Alger suggested four minor amendments, called the plan “fair, feasible and equitable,” and returned it to Bondy in late July.11 Nathan Rosenberg, an attorney for a group of independent debenture holders, indicated that he would oppose it in Judge Bondy's court, but otherwise there seemed to be no organized resistance from either shareholders or creditors. It finally looked as if RKO might be wrenched free of receivership within the next few months. However, about the time the amended plan was due to be filed, Floyd Odlum made an announcement that further muddied the waters. Odlum had decided to drop his option to purchase RCA's remaining holdings in RKO. He gave as his reason the renegotiated $5,500,000 price, which he considered “too high.” This meant that the movie concern was not going to achieve the single-minded leadership of one individual or group. Odlum remained the principal stockholder, but RCA held almost as much stock as Atlas, and the Rockefellers also owned a substantial block and stood to acquire another huge chunk through the reorganization. Even before Odlum declined the stock, RCA officials had indicated that they would want participation on the board of directors and “management authority” in the reorganized RKO, if they remained involved.12 A potential battle was shaping up among the three principal owners of RKO: the Rockefellers, David Sarnoff of RCA, and Floyd Odlum of Atlas. No one could say what would come of this, but the likely tug of war did not augur well for RKO's future.
In Hollywood, Katharine Hepburn's association with RKO came to a conclusion. Early in 1938 the actress was loaned to Columbia to make Holiday, a George Cukor-directed picture costarring Cary Grant. It was the first time studio management had ever rented Hepburn out, always having felt she was too valuable. Harry Cohn of Columbia paid RKO $50,000 for her services, as well as picking up her salary for the duration of the picture's shooting.13
When Hepburn returned in the spring, her status had fallen to an alltime low. Bringing Up Baby, primarily because of its excessive production cost, had been released and was a giant loser. In addition, various exhibitor groups around the country were voicing their distaste for Kate. Perhaps believing that a role in an old-fashioned saccharine story like Little Women would increase her appeal, RKO assigned Hepburn to Mother Carey's Chickens, a film that had been in preparation for several months. There is some evidence that this move was a ploy on the part of the executives to effect cancelation of Hepburn's contract. If this is true, the strategy worked. The actress refused to appear in Mother Carey, thus giving them cause to suspend her and begin negotiating the termination of her agreement.14 Negotiations were completed in early May, prompting the following telegram from Pandro Berman to Hepburn:
It is with great regret that I find a termination of your contract has been decided upon definitely. It is not easy to turn aside from an association of years as pleasant as ours has been and while I am of the opinion that you will probably be better off with the choice of material and collaboration of all the industry instead of just our studio, I deeply regret the fact that this had to happen. I hope you will be very happy in whatever association you make and that some day we may work together again.15
May 3, 1938, the day the above telegram was sent, must have been severely trying for Katharine Hepburn. On that date, a paid announcement appeared in the Hollywood Reporter headlined, “WAKE UP! Hollywood Producers.” It began:
Practically all of the major studios are burdened with stars—whose public appeal is negligible—receiving tremendous salaries necessitated by contractual obligations. Having these stars under contract, and paying these sizable sums weekly, the studios find themselves in the unhappy position of having to put these box office deterrents in expensive pictures in the hope that some return on the investment might be had.
This condition is not only burdensome to the studios and its [sic] stockholders but is likewise no boon to exhibitors who, in the final analysis, suffer by the non-drawing power of these players. Among the players, whose dramatic ability is unquestioned but whose box office draw is nil, can be numbered Mae West, Edward Arnold, Garbo, Joan Crawford, Katharine Hepburn and many, many others. Garbo, for instance, is a tremendous draw in Europe, which does not help theatre owners in the United States. Hepburn turned in excellent performances in “Stage Door” and “Bringing Up Baby” but both pictures died.16
The Independent Theatre Owners Association sponsored the attack. It marked the opening volley in the famous “box-office poison” campaign against a number of Hollywood performers. For a time it appeared Hepburn might be the biggest loser; no studio signed her after she left RKO, and she made no films released in 1939. But the RKO distribution executives, who, according to Leo Spitz, had been “greatly relieved” when Hepburn refused to appear in Mother Carey's Chickens, would ultimately regret the precipitancy of their celebration.17 Hepburn returned to Hollywood prominence in the 1940s, earning a good deal of money for MGM in the process.
Kate Hepburn's sparring partner in Stage Door, Ginger Rogers, also caused some anguish during the year. Rogers had always been a loyal employee, willing to go out of her way for the studio's benefit. In appreciation of her efforts, Leo Spitz and Pandro Berman decided to present her with a bonus of $10,000. Spitz wrote Rogers on April 14, enclosing the check. The last paragraph of his letter read: “I hope our relationship in the future will always remain as pleasant as it has been in the past. I am certain that nothing will ever occur to disturb it.”18 Mr. Spitz would be eating his words within two weeks.
The next Astaire-Rogers picture, Carefree, was supposed to begin dance rehearsals on April 18. Ginger Rogers had other notions, however, and informed J. R. McDonough she would not report. She had several grievances against RKO: a promise made by Berman that Mark Sandrich would never again direct any of her films (Sandrich had been assigned to direct Carefree); failure to deliver a script of the new film for her scrutiny; and the studio's refusal to renegotiate her contract.19 The conflict with Sandrich stemmed from statements the director had made to Rogers and about her. For example, he had told Ginger's mother, Lela Rogers, that “if Ginger [does] not learn to improve her singing and dancing she [will] at some future date find herself in great difficulties in the picture business.” In addition, Sandrich's behavior caused the actress to feel she was decidedly less important to the team than Fred Astaire.20 These, and a variety of other aggravations, soured Rogers on Mark Sandrich. The script problem was easily taken care of. Although she did not have script approval, a script of Carefree was sent to her as soon as one became available. As always, money was the major hurdle. In this, the RKO executives refused to budge.
When Rogers failed to appear on April 18, J. R. McDonough instructed company lawyers to begin preparing documents necessary to sue her for breach of contract. Marathon negotiations involving Berman, McDonough, the lawyers, and Rogers's agent, Leland Hayward, continued for days. They finally ended on April 21, when Ginger Rogers agreed to do the picture.21 She actually received few concessions: a promise to discuss amending her contract with RKO in September or October; six weeks' vacation following Carefree; and delivery of her scripts in advance of the start date of each picture. No mention of Sandrich was made in the final settlement, but Berman dispatched a letter to the director that very day, pointing out the ways he had antagonized Ginger and firmly suggesting that Sandrich be more careful in the future.22 The director would be released by RKO after finishing the picture.
This was actually a close call. Ginger Rogers had become the queen of the studio, its biggest female star. Because she had spent so many years in pictures, because she had labored in Astaire's shadow for a significant portion of her RKO career, and because she was not as luminous as Hepburn or many of Hollywood's other “celestial” females, it is doubtful that either RKO or Ginger realized how popular she had become. During the next few years, however, her appeal would climb even higher, and her films would dominate the company's list of box-office winners. If RKO had lost Ginger Rogers at this point, the financial impact would have been sizable.
A mass exodus of
producers, in the works for many months, finally took place in 1938. One of the first to go was Howard Hawks. At a meeting on March 17, J. R. McDonough informed William Hawks, Howard's brother and agent, that it would be best if RKO and the producer-director severed relations.23 Although McDonough would not say so specifically, the studio's dissatisfaction with Hawks was based primarily on the budget overrun on Bringing Up Baby. Also, Hawks was scheduled to direct Gunga Din, a challenging and extremely important picture, and there was no room for a profligate on that production. Howard Hawks was upset by this turn of events—not so much because he was leaving RKO and his $2,500 weekly salary as because he would not be able to direct Gunga Din. The film was precisely the type of male adventure saga that he loved best, and he had helped to shape its story. Nevertheless, the deal was canceled upon payment of $40,000 to Hawks.24 This severance money was $20,000 less than the studio would have paid him if he had been kept on for the duration of his contract.
Also departing the studio in 1938 were Edward Kaufman, Jesse Lasky, and Edward Small. Kaufman's 1936 productions had done well, but his last three films, The Life of the Party, Breakfast for Two, and Wise Girl, had all flopped. Lasky had joined RKO to produce six films over two years. He had made only two, Music for Madame and Hitting a New High, and both had been harsh disappointments.25 Small guided six pictures—some hits, most misses. His doom was sealed by The Toast of New York, a crushing fiscal calamity for the company. Small did leave behind one gem: the Gunga Din property.
To replace these gentlemen, Pandro Berman and Leo Spitz instituted an aggressive campaign to lure new producers and directors to the organization. The campaign produced notable results and one surprising rejection. Ernst Lubitsch expressed a strong desire to join RKO in order to work with Fred Astaire, but was passed up by Leo Spitz.26 No one questioned the German director's genius or achievements, but Lubitsch was now regarded as an extravagant and difficult individual whose record at Paramount had been declining during the past few years. Lubitsch signed with MGM instead, where he made the delightful Ninotchka with Greta Garbo as his first production.
RKO did manage to work out deals with two “hot” producer-directors. Leo McCarey, fresh from his Awful Truth success at Columbia, and Gregory La Cava, the Stage Door director, both joined the talent pool. Their contracts gave them considerable freedom regarding selection of story material and casting, which no doubt appealed to these veterans of the Hollywood wars. In addition, George Stevens was promoted to producer-director status and chosen to replace Hawks on Gunga Din. The picture would be his biggest undertaking so far. P. G. Wolfson once again emerged from the stable of studio writers to attain coveted producer-writer status. Finally, a young man who had been working for Sam Goldwyn managed to free himself from his contract and sign with RKO, where he would be given an opportunity that Goldwyn had refused him—to direct pictures. His first—A Man to Remember—indicated that RKO had stumbled upon a major new talent in Garson Kanin. All in all, 1938 was a felicitous year for producer and director acquisitions.
A different story was written in the acting department. Besides the loss of Katharine Hepburn, the studio also watched helplessly as Fred Astaire's reputation declined. Astaire was listed by Harry Brandt of the Independent Theatre Owners Association as being among the “box-office poison” contingent. The story was picked up by Time and Newsweek, much to the dismay of Astaire and RKO.27 Actually, the charge was ridiculous. Only one of Astaire's films (A Damsel in Distress) had ever lost money. Despite the studio's attempts to secure retractions from the Independent Theatre Owners and Time, none was forthcoming. And by the end of the year, Fred Astaire and Ginger Rogers had disappeared from the upper echelon of Hollywood's box-office champions.28
The studio foolishly gave up on Joan Fontaine in 1938. Jules Levy of the New York office, noting that Fontaine had been chosen to appear in Gunga Din, sent a strongly worded protest to Leo Spitz. After reporting that many of RKO's field men believed the actress had “little promise” and should be dropped from the studio roster, Levy added that he found Fontaine “a very colorless personality [who] certainly should not be cast in as important a picture as GUNGA DIN.”29
Spitz then wrote Pandro Berman, suggesting that an unknown female replace Fontaine in the picture and remarking that he doubted the actress would ever make the grade.30 He and Levy were badly mistaken. RKO had never had much patience for “grooming” its talent; if a performer failed to “click” immediately with audiences, he or she was usually looking for work shortly thereafter. Often these actors came back to haunt the studio later, and such would be the case with Fontaine. She did play the role in Gunga Din, but it was an abbreviated and thankless part. Soon after that assignment concluded, she was released.
In his new position, Pandro Berman achieved one goal that the studio had been working toward. He almost completely eliminated the “intermediate” pictures, concentrating on films that were truly B grade (less than $275,000 in production cost) or A grade (more than $700,000 in budget). Of the year's releases, only Wise Girl, Mother Carey's Chickens, and The Mad Miss Manton would fit into the mid-range that had been generally unprofitable in the past. Although the production year again proved disappointing, this was a sound fiscal strategy and helped the studio move toward a more positive record in 1939.
Berman naturally devoted most of his attention to the studio's top productions and continued to personally produce a small number of A pictures. The B films rested in the hands of Lee Marcus. In May, Leo Spitz became uneasy about the B unit; he wrote Berman asking him at least to assume responsibility for approving the major ingredients of the B films. “I am fearful of your having to devote too much time to ‘B' production, but I think that you should, without loss in efficiency in your more important problems, be able to give enough time to ‘B' product to be sure that stories, casting and direction meet with your approval.”31 Pandro Berman enjoyed a good working relationship with the corporate president, but this idea did not appeal to him. He simply ignored the request, preferring to keep one eye on all the As while devoting the other to his own special projects, such as Carefree and Room Service.
In fact, it was Leo Spitz rather than Berman who paid special attention to the Bs. At the beginning of the year, Spitz advocated that Lee Marcus's unit focus on melodramatic action pictures, which, the president felt, would generate the best results of all “cheap” budget features.32 Marcus responded with a group of crime and prison pictures that were mostly above average, considering their minimal budgets.
By June, however, there were rumblings that the Hays office or the Legion of Decency, or both, might crack down on crime pictures, a staple of the studios for years but now considered “overabundant.” Spitz wrote Marcus about the potential danger. He did not recommend abandoning crime subjects altogether but cautioned Marcus to “watch your step in this direction.”33 J. R. McDonough and Lee Marcus then discussed the possible problem and came up with a list of nineteen future B productions, only six of which could be considered crime oriented.34 Of these six, four were stories for the new “Saint” series.
At this time, a new kind of film entered the studio's field of vision, the “exploitation” film. Again, Leo Spitz provided the impetus for this special type of picture, though he would ultimately lack the courage to move forward aggressively in the area. Exploitation films dealt with subject matter of a topical and sensational nature, stories that might prove especially titillating to the audiences of the day. Smashing the Rackets, about a crusading district attorney who uncovers all manner of corruption, was the first of this type, scheduled for an August release. Suggested to follow were pictures about spies, fake evangelists, air piracy, and the “beauty” racket.35 Working overtime, Lee Marcus came up with two more exploitation ideas in August. After discussing them with Berman, he wrote Ned Depinet for a reaction:
The first is to make a picture titled “CLIP JOINT.” I know this title was disliked by Mr. Spitz previously, but nevertheless, we feel that it
is definitely box office and exploitable. This picture would show all of the workings and ramifications and flim-flamming that takes place in a typical clip joint in a large city, such as rolling drunks, slipping knockout drops to customers, and then throwing them out when they squawk, showing the connection that taxi drivers have with these places, and doing a story which would be as close to sensational as the limits of censorship would permit.
The second idea is to make a picture called “STRIP TEASE.” This title certainly is provocative and is box office. The story would have to do with the life of burlesque girls, the heroine probably being a very nice girl, the heavy girl being a tough tease artist, using as a basis for authenticity the article that Fortune ran on Minsky's and strip tease some time ago.36
No one suggested that such ideas had any artistic value or social significance; they were blatant sensationalism, designed to siphon dollars directly into the company's coffers. Even though Leo Spitz had stated in no uncertain terms that profits were his only interest, he backed away from Clip Joint and Strip Tease. Perhaps concerned about the company's image or the likely difficulties that such projects would raise with the censors, he refused to give the green light to either project. The exploitation pictures that RKO did produce were rather bland and poorly advertised and distributed. Lee Marcus recalled in 1940 that when Spitz finally got his wish, in the form of Smashing the Rackets, he and the sales force “didn't know what the hell to do with it.”37 If Spitz had displayed more courage, Marcus suggested, the studio's financial status might have improved dramatically.
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