Independents In The Age Of Oligopoly

There are two main periods in the history of top-rank independent production during the era of mature oligopoly (the era of the Big Five and the Little Three). The first period covers the years between the mid-/late 1920s and 1939. During this period top-rank independent production was a relatively isolated phenomenon in the American film industry and was mainly characterised by a small group of elite producers, which apart from Goldwyn, Selznick, Disney and Hughes included among others Walter Wanger, Joseph Schenck and Darryl Zanuck (before their company 20th Century Pictures merged with the Fox Corporation), Chaplin and Pickford. These producers had formed their own companies and were in the business of making only a few, mostly high-cost, prestige-level films per year.22 Their films were handled theatrically by United Artists, which represented the main outlet for distribution of independently produced films during those years.

The second period of top-rank independent production in the studio era spans the years between 1940 and 1948. This time it was characterised by an industry-wide shift to this type of filmmaking. A cluster of factors that included the growing demand for prestige-level films (especially during the World War II years), the increasing power and leverage of a relatively large number of above-the-line studio employees (actors, directors and, more rarely, writers) and the effects of changes in the taxation system for the duration of World War II encouraged a much larger number of film producers than in the previous period to go independent. Thus, by the end of World War II in 1945 there were fifty independent producers, while two years later the number had risen to ninety.23 Apart from the change in volume, what differentiates this phase of independent production from the earlier one was that the studios became active players in fostering this type of filmmaking. Starting with RKO, which had already signed Walt Disney from United Artists in 1938 and had become a major competitor for UA by 1940, all the major studios (with the exception of MGM) gradually opened their gates to independent producers and established an environment within which an increasing number of newly formed production companies were located. This of course raises questions about the degree of independence of those producers from the studios, questions that are tackled later on in this chapter.

THE FIRST PERIOD (MID-/LATE 1920s-1939)

The first period of top-rank independent production is intricately linked with the trade and business practices of United Artists, the company that was set up with the explicit mission to function as a distribution avenue for filmmakers who produced self-financed films through self-owned companies. As the only distributor to be established by the talent and the only one of the eight dominant film companies in the 1920s and 1930s without a production or an exhibition arm, UA was certainly an oddity in the studio system. Despite the fact that it has always been considered by film historians as one of the eight oligopolists and, especially, a member of the Little Three, United Artists did not also cease to be what Douglas Gomery calls a 'specialised studio', located 'further on the fringe' alongside companies such as Monogram and Republic.24 If the specialisation of the Poverty Row outfits was in producing and distributing cheap action films, especially westerns (see Chapter 2), the specialisation of United Artists lay in the distribution of prestige-level films and/or star vehicles by a small number of creative producers. United Artists was the only company outside the studios that was allowed access to the first-run houses, which had the power to dominate exhibition. With the other studios' doors firmly closed, top-rank independent producers needed United Artists' distribution apparatus to get access to those theatres.

By the time the structure of the American film industry stabilised in the late 1920s, there were over 20,000 theatres in the US. Although the five majors owned less than 20 per cent of those theatres, their possessions included 80 per cent of the first-run theatres and a large number of the best second-run ones. Concentrated in major metropolitan areas, those studio-owned theatres were responsible for between 50 and 80 per cent of all box office revenues generated in the US, figures disproportionately high given the five studios' low ownership percentage.25 Furthermore, these theatres and a small number of studio-affiliated theatre circuits were excluded from block-booking practices, which meant that they were free to book the most commercial titles from all eight studios, while in exceptional circumstances (when they could not fill all their playdates) they were prepared to accept independent films distributed by companies other than United Artists. Finally, the five studios had divided neatly the exhibition market among themselves (Paramount controlled the South, New England and Upper Midwest; Fox, the West Coast; RKO and Loew's each controlled a large part of New York, New Jersey and Ohio; and Warner Bros dominated the mid-Atlantic states),26 to the extent that no newcomer could enter the exhibition market without their approval.

With the danger of being shut out of the lucrative first-run theatre market clearly visible, United Artists, under the management of Joseph Schenck (1924-34), devised a programme of first-run theatre acquisition. Once the major studios realised that the small distributor of independently made films was ready to play their game, that is, expand into the theatrical exhibition branch, they agreed to allow UA-distributed films in their first-run theatres. This was under the provision that the company would remain solely in the business of film distribution and therefore abort its expansion (and integration) programme. As the studios were in no position to produce a combined output of prestige-level films that would cover the exhibition requirements of the first-run theatre market, United Artists' product would certainly make a welcomed addition from which both parties would stand to profit: the studios through ticket sales, which were expected to be high given the quality of the independently produced films; UA through distribution fees and rentals from first-run sites across the country, which were bound to be higher than the revenues the company would earn had it exhibited its films solely in its own theatres.27 Between 1928 and 1931 all five major studios signed deals with UA whereby they agreed to exhibit a fixed number of its films in their first-run theatres, while UA refrained from further expansion into the field of exhibition.

Although these agreements secured United Artists' future, they also compromised on the one hand the company's status as a vehicle for independent filmmakers' resistance to the integrated majors. Securing its future essentially meant becoming an integral part of the same oligopolistic structure the company originally set out to oppose. On the other hand, the majority of the independent filmmakers distributing through UA were prominent figures in American cinema and it was in their best interest to maintain a symbiotic relationship with the dominant forces of the industry rather than adopt a clearly oppositional stance. For that reason, even though UA, unlike the other studios, continued to avoid applying controversial trade practices such as block booking and blind-bidding, it did become a member of the eight controlling companies of the American film industry. For instance, its collusion with the five majors in the first-run theatre market was a good enough reason for the Antitrust Division of the US Justice Department to charge UA, alongside the other studios, with violating the Sherman Antitrust Act in 1938.

Despite this ambiguous status, however, United Artists' access to firstrun theatres ensured that there existed at least one serious distribution outlet for top-rank independent filmmakers. Not surprisingly then, the company attracted almost all of the few individuals who, for various reasons, defied the studio-based system of film production and ventured into independent production by forming their own companies. Table 1.1 contains details of the twenty-seven American-based production companies, the individuals behind them and the number of films they delivered to United Artists for distribution during the 1926-39 period (the + symbol indicates that a number of companies continued producing for UA in the post-1939 period).28

From the 27 American production outfits, which were responsible for the 179 (out of 223) films United Artist released in those 14 years,2911 made just one or two films for the company. These included ex-founder D. W. Griffith who had sold his stake in UA by 1924 to return to studio-based filmmaking but arranged a one-off deal as an independent producer in 1932, and

Table 1.1 US production companies distributing through United Artists, 1926-39

Production companies

Association

No o

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