William Goetz

William Goetz, a producer and studio boss who revolutionized the industry with the development of the profit participation deal, was born on March 24, 1903, in Philadelphia, Pennsylvania, to ship's purser Theodore Goetz and his wife Fanny. William was the youngest in a brood of eight children (six boys and two girls). After Fanny's death in 1913 Theodore abandoned his family, and William was raised by his older brothers. All of the Goetz brothers wound up in the movie business. Two of his brothers worked at Monogram and were among the founders of Republic Pictures (see Herbert J. Yates), and another worked for Corinne Griffith Productions. In 1924 Goetz took advantage of the well-known Hollywood practice of nepotism and moved to Hollywood where his brothers got him a job at Corinne Griffith Productions as a crew member. Within three years he had worked his way up to associate producer. Goetz then moved on to production jobs at MGM and Paramount before becoming an associate producer at Fox Films in March 1930. The first movies Goetz produced at Fox were two Spanish-language westerns, El último de los Vargas (1930), based on a Zane Grey novel, and Figaro and His Great Day (1931), both of which starred George J. Lewis as "Jorge Lewis." A dashing man with an earthy sense of humor, Goetz married Louis B. Mayer's daughter Edith in 1930. Edith said her husband was a fast talker who persistently telephoned her for date after they met at L.A.'s Ambassador Hotel. When Goetz asked Edith to marry him, Mayer objected, wanting to know how he was going to support her. Goetz won Mayer's consent when he replied, "If necessary, Mr. Mayer, with my own two hands." The two men would continue to argue about the proposed marriage right up until the ceremony itself. Their marriage was Hollywood's wedding of the year. William and Edith's marriage lasted until his death, and they had two daughters. His ultra-conservative father-in-law would eventually disinherit Edith, perhaps because of his son-in-law's key role in undermining the studio system in the 1950s, or because he was a staunch Democrat, or possibly due to the brothers' ties to a man with reputed underworld connections (although Mayer's ostensible boss Nicholas Schenck, Chairman of Loew's Inc. had the same connections). One of the most influential figures in Goetz's life would prove to be Warner Bros.' production chief Darryl F. Zanuck, who had remarkably risen through the ranks of Hollywood on his own merits and who had a natural disdain for nepotism. Nearly every one of Warner Bros.' successes after 1924 could be directly credited to the workaholic (many would add sexoholic) producer-writer-production chief. In 1933 Zanuck had quit Warners after a long-simmering rift with Harry M. Warner. Despite being offered several positions at other studios, Zanuck had a burning desire to run his own studio and was approached by the affable Joseph M. Schenck with an offer that would result in the creation of Twentieth Century Pictures. The deal was a conglomeration of backers, each with his own agenda, but each having enormous confidence in Zanuck's enviable track record of delivering a prodigious number of hits. Twentieth Century Pictures was created as a partnership between Louis B. Mayer, former United Artists president Joseph Schenck, and Loew's Inc. (the parent company of MGM) head Nicholas Schenck (Joe's brother and officially Mayer's boss), who arranged for underwriting by the Bank of America with additional backing by the cunningly abrasive Herbert J. Yates, who keenly sought out guaranteed business for his Consolidated Film Labs (and who would soon form Republic Pictures out of a merger among Mascot Pictures, Monogram Pictures and Liberty Pictures when bankrupt producer Mack Sennett's studio became available). Goetz's involvement was based on a string Mayer attached for his money: he wanted his son-in-law out from under his thumb. Whatever talents William Goetz possessed as a young man in Hollywood were lost on his father-in-law. Twentieth Century merged with ailing Fox Films (which owned a desirable theater chain) in 1935, and Goetz was named vice president of Twentieth Century-Fox, with Zanuck over him as production head and Joe Schenck serving as president. In its infancy the studio relied heavily on the talents of a small roster of popular stars such as Tyrone Power, Don Ameche and Alice Faye, but found a gold mine in an adorable and monumentally talented six-year-old moppet named Shirley Temple, who literally kept the ink from turning red. Among the 20th Century-Fox pictures Goetz personally produced were The House of Rothschild (1934), for which he received an Academy Award nomination for Best Picture along with Zanuck; Les Misérables (1935), a classic Hollywood production of Victor Hugo's novel; and a hit adaptation of Jack London's Call of the Wild (1935), which starred MGM loan-out Clark Gable, Loretta Young (who got pregnant by Gable during production) and Jack Oakie. Goetz's stock at the studio began to rise and he gained a reputation for being an efficient, unassuming producer who (most importantly) could bring a project in at or under budget. At the outbreak of WWII, Zanuck eagerly accepted an army commission and placed Goetz as acting head of the studio in 1942. As production head, Goetz was responsible for some prestigious films that brought credit to both he and the studio, including Guadalcanal Diary (1943) and the The Song of Bernadette (1943), which was nominated for 12 Academy Awards and won four, including a Best Actress Oscar for Jennifer Jones, who would eventually become the wife of Goetz's then brother-in-law, David O. Selznick. Like his father-in-law Louis B. Mayer, Goetz emphasized quality to distinguish his product in the market, and he did not flinch from spending money to achieve it. Unlike Mayer, however, Goetz learned the mechanics of bringing a project through to completion. Hollywood is a town where paranoid bosses push many ambitious men out of their positions, though, and 20th Century-Fox was no different. Zanuck still regarded Goetz as an unimaginative administrator and began hearing rumors that Goetz was growing ambitious. Goetz, however, resigned upon Zanuck's return in 1943 to avoid any conflict. Zanuck was also said to be furious that Goetz had turned his special 4:00 p.m. casting couch interview room into a storage area. Mayer, belatedly recognizing Goetz's production talents, offered him a chance to be the head of MGM's creative development, but Goetz told his wife that he had to turn her father down, since the first thing he would have done at MGM was fire Mayer. Zanuck's 1942-43 absence had given Goetz a taste of running a studio, and since there were no jobs on offer to become a studio boss, he created International Pictures in 1943 with lawyer Leo Spitz, who had been an adviser to Goetz's brother-in-law David O. Selznick. One of the great independent producers, Selznick had produced the most successful movie of all time, Gone with the Wind (1939), which he found impossible to bring to the screen without help from Mayer, given MGM's irreplaceable Rhett Butler: Gable. Like Zanuck a dozen years earlier, Goetz opted to strike out on his own with International Pictures (Selznick was furious about that name, believing it conflicted with his own Selznick International Pictures). During its brief life as an independent company, International Pictures produced ten middling films distributed by United Artists before merging with Universal Pictures to create Universal-International Pictures in 1945, with Goetz being appointed production chief. As U-I studio boss, Goetz partnered with British producer J. Arthur Rank to release Rank's British-produced films in America. A major stockholder, Rank at one point tried to take over the studio, but he proved unsuccessful. Under Goetz's direction, U-I became known for family fare and well-crafted B-pictures, including the long-running Bud Abbott and Lou Costello series of comedies, the "Francis the Talking Mule" series and the popular "Ma and Pa Kettle" movies. These would eventually become repetitious and Goetz had no particular fondness for inane comedies, but they were money in the bank for U-I. Goetz participated in the 1946 Waldorf Conference with his father-in-law, MGM capo di tutti capi Nicholas Schenck, and other top studio executives. The conference was a studio boss pow-wow called by Motion Pictures Producers Association President Eric Johnston, who was in a panic over the so-called "Hollywood Ten", a group of Hollywood creative people who were indicted after failing to testify before the House Un-American Activities Committee looking for evidence of Communist "subversion" in the motion picture industry. It was at the Waldorf Conference that the Hollywood blacklist was devised, with the aim of ridding the industry of any Communistsm real, suspected or imagined. What it did do was rein in the effect of New Deal progressives who may have proved too radical for the movie moguls' tastes when it came to labor relations. Some commentators believe the real deal struck at the Waldorf Conference was an agreement to break the militants in the craft unions by tarring them as "Reds". An ancillary part of this deal, as the argument goes, was an agreement to place in control of the unions men who had strong ties to organized crime, in order for them to offer the bosses sweetheart deals and put an end to the labor unrest that Hollywood experienced as World War II came to a close. The studios had already suffered through a 13-week strike the year before. The strike was launched on March 12, 1945, when the Conference of Studio Unions (CSU) went out in protest of the studios' delay in renewing the contract for interior decorators. The strike had been opposed by IATSE, which had been under the control of the Chicago mob in the 1930s and early 1940s. The studios had surreptitiously called on Mafia muscle to attempt to break up the strike. CSU officials were branded "Reds" and "Communist subversives" and harassed. Ronald Reagan, the future Screen Actors Guild (SAG) president, had volunteered to be an informer against the CSU, snitching to the FBI on its activities. Goetz signed on to the blacklist, perhaps realizing he could not alienate his fellow studio bosses if he was to establish Universal-International Pictures on a sound footing, as he needed to curry their favor to get loan-outs of their stars. U-I's major problem was that it had no box-office stars. Rock Hudson, Tony Curtis and Jeff Chandler were contract players, but their careers had not yet bloomed. U-I thus had to rely on the good will of the other studio bosses until it could establish itself as a major player. In 1949 Goetz and his good friend, super-agent Lew Wasserman, engineered the first profit participation deal in motion picture history. U-I wanted Wasserman's client, James Stewart, recently out of his contract at MGM, to appear in Anthony Mann's new Western, Winchester '73 (1950). Goetz felt he was unable to obtain funds necessary for such a costly production up front, so he signed Stewart to a deal that gave him half of the profits of the picture rather than a set fee. Wasserman had wanted to establish Stewart, an independent contractor, as a corporation to protect him from the then-prohibitive income tax, which topped out at 90% for earners of Stewart's caliber. By making him a producer, Wasserman put Stewart in a lower tax-rate via a production company that would take a tax-favored stake in his movies in lieu of a personal fee. Stewart's production company would then be taxed at the lower corporate rate. Stewart netted $750,000 from the deal, with U-I netting the same amount (while the deal cost the studio a greater percentage of profits from a hit, it was also insulated from the losses that possibly could be generated by a failure, as it lowered production costs). Regardless, it was a fortuitous deal since the picture was, deservedly, a smash hit. A profit participation deal was again used on U-I's excellent Stewart-Mann western Bend of the River (1952). The profit participation deal was revolutionary--- it would ultimately unravel the entire studio system, and would soon be copied by other independent-minded stars. Many of them would refuse to sign new contracts with their studios in order to go independent and take advantage of percentage deals. It proved to be the straw that finally broke the studio system's back (having lost proprietary theater ownership in the 1950s was another crippling blow, along with the competition from a new medium, television). With profit participation deals, power shifted from the studios to the stars and their agents. Studios now became financiers and renters of production facilities. Although U-I shared in the profits of its profit-participation contracts with Stewart, who became a top-10 box office star for the first time in the 1950s appearing in U-I westerns, it did not reverse a financial slump the studio underwent in the early 1950s. U-I was financially weak and succumbed to a 1952 take-over by Decca Records. Wasserman's MCA, an entertainment conglomerate that began as a talent agency but thrived as a leading TV producer due to a secret waiver granted it by SAG when it was headed by Wasserman client Ronald Reagan, ultimately would buy U-I by acquiring Decca Records in 1962 (Wasserman and MCA chairman Jules Stein reportedly had close ties to the Chicago mob; as late as 1984, a Mafia enforcer belonging to John Gotti's Gambino crime family with "a past history of arranging narcotics smuggling," according to the U.S. Drug Enforcement Agency, was serving as a middleman for MCA despite having no prior experience in the music industry. An investigation into MCA in the mid-'80s was quashed by then-President Ronald Reagan's Justice Department. Wasserman had remained close to Reagan, a man he had made a millionaire by giving him an ownership stake in the TV series Death Valley Days (1952) and also through a land deal. Through Wasserman, Reagan had become wealthy enough to pursue a political career after his acting career ended in 1964. Despite being a liberal Democrat, Wasserman raised money for Reagan's first gubernatorial campaign as a right-wing Republican and served as the chief fundraiser for his presidential library. Goetz left the studio in 1954 and went independent, having obtained a distribution deal through Columbia for his William Goetz Productions. Films produced by the independent Goetz were nominated three times for Golden Globes: Sayonara (1957), which garnered Academy Award nominations for Goetz, director Joshua Logan, star Marlon Brando and Best Supporting Oscars for featured players Red Buttons and Miyoshi Umeki; Me and the Colonel (1958), a Holocaust comedy starring Danny Kaye; and Song Without End (1960), a musical about composer Franz Liszt co-directed by George Cukor, which won Goetz the Best Musical Song from the Hollywood Foreign Press Association, and an Oscar for Best Music. Like many movie moguls, including Nicholas Schenck and his father-in-law, Goetz raised thoroughbreds. He bought his first racing stock from L.B, a famous horsebreeder who got out of the racing business after World War II, as it was bad for his image. Goetz's horse Your Host won the 1950 Santa Anita Derby and subsequently sired Kelso, one of the all-time money winners. Goetz terminated his production company in 1961 after making the Glenn Ford service comedy Cry for Happy (1961), but he came out of retirement in 1964 to take the job of vice president at Seven Arts Productions Ltd., a Canadian-controlled production and distribution corporation. Goetz possibly took the job as a favor to his friend Lew Wasserman, as the major stockholder in Seven Arts, Louis Chesler, had ties to the Chicago mob, as did Wasserman in his early days as a musician and recording artists' agent. Significantly, Chesler had served on the board of directors of Allied Artists, a subsidiary of his brothers' defunct Monogram Pictures. Chesler, an aficionado of horse-racing like Goetz and a reputed gambler, was the driving force behind Seven Arts Productions, which was capitalized on Toronto's stock exchange. In addition to investing in the entertainment field, the 300-pound entrepreneur was a major housing developer in Florida. Chesler was described as a front or associate of underworld crime bosses Vito Genovese and Meyer Lansky through the Florida real estate company General Development Corp., which he owned with another Lasky associate, Wallace Groves. General Development's board of directors included gangster "Trigger Mike" Coppola and Max Orovitz, who was Lansky's stockbroker. Another partner was Eddie DeBartolo, a shopping mall developer and racetrack owner with a taste for high-stakes gambling. DeBartolo, who bought the San Francisco 49ers professional football team for his son, Edward DeBartolo Jr., was close to Lansky and Lansky associates Carlos Marcello, who controlled Florida's narcotics and gambling, and New Orleans Mafia boss Santo Trafficante Jr.. Both Marcello and Trafficante, who owed fealty to the Chicago mob, had been recruited via Chicago boss Sam Giancana to assassinate Cuban leader Fidel Castro for the CIA, which they were glad to do, as Castro had booted them and Lansky out of Cuba--where they controlled lucrative gambling, narcotics, prostitution and other criminal activities--after the 1959 revolution (some conspiracy theorists place the responsibility for President John F. Kennedy's assassination on Marcello and Trafficante, though that has never been proven.) Through General Development Corp., Chesler and Groves introduced gambling to the Bahamas, buying half of Grand Bahama Island and setting up the Grand Bahama Development Co. in the early 1960s to build a hotel cum casino. It was through Chesler that the Bahamian gaming business was penetrated by Lansky, looking for a new territory after losing Cuba, and Dino Cellini, a mob banker described as Lansky's right-hand man, the person he most trusted with the receipts from his gambling operations. One of Chesler's partners in the Bahamas was Carroll Rosenbloom, owner of the Los Angeles Rams and one of the three largest shareholders in Seven Arts, who was described as a notorious gambler. Although Chesler is credited with opening up the British crown colony to gambling, having done most of the schmoozing and covert bribery through the awarding of "consulting fees" to well-connected politicians and colonial bureaucrats, he was forced out of the Bahamas in a power struggle in 1964. Chesler's story, well known in the 1960s, likely was one of the inspirations for Michael Corleone's Cuban sojourn and business dealings with Hyman Roth--a character based on Meyer Lansky--in The Godfather: Part II (1974). Lansky's gang ran the "skim" of Bahamian casino money that was repatriated to mob banks in Miami controlled by Cellini, who had to work in London and Rome, as he was persona non grata in Florida and the Bahamas. Subsequently, development in the Bahamas hit a downturn and the Canadian holding company Atlantic Acceptance, a major source of capital, went bankrupt in June 1965. The company's $104-million default touched off an international financial scandal. Although Chesler liquidated the rest of his holdings by the end of 1966, he had put his stamp on the Bahamas by creating the island's gaming industry and introducing the Lansky gang to the islands. In 1967 his company, now called Seven Arts Ltd., acquired Jack L. Warner's controlling interest in Warner Bros. Pictures and other interests, including Warner Bros. Records and Reprise Records (the $84-million price tag of the acquisitions was worth approximately $640 million in 2003 dollars). The company was renamed Warner Bros-Seven Arts. The ambitious studio bought Atlantic Records for $17 million in stock that same year but, crippled by debt, the company itself was acquired by the conglomerate Kinney National Services Inc. in 1969, the year of Goetz's death. One of the major shareholders in Warner Bros-Seven Arts was the Bahamas- and Switzerland-based mutual fund Investors Overseas Service (IOS), owned by Bernard Cornfeld, a reputed money launderer for Lansky and the mob. Allegedly in cahoots with Dino Cellini, swindler Robert Vesco took over IOS during the period Cornfeld was being held in prison by Swiss authorities investigating fraud (nothing was proven, and he was eventually released). Vesco defrauded IOS of $224 million in 1972, while major Democratic Party figures like former California governor Edmund G. Brown and President Franklin D. Roosevelt's son James Roosevelt served on the board of directors. Vesco was no partisan; he made a huge illegal campaign contribution to President Richard Nixon's 1972 re-election committee before going on the lam. Nixon paid Vesco back by firing Robert Morgenthau, the U.S. Attorney for the southern district of New York, who was investigating Mafia money laundering through Switzerland. Morgenthau already had won a conviction against Max Orovitz for violating stock registration laws, and he was moving in on IOS' John King when he was unceremoniously sacked. Although King was later convicted, he received a relatively light sentence. While it may seem ironic that a Democrat like Goetz would be involved with a possibly mobbed-up firm, one must remember that in the mid-'60s, at least 10% and as much as 20% of the Democratic Party's revenues were derived from organized crime, as in many cities, like Chicago, the Democratic ward headquarters usually doubled as a syndicate clubhouse. The Chicago organization swung the 1960 Presidential vote in Illinois to Kennedy. The Mafia had infiltrated Hollywood in the early 1940s, and many of the moguls rubbed shoulders with organized crime figures at the racetracks they haunted and at which they contested their own horses. Steve Ross, the Kinney conglomerate owner that acquired Warner Bros-Seven Arts, himself was reputed to have Mafia connections (former Paramount production chief Robert Evans boasts of his connections to mob lawyer and Hollywood fixer Sidney Korshak, whom he was not above asking favors from, in his autobiography "The Kid Stays in the Picture"). Democratic Senator Estes Kefauver had investigated the Mafia in 1951, holding televised hearings that put mob bosses such as Frank Costello on the spot and Kefauver in the spotlight. Later, Sen. John Kennedy and his brother Robert F. Kennedy were part of the committee investigating the Teamsters Union for its links to the mob (interestingly, Kefauver beat Kennedy out for the vice presidential slot on the 1956 ticket headed by Adlai Stevenson). The Democratic establishment was more interested in investigating labor corruption than it was in elucidating and ending the mob's links with politicians and legitimate businesses and businessmen, which included Kennedy's own father Joseph P. Kennedy, who had financed rum running by Detroit's Purple Gang during Prohibition. This focus on labor to the detriment of the businessmen who actually did business with organized crime was a prejudice portrayed in Hollywood films such as On the Waterfront (1954). In "Waterfront," union officials are shown as corrupt killers, whereas the warehouse-owner-surrogate is a sort of savior to the martyred longshoreman played by Marlon Brando, who leads the flock of his co-workers away from the mobbed-up union boss Johnny Friendly into the warm bosom of the owner's warehouse at the end of the movie. (ironically, playwright Arthur Miller had written a screenplay, "The Hook," about corruption on the New York waterfront for "Waterfront" director Elia Kazan. Columbia boss Harry Cohn, an attendee of the Waldorf Conference and a supporter of the blacklist, had demanded that Miller change the corrupt union officials to Communists, as it would then make the script "pro-American." Miller refused.). Goetz's father-in-law, Louis B. Mayer, had been the driving force behind the foundation of the Academy of Motion Pictures Arts & Sciences in 1927, which he had envisioned as a company union that would forestall unionization by more militant craft guilds. Mayer, through the Academy, managed to hold off unionization until the mid-'30s, when the crafts bolted the Academy and formed their own guilds. Mayer's dream of controlling labor and keeping absolute control over labor costs was dashed, and the Academy morphed into a scientific and research organization focused on publicity. By the end of the 1930s, the New York Mafia began infiltrating Hollywood through the projectionists' union. Studio bosses such as Mayer still kept tight control over labor costs, though that power began to decline in the 1940s due to concessions made to rebellious stars. The DeHavilland decision--named after a lawsuit brought against Warner Bros. by actress Olivia de Havilland--which forbade the studios from adding on suspension time to the end of the standard seven-year contracts, also helped erode the studio's power. However, it was Goetz's and Wasserman's profit participation contract that effectively destroyed the studios, that and the loss of their profitable theater chains (Loew's Inc. managed to fend off the divestiture for years, until well after Louis B. Mayer was forced out of MGM in favor of Dore Schary by Nicholas Shenck in 1951). As the power of the vertically integrated studios waned after their Justice Department-enforced divestiture of their movie chains, agents representing the now-free serfs who were stars moved into the breach, creating independent production companies. At the same time, the power of organized crime, which began at roughly the same time as Hollywood organized itself vertically to control the chaos of movie production and distribution, apparently waxed. A major landlord in vice districts, the Mafia controlled many old inner-city theaters abandoned by the studios that were subsequently turned into grindhouses showcasing exploitation fare and later pornography after the breakdown of censorship in the 1960s and early 1970s. Corruption extended to first-run houses as well. Warner Communications executives in the 1970s were convicted of accepting kickbacks from movie theaters, a case in which Warner boss Steve Ross was considered an unindicted co-conspirator, though he vigorously denied any knowledge of wrongdoing and was never himself indicted for any crime. Goetz was never implicated in any improprieties in all his years as a movie executive. In fact, he was something of an anomaly in Hollywood. Although he was a member of one of Hollywood's royal families, Goetz was unusual in that he enforced a "no nepotism" policy in his companies. He was renowned for his erudition and good manners in an industry studded with vulgar (Columbia's Harry Cohn being a stellar example) and semi-literate moguls. He eschewed a chauffeur and drove his own car to work, where he cultivated a persona as paterfamilias (as did his father-in-law at MGM), helping his employees with personal problems. Goetz had his personal chef oversee the preparation of food at the studio fare. Goetz was known for his exquisite taste, and he and his wife were counted among the movie colony's premier art collectors, specializing in the impressionists and post-impressionists. Some of his Vincent van Gogh paintings were used in MGM's Lust for Life (1956). In 1959 the Goetzs' art collection had its own show at San Francisco's art museum, The Palace of the Legion of Honor. Speaking about Goetz, fellow art collector Billy Wilder said that he was "the very antithesis of being pompous . . . he had a funny cynicism." A respected member of the community, Goetz served as a director of the City National Bank of Beverly Hills and as a trustee of Reed College (Portland, Oregon). His last motion picture production was the mediocre Assault on a Queen (1966), scripted by Rod Serling. William Goetz contracted cancer and was treated at the Mayo Clinic. On August 15, 1969, he died in his Los Angeles home from complications of the disease. He was buried in Hillside Memorial cemetery.