947. From 1947 to 1949, Paramount and Fox were temporarily awarded frequencies for experimentation.26

Then, in 1949, exhibitors filed another FCC petition requesting 10 to 12 channels in the UHF spectrum for a "movie band." Hearings were held October 1952 through 1953, but the FCC decided to deny special frequencies, suggesting that the petitioners use common-carrier services or reapply. For various reasons, the companies did not reapply.27 If these frequencies had been allocated, future development of film, cable, and television industries might have been quite different. However, without spectrum space, theater TV systems were forced to use expensive telephone lines, which affected the quality as well as the cost of operation.

Thus, another general problem was the FCC's resistance. Historical evidence indicates that the government did not share the film industry's enthusiasm for theater television. As film and radio historian Michele Hilmes noted, "the FCC, with an unerring eye for the maintenance of the status quo, rejected this vision…."28 The rejection in many ways was connected with the film industry's monopolistic tendencies, exemplified in the Paramount decrees, as well as the anti-trust suit dealing with the Scophony patents involving Paramount and Fox.

It is important to note that the broadcasting industry had similar inclinations, as evidenced in the case against the radio networks in the late 1930s, as well as a later anti-trust suit against the television networks for monopolizing program supply and distribution (1972).29 Nevertheless, at this point it was clear that the government favored the "public interest" orientation of the broadcast industry against the "crass commerical" interest of Hollywood companies.

Meanwhile, other developments contributed to the doomed theater television project. With the lifting of the FCC's freeze in April 1952, television exploded on the scene, as millions of Americans turned to "free" television in the convenience of their homes. By 1954, there were 233 commercial stations and 26 million TV homes.30 In addition, the size of home screens increased and color standards eventually were established. With these changes it became nearly impossible for theater television to compete.

During this time period, the industry was undergoing profound structural changes that ultimately separated production and distribution from exhibition. Thus, the interests of the studios (or the production/distribution companies) at times were different from those of exhibitors. This became even more significant when it came to selling products to the newly developing television industry, but also ultimately affected the support for theater television by the different sectors of the film industry. For instance, several unions were against theater television, especially the International Alliance of Theatrical Stage Employees (IATSE), but also trade organizations representing actors and musicians.31

In the end, the major studios and theaters shifted their focus to new formats or gimmicks that would compete with home television rather than continuing to pursue theater television. Various widescreen systems were adopted, as well as experimentation with 3-D. Theaters with financial problems found that these systems were less expensive, yet more profitable, than the equipment needed for theater television. Gomery concluded, "if theater television had proven profitable, it no doubt would have spread quickly to all parts of the United States."32

Meanwhile, the Hollywood companies were exploring another alternative television system through their active interests in developing subscription TV. Although there was some discussion of theater and subscription television co-existing, in the end, theater television was abandoned and the subscription TV battle began.

Subscription Television

Various experiments with subscription or pay television in the 1940s and 1950s involved companies connected to the film industry in one way or another. But it also must be noted that some film interests were involved in introducing pay systems, while others opposed those efforts. Though theater television was (at least, initially) welcomed by exhibitors, pay television was another thing altogether. Exhibitors not only feared it, they vigorously fought against it.

Again, Paramount took the lead in attempts to develop a viable pay television system. Timothy R. White pointed out that Paramount had a form of subscription TV in mind when it bought Scophony in 1942, and continued these efforts with DuMont. In the mid-1940s, Paramount planned to form a mobile system using DuMont equipment to transmit programming to theaters. However, these ideas ultimately were abandoned.33

By the late 1940s, three competing pay-TV sysems had been introduced, which then were tested in the early 1950s. Zenith's Phonevision was introduced in 1947, using telephone lines to unscramble a broadcast signal. Indeed, Zenith was the first company to ask for FCC permission to experiment with pay television in 1949, and tested its system in Chicago in 1950. After 1954, the company shifted to using a coin box or punch card system, but still was having problems obtaining programming. Paramount became involved with a system that used a scrambled broadcast signal through its 50 percent ownership of International Telemeter. Films were viewed by placing coins in a box on a television set, which then descrambled the picture. By 1957, Telemeter's system featured three channels using either wires or broadcast signals.34 The Skiatron Corporation owned by Matthew Fox, an entrepreneur with some connections to the film industry, developed yet another system. Fox received the help of IBM to develop a system called Subscribervision, which used a punch card and a scrambled broadcast signal. RKO became involved with this system when a Chicago television station, WOR-TV, tested the Subscribervision system in 1950.35

Again, there was a good deal of enthusiasm by some Hollywood companies for a pay television system as an alternative to the advertiser-supported system adopted by broadcasters. (For instance, see Chapter 1 for references to Sam Goldwyn's opinions.) However, there were only a few actual experiments with pay systems during the 1950s.

The system that attracted the most attention was Telemeter in 1953, when it provided a community antenna system, plus special programs for extra fees, to 274 homes in Palm Springs, California. Charges included a $150-$450 installation fee, plus additional fees for cable and coin box use, plus program charges. In addition to sporting events and other live programming, the service offered the same film that was playing at the local theater for a slightly higher fee.

Apparently, the aim was to attract viewers who never went to theaters, and some theater owners even cooperated with the experiment. However, one of the Palm Springs theater owners charged that Paramount was in violation of the recent anti-trust suit against the majors. Although Telemeter claimed to be a success with over 2,500 subscribers, the system apparently buckled under the threat of governmental restriction. And despite the connection to Paramount, the system seemed to be unable to procure an adequate inventory of Hollywood films.36

Meanwhile, Southwestern Bell Telephone and Jerrold Electronics in Bartlesville, Oklahoma, introduced another system, called Telemovies. This featured a first-run movie channel and a rerun movie channel. First-run movies were shown concurrently at the local theater chain, thus avoiding one potential source of opposition. But even though the experiment received a good deal of press attention, the service apparently had financial problems. The use of telephone lines was costly, the flat monthly fee to customers was very high, and the company had some difficulties developing a system for paying Hollywood companies for the use of their films.37 The Southwestern Bell system ceased operation in 1958.

Meanwhile, Paramount maintained its faith in pay TV, increasing its interest in Telemeter to 88 percent by 1958 and announcing that it would open systems in New York, on the West Coast, and in Canada. The company operated a service near Toronto, Canada, for a few years, but had lost $3 million by 1965, when Paramount's subscription TV activities ended.38

Despite the enthusiasm expressed for "pay-see" and "toll-video" (as Variety called them), most of these experiments had failed by 1965. One might wonder why a direct pay system of television that became successful two decades later failed at this time. Again, the reasons are multi-faceted, interrelated, and similar to the reasons that theater television failed. First, systems that relied on phone lines found that the costs were prohibitive. However, it seems possible that such technical problems eventually could have been overcome. Even more problematic was the attack on pay-TV that came from the theater sector of the film industry, as well as broadcasters and other groups, especially after the Paramount/Telemeter Palm Springs experiment in 1953. Ironically, Paramount Pictures was attacked by United Paramount Theaters, which had recently been divested from Paramount and merged with ABC television in 1953.

While additional experiments were carried out in the early 1960s, broadcast and theater forces continued to lobby extensively to defeat pay television. A statewide referendum specifically directed at former NBC President Pat Weaver's Subscription Television was passed in California in 1964.39 Although the referendum was eventually declared unconstitutional, the extensive publicity around the ballot measure and its success seemed to seal the fate of pay television, at least during this period in history.

There were also serious obstacles due to delay and resistance from the federal government. Hilmes argues that pay television failed because of "slow strangulation by federal regulation."40 It seems clear that the FCC understood its mandate was to protect the existing broadcast system, and it found encouragement as well from those who lobbied against pay-TV, namely broadcast and exhibition interests. Congressional representatives who had broadcast investments joined the anti-pay television movement as well. In fact, at least six bills were introduced to ban pay television, with hearings held on the topic by the FCC, the Senate, and the House.41 Although FCC agreed to a temporary sub-scription TV trial in 1957, during the next year the Senate and House requested a delay and finally forbid the commission to allow such trials.42 Undoubtedly, the film industry's efforts to establish pay-TV suffered from anti-trust litigation, not only the Paramount decrees, but other cases as well.

Another huge problem was the competition from "free" TV. It might be argued that the film industry mostly moved in the wrong direction with early subscription experiments. Perhaps it was too early for pay systems that did not offer a regular schedule of special programming for which audiences would pay an extra fee. But the idea of paying for television programming also suffered notably from the campaign to save "free" TV. Pay television succeeded in later decades when the systems merged with cable television and offered programming not available on over-the-air broadcasting.

In addition, Hilmes has pointed out that "the FCC's public interest mandate, adopted and reinterpreted by broadcast television and theater interests, became equated in the public mind with the unchallengeable supremacy of the 'free TV" system."43 For example, an article in Consumer Reports from 1949 made a case against the film industry's involvement in television, citing the large size and monopolistic tendencies of the film industry and the likely deterioration of public service with Hollywood's involvement in television programming.44 It might be noted that both industries exchanged barbs relating to the quality of their products, as can be seen in this quip from Variety: "Television is only indirectly show business. Mostly it's advertising business."45 And during testimony by an NBC executive at a government hearing, the "film-come-latelys" were accused of conspiring to unleash on television, "the lowest common Hollywood denominator … a continuing flow of stale and stereotyped film product."46

In summary, then, it is indisputable that Hollywood actively attempted to become involved in the evolving television system in the United States. Despite its inability to own or control broadcast outlets at an early stage or to develop successful alternative systems, the film industry eventually was able to profit from television in other ways.

Strategies for Coexistence with Television

While the events surrounding theater television and pay television unfolded, Hollywood was developing specific strategies for selling its products to the emerging television industry. By the 1950s, the film industry had firmly established a key role in the supply of the majority of television programming. Before discussing these developments, it is important to establish the backdrop for Hollywood's eventual triumph.

The evolving economic structure of television programming had shifted rather quickly from commercial sponsorship controlled by advertising agencies, with one main sponsor per program, to a magazine format with different sources of advertising controlled by the networks. As Mullen explained: "The degree of flexibility telefilm and videotape production techniques brought to television programming complemented the flexibility of magazine-format sponsorship. By the 1960s, virtually every component of the television schedule was both interchangeable and recyclable."47

The transition from live to recorded programming was another important factor in the evolution of television programming. The networks clung to live television, which was one way of maintaining control. (Live television meant that stations had to receive live feeds from the networks according to a specific schedule. Taped or filmed programs could be aired by stations whenever they chose to run them.) The networks and their critics also insisted that live television programming was creatively superior to filmed fare.48 Nevertheless, the lower cost and reliability of recorded programs finally prevailed. As Hilmes explained: "by breaking down their own restrictions against the use of recorded programs, the major networks paved the way for the gradual disappearance of unwieldy and unpredictable live programming and the rapid rise in the use of film, as Hollywood wedged a toe in the door by means of syndicated film series."49

The ongoing structural changes within the film industry due to the Paramount decrees meant that the interests of producers eventually became different from those of exhibitors. Additional changes included the decline of studio-produced feature films and the growth of independently produced films, as well as fewer, more expensive films with increased promotion costs. Generally, the production-distribution companies benefited from these developments, while exhibition mostly suffered. In a 1985 article on Hollywood and television, William Boddy concluded: "The cumulative effect of these changes within the theatrical film industry in the early 1950s was a shift of power from exhibition to production-distribution…."50 In an overview of the industry in the late 1950s, a Variety writer echoed these sentiments:

TV has had a terribly divisive effect on the film industry. It has accomplished what even divorcement could not really accomplish, i.e. a split between Hollywood (in the production sense of the word) and exhibition-distribution. It is simply a fact that, today, with the TV mart looming so importantly and the electronic medium advancing ever further, the basic interests of the Coast and the rest of the industry are not necessarily the same.51

Hollywood Television Production

As indicated by the numerous investments in production companies in the late 1930s and 1940s, the major studios clearly intended to become involved in television programming. As new stations opened, the demand for filmed programs increased. However, some of the studios delayed production for broadcasting, as they hoped to develop the alternative television systems discussed above. In addition, it wasn't until the late 1950s that the major integrated companies were fully divorced from their theater chains. Thus, during much of the decade, they were forced to avoid conflict with theater owners and moved ever so cautiously into television production, as well as resisting sales of their new theatrical films to television. (In fact, Boddy noted that in 1950 the FCC actually issued a warning to the Hollywood studios for withholding talent and products from broadcast television.)52 This is undoubtedly one of the reasons why many observers have concluded that Hollywood was hostile to television.

Nevertheless, a relatively large number of Hollywood independent producers created programming for broadcast television during the late 1940s and early 1950s. Jerry Fair-banks seems to have been the first Hollywood producer to sell a series to television when he marketed The Public Prosecutor to NBC in 1948.53 Other programs that followed were mostly low-budget shows, including numerous Westerns (Hopalong Cassidy, Roy Rogers, The Lone Ranger, and Cisco Kid, to name a few), as well as crime, mystery, science fiction, and situation comedies. The business was highly competitive, with over 800 producers claiming to be involved during this early period, which came to be known as the "gold rush" period of television production. However, the business involved high speculation and slow paybacks on programs that averaged $12,000 to $15,000 per half-hour episode. Even at this early stage, a distinct financing system was emerging, with programs usually produced at a deficit and profits emerging in syndication, international distribution, and other products.54

By 1952, the production costs were rising (up to $20,000 per program) and the competition declining. The most successful telefilm production companies were those that had resources available and could provide commercially oriented, profitable productions. Among the few surviving independents were Fairbanks's company, Bing Crosby Productions, Hal Roach Studios, Ziv Television, and a few others.55 Thus, early television production provides another example of an industry that moved through an initial period of robust competition to a concentrated market structure. As Dennis Dombkowski concluded:

"Efficiency" and industry stability were thus gained at the cost of variety in program sources. It should be pointed out that it was no economic law that made this necessary for the television program supply industry, but rather the inevitable requirements of a commercial system which was being designed for a nationwide service of networks and their correspondingly greater capital requirements, rather than a decentralized and less "efficient" system.56

Initially, the networks resisted filmed programming, aiming to control program supply and national advertising distribution. The networks insisted that their live, dramatic programming was higher quality than the cheaply made action-adventure shows and situation comedies produced by film companies. At this point, relatively low prices were offered for TV programming, even though high costs were anticipated for Hollywood produced programming.57

However, even at the networks, filmed programming ultimately prevailed. The market for subsequent release of television programming (reruns, syndication, and foreign sales) was a major factor in the acceptance of filmed TV programming by the networks and the entrance of the Hollywood majors into telefilm production.

Only a few of the major companies produced television series, commercials, and news during the late 1940s and early 1950s. By 1952, television subsidiaries were formed by Columbia (Screen Gems), Universal (United World Films), and Monogram (Interstate Television). It might be noted that none of these companies were major integrated studios that owned theaters.

Most historians agree that the other major studios became much more active in television production after 1953. The reasons often cited are the lifting of the freeze in 1952, the increase in advertising money, the decline in the theatrical box office, and the actual divorcement of production/distribution from exhibition.58

At first, the majors offered programs that were designed to promote their film products or that featured their own names: Disneyland, Warner Bros. Presents, MGM Parade, and Twentieth Century-Fox Hour. They also tended to draw from their film resources for some program ideas (for instance, Rin Tin Tin, a series of movies since the 1920s that became a popular TV series in the mid-1950s). But the studios moved on to produce a wide range of programs, including prestigious dramatic shows (such as Playhouse go) and especially half-hour series that were quite profitable in network and syndicated markets.

Each major company moved into television at a somewhat different pace. In 1956, Columbia produced thirteen half-hour series and one ninety-minute program, with television representing one-quarter of the company's revenues. Around the same time, Twentieth Century—Fox produced four half-hour shows and one one-hour series. Mean-while, Warner Bros. received nearly one-third of its profits from television by the end of the decade. Paramount was much slower than the other studios, and it wasn't until the 1970s that television production became important. By 1964, six Hollywood companies represented 45 percent of the domestic market for syndicated TV series.59

Although Hollywood had to make adjustments for television production, the pattern had been set. Commercially oriented filmed programming became the main staple of American television and the large Hollywood studios came to dominate the market. Erik Barnouw identified more than 100 Hollywood-produced television series on the air or in production by the end of 1957.60 By the end of 1959, 78 percent of network evening programming originated in Hollywood and over 88 percent of that was filmed.61 And, although a 1956 congressional study of the film industry found that 170 producers were involved in making television programs of various lengths,62 a handful of well-endowed Hollywood companies dominated the program supply. At the beginning of 1959, Variety estimated that $105 million would be dedicated to telefilm production during the year.63

Anderson concluded: "By the end of the 1950s, with the fates of the networks and studios deeply entwined, filmed television series emerged as the dominant product of the Hollywood studios and the dominant form of prime-time programming—a pattern that has remained unchanged for more than thirty years.64

Feature Films on Television

Hollywood's major line of business—feature-length films—would seem to have been an obvious program source for television, with its insatiable need to fill airtime. Paramount actually televised some of its films in the early 1930s, but through an experimental station in Los Angeles that only reached few receivers.65 A number of British films were sold to television stations as early as 1948, followed by features from small Hollywood companies such as Republic and Monogram. Yet, the major studios held their films back for various reasons, including their relationship with exhibitors and talent unions, their involvement in alternative exhibition schemes such as theater and subscription TV, and their dissatisfaction with the prices offered by the networks for quality films. Based on information from government documentation, Dombkowski argued that low prices offered by the networks was the primary reason. (Statements in the trade press confirm this point. For instance, in 1952, Spyros Skouras stated that TV, "can only pay us buttons for our old films, and certainly can't even begin to compete for the new product.")66

By 1955, the divorcement of exhibition freed the distributors from their commitments to theaters and broadcast television had become more established and profitable. Thus, the major studios began releasing their older films to television. An agreement between the producers and trade unions required negotiation for the licensing of films produced after 1948. Thus, pre-1948 films were the first ones sold to television stations. The majors either sold their films to other companies or set up their own television distribution divisions. RKO started the licensing deluge in 1955 when it sold its features and shorts to C. and C. Television. Meanwhile, Columbia sold its own feature films through its Screen Gems subsidiary, which also handled Universal's older films. Fox sold its films to National Telefilm Associates, but then purchased 50 percent of the company in 1956. Eventually, Paramount sold its library to an affiliate of the Music Corporation of America (MCA), which later was to merge with Universal. (White notes that Paramount delayed the sale of pre-1948 films until much later than the other studios because of their hope that pay television would succeed.)67

In his 1960 book, Michael Conant cited government documentation claiming that in 1954 there were eighty motion picture exchanges dedicated to the distribution of films to television, with total receipts of $24 million. He further estimated that by February 1958, around 3,700 pre-1949 feature films had been sold or leased to television for an estimated $220 million.68 As predicted, the appearance of feature films on television ate into the theatrical box office. A specially commissioned study by the theater owners found that towards the end of 1957, one-quarter of television programming represented recycled movies.69 Independent stations (not affiliated with the networks) found feature films to be a major source of programming, sometimes providing up to 48 percent of their schedules.70

But the licensing of feature films was still predominantly to individual television stations, not to the networks. Even though over thirty prime time network programs consisted of feature films between 1948 and 1957, these offerings were sporadic and inconsistent.71 The networks resisted the regular use of feature films in their schedules, but also were unable (or unwilling) to pay enough to satisfy the majors. Meanwhile, the studios found the syndication market for pre-1948 films to be quite profitable, but resisted issuing newer films because of the potential loss of revenues from theater reissues.

Of course, the networks eventually came around to featuring Hollywood films in their prime time schedules. But it wasn't until the early 1960s, after a new labor agreement had been negotiated with the talent unions, that the majors began seriously releasing their newer films to television. When they did, however, there was a plethora of post-1948 films on the market. In fact, so many newer films were licensed by the majors during 1961 that some feared supplies would be exhausted in only a few years.72 This was one of the factors that influenced the evolution of Hollywood-produced made-for-TV movies and mini-series that started emerging in the mid-1960s.73

By 1960, television had become the hot new medium; 90 percent of American homes were equipped with sets. And a good deal of the televised programming came from Hollywood. By this time, over 40 percent of network programming was produced by the Hollywood majors.74

It is nearly impossible to estimate the actual revenues that film companies earned from television during the 1950s, as few companies specifically identified television revenues in their annual reports.75 An overview of the diversification trends in Variety at the end of the decade included estimates of television's contributions to total revenues for a few companies for 1958: Columbia, 25 percent, Disney, 20 percent, Loew's, 11 percent, and Warners, 30 percent.76

It is clear that, at least by the mid-1960s television was heavily dependent on Holly-wood-produced programming and Hollywood had become dependent on television as a crucial source of revenues. This relationship continued to grow through the 1970s, as documented by Thomas H. Guback and Dennis J. Dombkowski in a 1976 article, and indeed through the end of the century.77 Even though the major studios were not able to control television or develop alternative forms, they eventually found television to be a valuable new market for their old products, and they also developed new products for the expanding new medium.

The New Diversification

By the late 1950s and early 1960s, the Hollywood majors represented newly diversified corporations, reporting sizable profits. The next two sections will look more closely at two companies that were particularly successful with these new diversification strategies: Walt Disney and Universal. The Walt Disney Company was an independent production company that benefitted greatly from diversification in the 1950s. At the same time, Universal was a "second rank" studio through the 1940s, but through its alliance with MCA in the late 1950s it became one of the Hollywood majors by the mid-1960s. Both companies moved into television during the 1950s, thus setting the foundation for their roles as diversified entertainment conglomerates at the end of the century.

Walt Disney Productions

As briefly noted in Chapter 1, the Walt Disney Company was a relatively small independent that mainly produced animated cartoons from the early 1920s, adding animated features in the 1930s. The extensive merchandising campaigns accompanying these films contributed to the company's revenues and made it possible to continue production of cutting-edge animation. However, Disney did not represent the kind of integration and diversification typical of the major studios until the 1950s.

Walt Disney is often acknowledged as the first executive in Hollywood to recognize the potential of television. While this claim ignores other film companies' ongoing attempts to get into the television business in various ways, Disney still deserves credit for recognizing television's potential value in promoting and diversifying the film business. Disney explained, "Through television I can reach my audience. I can talk to my audience. They are the audience that wants to see my pictures."78 It seems likely that Disney company had television in mind for its products from the mid-1930s, when it changed from United Artists to RKO as distributor; the crucial factor was United Artists' refusal to allow Disney to retain television rights to films.79

At first, the Disney Company produced a few Christmas specials, beginning with "One Hour in Wonderland," broadcast on NBC in 1950. Apparently, all three of the networks tried to convince Disney to produce a weekly series. Finally, in October 1954 the weekly series Disneyland appeared on ABC, moving to NBC seven years later as Walt Disney's Wonderful World of Color. The television series allowed the studio to recycle its already released products, similar to the technique of continuously re-releasing its animated features in theaters every few years, thus reaping further profits with little additional cost.

But television also proved helpful in several ways for Disney's most cherished project—an amusement park that would appeal to adults as well as children. The arrangements with ABC for the Disney television series apparently were prompted by Disney's need for capital to build Disneyland, which eventually opened in Anaheim, California, in 1955. ABC invested $500,000 in the park and became a 35 percent owner, plus guaranteeing loans of up to $4.5 million. Walt Disney apparently received little support from the Disney Company itself, but managed to raise the funds from the ABC deal and loans on his insurance policies. In 1952, he formed a separate company called Walt Disney Inc., later to become WED Enterprises, to develop the park without involving company funds. Disneyland ultimately cost $17 million, but was an instant success with one million visitors during its first seven weeks of operation.

In addition to providing financial backing, Disneyland, the television series, became a terrific promotional vehicle for the park even before it opened. The show was organized around the same four divisions as the park—Fantasyland, Adventureland, Frontierland, and Tomorrowland—and constantly featured updates on the new park. Of course, new content also was developed for the show. For instance, Davy Crockett started as a threepart episode, inspired a national merchandising sensation, and was then recycled as two feature films. (The company obviously underestimated the success of the series, as Disney explained: "We had no idea what was going to happen to 'Crockett.' Why, by the time the first show finally got on the air, we were already shooting the third one and calmly killing Davy off at the Alamo. It became one of the biggest overnight hits in TV history, and there we were with just three films and a dead hero.")80 However, a good deal of the show featured the studio's recycled cartoons and feature films. The Davy Crocket phenomenon—with coonskin caps purchased by young boys all over the country—was another reminder of the Disney Company's successful merchandising business, which had been established in the early 1930s.

In 1955, the company introduced a daily afternoon television show designed exclusively for children and proclaimed as a "new concept in television programming." The Mickey Mouse Club featured the mouse-eared singing and dancing Mousketeers, plus other segments that involved Disney's products (such as Disney cartoons and news about Disneyland). Despite its enormous popularity in 1955-1956 (at one point, reaching 75 percent of the television sets in the United States and attracting lots of advertising), and the endurance of its theme song, The Mickey Mouse Club only lasted four seasons. The main reasons for its cancellation were: 1) the high cost of producing the show; 2) a significant drop in ratings from 1955 levels; and 3) a dispute between Disney and ABC over control of The Mickey Mouse Club and another series, Zorro.81

In addition to these developments, the company also finally decided to distribute its own films, creating Buena Vista Distribution (as noted in Chapter 1). The move was attributed to Walt Disney's deep concern about maintaining control over his own products, as had been seen in an earlier incident when the Disney character, Oswald the Lucky Rabbit, was "stolen" by another company. To a large extent, the move into distribution signaled the Disney Company's transition from a marginal independent film company to one of the Hollywood majors.

Even though the company may have been slow to control its own film distribution, it might be argued that Disney led the way in the diversification that would characterize the industry for the next few decades. As writer Richard Schickel argued, the Disney Company had a head start on the rest of the industry. While the larger, integrated majors were dealing with the rising competitive threat of television, as well as the loss of their theaters due to the Paramount decrees, the Disney Company was diversifying its film products, as well as its over-all business.82 For instance, in 1960 Disney reported the following income sources: film rentals, $18.4 million, amusement park, $18.1 million, television, $4.9 million, and other (publications, comic strips, licensing cartoon characters and music), $4.9 million.83 Furthermore, by the beginning of the 1960s, the company was integrating these businesses, thus laying the foundation for the Disney synergy that blossomed in the 1980s and 1990s. In addition, the Disney Company was especially successful at selling and promoting its products globally. By 1954, it was estimated that one-third of the worlds population had seen at least one Disney film.

By the end of the 1950s, the company was recognized by Variety as one of the "ideal diversified amusements setups."84 And by the end of the century, the Disney Company was one of the largest entertainment conglomerates in the world, including substantial investments in network television (ABC), cable television (ESPN, A&E, Lifetime, the Disney Channel, and other stations), as well as motion pictures, theme parks, real estate, and merchandising.85


Another current major entertainment conglomerate to develop important diversified activities (especially in television) during the 1950s was MCA/Universal. The story involves two different companies that came together during this decade.

Universal Studios is one of the oldest film companies in the United States, dating back to 1906 when Carl Laemmle opened the White Front Theatre in Chicago. The same year, the Laemmle Film Service was established as a film distribution company that by 1919 was servicing a majority of cinemas in the Midwest and Canada. In 1909, the Independent Moving Picture Company of America (IMP) was formed to produce films. Universal Film Manufacturing Company as founded in 1912, was the result of a merger of IMP and several other film companies. In 1915, the company established studio facilities at a 230-acre ranch in southern California called Universal City.86 Although Universal produced and distributed a range of films over the years, the company produced mostly "B" pictures that supplemented the major studios' "A" films.

Universal began diversification activities in 1951 when Decca Records acquired a 38 percent share and soon thereafter controlled the company. Universal had encountered serious losses from a few expensive independent films from 1946 to 1949. Thus, the new management attempted to cut costs and increase revenues through low-budget productions, including situation comedies such as the Ma and Pa Kettle series, and a number of science fiction films, including Creature from the Black Lagoon (1954) and The Incredible Shrinking Man (1957).

The company had moved into television production in the late 1940s in hopes of attracting revenues, but also in an effort to keep its facilities open during production lulls. Universal's subsidiary, United World Films, was especially active in producing television commercials and had produced over 5,000 commercials that attracted $3 million in annual revenues by 1958.87 The company also was releasing theatrical films to television, with Variety dubbing United World "a dominant factor in the home movies field" in 1958.88

Decca/Universal's relationship with Music Corporation of America (MCA) began in December 1958, when Universal sold its 367-acre studio lot for $11.25 million to MCA, then leased back studio space at $ 1 million a year.

MCA dates back to 1924, when Dr. Jules Stein and William R. Goodheart Jr. founded it as a talent agency for live music and later radio. (See Chapter 1.) In 1935, in addition to Lew Wasserman joining the company, MCA received a "blanket waiver" from the American Federation of Musicians, permitting the agency to act in a dual capacity as talent hooker and program producer, and allowing it to package radio shows with its own bands. MCA added live show production in 1943 through a subsidiary called Revue Productions. The company also expanded its agency business with the addition of Hay-ward-Deverich Agency in Beverly Hills and the Leland Hayward Agency in New York. New clients included top Hollywood stars such as Greta Garbo, Fred Astaire, Jimmy Stewart, Henry Fonda, and Gregory Peck. The company gained a reputation for taking care of its clients, arranging lucrative contracts and creative financial deals. For instance, in 1950 Wasserman negotiated a percentage deal for Jimmy Stewart to receive 50 percent of the net receipts for Winchester '73 from Universal—a deal that was said to have revolutionized the film business, since before that time stars had rarely received a share of the box office.

As the company grew to become a dominant force in the entertainment industry, it began attracting the attention of the federal government for anti-trust violations. In the first of many suits filed against the company, a judge found MCA guilty of restraint of trade in 1946, calling the agency "the Octopus … with tentacles reaching out to all phases and grasping everything in show business." However, what followed during the 1950s extended the Octopus's reach much further than the judge might have imagined.

MCA, as the largest talent agency in the business, began its move into television production in 1952. Revue Productions re-emerged as the company's television subsidiary, with a TV version of radios Stars over Hollywood, called Armour Theatre. The series was recorded on film, which increased the production expense, but MCA arranged for its clients to appear on the programs for minimum scale.

As Revue continued to produce other television series, the issue of conflict of interest again emerged. And, again, the agency was able to obtain a "blanket waiver" from the talent guilds that enabled it to gain a considerable advantage in television production. The unprecedented and exclusive waiver from the Screen Actors Guild allowed Revue to produce television shows and simultaneously represent talent in those shows. The Writers Guild granted MCA a similar waiver, allowing it to represent screenwriters and to produce TV programs through Revue.

By 1954, MCA was earning 57 percent of its revenues from television programming. During the 1950s, Revue Productions became incredibly successful in television, with such high-ranking shows as Wagon Train, Alfred Hitchcock Presents, The Jack Benny Show, Ozzie and Harriet, Dragnet, This Is Your Life, Leave It to Beaver, and many, many others. By most accounts, MCA was the dominant force in television by the end of the decade, with 85 percent of its revenues from television sales and producing more programming than any other company, including the television networks themselves.

Although MCA produced programs for every network, the company developed a special relationship with NBC that was similar to Disney's with ABC. One report cited an NBC executive showing an MCA vice president plans for its 1957 season, saying, "here are the empty spots, you fill them." An assortment of MCA programs was featured on NBC that year, including M Squad, Wagon Train, Tales of Wells Fargo, and others.89 Meanwhile, MCA also produced a number of shows directly for syndication, including Mike Hammer, Biff Baker, U.S.A., and Famous Playhouse.

MCA expanded in other areas of the entertainment business, as well. In 1958, the company purchased Paramount Studios' pre-1950 sound film library for $50 million, the richest television syndication deal to date. The same year, the company incorporated as MCA Inc., a neatly diversified enterprise encompassing film and television production and distribution, talent management, music production and distribution, and a variety of other entertainment fields. By this time, it also had moved into the tourist/theme park business through a deal with Grey Line Bus Tours called "Dine with the Stars." Buses drove around the lot with visitors, who would then have lunch in the commissary. By 1964, the Universal Studios Tour opened in conjunction with Glamour Trams, including two drivers, two guides, and one ticket seller; the price of admission was set at $6.50 for two adults and a child

While these diversification activities were proving to be quite lucrative, at the end of the decade the government again began to focus attention on MCA. One of the problems was the blanket waiver that was issued in 1952 (and extended in 1954), while Ronald Reagan (an MCA client) was president of SAG. Although some argued that the waiver was issued to encourage employment, the government alleged that it was a conspiracy that allowed MCA to monopolize talent and television program production. (Other agencies had not been given such waivers.) Reagan's involvement as both SAG negotiator and MCA client suggested a conflict of interest. Reagan remembered few of the details during government hearings, but it seems that a year after MCA's waiver was granted, he had become the host and star (and later, producer) of Revue's General Electric Theater on CBS. The program contributed to Reagan becoming a multi-millionaire by the time the show closed nine years later.

Other allegations involved MCA's restraint of trade, extortion, discrimination, blacklisting, and use of predatory business practices. One of MCA's practices was to develop television programs or motion pictures as "packages" of the agency's clients. The agency received a commission on the sale of the package to various outlets. While other agencies used this technique, MCA was particularly successful in its implementation, and had become known for its practice of refusing to let a company employ one of its clients unless a complete MCA "package" was involved.

Around the same time as the government investigations, MCA announced plans to purchase Decca Records, which included Universal Pictures. Interestingly, the growth of Universal Pictures into a major studio was due to sizable profits from increasingly bigger films that were put together as "MCA packages." Examples included three of Universal's biggest moneymakers of 1959: Operation Petticoat ($18.6 million), Imitation of Life ($13 million), and Pillow Talk ($15 million).

Although the government initally moved to block the purchase of Decca and Universal, MCA finally agreed to a consent decree with the Justice Department in 1962, clearing the way for the merger. The company chose to divest its talent management activities, but gained even more clout in the lucrative film and television business, as well as in the music industry. Though the company continued to pursue other forms of diversification during subsequent years, these developments during the 1950s were consequential in the rise of MCA/Universal as a significant player in the entertainment industry at the end of the twentieth century.90


Although the film industry failed to dominate the emerging television industry in the 1950s, Hollywood actively participated in televisions evolution during the decade and established a strong relationship that eventually led to the integration of these two industries. It is clear that Hollywood companies kept a close watch on the evolving television technology and even became involved in its early growth. However, strategies that involved hardware development and ownership of broadcast outlets were mostly unsuccessful. Station and network ownership, as well as alternative systems, such as theater television and early forms of pay-TV, were thwarted, especially by government protectionism, but also by resistance from exhibitors and other factors. Notably, the Hollywood majors' monopolistic tendencies proved detrimental to some of their efforts to expand into the newly emerging television industry.

However, Hollywood did succeed in becoming involved in the television business through program supply. During a period of box-office decline, the newly emerging television industry provided the opportunity for the major studios to draw upon their expertise and resources to create new products (like prime-time series and made-for-TV films) for the growing television market. In the end, the majors were able to dominate that market. In addition, the film industry was able to recycle and profit yet again from feature films that had already produced sizable profits. Eventually, television also served as another market for newly produced theatrical films.

These activities ultimately led to the diversification of the film industry, as well as the eventual integration of the film and television industries later in the century. As Anderson fittingly concluded:

Since the movie studios began producing television, the diversification of media corporations into related fields and the consolidation of capital through corporate mergers have produced an environment in which media industries are increasingly interwoven. Although these tendencies existed before the 1950s, the impulse toward integration rose markedly during that tumultuous decade and has become more pronounced in subsequent years.91

In other words, television provided the film industry with new opportunities that laid the groundwork for the diversification and concentration that characterized the entertainment industry at the end of the century.

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Hollywood and Television in the 1950s: The Roots of Diversification

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