The Fifth Oldest studio in the world and the only one still headquartered in Hollywood,
Paramount was the symbol of the power in the American Film Industry - so much so that the
United States Government named them first in a landmark anti-trust case that ended the
so called Golden Era of Hollywood. Grab a seat cupcake as we layout a brief history
of Paramount Pictures.
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You want to know about Paramount? Well you gotta start with this guy, probably one of
the greatest moguls of Hollywood - Adolph Zukor.
Zukor was born in Hungary and at the age of 16, he promised a girl four years his senior,
that he would go to America, become a great success and send for her so they could be
married.
Cool your jets casanova, this isn’t that kind of love story - he never did speak to
her again.
Zukor and his family landed in New York harbor in 1889 where he immediately went to work
in an upholstery shop. From there the young Zukor got himself a job as a furrier.
No, gutter brains, a furrier.
The 1893 Columbian Exposition in Chicago drew the 20 year old Zukor out to the midwest where
he started the Zukor Novelty Fur Company that employed 25 people. By the time he was 30,
Adolph Zukor had in all respects accomplished the American Dream returning to live in New
York City’s wealthy German-Jewish neighborhood. But even bigger things were coming for Zukor.
In 1903, Zukor’s cousin, Max Goldstein, approached the successful businessman with
a proposition. This guy named Mitchell Mark had some great successes with a permanent
movie picture theater up in Buffalo even being the first American to distribute French films
from Pathé Frères. Well Mark wanted to open up shop in the Big Apple on 14th street. Zukor
not only gave his cousin the loan, he \went in as a partner in the Automatic Vaudeville
Company which opened up in 1904. Another partner was a man by the name of Marcus Loew, who
we’ll see in another time, was the founder of MGM.
After a failed venture called Hale’s Tours which screened travelogue footage in a simulated
train car (think Star Tours for 1905), Zukor went to work for Loew and his blossoming theater
business as a treasurer. The nickelodeon business was booming but Zukor was getting bored of
buying real estate to convert to nickelodeons.
In 1912 he struck out on his own, and with the help of Broadway producer Daniel Frohman,
purchased the American rights to the French film “Queen Elizabeth” starring the famous
stage actress Sarah Bernhardt. On July 12, he screened the 40 minute film at the Lyceum
Theater in New York to a crowd of New York elites. Apparently the blue hairs and society
ladies couldn’t get enough of the Frenchies and Zukor had a hit on his hands so he took
the film on tour generating over $200,000.
That’s a lot of grub - about $5,000,000 in today’s change.
With the cash, Zuckor and Frohman founded the Famous Players Film Company with the aim
of filming successful stage plays. An armory on 26th Street in Manhattan became Famous
Player’s first studio - Chelsea Studios, which is still in operation today.
Famous Player’s first film was the 1913 hit "The Prisoner of Zenda," which also reaped
a sizable box office reward.
As Zukor is getting his beak wet in the newborn movie business, let me introduce you to another
key player - Jesse Louis Lasky.
Lasky was home grown, born in San Francisco before finding a career in Vaudeville. But
Lasky soon found his way to the producing racket, producing two plays in 1911, Then
in 1913, Jesse Lasky started Jesse L. Lasky Feature Play Company with Oscar Apfel and
Lasky’s brother-in-law, a guy by the name Samuel Goldfish
Yeah, Goldfish, you might know him better as Sam Goldwyn, the G in MGM. You might have
also heard of their first employee, a stage director who was the son of a fellow play
producer by the name of Cecil B. DeMille.
With limited funds, Lasky rented a barn in Hollywood and shot the very first feature
film in what would be the capital of the movie industry: The Cecil B. DeMille directed “Squaw
Man” in 1913.
Starting in 1914, Lasky and Zukor’s Famous Players would begin releasing their films
through a company called Paramount Pictures Corporation started by Utah Theater owner
W. W. Hodkinson.
You see, here’s the dope on how movie racket works. On one side you got production - lights
camera action and all that jazz. That’s what everybody thinks of when they think movie
studio. But that roll of celluloid don’t do anyone any good if it sits there rotting
in a vault somewhere. You got to exhibit it, and that’s distribution and buddy that’s
where the real money is.
And this Paramount Pictures company that Hodkinson put together by buying 11 film rental bureaus,
became the first U.S. wide distributor of feature films.
If you owned a movie house and wanted to show a flick made by Famous Players or Lasky, you
had to deal with Paramount.
Being nationwide gave Paramount a real edge on the competition and Adolph Zukor knew a
good thing when he saw it. In 1916, Zukor managed a three way merger between his company,
Lasky and Paramount, buying out Hodkinson and forming the Famous Players-Lasky Corporation.
Zuckor put Lasky and his partners Goldwyn and DeMille in charge of running the production
side and Hiram Abrams in charge of distribution while Zuckor ran the empire.
First and foremost, Zukor understood the power of the movie star. People go to the movies
to see their favorite stars, and Zukor had most them on his payroll: Mary Pickford, Marguerite
Clark, Pauline Frederick, Douglas Fairbanks, Gloria Swanson, Rudolph Valentino, and Wallace
Reid. Maybe you never heard of them but just ask your great grandma.
Since Paramount had the stars audiences craved, they could introduce block booking. If you
wanted Paramount’s stars showing up on your movie theater screen, you had to buy a year’s
worth of other Paramount productions. In other words a movie theater couldn’t buy a single
movie to show, it had to buy the whole block
Kind of dirty but Zukor had other strategies up his sleeve. Why should Paramount let some
two bit projector monkey take a cut of the profits? Why not just own the theater as well?
And that’s what Zukor began doing.
Through the rest of the teens and twenties, Zukor built up the Publix Theatres Corporation
amassing nearly 2,000 screens through acquisitions. In 1926 Zukor picks up the successful Balaban
& Katz chain bringin in Barney and A. J. Balaban (this guy’s uncles) and Sam Katz.
In 1927, Famous Players-Lasky was renamed Paramount Famous Lasky Corporation before
finally becoming Paramount Publix Corporation because of the importance of the Publix Theaters.
The good times were rolling. And what a better symbol of success than opening the $13.5 Million
dollar Paramount Headquarters at 1501 Broadway in New York City completed in 1927.
Zuckor was showing off as it took the title of the tallest building in Manhattan at the
time at 33 stories. But storm clouds and a huge stock market crash colored the horizon.
Common Wisdom says that the movie business did well during the Great Depression, maybe
in hindsight, but practically all studios were hit hard by the economic panic in the
late twenties and early thirties.
Zuckor had bought or forced out most of his early partners, and now with income statements
bleeding red, Jesse Lasky was hung out to dry in 1932. Zuckor’s expansion and use
of overvalued Paramount stock led to company into receivership the following year with
Zukor holding on to a leadership position by the skin of his teeth. In 1935, the Paramount-Publix
wing went bankrupt, John Otterson became president followed by Barney Balaban in 1936. Zuckor
was bumped up to chairman of the board where he reorganized the company as Paramount Pictures
Inc., successfully bringing the studio out of bankruptcy.
Despite financial turmoils at headquarters in New York, the Hollywood studio, now in
the era of the talkies, was pumping out 60 to 70 feature films a year to fill its theater
chains and contracts to independents thanks to block booking strategies. Paramount’s
stable was still strong with stars like Marlene Dietrich, Mae West, W.C. Fields, Jeanette
MacDonald, Claudette Colbert, Gary Cooper, Bing Crosby... even the Marx Brothers graced
Paramount’s screens in the first half of the 1930s. On the cartoon short side, Paramount
contracted Dave Fleischer of Fleischer Studios who produced characters like Betty Boop and
Popeye the Sailorman, who in 1935 even beat out Mickey Mouse in a popularity contest.
But at some point, the bill comes due. Uncle Sam had been getting lots of complaints from
independent movie producers and theaters about Paramount and their block booking dirty tricks.
In 1940 Washington decrees an end to block booking and preselling (the practice of collecting
distribution fees for films not yet in production). Paramount’s filmmaking factory went into
serious slow down - going from 71 films a year to just 19 during World War II.
But don’t shed a tear for Uncle Zuckor, thanks to stars like Bob Hope, Alan Ladd,
Veronica Lake, Paulette Goddard and Betty Hutton, Paramount with their vertical monopoly
made even more money than ever.
Built into the 1940 decree was a allowance for the a new lawsuit if studios had not been
in compliance by 1943 - which they hadn’t. By 1945, studios owned either partially or
fully 17% of all theaters in the country accounting for 45% of the film rental revenue. That’s
when the Society of Independent Motion Pictures Producers filed a lawsuit against Paramount
Detroit Theaters - an outright monopoly in Detroit. The case never went to trial but
Washington did reinstate the 1943 lawsuit on October 8, 1945. The case was decided in
favor of the studios before reaching the Supreme Court in 1948.
And that my friend, is when Zukor’s vision of a vertically monopolized Hollywood from
script to screen, collapsed.
From the fallout of the Supreme Court Case United States vs Paramount Pictures et al
in 1948 came the Paramount decrees. All movie studios were forbidden from owning their own
movie theaters - Paramount Pictures Inc was split into two, a production distribution
company called Paramount Pictures Corporation and a 1,500 screen theater chain called United
Paramount Theaters. Zuckor stayed on at Paramount Pictures and Leonard Goldenson became the
president of this spin-off United Paramount Theaters. Having some extra cash lying around
from some real estate holdings Goldenson acquired the struggling ABC TV network in 1953 and
turned it around into a success.
Speaking of Television, Paramount Pictures itself had also invested new fangled device
- but much earlier - investing in an experimental TV station in Los Angeles that would eventually
become KTLA in 1939 and a Chicago station that became WBKB in 1943. The year prior,
Paramount had become a minority shareholder in TV manufacturer DuMont Laboratories and
their DuMont Television Network. Paramount also launched it’s own network, the Paramount
Television Network in 1948.
Despite these early insights, Paramount didn’t get far into TV land before the government
stepped in again and shut them down.
When Paramount sought to acquire additional owned and operated TV stations, the FCC denied
Paramount’s application.
See, when Television started booming in the 50s, the FCC stepped in and put a limit on
the number of VHF TV stations an entity could own to a total of five - you’re allowed
to have affiliates that are independently owned but you as a company could only own
and operate 5 stations. Since Paramount already owned 2 and had a minority share in DuMont
which owned 3, the FCC considered them to be at their limit. Neither company could gain
more power in the emerging cutthroat industry of Television and were left in the dust of
the big three, ABC, CBS and NBC.
But Paramount’s early foray into Television wasn’t quite done yet.
In 1953, Paramount began operating a coin operated Pay TV service in Palm Springs California
but shut the service down only 6 months later partly because of pressures from the FCC.
So now with no theaters, failed TV prospects, and no big names except the reliable Cecil
B. DeMille, who injected a bit of cash with the 1956 mega hit the Ten Commandments, Paramount
was in a bad bad slump. Paramount sold off it’s what they considered their useless
film catalog to MCA, the Paramount building in Times Square and even it’s LA TV station
KTLA to Gene Autry for 12.5 million dollars.
Old School Hollywood was dead. In 1964 Adolph Zuckor, it’s sole survivor, stepped down
as chairman to assume the title Chairman Emeritus at the age of 91 - a title he would hold till
his death at the age of 103. Now the second worst performing studio of the remaining nine
Hollywood studios, Paramount was up for sale.
What begins now is the roots of modern corporate Hollywood.
Paramount’s savior would be none other than the Industrist Charles Bluhdorn and his conglomerate
Golf + Western Industries Corporation. Like Zukor Bluhdorn hailed from central Europe.
Born in Vienna Austria, Bluhdorn immigrated to the United States where he began dabbling
in the import and export trade. His first major success was importing coffee from Brazil
and Africa using his company Fortuna Coffee. But the coffee business was prone to ups and
downs so Bluhdorn bought up Michigan Plating & Stamping Company - a publicly traded company
which Bluhdorn could use to finance other purchases - like Beard & Stone Electric Company
which was the first to get merged In 1958 he renamed the company Gulf & Western Corporation
and started acquiring Detroit auto parts suppliers and distributors. In 1965, Bludorn began to
diversify, first by purchasing New Jersey Zinc, a large mining and chemical company
- then Bludorn was on a mission to purchase any company that had undervalued assets he
could use to borrow against heavily and purchase even more companies.
From Sugar plantations to Cigars, Manufacturing, Consumer goods and Financial services, Bludorn
collected them all in his Gulf+Western portfolio, but one of his first was Paramount Pictures
in 1966.
Bluhdorn didn’t waste any time letting people know who the real boss was - he quickly plastered
the Gulf + Western title on Paramount's logo.
But Bludorn’s greatest contribution to film history was putting a virtually unknown producer
as head of production: Robert Evans.
Having only read about Evans in an article by Peter Bart, Bluhdorn gave Evans a shot
to turn around Paramount. Evans in turn brought in Peter Bart as an executive and ran Paramount
for 8 years: creating many of the now hailed masterpieces of American Cinema from the 1960-70s
like The Odd Couple, Rosemary’s Baby, Love Story, The Godfather, Chinatown and Paper
Moon.
Also In 1967 Gulf + Western purchased the Desilu Television Studio - once the RKO Lot,
inheriting established shows like Star Trek, Mission Impossible and Mannix. Paramount took
another stab at the boob tube with a newly incorporated Paramount Television but this
time specialized in producing half hour sitcoms.
After Evans left in 1974, Paramount stumbled a bit under Richard Sylbert who was rather
quickly replaced in 1976 by Bludorn’s newest protege, Barry Diller.
Barry Diller started out as a UCLA dropout working in the William Morris Agency mailroom.
He worked his way up at ABC and was put in charge of negotiating deals for TV rights
of feature films. While at the post he was a pioneer of the concept of the ABC Movie
of the Week - the first weekly specifically made-for-tv-movies.
I know that might sound cheesy to the modern ear, but in the 1960s a made for tv movie
with real stars sounded like snake oil considering the bad blood that still lingered between
film and television for, you know, almost bumping off the film industry in the 1950s.
But now a former TV producer was running the studio that made the Godfather. At Paramount
Diller surrounded himself with a TV trained team of folks you’ve probably heard of - the
Killer Dillers as they were called by their admirers, the Dilletes as they were known
by their detractors. This included Michael Eisner who would of course go on to head Disney,
Dawn Steel the first woman to head a studio, Columbia Pictures in 1987, Jeffrey Katzenberg
of Disney and later Dreamworks, and Don Simpson who would partner with Jerry Bruckheimer and
create many of the iconic films of the 1980s.
The strategy under Diller was high concept - hit big, hit hard, and hit all over the
world. These are movies where the story concept is the star - they can be encapsulated in
a single premise - a single idea or image and sold all around the world. But make no
mistake, the high in high concept doesn’t mean high brow, it means larger than life
and compelling and irresistible to the target audience. If you want an extreme example think
Snakes on Plane or Hobo with a Shotgun - don’t lie, some part of you wants to see that movie.
During Diller’s turn at Paramount we got high concept films like Saturday Night Fever,
Grease, Raiders of the Lost Ark, and Beverly Hills Cop….
Now coming from Television, Diller set his eyes on creating a new fourth network to compete
with the Big three - attempting to revive the Paramount Television Service. But the
board didn’t totally go for it and Diller’s dream of a fourth network well that wouldn’t
be realized until he left and moved over to Fox in 1984.
From Diller, the studio passed through Eisner and Katzenberg to Frank Mancuso Sr and, Ned
Tanen in 1984. Ned Tanen was the inspiration for Back to the Future’s Biff Tannen by
the way. Zemeckis and Gale had a run in with Tanen when working on I Wanna Hold Your Hand
and wanted to immortalize their feelings about the man.
Though commercially successful, during the 80s Paramount struggled to put out the grand
slams as they had before.
Then in 1983, Charles Bludorn died suddenly from a heart attack while coming back from
a resort on his private jet. Not the worst way to go but he was only 56 years old. Bludorn’s
successor at Gulf + Western began to consolidate the company from a bloated and confusing conglomerate
into a streamlined media and publishing company - selling off sugar plantations and consumer
brands in 1985. In 1989, Gulf+Western was rebranded as Paramount Communications. In
addition to the Paramount film, television, home video, and music publishing divisions,
Paramount Communications included Madison Square Garden properties, a 50% stake in USA
Networks, Simon & Schuster, Prentice Hall, Pocket Books, Allyn & Bacon, Cineamerica,
and Canadian cinema chain Famous Players Theatres where they could get away with owning some
movie screens.
With the cash from the sale of unrelated product lines, Paramount purchased TVX Broadcast Group
- a string of television stations which would form the nucleus of Paramount’s new TV network
United Paramount Network which utilized the TV stations of another conglomerate Chris-Craft
Industries. And since they didn’t want Disney and Universal to have all the fun, they bought
up King’s Entertainment Company - putting Paramount in the theme park business as well.
But then in 1994, Sumner Redstone and Viacom take control, buying Paramount Pictures for
$9.75 billion for 50.1% of it’s stock which begins what is known as the old Viacom days.
Let’s back up a bit Viacom was originally the syndication company for CBS. But the FCC
was worried the big three would monopolize the TV landscape and issued a decree in 1970
that forbid TV networks from owning their own syndicators. And so Viacom was split off
from CBS as a Television show syndicator.
And Viacom became really really profitable and started to acquire more and more assets.
Their first purchases came in 1978 with radio and tv stations. They continued buying up
cable networks that included MTV and Nickelodeon.
Then in 1986, National Amusement, a large theater chain, buys up controlling interest
in Viacom, bringing Sumner Redstone into the mix - who like all media moguls before him,
goes on a buying spree which includes Paramount, Blockbuster and Spelling Entertainment which
brings in a huge catalog of TV show rights including all of Republic Pictures Catalog.
Redstone even goes and buys the parent network, CBS in 1999, long after the FCC relaxed its
rule about Syndicators and TV networks.
Also in 1999, Viacom forces Chris-Craft Industries out of United Paramount Network and shortens
the channel’s name to UPN. Fox swoops in and buys up Chris-Craft’s television stations
and leaves UPN without any Owned and Operated Stations in the top three major US television
markets - leaving UPN destined to the trashbin of TV history.
While all this corporate shell game was going Jonathan Dolgen served as chairman of Paramount
Pictures with Sherry Lansing as Chief of the studio. Between Dolgen’s careful accounting
and Lansings sensibilities, this leadership team oversaw Paramount’s greatest track
record with the crowning jewel of Titanic which hauled in 2.2 billion dollars since
its release in 1997. Paramount also took home best picture wins and commercial success for
Forrest Gump and Braveheart as well as seeing box office successes with Saving Private Ryan,
The Truman Show, Event Horizon, the Mission Impossible Movies and Pootie Tang.
Just making sure you were paying attention.
According to Sherry Lansing, 80% of all Paramount films during this period were profitable leading
many in the Entertainment industry to view Paramount as the model of a well run movie
studio in the 90s.
In the Television world - Star Trek was starting to pay off really good - from movies, books,
videotapes and licensing - the franchise was a huge chunk of Paramount’s revenues. By
the late nineties nine of the studio’s 36 sound stages were dedicated to shooting Star
Trek: Voyager and Deep Space Nine.
But every great Hollywood story comes to an end.
The winning streak faded and in an attempt to revive it’s languishing stock, in 2005,
Viacom announces that it’s going to split off CBS as a separate entity. Famous Music
division, the music publishing arm from Lasky’s days was sold to Sony, UPN which only had
a year left to live, and the TV stations as well as many of the television production
side of Paramount was moved under the umbrella of CBS. The three movie chains were sold off
and the theme park group was sold to Cedar Fair.
The resulting Paramount Pictures, now owned by the new, and more streamlined Viacom, was
now approximately 1/5th of it’s former self and put under the Leadership of Brad Grey
in 2006. Brad Grey picks up Dreamworks - founded by former Paramount executive Jeffrey Katzenberg
in 2006 and held the title of CEO until he was ousted in 2017 in a dispute with Sumner
Redstone’s family over a series of flops that set the studio back over $450 million
in losses. Jim Gianopulos from Fox has taken over and is the current CEO.
And that’s where we stand on Paramount Pictures as of June 2018. Don’t yell at me for stuff
that happens after this point because frankly I’m not a fortune teller.
From Zuckor and Lasky to Evans and Viacom, Paramount Pictures is a fascinating tale of
rise and fall, rise and fall, and rise and fall again. Obviously there’s more stories
to unlock in this company’s 106 year history but if you liked our cursory summary why not
throw us a bone with a thumbs up, subscribe and ring that bell. Even consider becoming
a patron on Patreon where every contribution helps. If you didn’t like this video, I
can’t think of a worse insult than to drop a c note or two on our Patreon just to teach
us a lesson.
But I tell you sometimes the stories behind the curtain are just as good as what’s on
stage. Unfortunately I’m about out of material for this peak behind the peak, this look behind
the curtains at the business of show. Till next time, I’m John Hess and I’ll see
you at Filmmaker IQ.com