When Hollywood Had a King Page 20

  Korshak was famous for his sway over the Teamsters. The young MCA agent Harris Katleman had become friendly with Korshak because Korshak was close to Harris’s uncle, Beldon Katleman, who owned the El Rancho. (Once, when Harris had been invited to a dinner party at Misty Mountain, Wasserman had remarked dryly to him, “Don’t let Jules find out Beldon’s your uncle, or he’ll never invite you back.”) “Sidney Korshak controlled the Teamsters,” Harris maintained. He recalled an incident when Korshak went to Los Angeles’s Hollywood Park racetrack, which was owned by Marjorie Everett, a longtime Korshak adversary from Chicago. “He went to the Turf Club, and Marge Everett threw him out—because he was a gangster! The Teamsters struck the next day and closed down Hollywood Park. She called and apologized to Sidney—and the Teamsters quit the strike.”

  Katleman emphasized, too, that Korshak’s power was not limited to the Teamsters. In Chicago, Korshak had specialized in labor but also displayed an eclecticism—helping to win early release for the convicts in the movie industry payoffs case, for example, and allegedly blackmailing Kefauver. Furthermore, he had a reputation in Chicago for being particularly adept at making payoffs to judges in both criminal and commercial cases—a general practice that Judge Marovitz had described as almost institutionalized. Now that Korshak was operating more and more in the movie colony, he appeared to have even more wide-ranging influence; for those who enjoyed his protection, many of life’s problems—some nuisances, some momentous—would simply disappear. Richard Gully got in a car accident, and the other motorist sued him; Gully told Korshak, and the suit was dropped. Performers like Tony Martin incurred big gambling debts in Las Vegas; Korshak had them cleared (as he said to Bob Evans once, after Evans had lost heavily, “I could take the markers and use ’em as toilet paper”). Mickey Rudin, Frank Sinatra’s lawyer (and someone with no mean connections himself), desperately wanted to get his wife on a ship to Europe when there were no more cabins. He tried, and failed. He asked Korshak, and the next thing he knew she was on. “They gave her one of the officer’s cabins,” Rudin said. “And after they got her on the ship, I got a call from the travel agent—‘Would you please let the person to whom it was important know that it has been done?’ ” Rudin added, “He was very close to Giancana”—longtime head of the Chicago Outfit—“though I always thought it was Giancana who called the shots.”

  For most of his friends, Korshak did the occasional favor; but with Wasserman, Korshak seemed to be almost on call—a uniquely proficient kind of chef de bureau. “Lew and Sidney were joined at the hip in the fifties,” Katleman declared. “Sidney did whatever Lew needed.” Given the scope of his domain, Wasserman had a range of problems that tested even Korshak’s versatility. “Korshak was a fixer,” declared Chet Migden, executive director of the Screen Actors Guild for many years. “The studios had a lot of money invested in actors, writers, directors. And when those people got in trouble, they needed fixers.” Korshak’s reach into the judicial system was not always illicit; he came to count some of L.A.’s most powerful lawyers and judges among his good friends; he would often have lunch with Superior Court Judge Laurence Rittenband, for example, who presided over both civil and criminal cases in his Santa Monica courtroom. Sometimes, though, it was Korshak’s contacts in a different world that were required. MCA was shooting a movie in a Mafia-dominated neighborhood in Boston; the script was set in the twenties, so the TV aerials were a jarring anachronism—but the producer had had no success in trying to persuade the residents to take them down. Wasserman called Korshak; within hours the aerials were down, according to an MCA executive. And there were some situations—say, a deal that was difficult for MCA—in which Korshak’s mere presence might win the day. “When Sidney was brought in to negotiate, it was very powerful,” Ted Raynor commented. “Dealing with him, you never knew what the consequences would be.”

  The SAG waiver that allowed MCA to be at once agent and TV producer had been an amazing boon, enabling MCA in the space of a few years to dominate TV production; but MCA’s very success made it vulnerable, for it highlighted the waiver’s brazenness. Wasserman knew that SAG would not be able to withstand much longer the criticism of its unique dispensation; and the U.S. Justice Department was beginning to scrutinize MCA’s operating in tandem as well. If Wasserman was forced to choose between the agency and production businesses, his preference was unmistakable: it was for the business he had started. And by the late fifties—though there was no public hint that MCA might one day exit the agency business—Wasserman had begun positioning the company to do just that. He had been strongly acquisition-minded in the agency business, persuading Stein that MCA should buy up many other agencies here and also abroad. MCA had become, as Stein liked to say, “the largest agency the world has ever known.” Now, Wasserman’s appetite for acquisition continued unabated—but, this time, he was building a diversified entertainment company.

  In 1957, Wasserman set out to acquire Paramount’s pre-1948 film library. Prescient as that may seem, he was not the first to recognize the value of leasing movies to television. Two years earlier, a company called General Teleradio had bought RKO’s pre-1948 library for about $18 million, and then a syndicate led by the Canadian stock promoter, Louis “Uncle Lou” Chesler, who had ties to Meyer Lansky, had purchased Warners’s pre-1948 library for about $21 million. (The talent unions were demanding residuals for any films shown on television after the Paramount Decree came into effect, so agreements involving those post-1948 films remained blocked.) At first, these deals seemed providential to the studios, still trying to cushion their losses from the forced sale of their cinema chains; but it rather quickly became clear that they had sold too cheaply. Three years after the Warners deal, with television’s appetite for these movies driving up their value, company accountants figured they had underpriced their films by about $35 million. In truth, losing control of the negatives of these old movies at almost any price was shortsighted; the studios should have known from experience (and Wasserman was well aware) that the real money was in distribution. Barney Balaban somehow overlooked that fact, and became persuaded that it made sense to sell Paramount’s library at a much better price than RKO and Warners had done. That price, he told Jules Stein in their discussions, was $50 million.

  Stein refused, declaring that “if things went wrong I would lose everything I had spent a lifetime to acquire.” Then, with Doris, he departed for a trip around the world, and left Wasserman to explore whether a deal might still be made. When it came to acquisition, Wasserman’s desire was greater than Stein’s, generally—and this was a deal on which he was especially keen. What he contrived, finally, was the following: MCA would make a down payment of $10 million on signing; once MCA had regained that amount from movie sales, Paramount would receive a percentage of their ongoing sales, until Paramount had received another $25 million; and the remaining $15 million would only be payable if the library’s sales exceeded a certain amount.

  Wasserman and Balaban shook hands on this deal, and the lawyers went to work drafting the papers. A young attorney named George Gallantz was representing Paramount; he was a protégé of Ed Weisl, who seemed to be on all sides of this transaction, as he often was in matters involving the closely connected MCA and Paramount. Gallantz recalled that Wasserman had insisted that the deal must close in February 1958, before the TV selling season started. “Lew walked into the room, shut the door, and said, ‘Look—we are not leaving. This has to be done.’ He was with us a lot of the time. Any impasse, he was there,” Gallantz said. Wasserman made a very distinct impression on Gallantz, still vivid decades later. “I saw him quite a few times, dealt with him extensively here. There was never a conversation you would ordinarily have over time in these situations. ‘Do you live in the city or the suburbs? Are you married? Do you have children? Do you play golf?’ There was none of that with Lew. He kept everyone at a distance. I was a smart kid—I understood he did not want me to reduce the distance, and I didn’t try.”


  For the closing, everything was transported by train to Wilmington, Delaware, to avoid New York sales taxes; the lawyers and all their papers were given their own railway car. “At the closing, there was supposed to be a $10 million down payment,” Gallantz continued. “I said to Lew, how do you plan to transfer the $10 million? (Usually it’s not sitting somewhere in a savings account—it’s out working for you somewhere, and it’s transferred by wire.) So I asked him, and he said, what do you mean? He wrote a $10 million check—and signed it himself. The check was from a bank in Delaware—I’m sure the money got there twenty-four hours before. I thought it was odd.”

  The $50 million deal was widely viewed at the time as terribly rich, and perhaps even a serious blunder by Wasserman; but his critics may not have known of the risk-limiting structure he had devised. Nor did they know what an associate of Wasserman’s asserted—that Wasserman had about $80 million in sales commitments before the deal closed. With his experience in television, Wasserman no doubt had a keener appreciation of the values in distribution than most studio executives at this time. But probably not even he could imagine just how valuable these film libraries would become decades later, when the original TV appetite (“like the great maw of the sperm whale,” as Milton MacKaye had written) would be enlarged, many times over, by ever multiplying channels of distribution. According to Wasserman, MCA would eventually make over $1 billion on this investment of $50 million. “Not a bad return,” he commented, with thinly disguised pleasure.

  Wasserman quickly followed this coup with another. MCA had been leasing space at Republic Studios for Revue’s TV production, but Wasserman was ready now for MCA to have a studio lot of its own. He negotiated a deal with Milton Rackmil, president of Decca Records Inc., which controlled Universal Pictures Company, Inc.

  MCA would pay $11,250,000 for all the land and facilities of Universal—and then Universal would lease back studio facilities to make a number of movies for ten years, at a rental of $1 million annually to MCA. Universal was, in effect, paying the cost of being acquired by MCA. It was a remarkable deal—pronounced by Stein “one of the greatest deals Lew ever conceived and made for MCA.”

  “I was shocked when I found out the price,” said a then executive at Universal. “Four hundred acres, all of the offices and equipment, for $11.25 million!” This executive maintained that it was Wasserman’s aggressive romancing of Rackmil that had won him such an extraordinary deal. It closed in February 1959; and something that occurred then stuck in this person’s mind. He knew it was customary for the buyer’s bank to transfer the funds to the seller’s at a closing. “But Lew wrote a check for $11.25 million! It surprised me.”

  Even at its bargain price, however, the Universal acquisition took some daring. MCA executive Albert Dorskind (who was fond of saying that MCA stood for Muscle, Cash, and Attorneys) worked on the Universal transaction. He pointed out that it cost $7.5 million a year just to maintain the studio (paying staff, insurance, taxes)—so MCA was taking on a responsibility to pay out $75 million over ten years. “That was a big overhead—we had to produce enough to make it worthwhile. It was very risky. Lew had guts.” Dorskind also oversaw the extensive construction that was to be done at the studio after the MCA acquisition. It was that planned construction that gave him the idea of buying the Del E. Webb Corporation—made up of a construction company, large landholdings, and, according to Dorskind, interests in a number of Las Vegas casinos. Webb’s construction company had built Bugsy Siegel’s Flamingo, as well as the Sahara. “Lew thought it was great. We knew more about the casino business, and the talent for it than anyone—so it would make sense to own a piece of it,” Dorskind said. “We were in Phoenix, negotiating, and Jules called. He said, ‘Are you trying to buy that?’ We said we were. ‘Well, the chair says no.’

  “Jules said he didn’t spend his lifetime living as he had to get involved with those people,” Dorskind concluded.

  Moving to further solidify MCA’s strength as a production company, Wasserman began aggressively adding to his store of product. In 1959, MCA had already owned about 1,650 shows outright; in addition, it owned, on the average, a 50 percent interest in about 525 additional programs, which it had co-produced with other producers. For years, MCA had been setting its clients up in corporations for tax purposes, and often MCA would finance those corporations; then they would advise the clients that their companies should back other shows. Sometimes MCA would own a piece of these companies; sometimes they would own a piece of the shows that they placed in those companies; sometimes they would distribute a piece of the shows to clients whom they especially wanted to please. It was a dizzying financial maze that no outsider could penetrate, and only MCA (or, more likely, only Wasserman) knew all its disparate parts. For example, Jack Benny had created J&M Productions at MCA’s urging. Then MCA told Benny to add new properties to his corporation: Checkmate, Ichabod and Me, The Marge and Gower Champion Show, The Gisele MacKenzie Show. Checkmate was owned by J&M and by Revue, in a fifty-fifty split (and MCA gave 5 percent to a writer, Dick Berg, who was a favorite of Wasserman’s at that time). And it was also one of the shows MCA agents demanded CBS buy, as a condition of retaining The Jack Benny Show, according to CBS executives.

  Now, MCA was trying to buy in some of these companies, in order to gain the rights to their programs. Irving Fein, Benny’s manager, who also had an interest in J&M, recalled that MCA bought J&M in 1961, in a stock-for-stock transaction that garnered Benny about $3 million. “We owned about eighty-six filmed shows at that time, and we were making twenty-seven shows a year. We had two years to go on our contract at CBS, so we could have had many more shows, and sold it for much, much more. It was a terrible mistake—but MCA convinced Jack to do it,” Fein said.

  Not everyone whom Wasserman targeted proved as malleable as Benny. The Goodson and Todman Company was the producer of the most popular game shows (including What’s My Line) and Harris Katleman recalled that Wasserman had instructed him to try to develop a good relationship with its principals. “I took Goodson out a lot. Finally, I negotiated a deal for us to buy them for $12 million—which was a lot then. Lew and Jules were flying in to New York. And then Mark Goodson called me on Sunday night at ten o’clock, saying ‘I want out of the deal! I don’t want to work for anybody.’ I met Lew at the airport—he was destroying me all the way in to the city. He said he wanted to meet with Goodson. We went over there and Lew said, ‘Do you remember Phillips H. Lord?’ (He was the Goodson-Todman of radio.) ‘You know what’s happened to him? He’s broke! And that’s what’s going to happen to you!’ ” Katleman explained that MCA had tried to buy Lord’s company, and he had refused.

  Larry White, Leland Hayward’s assistant before the MCA acquisition of Hayward-Deverich, said that it was hard for many people to refuse to be bought by MCA. “If you didn’t sell, they’d kill you! Economically, I mean. They’d tear your guts out.” But when MCA had approached him about buying his shows, he had actually been a willing seller. White had been producing a series of circus shows for television; Sonny Werblin, acting as his agent, had sold the shows to Kintner in a thirteen-show package to be aired on NBC. “The show sold for $100,000 a week, so MCA was getting $10,000. It wasn’t enough for them. We were getting into our third year. They wanted to buy me out. They wanted to own all the residual rights to the programs. They were doing the Jack Benny deals at that time, it fit into that pattern. I was willing. One day, they stopped negotiating. The next thing I knew, they were selling the shows into syndication without asking me.” By this time, another MCA agent, Herb Rosenthal, was handling the account. “I said to Herb, how can you do this?

  “ ‘We got the rights.’

  “ ‘How did you get the rights?’

  “ ‘Lew gave your partner $100,000.’ ”

  White’s partner was a man named Joe Cates, producer of the $64,000 Question quiz show, which ended in a rigging scandal. “Cates never told me! They had been talking about a deal worth several million
dollars—and then they got it for $100,000! I could have sued—but I wasn’t capable of doing it. Lew knew that. He was so nice to me after that.” White paused. “I feel awful, really, that I was so passive. The worst of it is that I knew what was going on and I never said anything. But you couldn’t go to the government. MCA had what I call ‘scare power.’ It was as bad as McCarthy. Lew could put you through the wringer, and ruin your career.”