The End of the Studio System, Part 2



This is the second post of three parts that is part of the Classic History Project Blogathon hosted by Movies Silently, Silver Screenings, and Once Upon a Screen, and sponsored by Flicker Alley.

Part 1: The Foundation Slips


The House Un-American Activities Committee (HUAC), the Hollywood Ten, and the subsequent blacklistings are large topics in their own right. They did not directly impact the downfall of the studios of the system, but they were yet another symptom that something was broken. The anti-communism movement and the fallout contributed to a great deal of pessimism within the industry, while also removing talented individuals that included actors, directors, writers, and even common crew.

Alger Hiss Taking an Oath

The hearings and inquiries into Hollywood began in 1947 where they were trying to identify Hollywood filmmakers who had ties to the Communist Party, and were subsequently trying to influence Americans with a leftist agenda expressed through film. The Hollywood Ten refused to testify and were blacklisted. Many other notable individuals would later be blacklisted, including Charles Chaplin, Orson Welles, Martin Ritt, John Garfield, Judy Holliday, Dashiel Hammett, and countless more. Some cooperated and testified, naming names. This list included Elia Kazan and Sterling Hayden.


The Paramount Decision of 1948 was the smoking gun that effectively ended the studio system’s dominance of the industry. All of the tricks like block booking and blind bidding were immediately abolished, once and for all. The entire decision can be read here. It was a detailed decision and a pointed one. The studios had to divest themselves of their theater holdings and operate as production companies only.


The decision was devastating and there were major repercussions. Overnight, the landscape had changed and the studios had to make drastic operational changes. The fallout would pave the way for television and a new era of Hollywood filmmaking.

Since the studios could no longer push their lower quality inventory on theaters, they had to scale back on B picture productions. Most of the studios focused solely on A pictures. This meant there were also fewer overall productions. This meant fewer jobs, at least in film.

Each studio transitioned differently. Universal was one of the outliers that remained in the lower grade feature or B picture business. They revived the Abbott & Costello franchise, and originated some other franchises that would eventually land on television.

The studios now had to make deals directly with the talent. In this new world, they resembled the independent systems like the Selznick system. Since they had lost leverage, the negotiations were not always in their favor. They made deals with filmmakers, such as Alfred Hitchcock as independent producers and directors. The talent that was in demand held substantially more leverage than they did under the old system.

The directors, actors, and all of the talent were essentially free agents. They made films for different studios. During what most consider to be Hitchcock’s best work in the 1950s, he worked primarily with Warners and Paramount, but he made North by Northwest with MGM. Directors like Hitchcock developed more into auteurs, whereas in the previous system, producers such as David Selznick and many others (Val Lewton for instance) had some sort of authorial control.


Each studio handled the changes differently. With television coming into play, the industry was shaken up dramatically. At first the studios were reluctant to get into bed with television, which they saw as competing for the same viewers, although that changed once some social-economic realities set in.

Lew Wasserman

Lew Wasserman

Lew Wasserman formed MCA, basically a talent agency, and he became a power player in the scene. He functioned similarly as David Selznick did in the 1940s after getting out of feature production and farmed out talent to the various studios for a profit. MCA acquired talent such as Jimmy Stewart, and leveraged them against the studios to benefit their clients. One of Wasserman’s major deals involved Jimmy Stewart and Universal, where he negotiated a tax-friendly deal for Stewart to get a large percentage of the profits. This in a similar vein as the deals that Capra and others had made to get paid in capital gains, although far more generous. Stewart was able to obtain 50% of the profits of Anthony Mann’s Winchester ‘73. This was an unprecedented number, and Stewart was also more involved in other aspects of the production. This was new and shaky ground for the studios.

Here is an interesting and not very flattering piece on Wasserman from Slate.

Studio head Louis Mayer left MGM in 1951 after a power struggle with Dore Schary, the then head of production. This turned out to be a fortuitous move for MGM, as they were able to survive under Schary under the strength of the musicals. Musicals such as Singin’ in the Rain and An American in Paris were massive moneymakers for the studio, and there were plenty other successful musicals on a smaller scale. The studio continued churning them out and they outlasted all other studios at remaining profitable and prominent without making drastic changes. By 1955, most of the musical profits had run their course and MGM transitioned just like the rest of them.


There was reluctance for the studios to transition to television. It was thought to be a lower quality product, and in the beginning, that was true. At first there were mediocre offerings with an emphasis on being “live,” which is something that separated TV from film. Over time, the TV content transitioned to resemble the B features that the studios had formerly cranked out. In many cases, the same studio lots that were used for B films were used for TV shows. As the film industry went through a downfall, they had no choice than to jump into the arena.

tv_radio guide mar 55_cover

By 1955, most studios had made their attempts at launching television programs. Disney, MGM, Warner Brothers, and 20th Century Fox all made attempts, yet few of them were successful. Disney was the only significant success with their show Disneyland, which was partly because it was tied to their popular theme parks. Many studios noticed how well Disney was able to transitioned and tried variations with mixed results.

A watershed moment came when The Wizard of Oz was licensed to television and scored huge ratings. The studios again took note and unloaded their film inventory to television for large sums of money. Television became a second-run outlet for older film inventory. Back in those days, there was not much of a secondary market for film inventory, so this was a pivotal moment.

There will be more discussion of the studios and the transition to television in the next section.

Next: The Downward Spiral

Posted on June 25, 2015, in Essays, Film. Bookmark the permalink. 8 Comments.

  1. Great series on the collapse of the studios! I just wanted to add a bit on the Disneyland TV series.

    It’s absolutely correct that part of what made Disneyland successful was the connection to the Disneyland theme park, but that went both ways. It was the deal to make the TV show that led ABC to front some of the money for building it, and it was used, in turn, as a promotional vehicle for it. That was one of the brilliant things Disney figured out: that if you have faith in the quality of your product, then TV could be used to promote the films. Several of the episodes from the first season (1954-55) were just “making of” features. One of them, “Operation Undersea” on the filming of 20,000 Leagues Under the Sea, even won an Emmy and none of them were shy about showing off major sequences of the films they were promoting, enticing viewers with the promise of seeing it in colour, on the big screen.

    Disneyland also pioneered bringing those theatrical assets to small screens. The second episode was an abridgment of Alice in Wonderland, So Dear To My Heart was episode 5, and Treasure Island was broken up into episodes 11 and 12. They also made good use of True-Life Adventure shorts and their library of short cartoons.

    Then there was the original content, Davy Crockett being the foremost example. They also produced documentaries, some of which were wholly original (“Man in Space”) or made use of their assets (season 2’s “A Tribute to Joel Chandler Harris”). Basically, Disneyland was a fascinating anthology of self-promotion done in a way that was so entertaining in its own right that it managed to catch on in a big way. I don’t think it necessarily would have worked, either, if not for the quality of the assets they were using in it.

    • Terrific response! I actually have not seen the Disneyland TV series save for a snippet back in film school. You are exactly right that Disney became a self promotional machine and it is difficult to extricate the content from the brand. That’s the case today whether it is theme parks, movies or TV shows. Disney planted the seeds for the other studios to follow suit and they tried the same thing and fell flat on their face. In part 3 I talked about how they became successful, but judging from your response, I have a feeling you’ve read a good bit on the subject. Thanks for reading and commenting!

  2. Yes, I can see how deals like James Stewart was making with Winchester ’73 would make studios verrry nervous. As much as movie moguls are reviled (and often with good reason), they really did keep a lot of people employed. It would have been quite stressful to guide a major studio through this period.

    Yet, we can be grateful that television became a “clearing house” for older films. It was a brilliant strategy that preserved many films, no?

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