Ahhh, the Golden Age of Hollywood. It couldn’t last forever. And it ended with the fall of the Studio System.
Historically, the term “studio system” refers to the practice used between the 1920s and 1960s by the large motion picture studios that produced movies primarily on their own lots, using actors and actresses under long-term contracts. This also enabled them to control distribution of the films through the ownership or effective control of film distributors and movie theaters. They also used manipulative booking techniques that guaranteed more sales.
The studio system played a big part in the success of classic Hollywood. It was a system that assured the biggest studios in Hollywood were in total control of the movies they made and their distribution. The major studios were divided into two groups: the “Big Five” (MGM, Paramount, Warner Bros., RKO and Fox) and the “Little Three” (Universal, Colombia and United Artists). Indeed, the Big Five studios were credited with creating most of the legendary movie stars of the Golden Age.
Most movie stars signed seven-year contracts with a studio. These contracts were very strict and affected the social life of an actor or actress. Much of the time, the studio scheduled social activities for a star as a promotional technique. While it garnered the stars lots of press and attention, it also benefited the studios by drawing movie-goers to the theaters to see their favorite stars. The contracts also gave the studios complete control over the stars, including forcing them to accept any role chosen for them by the studio.
The fall of the studio system was a long time in coming. Anti-trust lawsuits had repeatedly been filed against studios since 1921, with no effect. The US Attorney General filed one such lawsuit in 1938 against Paramount Studios. Two years later — you know how slow legal wheels can turn — the studios agreed to stop buying theaters, end blind booking (requiring theaters to rent films without seeing them first) and limit block booking. But that still didn’t fix things.
In May of 1948, the United States Supreme Court issued a landmark decision in the Paramount antitrust case when the Court held that the existing distribution scheme violated the laws of the United States, which prohibited certain exclusive dealing arrangements. It changed the way Hollywood movies were produced and exhibited.
In October of that year, the Justice Department served notice on MGM, Paramount, Fox, RKO, and Warner Bros. to give up their interests in some 1,400 movie theaters. Surprisingly, the first one to cave was Howard Hughes, who had controlling stock in RKO Pictures. When RKO agreed to quit the battle and divest itself of controlling interest in 241 theaters within a year, the other studios followed within ten days.
Attendance at movie theaters had dropped drastically following World War II, and as the audiences dwindled, the studios had little choice but to liquidate their holdings. The seven-year contracts the studios imposed on their actors and artistic people were challenged. One-by-one the studios began to fragment. MGM was bought by Kirk Kerkorian, a hotel magnate. Warner Brothers was eaten up my Seven Arts. Paramount was acquired by the Gulf+Western Company. MCA took over Universal. Harry Cohn’s Columbia was acquired by Coca Cola.
The great empires had crumbled. The studio system was no more.