After the war, the film industry entered a ten-year recession, during which weekly attendance declined by around one half. The stock system that enabled the studios to turn out a new film every week of the year went by the board. Cutting back on production and trimming budgets in an attempt to reduce overhead, studios took actors, writers, producers and directors off long-term contracts or pared them from the payroll. In the process the majors abrogated the functions of nurturing and developing talent—and in so doing, relinquished power to the talent brokers.
MCA led the way. MCA's entry into the movie business was accomplished principally by buying out several other agencies. The company's most important acquisition came in 1945, when it bought the Hayward-Deverich Agency in New York for about 4 million dollars. Headed by Leland Hayward (1902–1971), this was the prestige company of the agency business, whose 200-odd clients included Fredric March, Ethel Merman, Barbara Bel Geddes, Henry Fonda, James Stewart, and Billy Wilder. The star power on MCA's roster after the war enabled Lew Wasserman (1913–2002), who succeeded Jules Stein as president of MCA in 1946 at the age of thirty-three, to exact new terms for his clients. Instead of asking for higher salaries, Wasserman began demanding a percentage of the profits. In a percentage deal, a star worked for a lower salary than usual, but received a share of the profits if the picture was a success. The arrangement lowered the cost of production for the producer and provided an opportunity for the star to take home more money and save on income taxes as well by sharing in the risks of the venture. In a landmark deal with Universal-International in 1950, MCA negotiated a 50-percent profit participation for James Stewart to star in Winchester '73 . Stewart earned more than 600,000 dollars from the picture. In comparison, a star such as Clark Gable in his heyday at MGM never earned more than 300,000 dollars for an entire year's work. James Stewart's deal with MCA changed the face of the business; thereafter, profit participations for top talent became standard practice.
Profit participations also played an important role in convincing stars and directors such as Kirk Douglas, Burt Lancaster, Frank Sinatra, Otto Preminger, and others to become independent producers and assume complete ownership of their work. In doing so, the star or director typically engaged a support staff consisting of an associate producer, production manager, story editor, accountant, legal representation, and, of course, an agent. Theoretically, the staff concerned itself with business affairs and the logistics of production, whereas the independent producer pondered creative matters. In turning independent, artists still required the services of agents. A good agent not merely negotiated as good a deal as could be made, but also tried to take the long view to nurture and sustain the client's career.
Most stars played safe and sold their services on a picture-by-picture basis. In such cases, talent agencies imitated the traditional functions of the old studios by effectively putting together packages consisting of stars, literary properties, directors, and other ingredients and offering them to the highest bidder. Packaging movies went hand in hand with the big-budget blockbuster policy the studios were relying on to revive the business. By the 1960s, it was estimated that of the 125-or-so films Hollywood made each year about 80, or nearly two-thirds, were prepackaged by agents for their clients. No packaging fee was assessed in movie deals; agencies got their money from the higher salaries their clients were now able to command.
The man who transformed Music Corporation of America (MCA) from the world's strongest talent agency to one of the largest global media conglomerates, Lew Wasserman was for forty years generally regarded as the most powerful man in Hollywood. Although he shunned the limelight, Wasserman was renowned for his business acumen, his political connections, and his ruthlessness. He was also admired for his philanthropy and was awarded a special Oscar ® for humanitarianism in 1973 as well as the Presidential Medal of Freedom, the country's highest civilian honor, in 1995.
The son of Russian emigrants, Wasserman started in the entertainment field in high school, ushering for a Cleveland movie theater seven nights a week. Unable to afford college, he got a job booking bands and doing publicity for the Chicago-based Music Corporation of America, then a fledgling agency. Impressed with Wasserman's resourcefulness, Jules Stein sent him and his wife, Edith, to Hollywood in 1939 to take MCA into the film business. In 1946, Stein named the thirty-three-yearold Wasserman president of MCA.
Wasserman opted to take MCA out of the talentagency business in 1962, foreseeing greater opportunities elsewhere in entertainment. He then solidified MCA's position as a film and television producer by buying out Decca Records, the parent of Universal Pictures, and by transforming the Universal lot into a profitable theme park and shopping complex. Afterward, MCA consistently captured a substantial share of the box office with hits such as Airport (1970), American Graffiti (1973), The Sting (1973), Jaws (1975) E.T. the Extra-Terrestrial (1982), and Back to the Future (1985). For years MCA's remarkably stable television operations had more network prime time shows on the air than any of its rivals.
MCA diversified in the 1980s, acquiring toy companies, music companies, a major independent television station, and an interest in a large theater chain. The diversification strategy strengthened MCA's existing positions and extended the company into contiguous businesses. Wasserman's most successful investment was the Universal Studios Florida theme park in Orlando near Disney World, which opened in early 1990.
Having exercised near total control of MCA since the death of Jules Stein in 1981, Wasserman decided to sell the company in 1990 to Matsushita, a Japanese electronics giant, for 6.6 billion dollars. Wasserman stayed on as chief executive, but his plans to make MCA more competitive were ignored by Matsushita executives. Dissatisfied with MCA's performance, Matsushita sold MCA to Seagram, a Canadian liquor company, in 1995. Edgar Bronfman Jr., the new chairman of MCA, retained Wasserman as a consultant but he was given no real responsibilities. In 1997, Wasserman departed MCA, marking the end of an era, and Bronfman changed the name of the company to Universal Studios.
Bruck, Connie. When Hollywood Had a King: The Reign of Lew Wasserman, Who Leveraged Talent into Power and Influence . New York: Random House, 2003.
McDougal, Dennis. The Last Mogul: Lew Wasserman, MCA, and the Hidden History of Hollywood . New York: Crown, 1998.
Moldea, Dan E. Dark Victory: Ronald Reagan, MCA, and the Mob . New York: Viking, 1986.
Tino Balio
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