Sample Book Chapters

Chapter 10 - Major Studios

Chapter summaries in this section of the website are distilled from 139,000 words in the book.
“Well, goodbye, Mr. Zanuck. And let me tell you that it certainly has been a pleasure working at Sixteenth Century Fox.”             
                                director Jean Renoir

   Hollywood’s venerable six major studios are criticized for being impersonal, stodgy, tight fisted, and unwilling to change with the times. The quote above, which plays off this viewpoint, is a farewell from the famous French director to Hollywood mogul Darryl F. Zanuck.
   The reality is that the Hollywood majors are world-beaters in business—nobody else comes even remotely close—so they must be doing something right. For all the knocks about inflexibility, the majors are changing with the times, as evidenced by their embrace of the DVD video format and entrance into the video-on-demand business.
   The venerable six are Walt Disney Studios, Sony Pictures/Columbia Pictures, Paramount Pictures, Twentieth Century Fox, Universal Pictures, and Warner Bros. Those six constitute the entire membership of the Motion Picture Association of American (MPAA) trade group. The six majors’ worldwide revenues from distribution of feature films to all media amounted to about $44 billion in global motion picture revenue, based on reported earnings.
   For decades, Metro-Goldwyn-Mayer was a seventh major, but it downsized distribution after being sold in 2005 to a consortium and from a prepackaged bankruptcy in late 2010.
   Although the workings are little understood, even within the film industry, the majors are essentially banks and distribution machines, whose economic clout comes from their film libraries. Having a physical production facility is not critical, and no studio operates with a permanent roster of star talent, as in the 1930s golden era. The majors contract out for production talent with their piles of money, creating new films in what is a low-profit business to replenish their film libraries, whose licensing to TV outlets and DVD sales is a high-profit business.
   Looking back further in history, the major studios emerged in the 1930s and have dominated film distribution ever since. In those early days until the post–World War II period, there were two tiers of studios.
   The Big Five were MGM, Paramount, RKO, Twentieth Century Fox, and Warner Bros., although RKO eventually faded, and the bulk of its film library was absorbed by Warner Bros. These studios were vertically integrated because they were distribution companies that also owned theater chains.
   The second-tier studios—known as the Little Three because they lacked theaters—were Columbia, United Artists, and Universal. Today, the United Artists library of films is owned by and represents the backbone value of MGM.#
Copyright © 2018, Robert Marich. All rights reserved.  Used here with permission from SIU Press.

Table 10.1 Hollywood’s major studios ranked by revenue, 2011

Studio Revenue ($ billion)
Warner Bros.     12.3
Sony/Columbia   8.0
20th Cent. Fox    6.9
Walt Disney        6.3
Paramount        5.9
Universal         4.9
Source: From company reports
Note: Revenue figures comprise all filmed entertainment, including television programs and
studio-affiliated indie films.