Dark Victory

by Moldea, Dan E. ; Miller, Mark Crispin;

  The 1954 agreement also prohibited talent agencies from producing television shows without a limited SAG-approved waiver—except MCA, which had received its blanket waiver in 1952. After 1954, several agents requested production rights and were granted limited waivers, such as the Saphier Agency, Ashley-Steiner, Art Rush, the Tom Somlyo Agency, GAC, the Mitchell J. Hamilburg Agency, Orsatti and Company, Famous Artists, the Lester Salkow Agency, Jerome Hellman Associates, Frank Cooper, and the John Gibbs Agency. However, none of these agents or agencies received an MCA-type waiver.7

  In April 1953, Lew Wasserman and Karl Kramer had requested and received a pro forma, nonexclusive waiver from the Screen Writers Guild in a letter signed by its then-president, Richard L. Green. Laurence Beilenson, MCA’s counsel, had previously represented the Screen Writers Guild as well as SAG. MCA never approached the Directors Guild for such a waiver.

  As a result of its blanket waivers, MCA literally began to take over the entertainment industry. In 1954, the first year that MCA published its financial records, the company reported a sizable $6 million profit from its MCA Artists, Inc. By comparison, MCA’s profit from its television and film production and rentals had already soared to an additional $15 million annually.

  The Justice Department’s Antitrust Division in Los Angeles had continued to observe the MCA situation, but still it received no support from official Washington.

  In 1954, Justice Department attorney Maurice Silverman conducted a lengthy interview with a source from Hollywood about the new phase of MCA’s “package deals.” The source indicated that he would be “a dead duck” if it became known that he was cooperating with the Justice Department. The source, according to Silverman’s report, stated that: “MCA has a representative stationed at every studio. [It] acquires information about the stories of pictures scheduled for production, the casts required, and the directors needed. If artists they represent are engaged for a picture they inquire about the director. If a director is proposed whom they do not represent they indicate that their artists are not going to like that director and in the end one of MCA’s directors gets the job. This technique is repeated with respect to the writers needed. This, of course, makes it advantageous for directors and writers to be represented by them rather than by other agencies and furthers the preservation of their dominant position.”

  The source added that all producers were “at MCA’s mercy.… Impasses are always developing between MCA and producers at crucial times of which MCA takes full advantage.… It takes many weeks of preparation to get a picture ready for actual shooting. The scenery and costumes are made up, the location is gotten ready, and the sets are put in place. Commitments are made for cameramen, personnel, and directors. When shooting time comes any delays are enormously expensive; each day’s shooting time [costs] many thousands of dollars. Just as everything [is ready] to begin the actual shooting MCA is in the habit of asking for changes in contractual arrangements made for the services of the people it represents. It has the power to call its artists off and because all producers must depend to a very great extent on MCA for talent … it can force such changes. Although this is true with respect to both the major studios and the independent producers, the independent producer is at a very much greater disadvantage, for the major studios have some talent directly under contract to it for a definite period of time. However, the tendency in recent years has been for the major studios to have fewer and fewer contract players as this cuts down their overhead.”8

  Assistant U.S. Attorney General Stanley N. Barnes, replying to Silverman’s report, advised that the matter “be kept highly confidential.”

  In an important antitrust case involving the producing, booking, and presenting of legitimate stage attractions in interstate commerce, the U.S. Supreme Court ruled on February 14, 1955, in U.S. v. Shubert, that antitrust laws were applicable to these business activities. During the case, the defendants—several New York theatre owners—tried to make a distinction between the interstate distribution of film and the interstate distribution of “live entertainment.” In the majority opinion, Chief Justice Earl Warren, ruling against this contention, wrote: “The defendants seek to distinguish the motion picture cases [U.S. v. Paramount] on the ground that the product of the motion picture industry is ‘an article of trade … an inanimate thing—a reel of photograph film in a metal box—which moves into interstate commerce like any other manufactured product’; on the other hand, according to this argument, a legitimate theatrical attraction is ‘intangible and evanescent, unique and individual … an experience of living people.…’ Congress can regulate traffic though it consists of intangibles.” Warren added that the matter was “clear beyond question that the allegations of the government’s complaint bring the defendants within the scope of the Sherman [Antitrust] Act even though the actual performance of a legitimate stage attraction ‘is, of course, a local affair.’”9

  Blaming the producers for allowing the agencies to get away “with murder,” Indiana theatre operator Roy L. Kalver, in delivering his keynote address to the national convention of theatre operators in November 1956, said: “Don’t the producers have the courage to strike back with vigor and not resort to shabby and shameful actions of a few years ago when they swooned supinely when threatened by the beetle-browed Mr. Bioff and the [mendacious] Mr. Browne …? It is evident that the producers have created their own monster which is threatening to devour them. When television first threw them into a panic, one of their first moves was the elimination of their contract players, their own reserve of players and artists, both for the present and the future. Today they are almost completely dependent on these talent agencies and not only are they desperate for personalities for the current needs, but are without the means to develop new talent, the new faces, the stars that our industry so greatly depends upon for its continuation.”10

  Inspired by the Supreme Court decision, Senator Warren Magnuson sent a letter to U.S. Attorney General William P. Rogers, complaining that the Justice Department’s Antitrust Division in Washington had failed to do anything with “a stack of information about the monopolistic practices of a handful of companies which included the networks that have already put out of business more than two-thirds of the TV producers.” Rogers immediately forwarded Magnuson’s letter to the Justice Department’s Antitrust Division, where it was assigned in March 1955 to Bernard M. Hollander for a status report.

  Completing his survey, Hollander noted that Magnuson’s “stack of information” consisted “entirely of clippings from Variety, Broadcasting, Billboard, and other trade papers.” Hollander added that MCA, the principal alleged antitrust violator, was being watched closely by the Antitrust Division. He also mentioned that a young attorney named Leonard Posner had been assigned to the case on a part-time basis.11

  Two months later, the Screen Actors Guild came under investigation by the Antitrust Division. The probe was touched off by a complaint from an irate agent who challenged the legality of the 1954 SAG–Artists’ Managers Guild agreement, which stated that talent agencies representing SAG members had to apply for and pay $100 or more for a “franchise” from the SAG board. The letter was sent to attorney Stanley Disney, of the Los Angeles office of the Antitrust Division, who later stated, “I believe the arrangement violates the antitrust laws of the United States.… Even without proof that the SAG has misused the power that this restriction gives it, I believe the restriction illegal. The SAG, including as it does virtually all screen actors, does not have the right to establish a ‘white list’ of agents with whom its members can deal, when the right of being entered upon such list is controlled by the SAG.”12

  Disney’s boss, James M. McGrath, consented to a “limited preliminary investigation” four days after Disney’s request.13

  The following day, May 18, Herman D. Hover—the owner of Ciro’s in Hollywood, who had had trouble with MCA in the past*—filed a triple-damages, $1.7 million antitrust suit against the talent agency/production comp
any, charging that he had lost $526,500 because “MCA defendants failed to permit name acts to be booked into Ciro’s, and as a result Ciro’s was forced to operate without name acts.…”

  Using most of the arguments about MCA’s tactics cited by Larry Finley in his suit against the corporation, Hover added, “The MCA defendants have employed or are employing the combined power which they have, arising from their control of the booking of name acts, name bands, name singers, top producers, directors and writers, together with the predominant position in the field of packaging deals for motion pictures, filmed and live television presentations, stage and floor shows for theatres, hotels, cafés, nightclubs and other entertainment outlets, their predominant position in the distribution of films for television and their position in television production, together with their position of exclusive booker of entertainment attractions into numerous hotel, café and nightclub entertainment outlets, to force and coerce name acts, name bands, name singers and other entertainment attractions to make an MCA defendant their exclusive representative and agent.”14

  In his brief to the court, Hover’s attorney, pointing to the recent Supreme Court decision in the Shubert case, wrote, “The correctness of Chief Judge McCormick’s ruling in the Finley [v. MCA] case has, of course, now been completely vindicated.…”15

  The case was later settled, with the terms undisclosed.

  MCA’s General Electric Theater had become a big hit among television viewers in America. Already among the top twenty shows in the Nielsen ratings during the first year with Reagan as its host, the program had featured the television debuts of such stars as Joseph Cotten, Alan Ladd, Fred MacMurray, James Stewart, and Myrna Loy, among others.

  Continuing on the SAG board of directors, with his wife still a board member, Reagan decided to broaden his experience by becoming a producer for GE Theater. According to SAG’s by-laws, any SAG member who was also a producer was ineligible to be a member of the SAG board. In fact, Reagan had become president of SAG in 1947 when Robert Montgomery was forced to resign because of his activities as a producer.

  Reagan’s first production for General Electric in 1955 was Seeds of Hate, a drama concerning racial prejudice against American Indians in the Old West. Written by Gerald Drayson Adams and directed by Sydney Lanfield, both MCA clients, Seeds of Hate starred Charlton Heston, Steve Cochran, and Diana Douglas, who were also represented by MCA.

  Reagan was so thrilled by his new role that he wrote a brief op-ed piece—which dealt with politics as much as television production—for the twenty-fifth anniversary issue of The Hollywood Reporter, saying, in part: “I have for the past months been … combining television and motion pictures chores. This manifold job has taught me one thing for sure: never again will I allow myself to get into a position where I must make a choice between a seat in Congress and a comfortable position in the arms of my leading lady.

  “Actors are citizens and should exert those rights by speaking their minds, but an actor’s first duty is to his profession. Hence, you can rest assured that I will never again run for mayor of anything but head man in my own household.

  “You may remember a few seasons back when I was honorary mayor of Thousand Oaks.… It was then that someone seriously approached me with the suggestion that I run for Congress.

  “That proved to be the last straw!

  “I realized then that I was becoming a Dr. Jekyll and Mr. Hyde, and the two characters were competing to control me. I selected the Jekyll character—an actor without self-competition.…

  “Now I am getting the biggest chance of my entire career. My General Electric Theater bosses have permitted me to produce Seeds of Hate for their series. It’s an exciting challenge and I’ll have a chance to blame only myself if it doesn’t pan out. At least I won’t be able to do what many producers are prone to do—blame the cast if the picture fails to pan out.”16

  At the time, Reagan was technically an employee of Batten, Barton, Durstine and Osborn, GE Theater’s advertising agency. Filmed at the studios of Revue Productions, Seeds of Hate went into production on September 29, 1955, for three days, after two days of rehearsals, and was aired on December 11.17

  Even when the program aired—and Variety announced that Reagan had produced the program—no one from the SAG membership challenged Reagan’s eligibility to remain on the SAG board.

  *Despite Reagan’s insistence that he not be seen with strippers, he was later photographed inside the showroom at Katleman’s El Rancho Vegas. Caught unaware, Reagan was sitting at a crowded table in the audience, directly under a trapeze, during the bawdy act of Lili St. Cyr, the most famous stripper of that era in Hollywood and Las Vegas. A smiling Reagan, apparently thoroughly enjoying himself, was captured in the picture as he watched the sexy St. Cyr slip out of her scant costume from the trapeze.

  *Reagan also continued his career as a free-lance motion picture actor, making two movies for RKO in 1954: Cattle Queen of Montana and Tennessee’s Partner.

  *In April 1950, five nightclubs in Pittsburgh agreed to boycott MCA after one of the clubs refused to succumb to MCA’s demands to accept a lesser-known band in return for the chance of a bigger-name band at a later date. Hover and Ciro’s joined the protest. That June, MCA and the six nightclubs settled their dispute—after the clubs promised to request MCA clients and MCA promised to be fair.

  CHAPTER FIFTEEN

  During the early 1950s, Sidney Korshak purchased $25,000 worth of stock in the Union Casualty Company of New York, owned and operated by Chicago labor racketeer Paul “Red” Dorfman, who had been the head of the Chicago Wastehandlers Union, and his stepson, Allen M. Dorfman. A few years earlier, Union Casualty had become the insurance company for the Teamsters Central States Health and Welfare Fund by decree of then-Teamsters international vice-president James R. Hoffa of Detroit. Allen Dorfman, who had had no previous experience in the insurance business, was appointed its manager.

  During the first eight years of fiduciary management by Union Casualty, the Dorfmans made more than $3 million in commissions and service fees. In one instance, Allen Dorfman took $51,462 in premiums and simply deposited it in a special account he had opened with his mother. There were no complaints from Hoffa and the Teamsters.

  An FBI intelligence report stated that “the labor racket’s web had as its center Sidney Korshak and around him were Murray Humphreys, Gus Alex, Joey Glimco, and Jake Arvey” as well as three local attorneys.

  Alex had been Korshak’s long-time friend. Humphreys, nicknamed “The Camel,” was identified as one of the top leaders of the Chicago mob. Glimco, a corrupt trustee of Chicago Cabdrivers Local 777 and a close friend of Hoffa, had been arrested thirty-six times—twice for murder. Arvey was a member of the National Democratic Committee and had allegedly been introduced by Korshak to associates of New York Mafia don Frank Costello in New Orleans.*

  Korshak had also moved into the band-booking business. The listed owner of the Associated Booking Corporation was Joseph G. Glaser, who represented, among others, Louis Armstrong. In its 1946 request for an FBI investigation, the Justice Department’s Antitrust Division in Los Angeles wrote a memorandum to Washington, suggesting a probe into the close ties between Associated Booking and MCA. According to a subsequent FBI report unrelated to the MCA investigation, “A rundown of the corporation does not reveal [Korshak’s] name; however, he is reported to be a principal in the Associated Booking Corp., who are booking agents for many of the top entertainers and orchestras. This corporation has offices at 445 Park Avenue, New York City, with branches in Chicago, Beverly Hills, Miami, Dallas, and Las Vegas. This puts him’ close to many of the top Hollywood set.”1

  Korshak and his associates in Paul and Allen Dorfman’s Union Casualty Insurance Company experienced another windfall in 1955, during union-management negotiations for the 1955 National Master Freight Agreement. Jimmy Hoffa, the chairman of the Central Conference of Teamsters, introduced an innovation in workmen’s benefits: the pension fund. Accor
ding to Hoffa’s plan, employers under Teamster contracts would contribute two dollars per week per employee to the Central States, Southeast, and Southwest Areas Pension Fund. Intended to provide a ninety-dollar-a-month pension to supplement Social Security benefits for eligible union members, Hoffa’s Central States Pension Fund was placed in the care of Korshak’s friend, Allen Dorfman, who had already been stealing money from the Central States Health and Welfare Fund.

  According to FBI documents, Korshak “had been doing work for Hoffa and the Teamsters” at the time of the creation of the Central States Pension Fund. The nature of the work was unknown. However, it was known that Korshak and “labor consultant” Nate Shefferman* had been negotiating contracts together between the Teamsters Union and the Englander Corporation, a large furniture manufacturer. According to federal investigators, these negotiations resulted in “sweetheart contracts,” in which Englander made a covert arrangement with the negotiators at the expense of the workers’ future salaries and benefits. Shefferman, alone, made over $76,000 for his role in bargaining talks.

  It is not known what Korshak—who rarely put anything in writing or appeared in court—thought about Willie Bioff after the Hollywood extortionist testified against his co-conspirators in 1943. In his testimony, Bioff cited Korshak’s role with and importance to the Chicago Mafia. Korshak suddenly found himself in a spotlight at center stage. Bioff not only exposed Korshak but sent several members of the Chicago mob to jail. Bioff wisely dashed off somewhere after his court appearance and hid. He moved to Phoenix and assumed the name “William Nelson.”