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The Ruthless Rise and Fall of Paramount Pictures During Hollywood’s Golden Age

The venerable movie studio, now up for grabs, once defined the industry's zeal for consolidation, pioneering vertical integration and serving as the model for each of its major rivals.

“I’ve seen Paris, France, and Paris, Paramount Pictures,” Ernst Lubitsch said, or so they say, “and on the whole I prefer Paris, Paramount Pictures.”

The great director’s preference for the Hollywood city of lights over the French one expresses a common enough affinity for illusion over reality, but the studio in question was not chosen for alliteration alone. If gritty Warner Bros. specialized in mean streets and threadbare apartments and glitzy MGM spent big on grand hotels and emerald cities, Paramount transported moviegoers into realms of dreamy exoticism, allegedly set in Vienna, Budapest or St. Petersburg, but conjured with better-than-the-original costuming, set design, lighting and dialogue. In an age before jumbo jets, who was to quibble over verisimilitude?  

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A new version of Paramount looks to be a-borning: Controlling stakeholder Shari Redstone may put her company on the auction block. Whatever conglomerate or mogul buys the assets, it’ll have a legacy to live up to, whether it wants to or not.  

The Paramount story begins with its legendary and long-lived founding mogul, Adolph Zukor. Born in 1873, a Hungarian Jew, he arrived in New York at age 15 and made his first real money in the fur trade, where he learned about the vagaries of fashion and the primacy of female tastes, not bad training for his next career move, the amusement trade, first penny arcades and then tent show exhibition at the dawn of cinema. In 1903, he joined forces with the theatrical impresario Marcus Loew and got in on the ground floor of a promising new business. 

The first iteration of Zukor’s motion picture empire was the Famous Players Film Company, founded in 1912, whose motto was “famous players in famous plays.” Like Carl Laemmle at Universal, he understood early on that people came to the movies to look at faces, so he paid the famed stage actress Sarah Bernhardt the regal sum of $35,000 to import her French-made starring vehicle Queen Elizabeth (1912), a biopic comprised of “three artistically tinted and toned reels.” He paid even more for the first true superstar of the silent screen, Mary Pickford, who made her name at Biograph but her fortune at Famous Players. Hired at $1,000 per week in 1913, America’s moneywise sweetheart was raking in $250,000 per year by 1916.

The Paramount logo, circa 1916, in a trade ad.

The other pillar of the Zukor enterprise was architectural. Foreseeing that ramshackle nickelodeons would not long contain a burgeoning mass audience, he gobbled up real estate, retooled theatrical houses and built grand motion picture palaces to showcase the emerging art. In 1914, Famous Players merged with a prestigious sounding outfit founded by distributor W.W. Hodkinson, Paramount Pictures Corporation. Hodkinson had created a memorable trademark for the company: a circle of stars wrapped around a snow-capped Rocky Mountain (Hodkinson was from Utah). Zukor soon ousted Hodkinson, but he kept the name and logo, still in use. By around 1916, the Paramount Pictures we know had come into being with the establishment of a West Coast production plant to match its East Coast plant in Astoria, New York. The latter was overseen by Jesse L. Lasky, Zukor’s longtime collaborator and competitor. Lasky would remain a vital player at Paramount until 1934.  

 Adolph Zukor in 1936.

Zukor’s zeal for consolidation and acquisition was relentless. He formatted the economic program that defined classical Hollywood cinema — the vertical integration of production, distribution and exhibition under a single studio shingle. A true oligopoly, it would serve as the model for each of the four other major studios that made up Hollywood’s Big Five (Warner Bros., MGM, Fox and RKO). As the film historian Robert Sklar stated in his landmark 1975 study Movie-Made America: A Cultural History of America Movies: “The studio system was the house that Adolph Zukor built.”

Under the management of B.P. Schulberg, head of production from 1925 to 1932, Paramount thrived with an eclectic and diversified product line. The highlight reel would include jazz age avatar Clara Bow, who embodied the antecedent in It (1926); William Wellman’s aerial spectacle Wings (1927), the first best picture winner; and Rouben Mamoulian’s innovative early sound film Applause (1929). Already, the studio was cultivating a reputation for smarts and sophistication. Overhearing his father and screenwriter Herman J. Mankiewicz breaking down the script for Mamoulian’s film version of Robert Louis Stevenson’s Dr. Jekyll and Mr. Hyde (1931), Budd Schulberg knew that “they weren’t ignoramuses butchering the classics; they were men and women who knew their Stevenson and were serious about bringing his work to the screen as authentically as possible.”

By the early 1930s, the Paramount house style had emerged. The code word was “Continental” — meaning that in location and attitude, the films affected a suave European worldliness about human desire that might ordinarily be expected to shock Victorian Americans — a mistress on the side, an adulterous lapse, a session of no-guilt transactional sex, all conducted in elegant-to-baroque surroundings somewhere offshore. Two directors — one florid, one discreet — typified Paramount in peak form: the authentically Viennese but bogus aristocrat Josef von Sternberg and the brilliant comedian of manners, Ernst Lubitsch.  

Von Sternberg’s breakthrough was The Blue Angel (1930). Shot for Paramount at UFA studio outside of Berlin, simultaneously in German and English language versions, it brought Weimar decadence stateside in the person of Marlene Dietrich, who left for Paramount the very night the film premiered in Berlin. “She’s an eyeful,” low whistled Variety, eyeballing “those Continental soubrette costumes of much stocking, bare limb, and garters.” Commenting on the von Sternberg-Dietrich collaboration, film historian Ethan Mordden marveled at “a Continental art of such gesticulative eroticism, such impishly grotesque sophistication, that even today it’s hard to believe that Paramount let them make six films together within five years.”  

Lubitsch’s eponymous touch was already his auteurist billing when he came from Germany to Hollywood in 1922 — brought over by Pickford, to supervise her persona shift as a Spanish street singer in Rosita (1923) — but he imprinted his “saucy but not salacious brand of screen satire” at Paramount. In Lubitsch’s hands, the potentially censor-enraging Design for Living (1932) — about a ménage á trois — could be utterly disarming with a practical solution for an age-old problem: A girl like Miriam Hopkins shouldn’t really be forced to choose between Gary Cooper and Fredric March, should she? Such was Paramount’s reputation for “smart and sophisticated” screen fare that studio publicity had to pull back for fear of scaring away the rubes. “Don’t misunderstand the word ‘smart,’” the pressbook for Lubitsch’s Trouble in Paradise (1932) assured exhibitors. The film was “not over the heads of the mob — and not a picture for the intelligentsia only.”

The Continental (the word is inescapable when talking about Paramount) spirit onscreen also seems to have infused the studio workplace. Passing under the Bronson Gate on Marathon Street (a signpost almost as famous as the “Paramountain”), cast and crew entered a self-contained community with its own barbershop, gym, clinic and cafeteria (where Cecil B. DeMille could be spotted at his table, presiding like Ramses).

The Paramount studio lot, circa 1933.

Even allowing for the nostalgic gauze filtering the lens of memory, studio veterans speak of Paramount as kind of backlot Camelot. In Sam Wasson and Jeanine Basinger’s Hollywood: The Oral History, cinematographer Ray Rennahan recalls Paramount as “the most homey and pleasant place to work of all of [the studios]. It was very friendly.”  Director George Seaton used a German word to describe the cozy atmosphere: “It was very gemütlich.” In Sunset Blvd. (1950), even the haughty star Norma Desmond knows the name of the guard at the Bronson gate when one Paramount director, Billy Wilder, takes us inside to see another Paramount director, DeMille, at work. 

Sometimes Paramount could be too welcoming to flashy foreigners with a signature style. In 1930, Jesse Lasky signed the Soviet director Sergei Eisenstein to a six-month contact. Why not? It worked with the Germans. “Mr. Eisenstein has been loaned by the Soviet government to that old radical group, Paramount, and he had hardly set foot on our Republican soil before he was [feted with] banquets and toured around town in Rolls-Royces by the local proletariat,” noted a bemused account in Motion Picture News. Unlike the German imports, however, Eisenstein refused to get with the capitalist program — he insisted there would be no talk, plot or stars in his films. Paramount and the Bolshevik parted ways before his contract was up.

Soon enough, though, Hollywood was having its own problems with capitalism. No studio was hit harder by the Great Depression than Paramount. Property rich but cash poor (it then owned 900 first-run theaters, all of which required massive investment for retooling for sound), it could barely meet its payroll. Worse yet, the revenue stream at the ticket window had dried up. “The Paramount flop in quality production” was the talk of the town.

By 1933, Paramount was on the verge of going belly up. In March, it filed for bankruptcy, the first major studio to be forced to do so. Scores of employees received pink slips. Zukor was not going to fire himself, so he fired B.P. Schulberg as head of production and began a frantic restructuring of production and finances. “Think of it,” said Billy Wilkerson, editor-publisher of The Hollywood Reporter, when he heard the news, “a company that, from the very start, meant tops in this business, a company the trademark of which was imprinted on the mind of every moving picture fan in the country, Paramount, a bankrupt now.”

Adolph Zucker and Mae West on the set of I’m No Angel in 1933.

What reversed Paramount’s death spiral was the timely arrival, not of a foreign director but a homegrown force of nature, the sass-mouthed, hip-swaying multihyphenate Mae West.  Her back-to-back smash hits She Done Him Wrong (1933) and I’m No Angel (1933) single-handedly and double entendre-ly saved Paramount from insolvency. Called “the biggest sensation Paramount has had in more than 10 years,” West was the studio’s life preserver, which was only fitting since that’s what sailors called their chesty flotation devices during World War II. “The wages of sin in all cases is not death,” she wisecracked, proving her own maxim. Thanks to West, Paramount ended the year with a $6 million surplus.

In 1935, Lubitsch — a director — was appointed head of production at Paramount, another indication of how friendly the studio was to the talent. Contrary to expectations (“it is like taking one of the world’s greatest plastic surgeons and making him overseer of a general clinic”), it was not a case of promoting an artist to his level of managerial inefficiency. Lubitsch recruited some A-list colleagues — Frank Borzage, Lewis Milestone and King Vidor — but, thankfully, he returned to his true vocation the next year.

Under president Barney Balaban (1936-64) and vp in charge of studio operations Y. Frank Freeman (1938-59), Paramount enjoyed a long and healthy period of managerial stability. Freeman kept with the institutional ethos, mainly staying off the soundstages and letting the directors do their work. Freeman “quite honestly confessed that he knew nothing about films so he just let the filmmakers make the film,” said George Seaton.

In the later 1930s and during the war years, Paramount, like the rest of Hollywood, found it hard to lose money. Its most popular star was probably Bing Crosby, who in the end earned the studio more money than West with a series of ludicrously popular “road” films, beginning with The Road to Singapore (1940), with radio superstar Bob Hope. Crosby was even more successful as a singing priest in director-producer Leo McCarey’s Going My Way (1944) and The Bells of St. Mary’s (1945), the top box office hits of their respective years. Meanwhile, perhaps only Paramount would have rolled the dice by promoting a couple of mere screenwriters, traditionally Hollywood’s bottom feeders, into the director’s chair: Billy Wilder and Preston Sturges.  

After the war, the bill for Zukor’s aggressive acquisition of theaters suddenly came due. The coast-to-coast circuit of Paramount theaters (in 1938, it owned 1,400 theaters in the U.S. and 275 in Canada) made the studio the target of choice when the Department of Justice sued the motion picture industry under the Sherman Antitrust Act for conspiring to create a monopoly in restraint of trade. The argument made by Paramount’s lawyers — that the monopoly existed only in the DOJ’s mind — proved unpersuasive. In 1948, when the Supreme Court issued its historic ruling that the studios must jettison their theater chains, it was Paramount that gave its name to the decision. The house that Adolph Zukor built was slated for demolition and with it the rest of the neighborhood.

As was true for all the major studios in the postwar era, Paramount underwent a gradual erosion of brand identity. The atmosphere behind the Bronson gate also became less gemütlichkeit. In 1953, George Weltner, head of international distribution for Paramount, suggested to Wilder that the Nazi spy who infiltrated the American POW barracks in Stalag 17 (1953) be changed to a Polish spy for release in the German market. A furious Wilder severed his 20-year relationship with the studio that had nurtured him.

However, for another old Paramount hand, the studio bond was still intact. The biggest hit of the decade — for Paramount, for Hollywood — came from the man who had been at the studio on and off since the very beginning, Cecil B. DeMille. Based on best-selling public domain source material, The Ten Commandments (1956) boasted a cast of thousands, state-of-the-art FX and enough pagan fun at the foot of Mt. Sinai to make up for the Mosaic lectures. The spectacle pulled millions of lapsed moviegoers away from their televisions for a motion picture event that was akin to a religious duty (“See The Ten Commandments — Keep the Ten Commandments!” urged ads). A company man, DeMille spread the wealth around. In a deal unprecedented in industry history, he earmarked a percentage of the profits for staff and crew who had been with him at the studio for a decade or more.

Lee Marvin, Robert Evans, Barbra Streisand, Bernard Donnenfield, Clint Eastwood, Rock Hudson, John Wayne and Yves Montand in 1970.

After The Ten Commandments, it was mostly downhill for the Paramountain — all the way down, actually. By 1966, the year the studio was bought by Gulf and Western, a mineral and mining company, its box office performance ranked dead last of the nine motion picture companies. The new ownership did not seem to place a high priority on the studio: The company’s first-quarter report referred to its sideline acquisition as its “leisure time division.” Variety snapped back: “also known as Paramount Pictures Corporation in the trade.”  

Hollywood’s worst fears seemed confirmed when G&W board chairman Charles Bluhdorn appointed as head of production a pretty boy former actor named Robert Evans, a Type A hustler whose managerial approach was definitely not hands-off. The choice turned out to be inspired. Evans guided Paramount back on top with an astonishing run of crowd-pleasing hits like True Grit (1969) and Love Story (1970) and critical and commercial masterpieces like The Godfather (1972) and Chinatown (1974), one of which is certainly the best film of the decade.

Amazingly, in 1975, the year Evans left Paramount to go into independent production, Zukor, “the old man” (he had been called that since the 1930s), was still in harness as board chairman emeritus at the studio he had founded 60 years before. In Hollywood histories and archival documentaries, Zukor tends to get overshadowed because he was “everything that the fictional film tycoon was not,” as The New York Times noted. So, when Zukor died in 1976, at the age of 103, MPAA president Jack Valenti had no colorful anecdotes or amusing malapropisms to repeat, just a poignant truth: With “his death snaps the last link to the giant founders of the film in America.”

The last human link, that is: The house that Zukor built and the logo he lifted are still around. If you’re in the market, the brand has proven value.