As the Depression continued, film industry profits suffered as theaters went out of business and box-office receipts slowed to a trickle. Radio, however, continued to thrive. As advertising agencies began to take the broadcast medium seriously as an outlet for their customers' campaigns, a new and influential partnership was about to emerge. Dissatisfied with CBS and NBC's staid approach to programming, several aggressive advertising firms turned their attention to Hollywood's untapped potential for radio-based product promotion. One of the biggest players in this Hollywood-agency alliance was the J. Walter Thompson Company (JWT), whose plan for radio advertising envisioned big-budget, starstudded productions sponsored by JWT clients over the major radio networks. By the mid-1930s JWT was producing at least five shows out of each year's top ten, most of them featuring Hollywood talent, such as The Chase and Sanborn Hour (with Edgar Bergen and Charlie McCarthy), Rudy Vallee's Fleischmann Yeast Hour , and

Orson Welles directs the historic War of the Worlds radio broadcast with his Mercury Theatre group for CBS radio, 30 October 1938.
Lux Radio Theatre . Other major agencies included Young and Rubicam, Blackett-Sample-Hummert, and Dancer Fitzgerald. When in 1936 AT&T, as a result of an investigation by the FCC, reduced its land line rates to the West Coast, a "rush to Hollywood" resulted, and most major agencies along with the two national networks opened up studios in Los Angeles. Radio had gone Hollywood.

This productive and profitable association would have great impact on both the radio and film industries. A variety of radio programs developed that centered on movie industry stars, properties, and Hollywood celebrities. The most prestigious was the movie adaptation format pioneered by JWT's Lux Radio Theatre . Hosted by celebrity director Cecil B. DeMille (1881–1959), Lux presented hour-long radio adaptations of recent Hollywood film releases, introduced and narrated by DeMille and featuring well-known film stars. Others in this format, often referred to at the time as "prestige drama," included The Screen Guild Theater , Hollywood Premiere , Academy Award Theater , Dreft Star Playhouse , Hollywood Startime , and the Screen Directors' Playhouse . A popular feature of these programs was the intimate, casual interviews with famous stars; DeMille, for instance, would chat at the end of each show with that night's leading actors, often casually working in a mention of the sponsor's product. Here audiences could enjoy a new, more intimate relationship with stars and celebrities that had formerly been available only in the pages of fan magazines. Chatting about their upcoming pictures, a recent performance experience, or even domestic details and romantic tidbits, allowed the celebrity to step off the screen and into the familiar space of the living room.

The second major venue for Hollywood stars and film promotion was radio's leading genre, the big-name variety show. Fleischmann Yeast Hour, The Jack Benny Program , The Fred Allen Show , and many others featured regular guest appearances from Hollywood's A-list stars, often promoting their latest pictures or acting out skits related to film properties. Supporting roles were often filled by B-list actors and actresses, some of whom went on to considerable broadcast fame. Many stars eventually began hosting such programs themselves, especially in the late 1930s and early 1940s. Adolph Menjou and John Barrymore served as hosts for The Texaco Star Theater ; Al Jolson appeared on radio almost exclusively after 1935; William Powell and Herbert Marshall hosted Hollywood Hotel at various times.

Some directors got into the act as well. Orson Welles's dramatic radio debut in 1938 on The Mercury Theatre on the Air , most notably his 30 October broadcast of War of the Worlds , helped secure his contract with RKO to produce, among other films, Citizen Kane (1941). Welles would frequently return to radio, as a variety show guest, guest host, and producer of lesserknown programs. Many accounts of the Mercury Theatre on the Air years agree that, once the first couple of broadcasts were past, the group Welles had gathered around him—notably John Houseman and Howard Koch—actually did most of the dramatic selection and adaptation work; nevertheless Welles's inimitable sense of drama and timing as well as his penchant for reflexive and confrontational material permeated the productions. And Welles would bring a heightened awareness of the potential of sound as an expressive medium with him to Citizen Kane and much of his other film work. Alfred Hitchcock, too, established a reputation on American radio, as well as film, before becoming a television personality.

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