The difference in 1960 was that a professional consultant was retained by both groups. His job was to carefully examine and predict the impact of the proposed merger, and to recommend whether it should happen.
In his final report to both union boards, consultant David L. Cole advocated the merger, stating that such a move would give the performers tremendous bargaining power when negotiating with the various production companies. He added that the union would effectively end the jurisdictional disputes and streamline their administrative procedures. Also, since many members of SAG were also members of AFTRA, and vice versa, pension and welfare plans could become uniform.
Cole proposed that the name of the newly merged union be the Television, Radio, and Screen Actors Guild. He recommended that its headquarters be in Hollywood, because of the heavier concentration of members in California.
Reagan had always openly admitted his opposition to the general idea of one big performers’ union to negotiate with management. As to Cole’s 1960 plan, he told actor Walter Pidgeon, “Walter, I agree with you completely—I’m going to keep an open mind. I’m going to read his plan before I vote no.”10
The proposed merger failed.
CHAPTER TWENTY
On September 1, 1959, MCA underwent a corporate reorganization, bringing all of its companies under one corporate structure, now called MCA, Inc. On October 9, it became a publicly owned corporation, listed on the New York Stock Exchange and offering 400,000 shares at $17.50 a share. Its new board of directors included Stein; Wasserman; Walter M. Heymann, the vice-chairman of the First National Bank of Chicago; Charles Miller, Stein’s brother-in-law; and Leigh M. Battson, the president of Union Oil of California.
In the July 1960 issue of Fortune, reporter Edward T. Thompson wrote a penetrating story about MCA entitled “There’s No Show Business Like MCA’s Business.” Thompson reported that MCA, which employed 3,000 people, had a $15 million revolving loan with the First National Bank of Chicago, but that the company’s working capital was $31 million. He added that Jules Stein personally owned 1,430,000 shares of MCA stock, which was selling for thirty-three dollars a share during the spring of 1960. Wasserman “holds 715,000 shares, and seven other officers own more than 30,000 shares apiece. In all, the officers and directors own at least seventy-five percent of the company.”
Thompson’s story only gave the Justice Department’s Antitrust Division further reason to pursue its on-and-off-again investigation of MCA. MCA seemed to take the high road with the Antitrust Division by pledging in a letter from its legal counsel, Cyrus Vance, on February 29, 1960, to Charles L. Whittinghill, chief of litigation for the Antitrust Division, that it would “cooperate fully” with the government’s investigation. MCA did limit the government’s discovery to the years 1957 and 1958, and excluded all documents referring to foreign acquisitions. The information submitted would include MCA’s six major divisions: National Television Sales, Revue Studios, Syndicated Sales, Pre-1948 Paramount Features Sales, MCA Artists, and the Industrial Show and Fair Division.
The Antitrust Division, in their response to Vance, insisted that there be no limits to the scope of its request. However, they did allow MCA to eliminate listing the acquisition of foreign agencies.*
A clearer indication of MCA’s willingness to cooperate with the federal government came in October 1960 when the FCC subpoenaed MCA vice-president Taft Schreiber to testify during its hearings on network programming. The FCC also requested a list of all television programs produced by MCA and Revue in which they had a financial interest as well as a list of those television shows which MCA or Revue had packaged or for which they had received a percentage of the selling price.
Schreiber, during his appearance before the commission, refused to comply with the subpoena and when pressed on the witness stand simply stood up and walked out of the hearing. The FCC’s presiding officer ruled that Schreiber’s actions were contumacious. Schreiber appealed but was overruled and again ordered to testify. FCC commissioner Frederick W. Ford had earlier complained, “It seems as if you can’t even go to the bathroom in Hollywood without asking MCA’s permission. What upsets me most is the way people tell me that MCA says, ‘Nobody in Washington can touch us.’”
While MCA made feeble, somewhat cosmetic attempts to comply with the Antitrust Division’s requests, the FBI was conducting an array of interviews. For the most part, those interviewed were primarily outside MCA’s sphere of influence. Those inside who were interviewed were not asked very penetrating questions for fear that interviewers would tip off MCA to the government’s case in the event that a grand jury was convened and prosecutions brought about. Nearly all of those interviewed demanded total confidentiality for fear of reprisals from MCA or one of its subsidiaries.
One industry source told Antitrust Division attorney Leonard Posner, “MCA is the biggest single power in television today. Its power and ‘tentacles’ are such that both networks and motion picture companies have to bow down before it.”1
Posner told another source that the government believed that “MCA has engrossed the largest part of the top talent in the motion picture and television industry. This they have used as leverage to obtain a powerful foothold in the programming production industry. MCA uses this unique talent (which is a kind of copyright or patent) as the source of leverage to enable it to gain a foothold in the markets in other areas. They use predatory practices such as blacklists, and they use tie-ins to require other parties to take certain talent, show facilities, or other production components that the other party did not want.” When Posner finished his summary, his source said, “That’s MCA. You have just described MCA; that’s the way they work.”2
FBI special agent Carter Billings filed his report on the Bureau’s findings after its search of MCA records. According to Posner, “Billings said that inspection of the MCA files took place in MCA offices. The files were brought to the FBI in a separate room. The FBI was not given direct access to the files. No personal files of Wasserman or Stein were produced. [MCA’s house legal counsel Morris] Schrier claimed they did not have any.
“Billings said that the FBI first began looking into MCA files on July 1, 1959. They finished examining files in December 1959. There was an average of three men per day employed almost continuously in examining these files. The total examination took approximately six months.”
One problem the FBI found was the destruction of records by MCA. For instance, “the records retained in [William] Meiklejohn’s office were all destroyed,” according to one FBI report. “This was apparently done upon the recommendation of a business efficiency survey concern which was then engaged in a survey of the studio operations.”3
The FBI found several of MCA’s responses to be “unsatisfactory,” particularly when they concerned MCA’s and Revue’s activities in the packaging and ownership of network television programs. Nevertheless, the FBI determined that MCA controlled “approximately fifty to seventy-five percent of the top motion picture, television, and radio talent,” which it had, for the most part, obtained through “predatory practices.” The FBI, among other things, questioned MCA’s relationship with NBC and its president, Robert Kintner, calling the network a “captive market for MCA’s television shows.”
One source interviewed by the FBI stated that “MCA would immediately agree to a [civil settlement] if one were filed. On the other hand … they will resist ‘to the end of time’ any criminal allegations against them.”4
As Posner continued his interviews, he was told, “MCA will do anything in its power to keep an independent producer like David Susskind [who was a former MCA agent] from getting some of its talent to use in an independent production—this, despite their fiduciary relationship, which should require MCA to try to get employment for its actors. But MCA also considers the fact that Susskind is competition when it comes to program production. Hence they will do everything in their power to book their talent elsewhere when Susskind wants some of them, even goi
ng to the extent of building a pilot show to keep the star out of circulation.… They would rather ‘break the leg’ of one of their stars than allow independent producers to use them on shows competitive to MCA.”5
A pro-MCA source told Posner that “MCA was benevolent. It was good to its employees, it set up trust funds for them, and when it represented a star, that star got the best representation that money could buy. He said that it is a brilliant organization. He also said: ‘You will not be able to prove your case against MCA, because … MCA has been extremely careful not to do anything overtly which could be construed as illegal.’”
Yet another MCA admirer told the FBI, “Jules Stein, Lew Wasserman, and Taft Schreiber are three of the smartest, most intelligent businessmen in the world today and so superior to the guys running agencies that they make them look sick. In principle, that is the reason why they are a big success. [They are] just smarter, shrewder, have more talent, and they were tough and did things within the law they were entitled to do.”6
When Posner broached the subject of the relationship between MCA and Paramount, his source replied, “[I]f you are talking about links, what about the one between Universal and MCA?” The most obvious was MCA’s purchase of Universal’s backlot, but the source added that “MCA now had working for them at least two or three of the big stars [at] Universal, such as [Burt] Lancaster, Tony Curtis, and Janet Leigh.”
Posner’s source said that there must have been some sort of a tie-in deal there in order for MCA to get these stars. The source added, “Perhaps that was part of the consideration for MCA’s paying so much for the Universal lot. Another example of such a tie-in … is the Alfred Hitchcock picture Psycho. The picture was produced on the Universal lot by MCA.… Financing for the picture came from the company that is going to distribute the picture—Paramount.… In other words, MCA represented Hitchcock and told Paramount that if it wanted to finance and release the Hitchcock picture, it would have to be produced on the Universal lot so that MCA could get its cut from the below-the-line facilities. This arrangement was made in spite of the fact that Paramount had a lot that was half empty at the time. Obviously, Paramount would have preferred to have had the picture made on its own lot, so that it could have gotten some of its money back toward overhead.”7
Since 1955, Alfred Hitchcock Presents had followed Ronald Reagan’s General Electric Theater on Sunday in the 9:30–10:00 P.M. slot on CBS. Although Hitchcock “owned” his program, it was made by MCA’s Revue Productions—as was The Jack Benny Program, which in 1959 followed GE Theater and Alfred Hitchcock Presents at 10:00 P.M. In September 1960, MCA switched Hitchcock’s mystery anthology from CBS to NBC, leaving a gap in the CBS Sunday-night schedule. All of this seemed mundane to most viewers, except the Antitrust Division.
CBS wanted to move Benny’s show up a half hour to fill the void left by Alfred Hitchcock. However, with a star of Jack Benny’s stature, a network could not make such a move unilaterally; Benny had to agree to the change. MCA, Benny’s representative, decided, according to the Justice Department, to flex its muscles with CBS. MCA allegedly told CBS and the Benny show’s sponsor, Lever Brothers, that if they wanted to move, and even keep, The Jack Benny Program, they would have to take two other MCA productions, Checkmate, an hour-long private-eye series, and Ichabod and Me, a situation comedy. Both shows were owned by Benny’s company, J & M Productions.
CBS reportedly complied, placed Checkmate on Saturday nights, and received permission to move The Jack Benny Program up a half hour to follow General Electric Theater on Sunday nights. Later, when Benny was having income tax problems, MCA bought his company for one percent of MCA stock, worth $2,745,000.
Speaking of the deal, Benny said, “What happened when MCA began representing me? Well, I got into business. They helped me set up a corporation, Amusement Enterprises, and then they advised me to dissolve it by selling the shares and keeping most of the money as capital gains.
“Then they helped me form J & M. They put me in a position where I could pay terrific taxes and still keep some money for myself. That was one of the attractions of MCA. They call it giving an actor an ‘estate.’”8
According to a Justice Department document, “MCA’s switch of Alfred Hitchcock Presents from CBS to NBC came shortly after the failure of [Revue executive producer Hubbell] ‘Hub’ Robinson’s Ford Star Time Show.” The Hitchcock program, according to the report, “might have been a sop to Ford because of the failure of Star Time. The Justice Department suspected that the Hitchcock switch released Ford from paying for the costs of nine Star Time episodes not aired and that MCA also had a proviso with NBC to take other lesser MCA shows, such as ‘Hub’ Robinson’s Thriller, in return for Hitchcock.
The report also said that the Star Time deal with Ford had begun before Robinson had become its executive producer. “MCA had an advantage over other independent package producers by virtue of its being able to go to J. Walter Thompson, the advertising agency which represented Ford, and say, ‘We’ll give you a lot of stars. We’ll give you [Alec] Guinness, Ingrid Bergman, and many others [including Marilyn Monroe, Sir Laurence Olivier, and playwright Arthur Miller].’ Ford swallowed the bait and signed the contract. MCA, however, did not deliver all the stars [except Guinness and Bergman]. But … it was by virtue of using the leverage inherent in the monopolies represented by these unique and irreplaceable stars that MCA was able to make the sale of the package (before it was produced) to Ford.”
“MCA would not explicitly tell outside packagers,” one source told Posner, “that it would never give them Guinness or Bergman. But let an outside producer try to get them. They would not allow an outside producer to use these stars. Part of the reason is due to the fact that these stars should not appear on television. They are too big and important. They are paid per exposure, and their price for exposure in motion pictures is about $750,000 per film. In television, Bergman would receive only about $100,000 for the exposure. Hence, since such exposure would serve to dilute her [public image as a motion picture star], she would never have been used on television. The only reason she was used on television was because it redounded to the benefit of MCA, if not Bergman.”
Posner added his own comment on his source’s statement, writing, “Bergman gets $750,000 per picture. Hence, if MCA merely sold Bergman to MGM, [MCA] would get ten percent of $750,000, or $75,000 commission. But when it sells Bergman as part of an overall package involving $160,000 per show, it gets ten percent of the gross price of the show, i.e., thirty-nine [episodes] times $160,000 or $6,240,000 gross, which nets MCA $624,000. In such a case, MCA is glad to sacrifice Bergman’s interest for MCA’s own interest. That is why MCA will put Bergman on television in an MCA package. But MCA will never permit such stars to do television shows for an independent producer. In such a case, since MCA would get nothing out of the sale of the overall package, it would merely obtain … ten percent [in a single commission].”9
The Ford Star Time case illustrated how MCA manipulated sponsors and advertising agencies to get good and bad shows on the air. According to a Justice Department report, “MCA will sell a ‘bomb’ [a bad show] to an advertising agency. The agency buys it in good faith and hopes that it will be a good show. After the MCA show proves its lack of worth, the agency approaches MCA to cancel the contract after thirteen weeks. MCA will say: ‘We’ll let you out of the “bomb” after thirteen weeks, but in order to do so you will have to take this other new series,’ which [MCA] touts very highly. The result is that MCA gets deeper and deeper into the advertising agency’s budget. The trouble with this tie-in proposition is that in order to obtain its release from a bona fide contract, the advertising agency agrees to take another show.”
Sources told Antitrust Division attorneys that the advertising agencies involved would never admit to falling for MCA’s scheme—because it would also be an admission that they purchased a “bomb” in the first place, which would anger their sponsor. An example of this was the MCA-Revue–prod
uced Johnny Staccato, which appeared on NBC in 1959 and proved to be a loser. Johnny Staccato was sponsored by Reynolds Aluminum, which was represented by the William Esty Agency. According to a Justice Department document, “In order to get out of its commitment to Johnny Staccato, Esty had to take another show.”10
According to an industry source interviewed by Posner, director Blake Edwards had earlier gone to his MCA agent with a new program idea, called Peter Gunn. “This show was then copied by MCA in an almost Chinese-copy style and the facsimile was called Johnny Staccato,” wrote Posner.* “In spite of its fiduciary obligations to Edwards, MCA then sold the show. When Edwards protested and sought his release from an MCA representation contract because of this incident, MCA refused to let him go.… MCA was seeking to keep him in bondage.”11
The parade of charges continued. One source said that he “would gladly shoot several of MCA’s officers if he had the chance.” Another charged that MCA had become an “Iron Curtain” organization because of its secrecy and bunker mentality during the antitrust investigation. One person even charged MCA with corporate espionage, charging that its executives regularly placed secretaries from their typing pool in studios all over Hollywood, so that it could “get copies of scripts virtually immediately.” Another source charged that some actors were forced to kick back part of their salaries to MCA. Someone else charged that MCA “was a bad influence on the industry because it puts out programs of violence and sadism and sex which help to create juvenile delinquents.” Yet another said that MCA had engaged in “commercial bribery” and even made “use of women to entice executives of buying organizations.” Someone else warned that MCA “was a tough, vindictive outfit. If you go after them too hard, watch out for the concrete shoes.” There was even a charge that MCA had helped to destroy RKO by refusing to give the studio its talent.
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