Agents and Agencies
The post-war recession in the motion picture business was caused in no small measure by television, which began its commercial expansion during the 1950s. At the start, prime-time programs were produced mostly live out of New York. As in radio, programming was left to advertising agencies, which bought blocks of time on the networks and negotiated with talent agencies for shows. Since many of the most popular shows on TV were patterned on the variety format of live radio, the old line agencies easily made the transition to the new medium. William Morris, for example, entered television in 1948 by converting its radio show, Texaco Star Theater starring Milton Berle for NBC (1948–1956). It went on to package other variety shows for the network such as The Jack Carter Show (1950–1951), Your Show
of Shows (1950–1954), and The Colgate Comedy Hour (1950–1955), among others.
By the end of the decade, prime-time television was produced on film in Hollywood. Regardless of the format of the package or the medium in which it was produced, agencies collected a 10 percent commission on the package price of the show to the network, just as in radio. Once again, MCA devised a way to wring more money out of the situation. In a daring move to provide employment for its unemployed clients, MCA went into television production in 1949 by forming a subsidiary called Revue Productions. Its first venture was a live variety show called Stars Over Hollywood. When it became apparent that filmed shows, particularly series, would become a TV mainstay, MCA moved into television production in a big way by negotiating a blanket waiver from the Screen Actors Guild in 1952 that allowed the agency both to represent talent and to produce television shows in which talent appeared. The head of the Screen Actors Guild at the time was Ronald Reagan (1911–2004), an MCA client. Generally, the Guild had prohibited agents from producing programming because it would allow them to act as both the seller and the buyer. Since no other company won the same rights, the blanket waiver was a watershed for the company. MCA through its Revue subsidiary quickly became the un-challenged giant of television production. By 1960, MCA, by then referred to as The Octopus, was producing some forty hours worth of television shows every week, among them The Danny Thomas Show , The Andy Griffith Show, and The Loretta Young Show .
Unlike William Morris and other agencies that packaged shows, MCA through its television production arm was able to maximize its takings. Launching a television series, MCA-TV went fifty-fifty with the star. Selling the show to the network, it collected 10 percent of the package price of the show. Revue Studios, the MCA subsidiary that actually produced the show, collected a 20 percent fee of the costs to physically produce the show for its services. The remainder of the production budget went to Revue to cover studio overhead, labor, and other expenses. After a successful network run, MCA received syndication fees when the show was sold to individual television stations for off-network programming and a cut of foreign sales.
By 1960, MCA was the largest talent agency in the business, with double the revenues of William Morris, its nearest competitor. Strengthening its position as a television distributor, MCA had purchased the syndication rights to Paramount's pre-1948 film library for 50 million dollars in 1958. Within months, MCA strengthened its position as a television producer by purchasing Universal's 367-acre back lot in the San Fernando Valley for 11.3 million dollars and spent an additional 30 million dollars to renovate the facility. The expansion ultimately led to a three-year investigation by the Justice Department of the Kennedy Administration into the possible antitrust violations by talent agents. In 1962, MCA signed a consent decree in which it agreed to immediately get out of the talent agency business.