Part of Hepburn's disenchantment apparently related to her salary (roughly $2,000 per week, when she worked), which, she realized, was well below her current value to RKO. The company had given her a small percentage of the profits of Spitfire as an act of good faith, but this evidently was less than satisfactory.47 Now she had the president of the studio over a barrel, and he buckled. Kahane authorized the additional scenes and a $10,000 payment to Hepburn.
Hard-nosed J. R. McDonough was outraged by Hepburn's “gun-play,” as he put it. He fired off a letter to Kahane, criticizing him for giving in and instructing him to immediately withdraw the actress's participation in the film's profits: “I do not agree with you that not paying Hepburn's demand would have jeopardized the biggest asset the company has. I believe we have now jeopardized the asset by submitting to her first demand. If you will remember when you were in New York I hazarded the guess that Hepburn would employ such arbitrary tactics against us. I believe our submission to the first of her demands has allowed her to open a breach which from now on she will attempt to widen at every opportunity.”48
Kahane argued vociferously against further alienating the actress by withdrawing her percentage of profits, but McDonough held firm. A letter was sent to Hepburn advising her not to expect any more money from the film. Interestingly, fourteen months later Hepburn coyly inquired when she would be receiving a check for her percentage of the profits of Spitfire. The request was made directly to McDonough, who crumbled and coughed up a check for $10,445. B. B. Kahane must have smiled when he received a carbon of McDonough's congenial letter to the star, informing her that any subsequent payments would be made on a monthly basis.49
Despite the Hepburn dustup, the end of 1933 contained mostly good news. A second report on the RKO receivership situation, filed in November, noted that a reduction of $5 million in RKO's net loss was expected, and that 58 of the 162 wholly owned RKO theaters had been abandoned.50 In addition, business at the Radio City theaters had jumped in the fall. Operations for the month of September actually showed a profit before rent of $90,580.87. The report also mentioned that the Cooper production regime had substantially reduced the cost of pictures produced by the Hollywood studio. The report concluded: “Encouraging progress has been made in reducing operating expenses, which has been reflected in improved results in operations, despite the disruption of organization and morale consequent upon the receivership and the decline in theatre attendance during the period of bank closings and moratoria throughout the country…. Despite the absence of borrowing and the maintenance of a full motion picture production schedule, consolidated cash reserves have not been depleted to any considerable extent.”51 These were encouraging signs, to be sure.
In December, Merian C. Cooper announced that he was fully recovered and ready to return to the helm. The positive news flowing from Hollywood had clearly trumped the negative assessments of him contained in the Mc-Donough survey; no one seemed inclined to dump Cooper as production chief.
Around the middle of the month, Merian Cooper went to New York to show the board of directors he was a healthy man. A memorandum prepared for the board outlined his production philosophy and his plans for the future.52 His avowed production preference was, as the experts had predicted, films with a “minimum of dialogue and a maximum of spectacle.” These pictures, he argued, were more universal in expression and therefore fared better in the world market than other types of productions. He recommended the following as an example of a spectacular story with the “epic universal quality” he was talking about: “For example, an African Covered Wagon, showing the British trek to open up Rhodesia, with Zulus, instead of Indians; lions, elephants and other animal hazards to the settler, instead of deserts, mountains, etc. of Western United States. There are literally hundreds of such pictures which can be made with universal appeal and with a maximum of action and a minimum of dialogue, equally good for the United States, England and the rest of the world.”
While admitting that such pictures would be expensive, he reminded the board that King Kong and Little Women would not have been made if the studio had been locked into a “rigid appropriations system.” In addition to revealing his personal preferences, Cooper stated that first priority for the new year would be getting picture production back to an annual rate of forty-eight films. The average had fallen to twenty-eight due to Cooper's illness, and he quoted figures showing that the studio could not make money on only twenty-eight pictures. The costs of studio and distribution overhead alone would absorb all the profits.
This last piece of information is revealing. It shows that RKO had to release a certain number of movies each year to have any hope of success. It was costly to run a studio, a worldwide distribution organization, and a chain of theaters. Without the constant product—on the order of one new picture a week—overhead alone would swamp the enterprise. Given this business model, it seems obvious that expediency was likely to take precedence over quality in the thinking of a studio head. Harry Cohn, Columbia's resident mogul, explained the situation to a young film editor in his own unique style: “Listen, kid,…I make fifty-two pictures a year. Every Friday the front door opens on Gower Street and I spit a picture out. A truck picks it up and takes it away to the theatres, and that's the ball game. Now, if that door opens and I spit and nothing comes out, you and everybody else around here is out of work. So let's cut out the crap about only good pictures. How many of those pictures I spit out do you think that I think are any good?…I run this place on the basis of making one good picture a year…. The rest of them I just have to keep spitting out.”53 One marvels that, working under such demanding conditions, the studios were able to produce as many engaging motion pictures as they did.
In his presentation to the board, Merian Cooper also emphasized his economizing efforts. He had scaled back average shooting time on pictures from 30.8 days (the Selznick figure) to 22.6 days, with corresponding reductions in the cost of production. He offered the following figures:
Negative Costs
LeBaron: Average of 43 pictures $342,000
Selznick: Average of 33 pictures $293,000
Cooper: Average of 28 pictures $204,000
Estimated Profit or Loss
LeBaron: Average of 43 pictures Loss $60,000
Selznick: Average of 33 pictures Loss $11,000
Cooper: Average of 28 pictures Profit $94,00054
The comparisons, based on production records beginning with the 1930-1931 program, reflected favorably on Cooper. It should be noted, however, that some of his productions had been initiated by Selznick and the production chief had been ill and absent from the studio for several months; thus, he was not entitled to full credit for the studio's apparent turnaround.
Cooper and the RKO board had plenty to celebrate on New Year's Eve 1933. Shortly before, Flying Down to Rio had opened at Radio City Music Hall, and it was selling a lot of tickets. Lou Brock, the head of the shorts unit, had been allowed to produce the first big company musical since Dixiana because he had handled Melody Cruise successfully earlier in the year. Thornton Freeland took care of the direction.
At the request of Ned Depinet, postproduction was rushed so that Flying Down to Rio could open in New York during the holidays. After the film was previewed on December 6, Kahane sent Depinet the following telegram: “Previewed Rio last night. Although if we had time could improve picture by additional cutting decided not to hold picture any longer. Think novelty of production plus beautiful music of Vincent Youmans and smartness of whole production should give us fair amount of success. Incidentally Fred Astaire steals picture and think properly handled we have created another new and fresh screen personality.”55 Ben Kahane underestimated the potential of his new musical. Flying Down to Rio would turn out to be more than a “fair success”; it brought in profits of $480,000.
Although those profits were sorely needed, this exuberant entertainment would ultimately be more important to RKO for establishing Astaire in movies a
nd introducing the Astaire-Rogers partnership. Astaire received fifth billing but was given ample opportunity to display his talents. As Kahane stated, he overshadowed the nominal stars of the picture, Dolores Del Rio and Gene Raymond. And in the captivating “Carioca” number, a team was cemented that would be RKO's class act for years to come: Fred and Ginger.
Merian C. Cooper returned to work at the studio in January 1934. He approached his job with gusto, bombarding producers and directors with memoranda about the necessity of volume production; about shooting schedules, proper picture length, omission of unnecessary sets; and about meeting tentative start dates.56 The year 1933 had indeed shown significant improvement for his company. Corporate losses were $4,384,064—less than half the deficit of the previous year. The production company's losses had been reduced even more dramatically, from $4,426,177 in 1932 to $300,134 in 1933.57 Thus it appeared that with Cooper back in charge, conditions would stabilize and continue to improve. This feeling of equilibrium was short-lived, however.
In early February, Cooper's health started to fail again, and he immediately resolved to take an extended vacation in the Hawaiian Islands. This precipitated a major studio restructuring. At first, it was reported that Cooper had resigned.58 Two weeks later, however, the trade papers divulged that he would return to his position after the Hawaiian holiday. Pandro Berman would once again provide supervision while Cooper was away. In addition, conferences between Merlin Aylesworth, J. R. McDonough, and the studio executives in Hollywood resulted in the naming of McDonough as president of RKO Radio Pictures. Ben Kahane, who had occupied the position, was made president of RKO Studios, a subsidiary. Ned Depinet was also given another promotion; he now became president of the RKO Distributing Corporation. According to Aylesworth, the purpose of the new setup was to change “the form of the operating organization so that executive activities might be coordinated in Hollywood.”59 Kahane's job would continue much as before, with McDonough assuming some of Kahane's administrative duties as well as taking responsibility for all of Aylesworth's managerial functions. This would free Aylesworth to devote himself exclusively to the company's financial problems. Plans called for McDonough to divide his time between the New York office and the Hollywood studio.60
The first few months of 1934 also produced some interesting developments in RKO's relationships with Fred Astaire and Katharine Hepburn. Astaire had gone to England after the completion of Flying Down to Rio. He was appearing in the London stage presentation of The Gay Divorce when he began to receive the pleasing news that Rio was a hit. Something else that he heard vexed him, however. He wrote agent Leland Hayward on February 9, 1934:
What's all this talk about me being teamed with Ginger Rogers? I will not have it Leland—I did not go into pictures to be teamed with her or anyone else, and if that is the program in mind for me I will not stand for it. I don't mind doing another picture with her but as for this team idea it's out! I've just managed to live down one partnership and I don't want to be bothered with any more. I'd rather not make any more pictures for Radio if I have to be teamed up with one of those movie “queens.”61
Astaire's comment about having “live[d] down one partnership” referred to the fact that he and sister Adele had been a very successful dance act before she suddenly retired, leaving him to founder for a time. Astaire dispatched another letter to Hayward three days later telling him to “squelch the idea of teaming me with Rogers.”62 Astaire had received several more clippings about the “new team” in the interim.
Leland Hayward responded to his client reassuringly:
I don't think R. K. O. have any intention of teaming you with Ginger Rogers. When Pandro Berman came through New York on his way West from Europe the last trip, I talked to him several times about the “The Gay Divorce” which they were negotiating for at that time, and told him you were not terribly keen to play forever and ever with Ginger Rogers. Pandro said there was nothing obligatory about having you do same, that she was popular, pretty and good in her pictures, but if you felt so vehemently about not having her with you, they probably would not use her. However, they have no intention of making it a permanent team.63
Hayward once again conveyed Astaire's feelings to Pandro Berman, who wired back: “Tell Astaire hold his water regard to teaming. He is not yet ready to be a star in his own right and if we want to bolster him with good support for next few pictures think he should thank us. Ginger Rogers seems to go rather well with him and there is no need assume we will be making permanent team of this pair except if we can all clean up lot of money by keeping them together would be foolish not to.”64 Berman's remarks proved prescient. Astaire's distaste for the teaming notion lessened when the pair became a giant success and he began to receive a percentage of their films' profits. Nevertheless, the dancer would continue to pressure the studio bosses to allow him to make films with other actresses.
The Hepburn matter also came up in February. Now that she had become a star, a renegotiation of her contract was in order. The parties were apparently close to an agreement when she discovered that RKO had exerted some pressure on Paramount to prevent her from making a series of personal appearances in its theaters. This so infuriated the actress that she fired off a personal letter to RKO charging that the two companies were acting in “illegal restraint of trade.” She ended the epistle by candidly remarking: “In many respects, I would greatly regret it if my contract with you was broken because of your fraud, collusion, or unfair business tactics, because my association with your operating personnel has been most pleasant and I would leave them with genuine regret. I propose, however, to stand upon every right which I possess, for I have noticed that your company is not at all meek in taking a position, whether it is right or wrong.”65
Once again, Katharine Hepburn proved to be a tough-minded, volatile businesswoman. While Fred Astaire had Leland Hayward take care of all his studio disputations, Hepburn, who was handled by the same agent, did not hesitate to involve herself personally in the fray. If a lesser player had behaved in this fashion, the studio would undoubtedly have fired her. But Hepburn was too valuable. Kahane set about appeasing her, and a satisfactory contract was eventually worked out. From this point on, RKO would be very careful in its relations with Katharine Hepburn. The studio officials now understood that she had much in common with the iconoclastic, often impetuous characters who were becoming her screen specialty.
Hepburn's close ally at the studio, Pandro Berman, kept the wheels turning while he waited for RKO's official production head to come back to his office. In early April, however, J. R. McDonough received the following news from Merian Cooper:
I regret to say my return looks quite a time off. I did splendidly out here at first—swimming four or five times a day, and really having a marvellous vacation. Unfortunately, I got caught in the flu epidemic with half the rest of Honolulu, and have to start all over again recuperating. At any rate, am not going to start drawing salary this time until I feel 100% efficient—or anyhow 97.2%. I think you should know, however, that it does not look as if I shall be back to work in April, as I had hoped.66
David Sarnoff received a copy of a similar letter from Cooper to Aylesworth and scribbled “All this is very distressing to me” on it.67 The company executives wanted Cooper back so production could move ahead without further disruption. On April 16 Merlin Aylesworth cabled congratulations to Cooper, whose wife (former RKO actress Dorothy Jordan) had given birth to their first child. Aylesworth added the following suggestion to his cablegram:
Hope you can return to Hollywood with your family as soon as possible. Honestly believe if you can get back to the office, the work can be so arranged that you can guide the program without getting into detail which pulled you down before. Three or four hours a day twice a week to start with and short days for the first month or two should put you on your feet…. Your wise counsel is much needed at RKO Radio Studios and this doesn't mean full responsibility until you are in good health.68
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br /> Cooper did return in May. J. R. McDonough was then on the West Coast and reported his impressions of the man in a telephone conversation to A. H. McCausland of Irving Trust. According to McDonough, Cooper looked healthy but his behavior seemed erratic. “One day he wants to make any number of pictures and the next day he decides he had better not make any,” said McDonough.69 McDonough informed Cooper that he could not go on working half of the year, that RKO management needed some assurance of his intentions. Cooper gave them his decision by electing not to continue in full charge of production. Instead, an agreement was concluded for him to produce two special films for the 1934-1935 program. The first of these would be The Last Days of Pompeii, inspired by the Bulwer-Lytton novel.70
Thus, Merian C. Cooper retired after sixteen months as RKO's nominal production head. He had actually functioned in the position for less than half of that time. Pandro Berman, who had reluctantly filled the gap, agreed to continue running filmmaking operations. It was well known, however, that Berman disliked the job and wished to have his own autonomous unit so that he could devote all his energy to ten or so pictures a year.
During the time Cooper was on leave, Berman had grown frustrated by the company's penny-pinching. Nearly all the films he had been allowed to put into production were undistinguished, low-budget projects. These pictures would enable the studio to meet its exhibitor commitments, but Berman knew they would reflect on him and not flatteringly. Berman was also piqued that RKO had practically abandoned the field of bidding for choice literary properties. He became so concerned that he dispatched a telegram to J. R. McDonough in March, imploring him to purchase the Broadway hit Roberta for the 1934-1935 season no matter what the price: “Think you can get it for sixty or sixty-five thousand and while you passed up all important properties of the year…feel I have reached time where we are desperate and moreover that in Roberta we will have property that is far more valuable than anything that has been purchased this year by other companies. We cannot make a go of this business without competing once in a while and this is the time to do it.”71
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