He then repeated that it was “extremely likely that SAG had contributed to MCA’s rise in the television film production industry exactly as the AFM had helped MCA in its control of big bands.”8
Another source told Posner on July 11, “[I]t is unconscionable for the Screen Actors Guild to continue permitting MCA a blanket waiver when it goes against all the rules of conflict of interest.”
*Eventually, the Justice Department’s Criminal Division decided not to press criminal contempt charges against Taft Schreiber, yielding instead to the FCC’s efforts to proceed against the MCA vice-president in civil court. That case was later dropped.
CHAPTER TWENTY-TWO
On August 22, Nicholas Zapple asked Posner if the Antitrust Division’s investigation would be harmed if his Senate subcommittee did one of two things: either called twelve to fifteen witnesses for a series of limited hearings on MCA, or called those people to testify who were already on the record about their feelings toward MCA. Posner felt that both of these alternatives would be harmful.
When Zapple asked why, Posner replied, “It would, at least, illustrate for MCA the main areas of thrust which they could expect to be exploited during an antitrust case. Hence, they would shore up their defenses against these areas, and seek ways of explaining away the testimony of these persons.… I told Zapple that in my estimation there was no possibility of using surprise as a means of catching MCA off base and that the only thing we could do was to prepare a very solid foundation for a case.”1
Three days later, on August 25, Attorney General Robert Kennedy authorized a federal grand jury to be convened in the Southern District of New York to investigate the numerous charges against MCA. In his request for authorization, Lee Loevinger charged that “MCA’s power has created fear of retaliation, including the ‘blacklist’ of talent and the boycotting of producers from access to ‘name’ talent. The alleged existence of boycotts, blacklists, predatory practices, and per se violations (such as ‘tie-ins’) may provide a basis for a criminal suit, and thus makes desirable the empaneling of a grand jury.” Loevinger added that “no grant of immunity to any of MCA’s top executives is planned.”
On August 28, Paul Laskin from the Senate Committee on Juvenile Delinquency told Posner that soon “the lid would be off” on the Senate’s proposed investigation of MCA. Posner pleaded with Laskin “that it was vitally important within the next few weeks that we get no publicity at all insomuch as we were going to the [West] Coast to try to unearth certain information with respect to practices of MCA.”
“When are you going to indict MCA?” Laskin asked sharply.
Posner said, “I told Laskin that because of the type of action that he himself had indicated might be contemplated, it was vitally important that our witnesses not be disclosed, and that their testimony not be made known to MCA. I explained that in all criminal cases, defendants make strenuous efforts to obtain the minutes of the grand jury, and to obtain by inspection thereof the testimony of the chief witnesses who would be marshaled against them, and that such defendants also commonly make great efforts to obtain lists of witnesses.”
Laskin finally said that he was sympathetic and saw the need for secrecy, asking, however, to be kept informed as to the progress of the case.
On August 28, rumors were flying from coast to coast in the wake of the decision to convene the grand jury. According to the Hollywood gossip, Revue Productions was planning to split off from MCA and merge with Paramount—and Paramount president Barney Balaban was going to yield his job to Lew Wasserman. Simultaneously, SAG was preparing to rescind its blanket waiver to MCA. Posner learned that “SAG is definitely pushing ahead. It will make new demands, and a waiver retraction will be one of these.” In a memorandum to his files, Posner wondered whether it was “significant” that SAG was acting at the exact time that Revue appeared to be preparing to split from MCA.2
On Friday, September 8, the Screen Actors Guild jolted the television production industry when it announced that it had voted to eliminate the waivers enabling talent agencies to produce shows, effective December 31, 1961—although SAG stated that it could grant a six-month extension.
The question became: What would MCA do now? Would it try to divest itself in advance of the deadline? Would it apply for the six-month extension? How would it retain as much control as possible over its empire, even after it was broken up?
Four days later, Posner received information that “MCA has already moved a considerable amount of its personnel to Revue.… Wasserman has been in Europe but is due back about now.” However, Posner also learned that SAG had no intention of policing the breakup—“so long as there is a legal separation, SAG will not care whether or not there is a practical separation.” As far as Posner was concerned—from what he had learned from his sources—a mere cosmetic separation would keep MCA in violation of federal antitrust laws.3
Had SAG—which could have been charged with restraint of trade by virtue of its singular blanket waiver to MCA—simply bought itself out of legal jeopardy by its sudden action? SAG’s good faith was immediately questioned, particularly considering the union’s cozy past with MCA. Posner’s sources speculated also that the whole waiver scenario between SAG and MCA had resulted from the fact “that certain actors had been instrumental in the granting of the MCA waivers, and that possibly this may have been due to promises by MCA to the actors that they would get a reward via certain tax-saver corporations.”
Another prominent theory, based on some evidence, was “that an aggressive corporation like MCA would not be apt to split off cleanly but there would remain certain close rapport between their officials [in MCA and SAG] for a number of years after this supposed divestiture.”4
Was there a secret deal? John Dales, the executive secretary of SAG, said, “Oh, no. Our attorney Bill Burger and my assistant, Chet Migden, and I met with Wasserman and [SAG counsel Laurence] Beilenson, and [we] told them that we were not going to renew the waiver.”5
On September 18, Loevinger was told by his antitrust lawyers that “if the split-off were genuine, it might possibly eliminate the most important element of the case, and could possibly lead to abandonment.”
Posner and his colleagues recommended that the Justice Department continue the FBI investigation and accelerate the grand jury by immediately calling witnesses. Loevinger agreed. “The way to keep pressure on MCA,” he said, “was to push ahead with the grand jury as hard as possible,” even though he realized that “the MCA split-off might seriously impair our case.”6
The immediate problem was procedural, one of empaneling a grand jury. For this antitrust case, twenty-three jurors would be selected by a random drawing from a pool of 125–150 persons. (There is always a danger that some of the prospective jurors may have connections with the company under investigation.) October 10 would be the earliest date that a grand jury could be seated. In the interim, the Justice Department began compiling its witness list and subpoenas, and started reviewing FBI reports and its own interviews.
During a conference with the FBI on October 2, special agents lamented that the results of their interviews had been “disappointing.” According to Posner, “They ran headlong into the principal problem of this investigation, i.e., fear of MCA.”7
The FBI was given more time, and the Antitrust Division decided to postpone the grand jury and move it from New York to Los Angeles. They asked Robert Kennedy for authorization. The attorney general gave his approval but in a handwritten note on the memorandum stated, “However, I want a summary of info we have developed on this.…”
On October 31, Posner received an official copy of the recent special MCA-SAG agreement, which had been negotiated on October 24. According to the Justice Department’s analysis of the document, “MCA will keep the same people in the talent agency as subagents. Moreover, MCA will keep in the same lieutenants who will be responsible to, and have loyalty to, the same MCA subagents.… There is little doubt that the new SAG-MCA agreement prov
ides that MCA will spin off Revue. However, MCA personnel will still be manning the talent agency.” The agreement also stated that MCA would have until September 30, 1962, to make a decision whether to divest itself of the talent agency or its film production company.
Under the agreement, MCA could buy the stock of a motion picture studio. There had been published reports in some newspapers that MCA was considering the purchase of either Paramount or Universal. Further, only the representation of screen actors was affected under the agreement. MCA could continue to represent producers, directors, and writers.
In a letter to its membership, dated October 31, 1961, the SAG board informed its members of its ultimatum to MCA but added, “The Guild board believes it to be a foregone conclusion that MCA will surrender the agency franchise and maintain and probably expand production activities.”
The Justice Department report also stated that “the members of the Artists’ Managers Guild [representing talent agents] were incensed because MCA, one of its members, was conducting secret negotiations with SAG without informing the rest of the members. The deal between SAG and MCA was conducted in strict secrecy, and many of the members of the Artists’ Managers Guild are still apprehensive that there are elements of the negotiations which they do not know and that MCA in giving up its waiver may have gotten other considerations and privileges not yet announced by SAG.”*
As the process of selection for the federal grand jury in Los Angeles began, the Antitrust Division summarized its case for Robert Kennedy in a long memorandum. Aside from the three hundred witnesses interviewed by the FBI, the antitrust attorneys had talked to another 150 industry sources. The memorandum to the Attorney General charged that a variety of antitrust violations had been engaged in by MCA, including:
1.Attempt to monopolize the trade in name talent;
2.Attempt to monopolize the production of TV film programs;
3.Conspiracy with the Screen Actors Guild to monopolize the trade in name talent;
4.Conspiracy with the Screen Actors Guild to monopolize TV film program productions; and
5.Restraint of trade in name talent and TV film program production by (a) contract with SAG, (b) tie-in sales and contracts with networks, (c) “shadow” or extorted payments for services not actually rendered, (d) foreclosure of independent producers from market, (e) discrimination between talent clients of MCA and producers represented by MCA in order to serve MCA’s interests, and (f) predatory practices.
“It is likely that MCA saw in television the opportunity for an operation similar to that by which it had obtained control of bands and radio band programs,” Loevinger wrote. “The union which parallels in TV film programming the operation of the AFM is the Screen Actors Guild.
“MCA obtained the only blanket waiver granted by SAG to a talent agency to engage in the production of television film on a permanent basis [with the exception of that provided to GAC a few weeks earlier].… We also hope to prove that the grant of this blanket waiver was effectuated by a conspiracy between MCA and SAG.”
Loevinger concluded his report by saying: “We expect to present witnesses to the grand jury as rapidly as possible.”
By mid-November, the grand jury had started calling witnesses. Posner continued to conduct the investigation. John Fricano of the Trial Section of the Antitrust Division and E. C. Stone of its New York office handled the questioning of the witnesses, who included Cary Grant and Danny Kaye, as well as a variety of industry executives, agents, producers, directors, and writers.
The FBI received reports that MCA tried to intimidate at least one witness, warning actor Joseph Cotten that MCA officials would receive a copy of his testimony, and that his film career would be affected accordingly.
*On October 10, 1961, SAG granted an “MCA-type waiver” to another member of the Artists’ Managers Guild, GAC, which was represented by attorney Abe Fortas of the Washington, D.C., law firm of Arnold, Fortas and Porter—in the midst of rumors that GAC was preparing to purchase Desilu Studios. According to George Chandler, Reagan’s successor as SAG president, “A request from General Artist Corporation for an MCA-type waiver, signed by Herbert J. Siegel, September 27, 1961, was received by the Guild shortly thereafter. This was his only request for such waiver. It was considered by the board of directors of the Guild on October 9, 1961, and granted. The actual waiver was dated October 10.… Whether this request had any connection with a purchase of Desilu Studios was never revealed to the Guild by Mr. Siegel.”5
CHAPTER TWENTY-THREE
On February 5, 1962, John Fricano prepared to question the man whom he hoped would shed new light on the relationship between MCA and the Screen Actors Guild. That afternoon, Ronald Reagan, wearing casual clothes after spending the morning shooting a new episode on the set of General Electric Theater, stepped to the witness stand and took the oath.
The following is a verbatim transcript of Ronald Reagan’s February 5, 1962, secret testimony before the federal grand jury in Los Angeles, investigating alleged violations of antitrust and criminal laws by MCA. The original transcript, taken down by certified shorthand reporter Lucille Girlow, contained occasional misspellings and typographical errors, which have been corrected by the author in brackets. This is the first time this document has been published in its entirety.*
“State your name and residence address,” John Fricano asked.
“Ronald Reagan, 1669 San Onofre Drive.”
“What is your profession, Mr. Reagan?”
“Actor, I think.”
“I think the Grand Jury recognizes you, Mr. Reagan. We will dispense with the usual formalities. However, very briefly will you state for the record your history, as it were, [of] being in the entertainment industry.”
“I graduated from college in 1933. I became a radio sports announcer in the Midwest. [Four] years later in 1937 I went under contract to Warner Brothers Studios here in Hollywood to make motion pictures, most of which are showing up on the late late show, and in 1954 [sic] while I was at Warner Brothers, with renewals of the seven-year contract until 1949 at which time we rewrote the last two years of a contract, the last three years of a contract to one picture a year for three years with no exclusivity. I had the right to go outside to make pictures for other companies. I did those three pictures and then was a free lance. In 1954 I took my present job with the General Electric Theater.”
“In 1937, Mr. Reagan, when you were under contract to Warner Brothers, by whom were you represented?”
“MCA, oh, wait a minute.”
“1937?”
“William [Meiklejohn].”
“Who was your next agent after Mr. [Meiklejohn]?”
“MCA. In a way, still both of them, William [Meiklejohn] Agency. MCA had never been in the motion picture representation field and they decided to come into the field and they did it by buying William [Meiklejohn] Agency and taking six of us who were clients as the first motion picture clients of MCA.”
“Do you recall who the other five were?”
“Bill Demarest was one I know. Jane Wyman was one, I don’t recall the rest beyond that. I know three of us. I think there were six. Could have varied one or two but I always referred to it as six.”
“Do you recall when MCA acquired the William [Meiklejohn] Agency?”
“I think around 1939 or ’40 but my memory is a little hazy there.”
“Have you been represented by MCA since 1939 or ’40 when William [Meiklejohn] was acquired by MCA?”
“Yes. Could I volunteer something here? I wouldn’t want these ladies and gentlemen to think that I wouldn’t wear a shirt and necktie to come down here. They caught me at the studio. I had no choice.”
“Revue [Productions’] studio?”
“Yes.”
“When was your first excursion into television, Mr. Reagan?”
“Well, that would have been in the period—oh, dear, that would be just prior to 1954. I would say in the year and a half or so prior to 1954 I did some gu
est shots. I did a few shows, both live and film, and I did them both here and in New York. It was new and you want to get your seat wet a little bit and find out what it is all about and at first it seemed like radio. We always did things like Lux Radio Theater and I did a few shows of that kind.”
“Who was your personal agent at MCA when you first went to the organization?”
“Lew Wasserman.”
“Have you ever had any other personal agent?”
“Yes, as Lew went more into the administrative end, becoming president of the company, Art [Park] has been my particular agent.”
“And he has handled you more or less exclusively since Mr. Wasserman gave up his duties?”
“Yes, except in MCA, when you have been around this long, you still go to Lew Wasserman on some matters and with Art and also they have a system there, it seems to me, of having men assigned to particular studios and a man is assigned to particular studios and a man is assigned like Irving Salkow to television. So many times you are offered a guest shot and it will come through Irving Salkow because that is his department and he is assigned to that as a department, not to me as an individual. If I have any question about rates or whether I should do it or not, I would take it up with Art [Park] and discuss it with him in relation to any problems we might have.”
“Returning once again, if we may, to the time when you went to MCA in 1939 or ’40. What type of contracts did you sign with MCA?”
“Oh, I never read them but they were the regular contract that is provided for by the arrangement with the Screen Actors Guild, the regular agency contract which I have helped negotiate those contracts with the agents when I was an officer and board member with the Guild, and yet I can’t remember where we made the changes. I know sometimes we shortened the time they were to hold you, that an agent company could hold an actor, but whatever it was it—”
“Well, did you sign an exclusive contract with MCA to the effect they would represent you in all media?”
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