Lehman Brothers Collection - Contemporary Business Archives

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Twentieth-Century Business Archives

MCA Inc. - Lehman Brothers Collection

MCA Inc.

List of Deals

MCA, originally known as the Music Corporation of America, was founded in 1924 by Jules C. Stein. Stein, with his partner William Goodheart, established the company to book bands. The company grossed over $30,000 in its first year alone and quickly began to revolutionize the booking business. At the time MCA was founded, most bands played under their bookers' names rather than their own. In return for exclusive rights to represent a band, Stein began to bill bands under their leaders' names. By 1927 MCA represented about forty bands. In 1930 the company persuaded Lucky Strike to sponsor a radio program that featured a different MCA band every night. The show caused bands to flock to MCA; by the late 1930s the company had attracted some 65 percent of the major bands in the country. This predominance in booking bands gave MCA such recognition that it was soon able to begin to book other entertainers as well.

In 1936 Stein hired Lew Wasserman to run the company's advertising and publicity departments. The following year, Wasserman became the first agent to negotiate a percentage of a movie's earnings rather than a straight salary for screen stars. Such contracts made millionaires of many actors. At first the company purchased talent agencies, which brought whole stables of stars under MCA's control. When agencies refused to sell, MCA then bought individual contracts. In 1945 MCA made its most important acquisition, the Hayward-Deverich Agency in New York City, for $4 million. Hayward-Deverich was the most prestigious firm in the business and brought clients such as Henry Fonda, Greta Garbo, and Joseph Cotton to MCA, making it the premier talent agency in the United States.

MCA began to produce television shows in 1949, forming a subsidiary to film a show named "Stars over Hollywood." The production then served as a vehicle for providing MCA's clients with jobs. Initially, MCA concentrated on selling shows to major networks, but in 1952 it began selling reruns to local stations across the United States. Then MCA produced its first syndicated show, "Chevron Theatre." Two years later the company purchased United Television Programs, a TV syndicator that owned mostly reruns. For the first time, MCA's agency commissions ($6 million) were exceeded by its income from television film rentals (nearly $9 million).

During the late 1950s MCA derived revenues from over 45 percent of all the network evening shows. It produced and co-produced more series than any competitor, including "Riverboat," "Wagon Train," and "General Electric Theater." MCA also acted as selling agent for about fifteen other series, including "Alfred Hitchcock Presents," "Ford Startime," and "Wells Fargo." In 1958 MCA purchased the TV rights to Paramount's pre-1948 library of about 750 feature films for $10 million. In 1959 MCA paid Universal Studios over $11 million for its 420-acre back lot, including facilities and equipment. The company first offered its stock for sale to the public in 1959, and that year a new parent company, MCA Inc., was organized to replace Music Corporation of America. The new organization had twenty subsidiaries or divisions, of which the most important were Revue Productions, the division that made television film series for MCA; MCA Artists, a subsidiary that functioned as a sales agent for television films; and Music Corporation of America, a subsidiary that represented nightclub and variety performers.

By that time, MCA was both the largest employer of show-business talent and the largest show-business agent. As a result, the company often hired its own clients, a practice deplored by other industry members. In 1962, when MCA bought Decca Records, Inc., the company that owned Universal Pictures, Inc., the Justice Department forced it to choose whether to operate as a talent agency or a film-production concern. The company decided to divest itself of its talent agency, concentrate on feature-film production under the Universal Pictures name, and branch out into non-entertainment fields to compensate for the loss in agency revenue.

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