The year 1973 was a blockbuster for Universal Pictures. American Graffiti, producer Francis Ford Coppola and director George Lucas’s rock-and-roll film about four teenagers growing up in the 1950s, earned $52 million against a production cost of $1 million. The film’s soundtrack provided an additional bonanza for MCA.
In December 1973, Universal released The Sting, starring former MCA Artists clients Paul Newman and Robert Redford, who played two con men who try to swindle an Irish gangster who ordered the murder of a mutual friend, in the studio’s biggest moneymaker for 1974 and one of the biggest grossers of all time. The film won the studio its third Academy Award for Best Picture, the first since MCA took over the company.
“You need to make a minimum number of films a year,” said Universal executive Ned Tanen. “There are films you come across that look very safe. The downside risk is fairly minimal, so therefore we will take them on. You do enough of these films and out of that group will suddenly emerge a picture that is a huge hit.”8
Universal had also produced Steven Spielberg’s highly acclaimed Sugarland Express, as well as three big box-office smashes: Earthquake, with “Sensurround” providing realistic rumbles; Airport 1975 in 1974, the latest in a series of star-studded disaster films trying to mimic the success of Airport.
Traditionally, MCA would wait until television series had been canceled before it would syndicate them to local stations. That practice was abandoned in 1972–73. Even though programs such as Columbo, McMillan and Wife, and McCloud were still hot after three years of production, MCA’s syndication rights division immediately began to sell them locally, capitalizing on the shows’ current popularity—thus increasing the price of syndication. Later, MCA would go even further, offering 104 episodes of The Six-Million-Dollar Man if the buyer gave MCA an option to sell the buyer thirteen episodes of The Bionic Woman. Both programs had been broadcast on ABC.
An attorney in the Antitrust Division, who was monitoring MCA for possible antitrust violations, wrote, “In short, MCA is using the power of Man to make sure that it gets syndie money from Woman (in a deal that reportedly was set up before Woman went on the ABC [schedule]).”9
Spencer Gifts mail-order and retail-store division had a record year in 1972. With plans being made to expand Spencer to over four hundred stores around the country, total revenues from Spencer’s current outlets were $61,446,000, a thirty-four-percent increase over the previous year. Since MCA had purchased Spencer in 1968, sales had tripled.
MCA’s Trans-Glamour tours—an open-air bus ride through Universal City, planned and executed by MCA vice-president Albert A. Dorskind and Cliff Walker, a renegade from Disneyland, Inc., in 1964—were being taken by nearly two million visitors each year. The tours produced millions of dollars of clear profit for only the cost of, among other items, bus and property maintenance and tour guides, who were usually attractive college students hoping to be discovered, who gladly worked for low wages. The money made from a few of the many souvenir stands covered these expenses.
For the price of admission, the curious saw Western gunfights acted out with stuntmen who fell off buildings after being “shot,” how animal trainers prepared their pets for cameo film appearances, and a glimpse of Norman Bates’s hilltop home in Alfred Hitchcock’s Psycho. Occasionally, a star or two would be available to talk shop and sign autographs. A family could easily spend the rest of the day—as well as their vacation money—walking around and seeing the sights after the bus trip. The program was so successful that MCA had already expanded Trans-Glamour and added Landmark Services in Washington, D.C., where tourists received bus tours of the nation’s capital and its monuments.
MCA had also developed the large-stage, 3,800-person capacity Universal Amphitheatre, which became a tourist attraction in itself, as well as a treat for natives of southern California. The new facility had been built to accommodate concert and theatre performances. At the end of 1972, MCA added Yosemite Park and Curry Company—encompassing the food, lodging, and transportation concessions at Yosemite National Park in the Sierra Nevada Mountains in central California—to its Recreation Services Division.
At the end of July 1974, Universal announced that during the first six months of 1974, its profits were higher than in any six-month period in the history of the company. And the news would only get better.
Universal hit the mother lode with the spring 1975 release of Jaws, a Steven Spielberg tale of a great white shark’s invasion of Martha’s Vineyard during the Fourth of July holiday. It costarred Lorraine Gary, Sid Sheinberg’s actress-wife. Another record-breaker at the box office, Jaws became the biggest money-making film in motion picture history.*
Universal had become a movie factory, cranking out films like Congress cranks out legislation—but with better quality control and discipline. Few celebrities basking in the excitement and glamour of Hollywood thought of themselves as being workers on an assembly line. But under contract at Universal they were. Schedules and budgets were etched in stone, and no one fooled with them once they were decided.
“The assembly line …,” one description stated, “is organized into three phases. In preproduction, budgets are drawn up, personnel assigned, and sets designed and built.… Then comes production—what most people think of as moviemaking—where the actual shooting takes place. Once the cameras quit rolling, the raw film and soundtracks are delivered to film editors and dubbing specialists in the postproduction department. The entire process takes from eight weeks for a thirty-minute TV show to a year for a full-blown movie.
“To coordinate the whole operation MCA has developed some special techniques. At 1:30 every afternoon the technical-department heads meet in a ‘war room’ with the unit managers of all the production companies to talk over personnel and equipment allocations for the next day’s shooting. The discussion gets down to such items as battle-scene explosives and doughnuts for the crew. By paying attention to detail, MCA’s managers have earned a reputation as the maestros of the bottom line.”10
With MCA so incredibly attractive and corporate mergers becoming an everyday event, the MCA board of directors decided to insulate the company against a possible hostile takeover by amending MCA’s bylaws. The new amendment required that seventy-five percent of MCA’s stockholders had to approve of any attempt to absorb the corporation.
“I wanted to protect the future management and the board to the maximum degree possible,” said Lew Wasserman. “If the board wants to make a deal, fine. They’ve got total authority, whoever is on the board at that time. I just don’t want them to be sitting ducks, spending all of their time worrying about being raided.”11
There was one area where MCA was enjoying less than success. It was having enormous technical problems with Disco-Vision. RCA had emerged as MCA and Philips’s most serious competitor in the videodisc market, claiming that its system, SelectaVision, would be less expensive and easier to make and service than Disco-Vision. The individual discs for both systems were to cost two dollars to ten dollars. As the MCA-RCA race for control of the home video market was neck-and-neck, the Sony Corporation—which was developing its own system, using audio/videotape cassettes—was coming fast from behind. Other companies in the field included Matsushita-Panasonic, the 3M Corporation, Bell & Howell, TPC, Zenith, Telefunken, CSF Thomson, and Eastman-Kodak.
To add to MCA’s growing concern for Disco-Vision, the Justice Department’s Antitrust Division was again investigating MCA—because of “the possible anticompetitive affects” of its prospective uses of the pending patent of its system.12
On August 25, 1975, Willie L. Hudgins, the attorney in charge of the probe, recommended that charges be filed against MCA and Philips for violations of the Sherman Antitrust Act, specifically, among other things, for “forming a technology pool to handle all licensing of their video-disc technology,” and because “MCA’s programming will be used exclusively to support the joint Philips-MCA video-disc system.” Hudgins believed that this situation would
have the adverse effect of “eliminating competition between Philips and MCA in research and development,” which would result in the “restricting and suppressing [of] competition in the purchase of patents and patent rights covering video disc technology.”13
Hudgins asked that the MCA-Philips partnership be disengaged and “that the defendants be required to make available [all of their technology] on a royalty-free basis to any applicant interested in developing video-disc technology” created by both MCA and Philips.
There was still another complication on the home entertainment front. Almost twelve years after former NBC president Pat Weaver lost a 1964 statewide referendum, hoping to get approval for the establishment of pay TV in California, cable television came of age during the mid-1970s. Home Box Office, owned by Time, Inc., began offering subscription services to the general public. HBO, which distributed its programs via satellite, offered viewers movies from the studios’ film libraries, as well as first-run specials produced exclusively for subscribers and a variety of sporting events.
The difficulties plaguing MCA did not stop Wasserman and his wife, Edie, from throwing a big Hollywood party at their Beverly Hills home in honor of Henry Kissinger, President Gerald Ford’s secretary of state. The guests included: William French Smith, Paul Ziffren, Taft Schreiber, Jules Stein, and Sidney Sheinberg—along with Cary Grant, Kirk Douglas, Danny Kaye, Rosalind Russell, Alfred Hitchcock, and Gregory Peck. “Show business people and politicians aren’t that dissimilar,” Kissinger replied to a Wasserman toast, “except that politicians play only one role and have a shorter life.”
“The Wasserman driveway and the house itself were jammed with Secret Service men as well as Superstars, Super-producers, Super-directors and Super-distinguished citizens,” gushed Los Angeles Times gossip columnist Joyce Haber. “The living room was California-fresh with plants and flowers. Someone remarked correctly that Edie, the hostess, does parties so well that if she ever stopped, florist David Jones would be out of business. Each lady found a spring flower on her napkin at dinner. The dinner itself started off with a baked potato topped by Iranian caviar and ended with Dom Pérignon.”14
Kissinger, who attended the party with his new wife, Nancy, had previously dated Jill St. John. During their romance, the press frequently speculated about the possibility of marriage between the two. When asked what he might do after he left the government, Kissinger replied, “I’m thinking about going into the movies. I’ve got the connections now.”15
*Mitchell—who had resigned as Nixon’s attorney general to head the president’s campaign committee—was later convicted of obstruction of justice and perjury in connection with his role in the planning and cover-up of the Watergate break-in.
*Stein left MCA holding 1,687,294 shares of stock, or twenty-one percent of the company. Wasserman held 869,083 shares, 10.4 percent of MCA.
†Kerkorian purchased from Moe Dalitz the land on which the MGM Grand was built; he paid Dalitz $1.8 million.
*The nine members of the AMPTP were Universal, Paramount, Columbia, Twentieth Century–Fox, Metro-Goldwyn-Mayer, Warner Brothers, United Artists, Avco-Embassy, and Allied Artists. All operated as production/distribution companies, with the exception of MGM, which had an exclusive distribution contract with United Artists.
*In February 1973, Wasserman was singled out by IATSE for his intervention in a stalemated labor dispute between the union and television producers. Called a “hero” by IATSE officials, “Wasserman was the guy who clinched the deal, really,” an IATSE leader told Will Tusher of The Hollywood Reporter. “He was the only one that we listened to. The only one of that group we believed was Wasserman. He made two or three really brilliant talks.… You’ve got to hand it to Wasserman. I think he saved the day.” Of his negotiating skills, Wasserman told Tusher, “you accomplish unanimity by locking people in various rooms—I might add, without any bathrooms. It’s amazing how many deals have been finalized because of a lack of a washroom.”
*According to Variety, the twelve all-time top-grossing films in 1976 were Jaws, The Godfather, The Sound of Music, Gone With the Wind, The Sting, The Exorcist, The Towering Inferno, Love Story, The Graduate, Doctor Zhivago, Airport, and American Graffiti. Soon after the release of Jaws, Jules Stein put a sign on his front gate, warning: “Beware of Guard Dogs and Sharks.”
CHAPTER THIRTY-TWO
In 1976, New Jersey voters approved a state referendum to legalize gambling in Atlantic City. Within two years, casino gambling would be in operation. However, what worried the Nevada gaming community was not the competition of Atlantic City or the 1976 death of billionaire recluse Howard Hughes but the forced end of all loan commitments to its casinos from the Teamsters Central States Pension Fund. After years of corruption and fiduciary mismanagement, the pension fund—which had loaned hundreds of millions of dollars to Nevada casinos—was placed by the federal government in the supervisory hands of private investment firms.
In 1976, Frank Sinatra bought five percent of the Las Vegas–based Del Webb Corporation along with his attorney Milton Rudin. Sinatra had had his interest in the Cal-Neva Lodge, a casino in Lake Tahoe, revoked in 1963 by the Nevada Gaming Control Board because of his ties to Chicago mobster Sam Giancana. The 1976 deal was an attempt by Sinatra to move back onto the Nevada gambling scene. But the Nevada Gaming Commission stepped in, insisting that Sinatra and Rudin be licensed since their share in the company was so large. Although Rudin was appointed to Webb’s board of directors, Sinatra backed off from the company, not wanting another confrontation with law-enforcement authorities.
Soon after Nevada senator Paul Laxalt came to Washington in 1975, his Ormsby House was near financial collapse, forcing the Laxalt family to find a buyer. In 1976, its new owners simply assumed the $8.5 million debt the hotel/casino had amassed. Laxalt walked away from Ormsby House suffering a major loss, and preaching the gospel of the risky business of casino ownership.
“People have the mistaken impression that all you have to do is build a casino and open the doors and then reserve a vault in Fort Knox,” Laxalt said. “It plain doesn’t happen that way, and I say that from my own experience.… The lead time of almost every Nevada casino, almost without exception, is close to five years before it flies. And this requires continued financial subsistence.”1
In the midst of the failure of Ormsby House and his new marriage to his long-time secretary, Carol Wilson, Laxalt quickly became involved in national politics, trying to convince his friend Ronald Reagan to challenge President Gerald Ford for the Republican nomination. In July 1975, with the support of some of Reagan’s long-time backers, Laxalt formed the Citizens for Reagan Committee, which also included Holmes Tuttle, Henry Salvatori, William French Smith, William A. Wilson, and Jules Stein.*
“They’ve known each other since the mid-1960s, since the Goldwater campaign,” said Reagan’s 1976 campaign manager, John Sears. “After they were elected the governors of their states—Reagan in California and Laxalt in Nevada—they became closer. They principally got together during meetings of the Western Governors’ Conference, where they discussed such issues as water rights and other functions in which politics and individuals interact. But they both loved the outdoors. They both liked horses and wore cowboy boots.… Reagan and Laxalt really became close during Reagan’s first campaign for president [in 1968]. A lot of people were skeptical of Reagan’s chances, and Laxalt was one of the few national elected officials to stand beside him.”2
Reagan aide Jude Wanniski explained, “Laxalt was very anxious for Reagan to run against Jerry Ford, because he thought Ford was the Eastern-wing candidate, typifying business-as-usual Washington. Laxalt felt that Ford served the interests of the establishment rather than the free markets. This is what brought Reagan into the race. Laxalt, very early, kept pushing and yelling, ‘Come on! Come on!’ Reagan resisted until he finally realized, ‘Yeah.’”3
Since leaving the governor’s mansion in California, Reagan had started a daily radio co
mmentary program, which was carried by nearly three hundred stations, and wrote a newspaper column that was syndicated by over two hundred newspapers. Even though the Republican Party had been hurt by President Nixon’s resignation, Reagan’s popularity remained undiminished. According to public opinion, Reagan was still “Mr. Clean.”
Despite his challenge of Gerald Ford’s bid for a full term as president, Reagan was supportive of his opponent, especially after Ford had pardoned Nixon. Reagan was among those who stated that Nixon “had suffered enough”; thus he felt that Ford’s pardon of the former president was justified.
In the days preceding the 1976 Republican convention, Reagan shocked everyone by selecting his vice-presidential candidate in advance, Pennsylvania senator Richard Schweiker, a moderate who had been a member of the U.S. Senate Select Committee investigating the CIA-Mafia plots to assassinate Fidel Castro* and had been selected to co-chair, with Democratic senator Gary Hart, a special Senate inquiry into the assassination of President Kennedy. Schweiker was respected by both conservatives and liberals. Liberals were as shocked that he had accepted Reagan’s offer as conservatives had been that Reagan made the offer in the first place. The controversy quickly became academic when Ford defeated Reagan on the GOP convention’s first ballot.
Reagan’s defeat was the second big blow he suffered that summer. The first came on June 14 when his long-time friend and political supporter, MCA vice-president Taft Schreiber, died after being admitted to the UCLA Medical Center for “minor and routine prostate surgery.” Schreiber entered the hospital on June 3 and was operated on the following day. Schreiber was administered a mislabeled transfusion, causing a “hemolytic transfusion reaction, renal breakdown and other complications.” However, Schreiber’s cause of death was not known until the coroner’s autopsy report was released on July 21. The report showed that Schreiber had died “due to complications of a transfusion reaction due to incompatible blood after prostate surgery.”
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