10
The Hollywood Studio System, 1946-1949

In the movie industry's roller-coaster postwar ride from the unprecedented heights of 1946 to the panic of 1949, the Hollywood studio powers underwent enormous changes. Their way of doing business and of making movies changed radically in a few short years as the industry peaked and began its rapid descent. In the process, euphoria steadily gave way to a deepening malaise and a growing nostalgia for Hollywood's halcyon days. By 1949, in fact, trade papers were wistfully invoking the prewar era as "the golden age of Hollywood production."¹ And there was also a bitter desperation about the current state of the industry—made all the worse by the economic conditions in the nation at large. "Hollywood," lamented one major producer in 1949, "is an island of depression in a sea of prosperity."²

The studios would endure, of course, and in fact their survival instincts proved to be remarkably acute in the chaotic and uncertain postwar era. In the short term, survival was primarily a matter of controlling costs. Fortune magazine deemed Hollywood's "cost-cutting program" of 1948—1949 "the severest the movie colony has known since the great depression."³ In late 1949, Thomas F. Brady of the New York Times wrote, "Hollywood's economy, declining from the 1946 peak of excess profits and lavish waste, reached a nadir early in the year and leveled off." But over the past year, said Brady, the studios "emerged from a state of panic and settled down to the production of films on a reasonable and, by previous standards, a business-like basis."⁴

While controlling costs enabled the studios to survive the postwar downturn, the key to industry fortunes remained the exhibition sector. The theater end of the business was far more profitable than the production end in the postwar era, owing in large part to inflated ticket prices. In January 1948, Variety reported that in terms of overall revenues, "the real lifeline has been the company-owned theater chains." Variety estimated that of the nearly $100 million in total studio profits for the previous year, roughly 70 percent came from the majors' affiliated chains. The increasingly "steadying influence" these chains had on the majors in a difficult time was "a bright sign for the future if the U.S. Supreme Court permits the Big Five to hold on to them."⁵

The Court did not, of course, and thus a governing irony for the postwar movie industry was that the companies with the most to lose in the antitrust battle—the integrated majors—enjoyed, until divorcement took effect, even greater hegemony than ever, owing to market conditions. This position clearly favored Paramount, with its chain of over 1,200 theaters, while Fox and Warners (with about 500 houses each) held the middle ground. The once-dominant MGM (with only about 125 theaters) steadily lost ground but still remained profitable throughout the late 1940s, thanks to the superiority of both its pictures and its distribution operation. The only integrated company to lose money in the late 1940s was RKO; not only were its holdings limited (about 100 theaters), but it suffered from chronic management troubles. Meanwhile, the three majorminors, without the relative security of theater holdings, struggled simply to stay afloat.

Performance is clearly tied to studio holdings in the postwar studio profits and profit shares outlined in table 10.1:

Hollywood began its postwar decline in 1947. That decline accelerated in late 1947, when the effects of falling attendance and the lost British market began to take their toll, and by 1948, as the figures in table 10.2 indicate, every studio was losing ground:

Besides the general economic downturn, these figures signal several other important postwar developments. First, the integrated majors were making a great deal more in gross revenues and profits than the other companies. Second, a larger portion of the majors' gross income was being retained as profit (i.e., they had wider profit margins). Third, more extensive theater holdings led to proportionately higher revenues and profits. And fourth, to state the obvious, business was declining rapidly, in fact, the falling gross revenues and profits for all the studios would not only continue but accelerate over the coming years with only one exception: Universal's losses bottomed out in 1948 and 1949, and it was the only studio to actually increase revenues and profits in the early 1950s. The Big Five suffered their heaviest losses in 1950—and afterwards, of course, as they began to divest their affiliated theaters.

The figures in table 10.2 also indicate the dwindling profit margins for all of the studios in the late 1940s, and in fact the decline in profits was far more severe than the decline in gross revenues. From 1946 to 1949, the studios' total box-office receipts fell from an all-time high of $1.7 billion to $1.45 billion, a drop of about 14 percent; mean-while, profits plunged from a record $120 million to $33.6 million, a three-year drop of over 70 percent. Rising production and operating expenses were the main reason for the squeeze, and thus the studios steadily intensified their efforts to cut costs—not only film budgets but also the operating costs of the studio-factories themselves. The belttightening was done without significant reductions in overall output. The Big Eight had averaged about thirty-three releases per year in the later war years (1943—1945). This average fell to just under thirty-one releases per annum from 1946 to 1949, with the major-minors accounting for most of the decline. (The Big Five averaged some twenty-nine releases per year from 1943 to 1945, and twenty-eight from 1946 to 1949.)

During the war boom, film costs had inflated considerably, as has been seen, and the majors had helped fuel the inflationary trend by concentrating so heavily on first-run product. They continued this strategy through 1946; the Wall Street Journal noted in November that the "big studios" had all but eliminated low-budget production to concentrate exclusively on A-class pictures.⁶ In 1946, the average feature film cost about $665,000, roughly double the cost five years earlier.⁷ That year, MGM reportedly spent an average of $1.6 million per feature, Paramount $1.5 million, Warners $1.3 million, and Fox $1.25 million. Columbia, Universal, and RKO were close to the industry average, while Republic spent under $500,000 and Monogram only about $200,000 per picture.⁸

The majors' production expenditures paid off in 1946 and early 1947 as top features continued to return record grosses. But as economic conditions worsened, the studios began cutting production and operating costs—an effort that began in earnest in late 1947 after Britain initiated the 75 percent ad valorem tax. By 1948, cost-cutting had become a way of life at all of the studios. Reviewing the year 1948 in the 1949 Film Daily Year Book, the industry analyst J. P. McGowan described "the policy that has been established in most of our studios. Shooting schedules have been reduced 50 percent. Budgets have been cut in half." McGowan reported that the studios had reduced the number of A pictures from 136 in 1947 to 100 in 1948, while increasing B output from 110 to 156. He noted, too, that several companies—including Universal, RKO, and Warners—had actually suspended production in 1948, relying on backlogs while reorganizing and streamlining operations to further cut costs.⁹

Actually, none of the majors achieved quite the reductions that McGowan described, but the cost-cutting was substantial. The Wall Street Journal reported in 1949 that budgets and schedules were down roughly 25 percent at the major studios since their postwar peak. In 1946, for example, Paramount's features had required an average of 55.2 shooting days; in 1949, the average was down to 41.3 days. Paramount's average budget was down from $1.95 million in 1947 to $1.5 million in 1949. Fox, meanwhile, had cut its budgets for top features from $2.35 million in 1947 to $1.785 million in 1949.¹⁰ At year's end, Variety announced that Paramount and Fox had set strict budget ceilings (of $1.5 million and $1.75 million, respectively) on their high-end features. Variety also reported industrywide budget reductions of 25 percent."¹¹

Overall, the studios' efforts to control production costs proved to be effective and were especially impressive in light of the heavy inflation throughout the U.S. economy in the late 1940s. Hollywood's total production expenditures had doubled during the war, climbing from around $200 million in 1942 to just over $400 million in 1946, but over the next three years they rose less than $10 million.¹² The average feature budget did move past the $1 million mark in 1948, more because of inflation, however, than lax studio cost controls, in fact, a recent study calculating Hollywood feature production costs adjusted for inflation found that budgets had increased 100 percent from 1940 to 1946—the biggest periodic leap, by far, in Hollywood's history—but actually declined about 5 percent from 1946 to 1950.¹³

While the studios focused their cost-cutting campaigns primarily on reducing budgets and shooting schedules for individual films, they pursued other strategies as well. The postwar trend to location shooting was motivated, in part at least, by the fact that production and labor costs were lower outside California, particularly in New York City. The studios also eschewed high-priced presold story properties—or virtually any pre-sold properties, for that matter—relying more heavily on original screenplays. In 1947, the studios spent $4.35 million on screen rights to stage plays; in 1948, they spent only $350,000—the lowest total in two decades, according to the Motion Picture Herald.¹⁴ In 1949, Variety reported a continued "sharp upswing" in original screenplays; by then, roughly 70 percent of Hollywood films were based on original stories.¹⁵

The principal means of cutting studio overhead and general operating expenses was simply reducing the labor force; wages had climbed even faster than the rate of inflation after the war. In January 1945, there were 31,000 employees in Hollywood on a combined payroll of $192 million. Within a year, the payroll was $240 million—a 25 percent increase—for roughly the same number of workers. By January 1948, the workforce had declined by some 1,500 while payroll rose to $314 million, having climbed another 30 percent in two years. By then, the studios were cutting both operating costs and the number of employees, and within two years (as of January 1950), the total payroll was reduced to $230 million and the studio workforce to 17,500 employees. Thus, the studios managed to bring wages back to about the 1946 level, but only by eliminating over one-third of their workforce in the span of two years.¹⁶

Several other factors should be mentioned here in relation to Hollywood's cost-cutting campaign. One was that economies were virtually forced on the studios by lending institutions. With the general inflationary trend in the United States after the war, as well as the decline of the movie industry (which made it an increasingly risky investment), the studios faced higher interest rates and tighter credit terms.¹⁷ These constraints were especially hard on independent producers, but the studios felt the pinch as well. Another factor was the studio management control that accompanied cost-cutting. Simply stated, the tighter economy meant tighter management, which for filmmakers meant that much of the hard-won autonomy and creative control they had enjoyed during the boom years was now lost. Tight money also meant limited opportunities for independent producers, and so many of them, especially producer-directors, returned to the studio fold in order to finance their films—and thus had to submit to tighter management controls.

Another significant factor was the general reassessment, especially by the majors, of both the first-run market and the value of top product in the late 1940s. Given the overall decline of the industry and growing uncertainties about the effects of the suburbanization of the late 1940s on major urban markets, the studios avoided high-cost, high-stakes productions. Indeed, top hits were rare in the late 1940s owing in large part to the fact that the studios simply stopped making the lavish spectacles and pre-sold "event" pictures which were most likely to become major box-office hits. This strategy was confirmed by the late-1940s dearth not only of big moneymakers but even of more modest "sleeper" hits.

Given the uncertain postwar marketplace and the increasing need to cut costs, the studios' management and marketing operations were more important than ever—more so than at any time since the early 1930s, when Hollywood responded to the Depression. And as in that earlier period of sustained (and deepening) crisis, these operations at virtually all of the Hollywood studios underwent extensive and lasting change.

Studio Operations and Market Strategies

The Major Studios

Paramount Pictures dominated the movie industry throughout the postwar era because of its massive theater holdings, superior resources, and stable and capable management setup. Barney Balaban continued to run the company and to oversee sales and exhibition out of the New York office. Frank Freeman managed the studio, mainly handling contract negotiation and labor relations with the studio's 3,200 employees, while Henry Ginsberg guided filmmaking operations.¹⁸ Paramount had a classic top-down management structure, with virtually all decisions emanating from Balaban, in fact, an inviolable company policy was that Balaban had to approve any expenditure over $100. Balaban gave his top executives ample authority, however, and Ginsberg clearly ruled studio filmmaking operations. As a 1947 Fortune profile of the company asserted: "The focus … in the whole studio, inevitably, is on Ginsberg. He is the man who makes the decisions in picture making, and although he is in constant consultation with other executives, from Balaban on down, his is the final word."¹⁹

Paramount's postwar output was essentially a continuation of its wartime efforts—a succession of light comedies and romantic dramas, punctuated by an occasional Road picture with Hope, Crosby, and Lamour (Road to Rio in 1947), an occasional DeMille epic (Unconquered in 1947, Samson andm Delilah 1949), and an occasional Wilder-Brackett triumph (A Foreign Affair in 1948). Hope, Crosby, and Alan Ladd continued to be its dominant stars, with William Holden on the rise and top freelancers like Gary Cooper, Barbara Stanwyck, and Olivia de Havilland coming in for one-and two-picture stints.

Paramount enjoyed tremendous success in the mid to late 1940s, setting an industry record with profits of over $15 million in 1945 and then far surpassing that total in each of the next three years. Its most profitable year was 1946, when net proceeds were nearly $40 million.²⁰ Significantly enough, even during that period of routine $3 million rentals, the company's record pace owed far more to its "highly profitable and strategically located theater holdings" than to its hit films, as Balaban told Variety's Ira Witt in 1946. "Balaban's disclosure," stated Witt, "indicates that the theater end continues to be the bigger money-getter of the film business."²¹ At the time, Paramount had a stake in roughly 1,500 theaters, including about 250 overseas. It held majority ownership in some 1,200 theaters in the United States, most of which were located in major markets. And because of the relative size of these houses, Paramount controlled roughly one-eighth of all the theater seats in the United States (1.45 million out of a total of 11.4 million).²²

Paramount responded relatively quickly to worsening market conditions in 1947, and by mid-1948 the studio had reduced its overhead by a reported 30 percent.²³ Paramount also reissued films very aggressively throughout the late 1940s, keeping literally dozens in circulation at any given time. This reliance on reissues was more than an effective defensive market strategy; it also enabled Balaban to test his conviction that Paramount's old films would be vital to its anticipated move into television.²⁴ Indeed, Balaban's hopes for television as the key to Paramount's future helps explain his willingness to divest the all-important theater chain without a serious fight after the Paramount decree. By 1949, the company had pretty well abandoned theater-based video projection, and Balaban saw Paramount's future television plans primarily in terms of feature film distribution through Paramount-owned TV stations (see chapter 13). Thus, Balaban, despite his extensive background in exhibition, decided to stay on with Paramount Pictures after divestiture rather than take over the newly created United Paramount Theaters.

Twentieth Century-Fox, Paramount's chief competitor through the postwar era, also enjoyed stable and capable management, led by Spyros Skouras in New York and Darryl Zanuck at the studio. As in earlier years, Fox's postwar output evinced a fundamental split between Technicolor hokum on the one hand—chiefly Betty Grable musicals and Tyrone Power costume adventures—and relatively ambitious, socially astute drama on the other, much of it supplied by producer-directors like Otto Preminger and Joe Mankiewicz. The latter ranged from noir thrillers and realistic crime films to women's pictures and social problem dramas, all trends which Fox developed and dominated in the late 1940s. Perhaps the best example of the studios split personality can be seen in the two late-1947 films which finished among the top ten box-office hits of 1948: Captain from Castile, a color costume drama starring Tyrone Power and directed by the spectacle specialist Henry King, and Gentleman's Agreement, a drama about anti-Semitism starring Gregory Peck, produced by Zanuck, and directed by Elia Kazan.

Like most of Fox's postwar successes, these were solid but unspectacular hits. Fox relied on a steady supply of profitable A-class films, which it delivered in the late 1940s perhaps as consistently as any studio besides MGM. Moreover, owing to Zanuck's practical approach to the marketplace, Fox relied more heavily on B's than any other major. Actually, Fox hedged its bets in this area by phasing out active B production at the studio in 1946, dismissing the head of the B unit, Bryan Foy (who went to PRC), and subcontracting B-picture production to independent low-budget producers like Sol Wurtzel, Ben Pivar, and Bernard Small. These moves gave Fox considerable flexibility, enabling Zanuck to revert to a high-output strategy, all through outside producers. (The twenty-one B's Fox produced for the 1947-1948 season account for the studios one-year surge from twenty-seven releases in 1947 to forty-five in 1948). When the strategy did not pay off, Zanuck simply scaled back Fox's outside B commitments, although its thirty-one releases in 1949 still included a few B pictures.²⁵

Another measure of Zanuck's pragmatism was his willingness to shoot pictures away from the studio to curb escalating production costs. Fox helped start the trend toward location shooting in 1945 with The House on 92nd Street, the first film of the era to be shot entirely on location in New York City. That was done more as a production experiment (at the behest of the producer Louis de Rochemont) than as a cost-cutting measure, but by 1947-1948 brutal inflation and labor problems had Fox (and other studios) mounting "runaway" productions for economic reasons as well, in fact, by 1948 Zanuck sometimes had more pictures being shot on location than at the studio.²⁶

Like Paramount, Fox was considering its television options as the ascendancy of the new medium and theater divorcement appeared increasingly inevitable in the late 1940s. For Fox, the principal thrust was in video projection for theaters through a cooperative research and development effort with RCA; Fox also actively pursued a plan to purchase ABC-TV in 1948. But as with Paramount, Fox's move into television would be undercut by the FCC in the wake of the 1948 antitrust decree.²⁷

MGM, more than any other studio, actively sustained the studio system at all levels during the postwar era, continuing to produce relatively expensive A-class star vehicles and to keep more top talent under contract than any other company after the war. The studio still had nineteen directors and eighty stars under contract in 1949, for example, fifty of whom were top-billed.²⁸ For its high-end product, Metro continued to rely on costume pictures, historical romances, and especially musicals, many of them in Technicolor, in fact, in 1948-1949 MGM produced twenty-two of Hollywood's seventy-four color releases.²⁹ And as mentioned earlier, MGM concentrated more on distribution and sales than did its theater-heavy major counterparts.³⁰

Thus, MGM did quite well in terms of both gross revenues and rental income in the late 1940s. Combining Variety's annual lists of leading moneymakers from 1946 to 1949, MGM accounted for 65 of the 316 most successful films (versus Fox with 55, Paramount with 49, Warners with 47, and RKO with 40).³¹ Cost-efficiency was another matter, however: MGM's steadily narrowing profit margins reached crisis proportions by 1948, when its gross revenues of $164 million, roughly on a par with both Fox's ($163.4 million) and Paramount's ($170.4 million), yielded profits of only $4.2 million, far below Fox's $12.5 million and Paramount's $22.6 million.³²

At that point, Loew's chief executive, Nick Schenck, and his board of directors demanded that Mayer make wholesale changes in MGM's production and management operations and its general market strategy. The most significant changes involved studio management. In late 1947, Metro announced a realignment of its executive staff and "an abandonment of the executive producer system, which has been in effect for more than 10 years"—that is, since the death of Irving Thalberg in 1936, when Louis B. Mayer initiated his management-by-committee system. Then, in early 1948, Schenck issued his now-famous directive to Mayer: "Find another Thalberg." That resulted in the July 1948 hiring of Dore Schary as the vice president in charge of production (at a salary of $6,000 per week). On his arrival, Schary promised to make "good films about a good world," including five to ten "progressive" films per year—a rather dubious prospect in those days perhaps, but one consistent with Schary's liberal bent.³³

Schary was successful in reducing production and operating costs at MGM without compromising the overall quality of the company's products. His role, in essence, was to oversee all production except for the musicals, most of which were handled by the producers Arthur Freed (Easter Parade, 1948; On the Town, 1949) and Joe Pasternak (A Date with Judy, 1948; In the Good Old Summertime, 1949). MGM continued to turn out lavish costume pictures and adaptations like The Three Musketeers (1948) and Madame Bovary (1949) as well, but Schary's overall effort to reduce both the costs and scale of production was effective. Among MGM's biggest hits in 1949, in fact, was Adam's Rib, a lean, high-energy Tracy-Hepburn comedy directed by George Cukor in only thirty-seven days. And Schary did manage to turn out a few "progressive" films, notably an adaptation of William Faulkner's Intruder in the Dust and his own production of Battleground in 1949.³⁴

Dore Schary's move to MGM followed a massive shake-up at RKO in May 1948 after Howard Hughes purchased the company from Floyd Odium. As mentioned earlier, Schary had arrived at RKO in late 1945 to manage a multi-film package put together by David Selznick, and Schary stayed on with the studio after the death of the production chief Charles Koerner in 1946. Under Koerner, RKO had finally achieved stability and financial success, recording profits of over $12 million in 1946 and settling into an ideal balance of modest in-house productions and more ambitious pictures from allied independents like Goldwyn and Disney. Schary shifted from outside producer to production head in January 1947, and among his primary objectives was to upgrade the quality of RKO's high-end productions. The strongest of the in-house A pictures were noir thrillers like Cornered (1945), The Spiral Staircase (1946), and Crossfire (1947). RKO's outside productions in 1946 included some of the best films of the postwar era, including The Best Years of Our Lives, Notorious, and IT'S A Wonderful Life. The studio also scored with two Cary Grant vehicles, The Bachelor and the Bobbysoxer (1947) and Mr. Blandings Builds His Dream House (1948), both initiated under Schary's regime.

Schary's efforts to upgrade in-house production increased RKO's revenues in 1947, although its profits fell to $5 million. Still, the studio was clearly in better shape than at any period in its troubled twenty-year history. Hughes's buyout of RKO in May 1948, within days of the Paramount decree, effectively ended the climb to profitability. Shortly after his takeover, Hughes fired RKO's president, Peter Rathvon, and closed down the studio, rendering it "practically non-existent during its process of reorganization," according to Film Daily's J. P. McGowan.³⁵ RKO eventually resumed production, but Hughes's obsessive quest to cut costs, root out subversives, and control production kept the studio in complete turmoil. Hughes ran the company until 1954, but the studio never regained its stability or financial health. The Hughes purchase, as Douglas Gomery aptly states, "signaled the end of RKO as a serious movie concern."³⁶

Warner Bros, moved completely to a unit system in the postwar era. Steve Trilling, Jack Warner's longtime aide and casting director, was named executive assistant in charge of production in 1945, but he had far less control over the actual filmmaking process than top producers like Henry Blanke and Jerry Wald or producer-directors like Michael Curtiz and John Huston. The most significant of these, without question, was Jerry Wald. Allegedly the model for Budd Schulberg's hero Sammy Glick in What Makes Sammy Run?, Wald had been Warners' most prolific writer in the late 1930s and developed into an efficient and successful associate producer during the war. Wald hit his stride as a producer in 1945 with two solid hits, Objective Burma and Mildred Pierce, and by the late 1940s he was personally producing eight to ten pictures per year—almost half of Warners' output. These tended to be the company's more action-and male-oriented product, although Wald handled Joan Crawford's pictures as well. Meanwhile, Blanke produced most of Warners' prestige pictures, notably its Bette Davis vehicles.³⁷

Warners produced very few top hits during the postwar era but did turn out its share of solid box-office performers. Most characteristic perhaps was its string of Bogart vehicles, including The Big Sleep (1946), Dark Passage (1947), The Treasure of the Sierra Madre (1948), and Key Largo (1948). A 1947 adaptation of the long-running Broadway hit Life with Father was the only Warners release from 1946 to 1949 to earn over $5 million (it returned $6.25 million), and remarkably enough, in 1949 Warners failed to place a single film even in the top twenty-five. By then, Harry and Jack Warner had closed the studio and were overhauling studio operations and in 1948-1949 began phasing out the contracts with many of its biggest long-term stars, including Bette Davis, Humphrey Bogart, Errol Flynn, and Edward G. Robinson. Davis left in 1949 and did not work at the studio again until the early 1960s. More typical was the pattern established by Cagney and Bogart, who played out their contracts but returned for occasional one-picture deals over the next few years.

In early 1950, with divorcement imminent, the Warners began to trim the producer ranks as well. In February 1950, Jack Warner renegotiated Henry Blanke's fifteen-year contract (signed in 1945), cutting his salary and giving him an "advisory capacity" with the studio.³⁸ In June 1950, Warner sold Jerry Wald's contract for $150,000 to Howard Hughes and RKO—where Wald lasted only a few months before leaving to start his own independent company.³⁹ The demotion of Blanke and departure of Wald indicated how serious the Warners were about revamping operations and cutting costs. In what was perhaps the consummate irony in the studio's history, Warners' net profits of $10.3 million in 1950 were the highest of any studio. This was the first time Warners had ever finished at the top of the Hollywood heap, but the achievement resulted less from hit pictures than from the elimination of studio personnel to reduce overhead.

The Major-Minors and Minor Studios

Columbia, Universal, and UA, like the major studios, peaked immediately after the war and in 1947 began a rapid, steady fade. UA and Universal suffered parallel and fairly severe declines, and both companies posted losses in 1948. Columbia, which had not posted a deficit in its history, managed to keep that streak alive through the late 1940s, in fact, it was the only nonintegrated motion picture company, including Republic, Monogram, and Eagle-Lion, to avoid posting losses in the late 1940s. Columbia's management team of Joe and Harry Cohn was crucial to its modest postwar success, as were a few well-timed hits like Gilda and The Jolson Story in 1946, and Sings Again in 1949. Columbia also developed an unlikely star in Broderick Crawford, who scored in All the King's Men (1949) and Born Yesterday (1950).

Columbia always had relied on outside producer-directors for one or two high-class productions per year, but in the late 1940s Harry Cohn began signing multipicture deals with independent companies—including the companies of stars, such as Gene Autry Productions in 1947 and Humphrey Bogart's Santana Productions in 1948.⁴⁰ By mid-1949, remarkably enough, Columbia had nine independent pictures in the works and was the most active distributor of independent productions besides UA. Most of these were crime dramas and social problem films rather than the romantic comedies that had been Columbia's trademark in earlier years, although the company did reissue most of its comedy hits from the Depression and prewar era. And as always, Harry Cohn relied on B pictures and series programmers for the company's bread and butter.⁴¹

Universal had, of course, been relying on in-house independents and outside talent for its A-class pictures throughout the 1940s, and in the immediate postwar era it moved even more emphatically in that direction. In August 1946, J. Cheever Cowdin and Nate Blumberg merged Universal with International Pictures, an independent production company run by Leo Spitz and William Goetz that specialized in prestige productions. The merger was orchestrated by the British producer J. Arthur Rank, who already had an elaborate coproduction and codistribution deal with Universal.⁴² Rank clearly planned to play a major role in the reorganized company, albeit from a considerable distance. In terms of studio operations, Goetz and Spitz were to supervise all production at Universal-International, with Cliff Work staying on as "senior studio executive." All A production, including Westerns, was to be phased out as the company concentrated on some twenty-five first-run pictures per year.⁴³

At the time of the merger, Universal already had contracts with independent filmmakers like Walter Wanger, Fritz Lang, and Mark Hellinger, who leased studio space and distributed what were essentially coproductions through Universal. Now similar deals were cut with Ben Hecht, Garson Kanin, Sam Wood, Douglas Fairbanks Jr., and others. Complex international distribution arrangements also were worked out with Rank and Alexander Korda. In terms of in-house production, Spitz and Goetz eliminated all low-budget series and set a minimum length of seventy minutes for all features. Universal still turned out subpar product as well, but that was scaled back along with the company's overall output. After averaging fifty releases per year during the war (by 1944-1945 roughly twice the majors' output), Universal cut its annual output to thirty-five pictures after the merger.

The results of the Universal-International merger were critically favorable but commercially disastrous. For the first time in a decade, Universal pictures were on ten-best lists and in contention for major Oscars. Not since 1937-1938 had any Universal release been nominated for best picture, best director, best actor, or best actress. Then, from 1946 through 1948, Universal scored ten nominations in these categories. All ten were for outside productions or imports, and seven went to nominees who never set foot on the Universal City lot—including Laurence Olivier, who directed and starred in Hamlet, which won Oscars for best actor and best picture of 1948. But by then it was evident that Universal could ill afford the high cost of prestige. The company had gone into a financial tailspin after the merger, falling from record profits of $4.6 million in 1946 to a net loss of $3.2 million in 1948.

So it was back to basics at Universal City—high-volume, low-cost formula films for the subsequent-run market. And it was back to the old management regime as well,. Universal phased out its arrangements with outside producers, along with the management team of Spitz and Goetz (though the two did remain at the studio), while the long-time plant manager Edward Muhl took over production. Universal reversed its market strategy as well, turning from the competitive and uncertain first-run market to the less lucrative but more consistent subsequent-run market. After the Paramount decree, escalating rental prices for top features forced smaller exhibitors to settle for second-rate product, and Universal planned to supply it. Key to this effort were several low-budget series initiated late in the decade, notably the Abbott and Costello Meet … series begun in 1948, the Ma and Pa Kettle series in 1949, and the Francis the Talking Mule series in 1950. All were targeted for small-town and rural markets, which generally were poorly served by Hollywood except for B-Western production, and all were enormously successful.

The three minor studios, Republic, Monogram, and PRC, also found it tough going in the late 1940s. The British studio Eagle-Lion bought PRC in 1947, securing a distribution setup in the United States and also a source of low-budget product for Britain. While the deal marked yet another effort to exploit the favorable market conditions, the late-1940s industry decline in England and the United States severely undercut this venture.⁴⁴ Meanwhile, Monogram and Republic, like the other studios, earned record prof its in 1946—$1.1 million for Republic, and $397,000 for Monogram. While minuscule by the majors' standards, these profits were sufficient to encourage both companies to upgrade production. Though financially trying in the short term, upgrading was crucial to their long-term survival. Monogram in 1947 created Allied Artists, a wholly owned subsidiary through which it released productions with budgets ranging up to $1 million, most of them produced by outside independents. Republic in the late 1940s began producing "Premiere" productions, the term it used to designate its high-end releases, which cost $500,000 to $1 million and were done exclusively through arrangements with outside independents.⁴⁵

Independent and Unit Production

Like the major studio powers, Hollywood's major independent producers saw their fortunes swing wildly in the late 1940s. During the immediate postwar period, independents enjoyed tremendous success. Never had industry conditions been better suited to their interests, and never had so many filmmakers sought commercial and creative autonomy. The independent ranks included low-budget specialists like Sol Wurtzel and the team of William Pine and William Thomas as well as mid-range producers like Mark Hellinger and Jack Skirball. But the prestige-level independents garnered the lion's share of the publicity and the revenues in the peak postwar period, in fact, most of the runaway hits released just after the war were independent productions, notably The Bells of St. Mary's (McCarey for RKO) and Spellbound (Selznick-Hitchcock for UA) in late 1945, and then in 1946 The Best Years of Our Lives (Goldwyn-Wyler for RKO) and Duel in the Sun (Selznick-Vidor SRO), the two biggest hits of the decade.

The clearest signal of Hollywood's independent-minded shift at the peak of the war boom was the 1946 Universal-International merger, which brought the studio's management, production, and marketing operations in line with the independent movement. But there were scores of other moves to independence in that heady "the sky's the limit" era. In November 1946, as the merger was finalized, the Wall Street Journal ran a pageone story on Hollywood's independent outbreak. "Stimulated by the ravenous demand at the box-office and the prospects of a 'freer' market for their pictures," wrote the Journal, "these newcomer studios have swollen the industry to grotesque proportions." While Hollywood once could support no more than about thirty independents, now over a hundred independents described themselves as "permanent producing companies," along with the dozens of "single-picture corporations" formed by top talent for tax purposes. The power behind most of these efforts was the "bankable" talent, including stars like Bing Crosby, Edward G. Robinson, Rosalind Russell, and Joan Bennett and producerdirectors like Leo McCarey, John Ford, and Howard Hawks.⁴⁶

Because the studio-distributors and large unaffiliated chains continued to control the industry, however, the term "independent filmmaker" still was essentially a misnomer. As Walter Wanger put it, "The independent producer is a man who is dependent on the exhibitors, the studios and the banks."⁴⁷ Traditionally, most of the independents enjoyed a privileged arrangement with a studio—as did Wanger with Universal. But now there were signs of real change, especially among the more powerful (and well-financed) independent producers who challenged the established marketing and promotional practices for prestige-level productions.

One clear signal was Howard Hughes's The Outlaw, which finally went into wide-spread release in 1946 after years of wrangling with the PCA, the Legion of Decency, local censors, and the courts. With UA as distributor, Hughes handled the sales and promotion personally, proving remarkably deft at exploiting the picture in a city-by-city campaign that extended into 1948, eventually returning $5 million. Another independent production with an innovative marketing strategy was Rank's Henry V, which was handled as a road-show special by a three-person team which took the picture from one major market to another, eventually netting some $2 million in the United States.⁴⁸

Selznick's Duel in the Sun, a Western with strong psychosexual themes that also was targeted at more sophisticated "adult" audiences, was the object of perhaps the most significant marketing innovation in the immediate postwar era. While completing the film, Selznick became embroiled in a dispute (and extensive legal difficulties) with the UA owners Charlie Chaplin and Mary Pickford, a conflict that resulted in Selznick leaving his longtime distributor. In late 1946, he created Selznick Releasing Organization (SRO) to handle the nationwide distribution of Duel in the Sun. In fact, Selznick engineered Duel from the very outset with the postwar marketplace in mind—and in the process he came up with a veritable blueprint for the calculated blockbusters of the 1950s and beyond. As he later confided to Louis B. Mayer: "I set out to make this picture partially as a challenge, partially as an exercise in making a big grossing film."⁴⁹ He succeeded, of course, though more because of his creation of SRO and unique promotion and release strategy than the quality of the film. After a heavily promoted and highly successful opening at the Egyptian and Vogue Theaters in Los Angeles over Christmas 1946, Selznick sent the picture into a massive road-show release accompanied by aggressive advertising in national magazines and radio as well as the press. Duel in the Sun played some 8,000 road-show dates, nearly twice the number of Gone with the Wind, and in far less time. Within six months, it had already played 2,000 dates and was the talk of the industry.⁵⁰

Variety ran a story on what it termed the "blitz booking" of Duel, "the policy of opening a picture simultaneously in as many houses as possible in each situation."⁵¹ While Variety's view was upbeat, Bosley Crowther of the New York Times was less sanguine. He described Duel in the Sun as "spectacularly disappointing" after its simultaneous May 1947 opening in thirty-eight Loew's theaters in the New York City area. Crowther also noted in his review that "a new sales technique in the film business has been cleverly evolving from scientific audience research." If the publics "want to see" scores higher than the reactions of preview audiences to the film itself, wrote Crowther, "you sell your picture in a hurry before the curious have a chance to get wise."⁵²

As these developments indicated, movie exhibition and distribution were being radically redefined in 1946-1947. Because of the government's antitrust campaign (and related litigation) and other factors, the postwar era saw the steady dismantling of the studios' long-established sales practices—block booking and blind bidding, the myriad pooling, franchise, and cross-licensing arrangements—as well as the modification of run-zone-clearance constraints. Consequently, movie distribution was becoming an increasingly wide-open affair. The major independents recognized that the movie marketplace was undergoing a massive deregulation, and they devised ways to exploit it. Hughes, Rank, and Selznick all demonstrated that specialized films, particularly those geared for the first-run market, could be handled efficiently and profitably on a marketby-market and a theater-by-theater basis.

While high-end independent films were returning top dollar at the box office, they were also the costliest productions of the period. Selznick spent a reported $5 million on Duel in the Sun, making it the most expensive picture in Hollywood history to date, while costs on both The Best Years of Our Lives and Capra's initial postwar effort, IT'S A Wonderful Life, were about $3 million.⁵³ These costs were far beyond the industry average in 1946 of $665,000, and well beyond what companies like MGM and Paramount were spending even on their top features. Extravagance and waste contributed to these record budgets, although inflation and the difficulty of operating efficiently outside of a studio-factory left their mark as well. And as the market began to decline in 1947 and credit became tighter, the prospects for independent production grew increasingly dismal.

Thus, 1947 was the oddest and most contradictory year ever for independent filmmakers. Variety reported in its year-end survey that 1947 saw "the greatest number of new indie production units come into being in the history of Hollywood," with more than one hundred new companies formed.⁵⁴ But industry conditions no longer favored independent production—or freelance status, for that matter—and by year's end many of the newly liberated filmmakers were returning to the relative security of studio affiliation. The primary reasons for this reversal were financial, and they extended well beyond the concerns about rising costs and falling attendance.

One key reason was taxes. In July 1946, the Internal Revenue Service closed the legal loophole which rendered the single-picture corporation so attractive as an incometax dodge. In the words of Commissioner Joseph D. Nunan Jr., "We have ruled that where single pictures are incorporated and the profits for the pictures are divided by liquidation of the corporation, that those profits will be taxed to the individuals concerned as ordinary income at ordinary tax rates instead of as capital gains at a 25 per cent rate." The ruling applied to established independents as well as to the more recent entrepreneurs, and in fact, Goldwyn's "collapsible corporations" were cited by Nunan as prime targets for an IRS audit. The new IRS regulation also was retroactive to 24 July 1943, with back taxes subject to accruing interest of 6 percent—although offending parties would not be subject to criminal penalty.⁵⁵

Expecting Hollywood "corporations" to fight the ruling (they did), the Treasury Department also sponsored new legislation in Congress to legally close the capital gains loophole. By 1947, it was clear not only that the capital gains ruling would hold but that the economic conditions in the industry simply put too high a price on freelance status for most filmmakers. Variety reported that "with financial backing getting increasingly difficult to obtain and the film industry beset by uncertainties both domestically and abroad," the "moneymoon" was over for independents, who now had to "backtrack" to the studios.⁵⁶ The point was reinforced time and again that year as freelancers and independents sought out permanent financing and distribution deals with major studios. Cagney, for instance, returned to Warners in 1947 after running into trouble financing his UA unit, and he worked out an arrangement whereby he alternated percentage deals and flat salary on each Warners picture. Both Frank Capra and Leo McCarey moved their independent operations—Liberty Films and Rainbow Productions, respectively—from a quasi-independent deal with RKO to a more stable setup with Paramount in 1947, and McCarey announced that it was only a matter of time before all the major studios became "combines" for independent filmmakers.⁵⁷

With the declining market and Britain's ad valorem tax, the return to the studio fold gained momentum in late 1947. In November, the Wall Street Journal and Variety ran stories, under virtually identical headlines, noting the "open door" policy at Warner Bros., 20th Century-Fox, and Columbia, studios that had not previously catered to independents. And interestingly enough, the three studios previously geared to independents—UA, RKO, and Universal—were now the three least attractive prospects for independents seeking a home. Economic conditions had forced Universal, as mentioned earlier, to resume a more modest market strategy and to phase out its in-house independent units. Hughes closed RKO for "reorganization" in mid-1948 and was not actively promoting tie-ups with independents.

Meanwhile, UA, after spearheading Hollywood's independent movement for three decades, was foundering badly in the late 1940s. As Tino Balio aptly summarizes UA's plight: "Nearly all of the majors were beginning to accommodate independents by providing financing, studio space, and attractive distribution terms. UA now had nothing unique to offer producers, and discontent with the company was heightened by the continuous quarrels of the owners. UA failed to attract any producer of distinction during the postwar period."⁵⁸

The 1948 flap between UA and Hawks over Red River was a case in point. After completing his contract with Warners in 1946, Hawks signed with UA. While preparing and producing Red River, a Western starring John Wayne and Montgomery Clift, Hawks grew increasingly concerned about UA's response (or lack thereof) to worsening market conditions and about their handling of the film. On completing Red River, Hawks announced that UA's distribution terms and promotional plans for the film were unacceptable, and he refused to deliver it to UA for release. He later acquiesced, but only on the condition that the film be handled by Gradwell Sears, who had recruited Hawks to UA but had been kicked upstairs to an ineffectual board position during one of UA's frequent management squabbles. Red River went on to earn $4.5 million and was among the top hits of the year; it was also Hawks's only project with UA.⁵⁹

Like many independent producer-directors, Hawks reverted to freelance director status in the late 1940s, choosing to work for hire rather than deal with the risks and hassles of independent production. In 1948, he reteamed with the producer Sam Goldwyn, sacrificing supervisory control for an astounding weekly salary of $25,000 to direct A Song Is Born, a remake of his 1941 Goldwyn hit Ball of Fire. Then, in 1949, Hawks directed I Was a Male War Bride at Fox for the in-house independent Sol C. Siegel. Once the dust had settled from the Paramount decree and the industry had stabilized, Hawks returned to independent producer-director status with his own company.⁶⁰

This pattern was followed by a number of top producer-directors (notably John Huston at MGM and Capra, Wyler, and Stevens at Paramount) in the late 1940s—settling in with a major studio as a highly paid director but without real autonomy or genuine independent status. Several top filmmakers like Leo McCarey and Charlie Chaplin simply remained inactive in the late 1940s. Others like Alfred Hitchcock maintained their independence until financial conditions forced them to retrench. Hitchcock had created Transatlantic Pictures in 1947 after he left Selznick, but after two disappointments (Rope in 1948 and Under Capricorn 1949), he dissolved the company and signed as an in-house independent at Warners, which had released his Transatlantic productions.

Still others like John Ford and Orson Welles managed to maintain their independence, but only by radically lowering their sights. Welles began the postwar era at Columbia, where he teamed with his soon-to-be ex-wife Rita Hayworth for The Lady from Shanghai. Welles wrote, produced, and directed the film in 1946, but it was shelved for nearly two years by the studio boss Harry Cohn, who found it incomprehensible. After extensive reediting, Columbia released the film in 1948 to a disappointing popular and critical response. Welles, meanwhile, produced and directed a highly inventive adaptation of Macbeth for Republic in 1948 (via his Mercury Productions); he shot it in twenty-three days for under $200,000. But Macbeth also fared badly, leaving Welles unemployable in Hollywood as a producer-director, although he still was being offered up to $100,000 per film as an actor. Welles had no interest in devoting himself to acting—or in becoming a Hollywood star, for that matter—so he set out for Europe. His next significant opportunity, as it happened, was acting in Carol Reed's The Third Man.⁶¹

Ford also closed out the decade at Republic Pictures in order to maintain his independence. In 1946, he completed a long-term contract at Fox with MY DARLING CLEMENTINE, and over the next few years he turned out a succession of independent productions through Argosy Pictures with his partner and coproducer Merian C. Cooper. Ford and Cooper kept Argosy afloat by moving from MGM (Three Godfathers, 1948) to the struggling RKO (The Fugitive, 1947; Fort Apache, 1948; She Wore a Yellow Ribbon, 1949), and finally to Republic in 1949, where their initial productions (Rio Grande and Wagon Master, both 1950) launched Republics risky, extravagant move to A-class films on million-dollar budgets.⁶²

Clearly the postwar picture was growing increasingly bleak for independents, especially producer-directors and small-time independents operating on a picture-by-picture basis. A Variety story in May 1948, under the headline "Bell Tolls for Indie Producers," noted that "all but the biggest" independents—that is, Goldwyn, Selznick, Chaplin, and Disney—were simply unable to secure financing.⁶³ in fact, even these major independents were struggling in the late 1940s.

As noted earlier, Selznick enjoyed tremendous success in 1946, not only with Duel in the Sun but also with the highly lucrative sale of Notorious and several other packages to RKO. But he followed those with two ambitious, costly failures: The Paradine Case (1948), a final project with Hitchcock, and A Portrait of Jenny bloated vehicle for Jennifer Jones and Joseph Cotten, his top contract stars, that lost virtually all of its $4 million production cost. That picture effectively ended Selznick's career as a major independent in Hollywood. In 1949, he decided to seek production opportunities in England—on The Third Man, in fact, for which he arranged the financing and the U.S. distribution.⁶⁴

Sam Goldwyn fared somewhat better in the postwar era, beginning with the tremendous success of The Best Years of Our Lives in 1946. Besides its $10 million rentals, the picture won six Oscars, including best picture and best director (for William Wyler), along with the Academy's prestigious Thalberg Award to Goldwyn as the industry's top producer. But after Best Years, Goldwyn'S key employee and longtime collaborator William Wyler left to join Liberty Films. Then, in 1948, Goldwyn suffered another huge loss when the cinematographer Gregg Toland, who had shot almost all of Goldwyn's sound films (thirty-seven in all), died suddenly at age 44. Goldwyn increased his output to a steady two pictures per annum in the late 1940s, but none was of any real consequence commercially or critically, and by 1950 Goldwyn was easing into semiretirement.⁶⁵

Disney struggled throughout the late 1940s to regain its prewar form, but with little success. The company produced no features in the late 1940s, concentrating instead on package films—compilations of up to ten animated shorts combined into a feature-length release. Disney's initial postwar release, for instance, was Make Mine Music (1946), a seventy-minute, ten-cartoon package which included a few excellent pieces like "Casey at the Bat" and "Peter and the Wolf" but was scarcely on a par with its prewar features. By 1949, Disney showed signs of recovery with the release of Ichabod and Mr. Toad, comprising two exceptional longer animated works, while it had in production two full-length features, Cinderella and Treasure Island (both 1950)—the latter marking its move into live-action feature films.⁶⁶

In 1949, however, the resurgence of Disney or any other independent appeared to be a long way off. As Fortune reported in April: "Independent production, which boomed up to more than a hundred working units in 1946 and 1947, is substantially wiped out. If the independent is producing he has cut costs, like everyone. But more likely he has suspended operations and is waiting for the market to stabilize."⁶⁷ In June, the Wall Street Journal reported that only about one-third of Hollywood's eighty-five independent companies "have exposed any negative so far in 1949."⁶⁸ Perhaps the future belonged to independents and freelance talent, given the thrust of the Paramount decree, but the present was discouraging at best, and there was no telling how long it would take for "the market to stabilize."

Case Study: Capra, Wyler, Stevens, and Liberty Films

The postwar careers of Frank Capra and his two Liberty Films partners, William Wyler and George Stevens, provide illuminating examples of postwar independence in Hollywood. As seen in chapter 2, Capra had been one of the most successful producerdirectors and unit filmmakers in Hollywood's classical era, and he parlayed that success into self-styled independence in 1940-1941. Capra had made films very much on his own terms both financially and creatively before joining the military, and he was determined to resume what he termed his "one man, one film" crusade once the war ended. Thus, in late 1944, Capra and the former Columbia executive Sam Briskin, Capra's unit manager during his studio days, created Liberty Films, and by late 1945 they had lined up Wyler and Stevens as partners.⁶⁹

Wyler signed on while he was preparing The Best Years of Our Lives for Goldwyn in mid-1945. Wyler had been with Goldwyn for ten years and now enjoyed an excellent profit-participation arrangement—in fact, he was set to receive 20 percent of the net profits on Best Years. But despite Goldwyn's inducements to renew his contract, Wyler was determined to strike out on his own with Capra.⁷⁰

George Stevens, fresh out of the military with no such commitments, readily signed on with Liberty, officially joining the company on 1 January 1946. The last partner to join, Stevens signed a contract that well illustrates the setup at Liberty Films. He signed on as "Producer-Director and Producer," with complete authority over all phases of production, from the inception of a project through post-production. A majority of the four partners had to agree on each project, including budget and casting, but thereafter Stevens had "sole control of the production and direction of the photoplay consistent with the budget approved for it." Liberty paid Stevens a weekly salary of $3,000, and as an equal partner (and stockholder) with Capra, Wyler, and Briskin, he shared in the company's profits. As with Capra and Wyler, this exclusive contract called for Stevens to deliver three pictures within three years.⁷¹

The company's title and its Liberty Bell insignia openly announced that Liberty Films was dedicated to independent filmmaking. Capra secured a line of credit with the Bank of America and a favorable financing and distribution deal with RKO, thus ensuring Liberty's freedom from studio control and leading the Wall Street Journal to single out the company in 1946 as Hollywood's "leading true independent."⁷² Liberty would not maintain that status for long, however, owing largely to its founders' initial postwar productions. At the time of Stevens's signing, the only Liberty project in the works was Capra's It's a Wonderful Life. The film was budgeted at $2.36 million and set to start in April 1946.⁷³ in fact, Capra recalls starting it on the same day, 8 April, that Wyler started Best Years for Goldwyn.⁷⁴ Both films were completed and released in late 1946 and competed head to head not only in the marketplace but at the Academy Awards banquet as well—further solidifying the stature of Capra and Wyler as two of the top filmmakers in Hollywood. Best years was by far the more successful film, and in fact, It's a Wonderful Life represented a setback for Liberty. Although it earned $3.3 million, the film's $3.2 million cost meant a sizable net loss for Liberty Films.⁷⁵

Capra, meanwhile, planned even more ambitious productions, buying the screen rights to a hit Broadway play, State of the Union, and a recent best-seller, Friendly Persuasion. But RKO balked at the proposed $2.8 million budget on the former, so Capra was forced to shop the project at other studios, including Paramount and MGM. Thanks largely to Spencer Tracy, MGM took it on as a Tracy-Hepburn vehicle. Capra brought State of the Union in under budget at $2.8 million, and when it finally was released in 1948 (after MGM held up its release for another Tracy-Hepburn picture, The Sea of Grass [1947]), the film fared well commercially, returning $3.5 million. But State of the Union did not mark a success for Capra or Liberty Films. The critical response to the film was only lukewarm, and because of MGM's sizable promotion and distribution costs, the film failed to turn a profit.⁷⁶

The two Capra films were the only ones made under the Liberty Films trademark, and the only truly independent ventures by the company. Capra later described State of the Union as "my last independent production," but in fact Liberty was finished as an independent enterprise even before that film was made. In early 1947, after the weak box-office showing of It's a Wonderful Life and RKO's refusal to back State of the Union—and considering the tighter credit terms and the signs of a market decline—Capra began looking for a studio with deeper pockets and better distribution than RKO. In April, he closed a deal with Paramount, which purchased Liberty Films and paid each partner $1 million for his stake in the company. Paramount assumed each filmmaker's three-year, three-film commitment at the same salary ($3,000 per week) but severely limited their creative freedom and authority.⁷⁷

Although the three filmmakers were granted producer-director status at Paramount, there was no question of studio control. As Capra described the situation, he was "an employed contract director taking orders." Thus, Capra's "one man, one film" campaign was over, and he would look back on the Paramount deal as a watershed in movie history. "The more or less continuous downward slide of Hollywood's artistic and economic fortunes that began in 1947 was triggered not by the advent of television, not by the intransigence of foreign governments," wrote Capra in his 1971 biography. "That slide was set in motion by our sale of Liberty Films to Paramount."⁷⁸

Capra found the constraints at Paramount maddening, particularly what was termed "Balaban's law." This decreed that (a) a picture broke even at twice its cost; (b) market projections indicated that $3 million was the top box-office take at the time; and there-fore (c) the production costs of top films should not exceed $1.5 million.⁷⁹ The numerous projects Capra tried in the late 1940s were nixed by the New York office because of cost, including Roman Holiday and Friendly Persuasion. After two years of frustration, he finally agreed to take on two lackluster Bing Crosby comedy-dramas in 1950-1951 (one of which, Riding High in 1950, was a remake of Capra's 1934 hit Broadway Bill). In 1951, Capra left Paramount, where he had suffered through what his biographer Joseph McBride aptly describes as "one of the most precipitous collapses in the career of any major American director." And as Capra readily admitted, he himself was largely to blame despite conditions at the studio and in the industry at large. Although only 54 years old, he had lost faith both in the cinema and in himself, and he retired from active feature filmmaking.⁸⁰

Wyler and Stevens, meanwhile, each managed to turn out only one film in the late 1940s after Liberty's move to Paramount—far below what they expected or were contracted to produce, but hardly surprising under the circumstances. Like Capra, both struggled to get projects approved and under way at Paramount, although both eventually adapted to changing industry conditions and did quite well at the studio. After Best Years in 1946, Wyler's next film was The Heiress in 1949, an ambitious adaptation of Henry James's Washington Square starring Olivia de Havilland and Montgomery Clift. Critically acclaimed and nominated for a half-dozen Oscars, including best picture, best director, and best actress (which de Havilland won), THE HEIRESS did only moderate business. But Wyler was settling in at Paramount and enjoyed considerable success there over the next few years.⁸¹

Stevens's stint with Paramount, conversely, was an ongoing struggle with Balaban and the studio brass. His first project, an adaptation of the hit novel and stage play I Remember Mama, was turned down by Paramount in 1947 because of its cost. Stevens took the project to Dore Schary at RKO, where it was a critical hit and earned $3.3 million in 1948. I Remember Mama cost $3.068 million, however, and failed to break even.⁸² "Balaban's law" also prohibited both of Stevens's 1948 projects, adaptations of Madame Butterfly and The Young Lions, and in early 1949 he found himself fighting the Paramount powers over yet another project. On 21 January, Stevens received a memo from Sam Briskin informing him that "Liberty Films, Inc., has disapproved your selection of Theodore Dreiser's An American Tragedy as the story for one of your films."⁸³ (Briskin, still technically a Liberty executive, was in fact working for Paramount, which now owned the company.)

Stevens responded in a memo the following day, challenging the studio's decision and asserting: "I am willing to stake my professional reputation … on my judgment of this property." Stevens then received a ten-page scolding from the production chief Henry Ginsberg, who asserted the studio's position in stronger terms. After outlining the troubled history of both the Dreiser novel and a 1931 Paramount adaptation, as well as a recently abandoned Wilder-Brackett adaptation, Ginsberg admonished Stevens: "We refuse to admit that your judgment is better than that of our entire production organization, our sales department, and our New York home office executive's combined. … We had expected that you would be most appreciative of the time and effort expended not only by me but by everyone including Mr. Balaban in studying the advisability of proceeding with this story." Citing legal, financial, and censorship problems, Ginsberg again refused to approve the story.⁸⁴

Stevens persisted, and the Paramount powers began to yield when he personally secured commitments from Montgomery Clift, a sudden star after Red River and The Heiress, and Elizabeth Taylor (in her first adult role). In September, he submitted a budget of $1,498,000, barely under the Paramount budget ceiling, and a shooting schedule of forty-five days. By then, Balaban and Ginsberg were sold on the project, now titled "A Place in the Sun," and they eventually approved a budget of $1.8 million and a sixty-day schedule.⁸⁵ A Place in the Sun was completed in early 1950 but not released until mid-1951. It was a solid commercial and critical hit, earning $3.5 million and four Academy Awards, including a best-director Oscar for Stevens.

In March 1951, Capra officially left Paramount and dissolved Liberty Films. Stevens stayed on to produce and direct Shane (1953) before leaving Paramount for genuine freelance status. By then, independent production had returned with a vengeance, and, in fact, Wyler and Stevens were among its leading proponents. The studio system, meanwhile, was a thing of the past—at least where the movie industry was concerned. The major studios in the early 1950s responded to court-ordered dis-integration not only by divesting their theaters but by gradually phasing out feature film production, concentrating instead on movie financing and distribution. Meanwhile, the nascent TV industry steadily adopted Hollywood's factory-oriented system for "telefilm" series production, which became the industry staple in the late 1950s. Thus, factory-oriented studio production persisted, albeit as a mode of TV production, and the independent film production movement that had been taking hold since the early 1940s, after weathering the stormy postwar era, emerged during the 1950s as the dominant form for making feature films.