On June 8, 1912, Laemmle merged IMP with eight smaller companies to form the Universal Film Manufacturing Company--the first appearance of the word "universal" in the organization's name. Laemmle was the primary figure in a partnership that included Mark Dintenfass, Charles Baumann, Adam Kessel, and Pat Powers. Eventually all would be bought out by Laemmle. (Baumann and Kessel partnered with Mack Sennett for their highly successful Keystone Film Company.) The new Universal studio was a horizontally integrated company, with both movie production and distribution capacity (the company lacked a major circuit of exhibition venues, ownership of which would become a central element of film industry integration in the following decade). The company was incorporated as Universal Pictures Company, Inc. in 1925.
Following the westward trend of the industry, by the end of 1912 the company was focusing its production efforts in the Hollywood area. Its first logo was an Earth with a Saturn-like ring and the text in a bold Kentucky font. In later years it was replaced by a model to ultimately to today's CGI animation. In 1915, Laemmle opened the world's largest motion picture production facility, Universal City Studios, on a 230-acre (0.9-km²) converted farm just over the Cahuenga Pass from Hollywood. Studio management now became the third facet of Universal's operations, with the studio incorporated as a distinct subsidiary organization. Unlike other movie moguls, Laemmle opened his studio to tourists. Universal became the biggest studio in Hollywood, and remained so for a decade. However, it sought an audience mostly in small towns, producing mostly inexpensive melodramas westerns, and serials.
Despite Laemmle's role as an innovator, he was an extremely cautious studio chief. Unlike rivals Adolph Zukor, William Fox, and Marcus Loew, Laemmle chose not to develop a theater chain. He also financed all of his own films, refusing to take on debt. This policy nearly bankrupted the studio when actor-director Erich von Stroheim insisted on excessively lavish production values for his films Foolish Wives and Blind Husbands, but Universal shrewdly got some of its money back by launching a sensational ad campaign that attracted moviegoers. Character actor Lon Chaney became a huge drawing card for Universal in the 1920s, appearing steadily in dramas. His two biggest hits for Universal were The Hunchback of Notre Dame (1923) and The Phantom of the Opera (1925). During this period Laemmle entrusted most of the production policy decisions to Irving Thalberg. Thalberg had been Laemmle's personal secretary, and Laemmle was impressed by Thalberg's cogent observations of how efficiently the studio could be operated. Promoted to studio chief, Thalberg was giving Universal's product a touch of class, something it seldom had during the silent era.
Louis B. Mayer lured Thalberg away from Universal with a promise of better pay. Without his guidance Universal became a second-tier studio, and would remain so for several decades.
In 1926, Universal opened a production unit in Germany, Deutsche Universal-Film AG, under the direction of Joe Pasternak. This unit produced three to four films per year until 1936, migrating to Hungary and then Austria in the face of Hitler's increasing domination of central Europe. With the advent of sound, these productions were made in the German language or, occasionally, Hungarian or Polish. In the U.S., Universal Pictures did not distribute any of this subsidiary's films, but at least some of them were exhibited through other, independent, foreign-language film distributors based in New York, without benefit of English subtitles. Nazi persecution and a change in ownership for the parent Universal Pictures organization resulted in the dissolution of this subsidiary.
In 1927, Charles B. Mintz, a film producer and distributor, took control over Margaret J. Winkler's Winkler Pictures after marrying Winkler. He commissioned an all new all-animated series for production that would be distributed through Universal Pictures. The series, Oswald the Lucky Rabbit, was created by animator Ub Iwerks, an original partner of famed studio magnate Walt Disney. A young Disney, in the years before gaining worldwide acclaim with his own studio, earlier entered into a creative contract with Winkler for producing cartoon shorts like "Oswald." Disney tried negotiating a higher fee for the shorts he was making.
Yet while Iwerks created the "Oswald" character, which had enjoyed a successful theatrical run, Universal - and not Disney - owned the rights to it. This gave Mintz leverage in actually demanding that Disney accept a lower fee for producing the property or he would produce the films with his own group of animators. In the end, Disney refused the offer. As an alternative, he and Iwerks created what became Disney's flagship trademark, Mickey Mouse, which contained some of Oswald's features and soared to popularity following the duo's producing of its first talking short, Steamboat Willie. This moment effectively launched the Disney empire, while Universal became a relatively minor player in movie animation after Oswald.
In 2006, after almost 80 years, NBC Universal sold all Disney-produced Oswald cartoons back to Disney, in return for the release of then-ABC TV sportscaster Al Michaels from his contract so he could work on NBC's Sunday night NFL football package. However, Universal kept the Oswald cartoons that Walter Lantz produced for them from 1929 to the mid-1930s.
To his credit, "Junior" Laemmle persuaded his father to bring Universal up to date. He bought and built theaters, converted the studio to sound production, and made several forays into high-quality production. His early efforts included the 1929 part-talkie version of Show Boat, the lavish musical Broadway (1929) which included Technicolor sequences, the first all-color musical feature (for Universal); King of Jazz (1930); and All Quiet on the Western Front, winner of the "Best Picture" Academy Award for 1930. Laemmle, Jr. also created a successful niche for the studio, beginning a long-running series of monster movies, affectionately dubbed Universal Horror, among them Frankenstein, Dracula, and The Mummy. The 1931 six-sheet (81-by-81-inch) poster for Frankenstein is considered to be the most valuable movie poster in the world. There is only one copy of this poster known to exist. Other Laemmle productions of this period include Imitation of Life and My Man Godfrey.
Standard Capital's J. Cheever Cowdin took over as president and chairman of the board of directors, and instituted severe cuts in production budgets. Gone were the big ambitions, and though Universal had few big names under contract, those it had been cultivating, like William Wyler and Margaret Sullavan, now left. By the start of World War II, the company was concentrating on smaller-budget productions: westerns, melodramas, serials and sequels to the studio's horror classics.
Producer Joe Pasternak, who had been successfully producing light musicals with young sopranos for Universal's German subsidiary, came to America and repeated his tried-and-true formula. Teenage singer Deanna Durbin starred in Pasternak's first American film, Three Smart Girls (1936). The film made a fortune and restored the studio's solvency. If any one star can be said to have kept Universal in business during the late 1930s, it was Durbin, despite her often being woefully miscast as a young teenager when she was, clearly, a fully adult woman. As Durbin outgrew her screen persona and pursued more dramatic roles, the studio signed 13-year-old Gloria Jean for her own series of Pasternak musicals; she went on to star with Bing Crosby, W. C. Fields, and Donald O'Connor.
Universal could seldom afford its own stable of stars, and often borrowed talent from other studios, or hired freelance actors. James Stewart, Marlene Dietrich, Margaret Sullavan, and Bing Crosby were some of the major names that made a couple of pictures for Universal during this period. Some stars came from radio, including W. C. Fields, Edgar Bergen, and the comedy team of Abbott and Costello (Bud Abbott and Lou Costello). Abbott and Costello's military comedy Buck Privates (1941) hit like a bombshell, catapulting the former burlesque comedians to unprecedented popularity. They became the biggest movie stars in America, improving Universal's bottom line even more than Durbin's glossy productions had.
During the war years Universal did have a co-production arrangement with producer Walter Wanger and his partner, director Fritz Lang, but their pictures were a small bit of quality in a schedule dominated by the likes of Cobra Woman and Frontier Gal. Universal's customer base was still the neighborhood movie theaters, and the studio continued to please the general public with low- to medium-budget comedies, musicals, adventures, westerns, and serials. The studio also fostered a number of series: The Dead End Kids and Little Tough Guys action features and serials (1938-43), the comic adventures of infant Baby Sandy (1938-41), Hugh Herbert comedies (1938-42), horror thrillers with Frankenstein, Dracula, The Wolfman, The Invisible Man, and The Mummy (1939-45), Basil Rathbone and Nigel Bruce in Sherlock Holmes mysteries (1942-46), teenage musicals with Gloria Jean, Donald O'Connor, and Peggy Ryan (1942-43), and screen adaptations of radio's Inner Sanctum Mysteries (1943-45). Since Universal made mostly low-budget films for many years, it was one of the last major studios to begin using full Technicolor. The studio first made use of the three-strip process in 1942, when it released the entertaining Arabian Nights, the first of a series of Technicolor spectaculars starring Jon Hall and Maria Montez. Technicolor was also used in Universal's 1944 remake of the classic melodrama, Phantom of the Opera with Claude Rains and Nelson Eddy.
Goetz set out an ambitious schedule. Universal-International became responsible for the American distribution of Rank's British productions, including such screen classics as David Lean's Great Expectations and Laurence Olivier's Hamlet. Broadening its scope further, Universal-International branched out into the lucrative nontheatrical field, buying a majority stake in home-movie dealer Castle Films in 1947, and taking the company over entirely in 1951. For three decades, Castle would offer "highlights" reels from the Universal film library to home-movie enthusiasts and collectors.
The production arm of the studio still struggled. While there were to be a few hits like The Egg & I, The Killers, and The Naked City, Universal-International's new theatrical films often met with disappointing response at the box office. By the late 1940s, Goetz was out, and the studio reverted once more to the low-budget fare it knew best. The inexpensive Francis the Talking Mule and Ma and Pa Kettle series became mainstays of the new company. Once again, the films of Abbott and Costello, including Abbott and Costello Meet Frankenstein, were among the studio's top-grossing productions. But at this point Rank lost interest and sold his shares to the investor Milton Rackmil, whose Decca Records would take full control of Universal in 1952.
Though Decca would continue to keep picture budgets lean, it was favored by changing circumstances in the film business, as other studios let their contract actors go in the wake of the 1948 U.S. vs. Paramount Pictures, et al. case. Leading actors were increasingly free to work where and when they chose, and in 1950 MCA agent Lew Wasserman made a deal with Universal for his client James Stewart that would change the rules of the business. Wasserman's deal gave Stewart a share in the profits of three pictures in lieu of a large salary. When one of those films, Winchester '73 proved to be a hit, Stewart became a rich man. This kind of arrangement would become the rule for many future productions at Universal, and eventually at other studios as well.
By the late 1950s, the motion picture business was in trouble. The combination of the studio/theater-chain break-up and the rise of television saw the mass audience drift away, probably forever. The Music Corporation of America (better known as MCA), mainly a talent agency, had also become a powerful television producer, renting space at Republic Studios for its Revue Productions subsidiary. After a period of complete shutdown, a moribund Universal agreed to sell its (by now) 360-acre (1.5 km²) studio lot to MCA in 1958, for $11 million, renamed Revue Studios. Although MCA owned the studio lot, but not Universal Pictures, it was increasingly influential on Universal's product. The studio lot was upgraded and modernized, while MCA clients like Doris Day, Lana Turner, and Cary Grant were signed to Universal Pictures contracts.
The actual, long-awaited takeover of Universal Pictures by MCA, Inc. finally took place in mid-1962 as part of MCA -Decca Records merger (Universal's then parent company), with MCA as surviving corporation. Universal-International Pictures, the production subsidiary reverted in name back to Universal Pictures. As a last gesture before getting out of the talent agency business, virtually every MCA client was signed to a Universal contract. In 1964 MCA formed Universal City Studios, Inc. to take over the motion pictures and television arms of Universal Pictures Company and Revue Productions (officially renamed Universal Television in 1966). And so, with MCA in charge, for a few years in the 1960s Universal became what it had never been: a full-blown, first-class movie studio, with leading actors and directors under contract; offering slick, commercial films; and a studio tour subsidiary (launched in 1964). But it was too late, since the audience was no longer there, and by 1968, the film-production unit began to downsize. Television now carried the load, as Universal dominated the American networks, particularly NBC (which later merged with Universal to form NBC Universal; see below), where for several seasons it provided up to half of all prime time shows. An innovation of which Universal was especially proud was the creation in this period of the made-for-television movie.
Though Universal's film unit did produce occasional hits, among them Airport, The Sting, American Graffiti, Earthquake, and a blockbuster that restored the company's fortunes, Jaws, Universal in the 1970s was primarily a television studio. Weekly series production was the workhorse of the company. There would be other film hits like E.T: The Extra-Terrestrial, Back to the Future, and Jurassic Park, but overall the film business was still hit-and-miss. In the early 1970s, Universal teamed up with Paramount Pictures to form Cinema International Corporation, which distributed films by Paramount and Universal worldwide. It was replaced by United International Pictures in 1981, when Metro-Goldwyn-Mayer joined the fold. UIP began distributing films by start-up studio DreamWorks in 1997, and MGM subsequently dropped out of the venture in 2001, letting 20th Century Fox internationally distribute its films. In 1990, MCA created MCA/Universal Home Video Inc. to enter the lucrative videotape and later DVD sales industry.
Anxious to expand the company's broadcast and cable presence, longtime MCA head Lew Wasserman sought a rich partner. He located Matsushita Electric, the Japanese electronics manufacturer. Around this time, the production subsidiary was renamed Universal Studios Inc. Matsushita provided a cash infusion, but the clash of cultures was too great to overcome, and five years later Matsushita sold control of MCA/Universal to Canadian liquor distributor Seagram. Hoping to build a media empire around Universal, Seagram bought PolyGram in 1999 and other entertainment properties, but the fluctuating profits characteristic of Hollywood were no substitute for the reliable income stream of hard liquor.
To raise money, Seagram head Edgar Bronfman Jr. sold Universal's television holdings, including cable network USA, to Barry Diller. (These same properties would be bought back later at greatly inflated prices.) In June 2000, Seagram itself was sold to French water utility and media company Vivendi(which owns StudioCanal). The media conglomerate became Vivendi Universal. Afterward, Universal Pictures acquired the United States distribution rights of several StudioCanal's films, such as Mulholland Drive (which received an Oscar nomination) and Brotherhood of the Wolf (which became the second-highest-grossing French-language film in the United States in the last two decades). Universal Pictures and StudioCanal also co-produced several films, such as Love Actually(an $40 million-budgeted film that went on grossing $246 million worldwide ).
Burdened with debt, in 2004 Vivendi Universal sold 80% of Vivendi Universal Entertainment (including the studio and theme parks) to General Electric, parent of NBC. The resulting media super-conglomerate was renamed NBC Universal, while Universal Studios Inc. remained the name of the production subsidiary. Though some expressed doubts that regimented, profit-minded GE and high-living Hollywood could coexist; as of 2007 the combination has worked. The reorganized "Universal" film conglomerate has enjoyed several financially successful years. As presently structured, GE owns 80% of NBC Universal; Vivendi holds the remaining 20%, with an option to sell its share in 2006.
In late 2005, Viacom's Paramount Pictures swooped in to acquire DreamWorks SKG after acquisition talks between GE and DreamWorks stalled. Universal's long time chairman, Stacey Snider, left the company in early 2006 to head up DreamWorks. Snider was replaced by then-Vice Chairman Marc Shmuger and Focus Features head David Linde.
Over the years, Universal has made deals to distribute and/or co-finance films with various small companies, such as Imagine Entertainment, Amblin Entertainment, Morgan Creek Productions, Working Title Films (and DreamWorks), StudioCanal, Shady Acres Entertainment, Mark Platt Productions, and Beacon Communications LLC.
Through subsidiary NBC Universal Television Distribution, they own the following:
The company also owns the libraries of:
It also owns several films made by others, including some pre-1952 United Artists material, an Alfred Hitchcock feature originally released by Warner Bros. - Rope, and the UK rights to most of the RKO Pictures library. Through its Focus Features division, Universal owns most ancillary rights to The Return of the Pink Panther (originally a UA release). Universal also owns the film rights to the Hanna-Barbera characters of The Jetsons, The Flintstones, Yogi Bear and Dick Dastardly and Muttley. They also own a theme park character license for Scooby-Doo.
For several years some of these junior partners carried considerable weight within Universal; inevitably factions and rivalries were the rule. At least one version of corporate history claims that the twenty-year-old Irving Thalberg rose so quickly because he told subordinates that he alone spoke for Carl Laemmle in making production decisions, while the others were more concerned with battling among themselves.