Bill LeBaron also expended considerable energy building up the RKO stock company. Given his theatrical roots, LeBaron might have been expected to draw on the New York stage for new talking picture talent. Several of the other companies were doing just that, convincing actors comfortable with dialogue, such as Paul Muni, Claudette Colbert, Edward G. Robinson, the Marx Brothers, Bette Davis, James Cagney, and Spencer Tracy, to move to Hollywood. But while the RKO studio chief cast adrift many of the performers from his FBO productions, he did gamble that established silent-film stars would continue to be box-office magnets in the talkies. Richard Dix and Bebe Daniels were the biggest names among the initial RKO acting contingent, which also included Olive Borden, Betty Compson, Rudy Vallee, and Sally Blane. In addition, silent directors Wesley Ruggles, William J. Cowan, and Mal St. Clair were placed under contract, and, in keeping with RKO's commitment to musicals, Bert Kalmar, Harry Ruby, and Vincent Youmans would be the first composers or lyricists to work for a company that would later employ some of the most famous figures in the musical world for its Astaire-Rogers pictures. Luther Reed, who would oversee Rio Rita, was considered the studio's leading writer-director, and LeBaron promised to take time away from his administrative duties to contribute to the writing and production of certain RKO films. His first personal production would be Rio Rita.
This looked like a strong nucleus around which to mold a production enterprise. But 1929 was the key transitional year between silent and sound movies, and a good deal of uncertainty prevailed. Many of the important stars of the 1920s, such as John Gilbert, were already losing their hold on the public. Others would quickly rise to take their places. Richard Dix won a poll as the “most popular male star of the era” in 1929, but no one could be sure his popularity would continue in the new talking picture milieu.19 Ominously, both Dix and Daniels had been released by their former studios. Likewise, who could say if established silent directors such as Mal St. Clair and Wesley Ruggles would be able to master the complicated requirements of sound motion pictures? The assembling of RKO personnel was, thus, a very provisional operation.
But no one seemed worried. In September 1929 a nationwide sales drive was launched with the slogan, “It's RKO—Let's Go!”20 Six weeks later, shortly after the release of Rio Rita and around the time the stock market crashed, company leaders felt so confident, they renewed William LeBaron's contract for three years at a salary of $4,000 per week. According to trade paper reports, the new arrangement made him one of the highest-paid executives in the motion picture industry.21
LeBaron's reputation was made by Rio Rita, a smash hit from its first day of release. Shortly after Joseph Schnitzer was named president of RKO's film production arm, he had purchased the screen rights to Flo Ziegfeld's musical success for $85,000.22 The play had opened in New York in February 1927 and, following sixty-two weeks on Broadway, had become a roadshow attraction throughout the country.23
The New York premiere of the film in October 1929 represented the high point of the year for the new studio. Joseph Schnitzer described it in a wire to musical director Victor Baravalle: “Too bad you could not have witnessed the opening of Rio Rita last night. We had most brilliant audience ever assembled for picture opening and thing went off with a bang. Everybody raving about it in New York.”24 Schnitzer's comments were reiterated by Douglas Hodges of Exhibitors Herald-World when the film opened in Los Angeles. Calling Rio Rita “a triumph in many ways for many people,” Hodges lavished praise on LeBaron, star Bebe Daniels, director Luther Reed, comedians Bert Wheeler and Robert Woolsey, and production and costume designer Max Ree.25 Audience members agreed, contributing almost $1 million in profits to the fledgling company.
But Hiram Brown and Joe Schnitzer should have been less exhilarated and more circumspect before they offered Bill LeBaron his munificent new contract. Rio Rita was in fact a “false positive” that blinded them to the fact that their new company was not off to such an auspicious start. The film itself was essentially a stodgy recording of the stage play, its success attributable to the public's initial love affair with sound movies and especially with the novelty of musicals. A better reading could be gleaned from RKO's other 1929 releases, which were a thoroughly undistinguished lot. Nevertheless, the numbers looked good. RKO corporate profit for the first year was $1,669,564, and David Sarnoff must have been quite pleased with his creation.
In February 1930, Radio-Keith-Orpheum stock was considered one of the best buys on Wall Street. One broker conjectured that the company's theaters would entertain 500 million customers during the year, and the stock could possibly show earnings of $10 per share.26 Most Wall Street professionals expected that the economic downturn begun by the crash of October 1929 would not last long, while few Hollywood insiders paid the slightest attention to the onset of hard times. Why should they have?—their coffers were overflowing. Warner Bros. realized a profit of $17 million in 1929, while Paramount reported $7 million in earnings, Fox $3.5 million, and MGM $3 million.
Industry experts realized that a large portion of the extraordinary earnings from Warner Bros. was attributable to their sound innovations. They therefore began to consider what might be the next crucial technological breakthrough and how they could profit from it. If they beat their competitors to the next revolutionary innovation, they might realize even more income than the Warners had. Color films seemed to be one possibility, but another concept intrigued company leaders even more: the wide screen.
In November 1929, RKO acquired the rights to a “wide stereoscopic film” process invented by George K. Spoor and P. J. Berggren.27 Joseph Schnitzer announced that RKO would soon begin the construction of sets and the installation of new cameras and accessories at the studio and expected to have a feature completed within three months. The studio's initial commitment to musicals had a great deal to do with the decision. If the Spoor-Berggren process worked, it would enable RKO to shoot big musical shows “in their natural perspectives, showing complete choruses, the full width of a 52-foot screen or even larger, and full 30-feet high, with all the action of a stage production as naturally as it is seen in three dimensions behind the footlights.”28
RKO was not alone in mobilizing this idea. Fox, MGM, Paramount, and naturally, Warner Bros. were also working feverishly on their own widescreen experiments.29 RKO continued its tests with the enlarged image during the early months of 1930. Three special Spoor-Berggren cameras were delivered to the Hollywood studio for use in several proposed pictures.30 But by late March, enthusiasm for the new technology had waned. The trade papers speculated that RKO was dropping wide film altogether.31
At least one widescreen RKO picture did reach a few select theaters. This was Danger Lights, a railroad story that opened in New York in December. Although the Spoor-Berggren process did provide a greater illusion of depth and added excitement to action sequences, there were many drawbacks. Chief among these was the prohibitive cost of the 63.5-millimeter film and cameras. In addition, the technique was not yet perfected; figures in screen-center were always in focus, but those on the sides and in the background appeared fuzzier than normal. The cost of the special equipment needed to project the film represented the final impediment.
RKO was not the only company to reembrace the standard format. Fox tried its “Grandeur” film in newsreels and Happy Days and The Big Trail, then decided there was no advantage to it. Likewise, MGM's “Realife” process was scrapped after the release of Billy the Kid. The 65-millimeter “Vitascope” process that Warner Bros. tried out also joined the ranks of the quickly forgotten, though expensive, experiments. In late November 1930, Variety ran the following postmortem: “Burial services are all that remain to end the wide film era which never really was born. Producers are satisfied that the public won't go for it. Furthermore any increase in the width of celluloid is too expensive a proposition all round.”32 Widescreen movies would reappear twenty-two years later; the reception would be more enthusiastic the second time around.
Desp
ite RKO's much reiterated promise to pull together the best production talent in the business, only one potential star was signed in 1930: Irene Dunne. She had gained a reputation as an attractive musical performer in the Broadway production of Show Boat and was expected to step rapidly into musical comedy roles at the studio.33 Hardly an overnight sensation, Dunne did not become a major asset for several years, at which time she was no longer exclusively bound to the company.
Another signing that appeared to have considerable potential involved radio comedians Amos ‘n' Andy. Their tenure at RKO, however, represented one of the fastest revolutions of the wheel of fortune in show business history. Following a policy begun with Rudy Vallee (The Vagabond Lover, 1929) that reflected David Sarnoff's belief in radio-film synchronicity, RKO signed the well-known personalities (Freeman Gosden and Charles Correll) and starred them in Check and Double Check. The movie was so successful that the pair were rated RKO's top stars at the end of the year.34
In studying the pattern of gross receipts, however, the company decided that Check and Double Check had no “holdover” value whatsoever. Apparently, audiences turned out to see the two white men in blackface out of pure curiosity. Studio executives determined that, having viewed the radio comedians once on celluloid, audience members had little interest in additional adventures featuring the duo. According to Variety, they were “freaks of the screen, good for one film only.”35 RKO's “biggest” stars of 1930 were dropped by the company with minimal fanfare.
One comedy team that did succeed was Bert Wheeler and Robert Woolsey. They had emerged from the vaudeville circuit and played secondary roles to Daniels and John Boles in Rio Rita. Audiences liked them, prompting LeBaron to feature the pair in a series of wacky comedies. At the end of 1930, Variety called them “head and shoulders above any other featured draw on the Radio lot.”36 This suggested that the value of the company's principal stars, Bebe Daniels and Richard Dix, was diminishing rapidly.
RKO's product did not showcase them, or any other members of the studio's thespian group, very well. Its output consisted primarily of musicals, comedies, domestic dramas, and an occasional “socially important” film like The Case of Sergeant Grischa. Most were lambasted by critics and paled when compared to equivalent MGM, Warner Bros., and Paramount productions, but they were not all failures at the box office. Check and Double Check earned $260,000 in profits, and Hook, Line and Sinker, an early Wheeler and Woolsey effort, made $225,000; indeed, more than half of the 1930 releases were profitable, though none approached the blockbuster status of Rio Rita. The full impact of the Depression had not yet penetrated America, and the tastes of the new talking picture audience were less than discriminating.
But, besides the mediocre product moving through theaters bearing the RKO logo, there was another ominous sign that business conditions were about to change for the company and not for the better. Dixiana, a topbudget musical starring Daniels and made by the same team that had turned out Rio Rita, ended up as the year's biggest loser ($300,000).
In October, Variety reported that vaudeville programs in RKO theaters were apparently carrying the company.37 All but one of the theaters featured variety shows as well as films, and considering the poor quality of the company's pictures, there seemed to be no other explanation for its continued profits. Joseph Schnitzer, not oblivious to the situation, began reading scripts and plays and promised to take a more active interest in production matters. By the end of a gloomy year in which banks began failing throughout the country, Hollywood rumors started to circulate that Schnitzer would replace LeBaron as head of production, though why anyone felt he could do a better job remains a mystery.38
Undeterred by the shriveling economy, RKO executives continued to act as if their company would soon be the flagship of the industry. They agreed to two huge financial commitments in 1930 that would affect the corporation for years to come. The first involved a giant office and retail complex in midtown Manhattan—Rockefeller Center.
Begun just as the United States was sinking into economic purgatory, the Rockefeller venture was a grandiose gamble that would eventually take its place among New York's most famous landmarks. By the time its patriarch, John D. Rockefeller, Jr., drove the last rivet into the twelfth building in 1939, the center had also become another of the famous family's successful investments. But it might never have become a reality if David Sarnoff had not decided to relocate to the uncompleted complex: “For an annual payment of $4.25 million, RCA and its affiliated companies—NBC, RKO, RCA Victor, Photophone—would take control of one million square feet of office and studio space; four broadcasting-equipped theaters; and naming rights to [the] entire western part of the development.”39
Because Sarnoff was the first leader of a major company to make a commitment to Rockefeller Center, he would be rewarded by having his favorite brands displayed prominently throughout. The dominating, seventy-story central structure would be named the “RCA Building”; it would contain the broadcasting studios for the NBC networks and a large portion of the entire complex would be called “Radio City.” In addition, RKO would have a building named in its honor, though, like RCA, it would not be the sole tenant. The original plan also called for four theaters to be operated by RKO.40 The largest would be devoted solely to variety entertainment and seat seven thousand; the others would present talking pictures, musical comedy productions, and dramas. The film theater was supposed to seat five thousand people.
David Sarnoff could still afford to be an optimist at this point. The 1930 RCA annual report revealed gross income of $137,037,596 and net profit of $5,526,293. RKO was one of the reasons Sarnoff's company was doing well, and he was also undoubtedly pleased to reveal that RCA Photophone “had equipped 1,690 theatres in the United States and 635 theatres in foreign countries with its system of talking picture reproducing apparatus” during the year.41 In addition, Sarnoff was using his leverage in the new industry to institute lawsuits against Western Electric's near-monopoly on studio sound equipment. Eventually its leaders would back down, allowing the studios that had signed exclusive agreements with Western Electric to shop around.42 Several of them ended up switching to Photophone.
Although RKO's executives had little choice concerning the move to Rockefeller Center, there is no evidence they expressed any resistance to Sarnoff's plan. Indeed, Hiram Brown enthusiastically predicted a number of future benefits:
In leasing and operating a theatre devoted to variety, a second devoted to sound, a third devoted to musical comedy, and a fourth to dramatic productions, the Radio-Keith-Orpheum Corporation is providing itself with facilities for the greatest possible development of its business; it proposes to use the technique of all the arts in the creation of its entertainment programs and it will obtain this first hand under this new plan.
In the entertainment center now to be established, RKO will be able to tap the creative talent developed by the variety, musical comedy and dramatic stages and by the air. It will have the opportunity to test the audience's reaction to any musical or dramatic production before deciding to place it before the country on the screen. The association of motion pictures with the sister arts of radio, electrical recording and other forms of entertainment, can only result in raising the values and standard of the screen.43
The logic of President Brown's statement is suspect. Why did RKO need to make a substantial financial commitment to Rockefeller Center in order to “test” performers and properties for possible movie presentation? Couldn't the company simply send story experts and talent scouts to vaudeville presentations and to the openings of plays for evaluative purposes? All its competitors did. And what was to prevent the representatives of those other companies from attending Radio City theaters and signing the best talent or bidding for the best plays? Despite Brown's remarks, it appeared rather obvious that the only tangible benefit RKO might derive from the arrangement would be income generated by the theaters.
The second set of negotiations resurrected rumors
that had been dormant for more than a year. They involved a potential merger between RKO and Pathe. Although original announcements in 1928 indicated Joseph Kennedy was joining Pathe as an unpaid advisor, Kennedy had quickly taken control of the company. And with a few deft managerial moves he appeared, once again, to have turned a struggling movie enterprise around. The price of Pathe stock had doubled, though Kennedy was less impressed than most investors. While they were buying, he was selling company shares.44
At first, speculation concerning a merger between RKO and the Pathe Exchange was flatly denied by both parties. In February 1930, E. B. Derr, executive vice-president of Pathe, stated that “any discussion of an amalgamation between these two film companies has been pure rumor and such a plan has never been under actual consideration.”45
In May, a press release indicated that Joseph Kennedy was giving up active management of Pathe, though he would remain chairman of the board of directors. It was claimed that the company had shown “marked improvement” under his leadership.46 In truth, the “improvement” had ended some time before this. The cost of converting to sound production, the business downturn, and the company's lack of a theater chain were pulling it in a southerly direction. Joe Kennedy knew he needed to unload this albatross as soon as he could. So he went back to David Sarnoff.
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