United Artists

THE TRANSAMERICA MERGER AND BEYOND

United Artists' successful track record made it an object of a takeover. The American film industry entered the age of conglomerates during the sixties as motion picture companies were either taken over by huge multifaceted corporations, absorbed into burgeoning entertainment conglomerates, or became conglomerates through diversification. The takeover of Paramount by Gulf + Western in 1966 marked the first such entry of a conglomerate into the film industry. This move was followed by the merger of United Artists with Transamerica Corporation, a full-line financial service organization headquartered in San Francisco in 1967. The takeover was a friendly one, but relations between parent and subsidiary soured when UA posted significant losses at the end of the sixties and Transamerica attempted to foist "new management techniques" on the company.

United Artists turned itself around by 1974 and reestablished ties to the creative community. Going into the 1970s, Woody Allen (b. 1935) delivered four pictures to UA— Bananas (1971), Everything You Always Wanted to Know About Sex but Were Afraid to Ask (1972), Sleeper (1973), and Love and Death (1975). Blake Edwards delivered a series of Pink Panther blockbusters— The Return of the Pink Panther (1975), The Pink Panther Strikes Again (1976), and Revenge of the Pink Panther (1978). And the Saul Zaentz-Michael Douglas production team delivered One Flew Over the Cuckoo's Nest (Milos Forman, 1975). Based on the Ken Kesey's celebrated cult novel, Cuckoo's Nest , starring Jack Nicholson and Louise Fletcher, grossed more than any previous UA release and achieved what no other picture in forty years had done—a sweep at the 1975 Academy Awards ^® ( It Happened One Night was the first, in 1934). Nominated for nine Oscars ^® , Cuckoo's Nest won the top five—best picture, best director, best actor, best actress, and best screenplay adaptation. The following year, the Robert Chartoff-Irwin Winkler production of Rocky (John G. Alvidsen, 1976) won the Oscar ^® for best picture, the second time in a row for a UA picture. And in 1977, Woody Allen's Annie Hall won the Oscar ^® for best picture, the third time in a row for a UA picture and an industry record.

In January 1978, UA chairman Arthur Krim and top executives resigned from the company. The dismantling of what had been the industry's most stable management team stunned the film business and climaxed years of friction between the company and Transamerica, its conglomerate parent. Krim and his partners went on to form Orion Pictures, a boutique production-distribution company that struggled for most of its life until it finally filed for bankruptcy in 1991.

UA's new management had the misfortune of falling into a blockbuster trap. Sometimes a picture of enormous box office potential goes over budget immediately when put into production. What to do? If the company pulls the plug, the entire investment is lost and the company suffers the wrath of the creative community for not

permitting the filmmaker to realize the expected masterpiece. So more money is pumped in with the hope that no more catastrophes will occur. Such was the case of Michael Cimino's (b. 1943) Heaven's Gate . Proposed at $7.5 million, budgeted at $ 11.5 million, and written off finally at $44 million, the fiasco led to at least temporary unemployment for almost everyone associated with the picture and ultimately to the demise of UA itself.

UA had fallen into the blockbuster trap once before during the Krim-Benjamin regime. The picture was The Greatest Story Ever Told (George Stevens, 1965), a drama of the life of Christ based on the best-selling Fulton Oursler novel. Stevens was one of the most respected directors in the industry and the picture showed every promise of surpassing the box office performance of biblical spectaculars of the 1950s like The Ten Commandments (1956) and Ben-Hur (1959). The Greatest Story , though, earned the distinction of becoming the most ambitious and expensive film ever to be shot in the United States up to that time. Originally budgeted at a modest $7.4 million based on a twenty-three week shooting schedule, the picture ultimately cost $21 million and was brought in seventeen weeks behind schedule. The overrun was due in part to logistical problems, severe weather conditions on location in Nevada and Utah, and to the pace of Stevens's direction.

Critics found just about everything offensive—Stevens's literal and orthodox interpretations, the excessive running time, the sets "by Hallmark," the music, and particularly the cameos that employed thirty Academy Award ^® winners, among them Shelley Winters, Carroll Baker, John Wayne, and Sidney Poitier. To counter the adverse reviews, UA planned a slow and deliberate campaign that was designed to build the picture's prestige. Eventually, the picture recouped most of its investment.

Heaven's Gate met with a grimmer fate. It was booby-trapped from the start. Within months after UA approved Heaven's Gate , Cimino's The Deer Hunter

(1978) opened in New York and Los Angeles to smash business and won numerous awards, including five Oscars ^® for best picture, director, supporting actor, editing, and sound. Cimino began shooting Heaven's Gate immediately after the Academy Awards ^® ceremony. Two weeks into production, Cimino fell two weeks behind schedule. Sixteen weeks into production, costs had escalated to $21 million. Four weeks later, Cimino held a champagne party to celebrate the shooting of the millionth foot of film. Although UA took the drastic step of assuming fiscal control of the picture, the action came too late. A UA executive admitted that the studio seemed to have lost control of the film early on. Film critics were unanimous in their appraisal of the movie, calling Heaven's Gate an unqualified disaster. In its first theatrical run, the $44 million (including promotion costs) superbomb grossed at the box office exactly $12,032.61.

Transamerica had always enjoyed basking in UA's limelight; now it had to endure the humiliation of being associated with one of the most public motion picture failures of all time. Transamerica, therefore, was receptive to a preemptive offer from Kirk Kerkorian, the Las Vegas developer and new owner of MGM, to take UA off its hands. Transamerica got out of the motion picture business with a nice profit. The conglomerate paid $185 million for UA in 1967; Kerkorian offered and Transamerica accepted $320 million for the company in 1981. In acquiring UA, Kerkorian merged the company into a new corporate entity, MGM/UA Entertainment Company. Afterward, Kerkorian sold and bought all or parts of MGM at least four times. The final sale, for $4.8 billion, was to Sony in 2004, after which MGM and United Artists ceased to function as autonomous production entities.