Twentieth Century Fox Film Corporation History

Company History:

Twentieth Century Fox Film Corporation is a subsidiary of Fox Inc., which is owned by media mogul Rupert Murdoch's News Corporation Ltd. Throughout its long history, the company has enjoyed a reputation as a major Hollywood motion picture studio. It produced some of the more prominent box-office hits--such as The Sound of Music and Star Wars--and has expanded into related areas of the entertainment industry through the development of subsidiaries such as Fox Animation Inc. and Twentieth Century Fox Home Entertainment.

William Fox and his Nickelodeons

In 1904 William Fox, a 25-year-old Hungarian immigrant, bought his first nickelodeon, an early form of movie theater, in New York City. Within a few years Fox and two partners, B.S. Moss and Sol Brill, had parlayed their success into a chain of 25 nickelodeons.

The partners soon opened the Greater New York Film Rental Company, and then in 1913, concerned that the demand for movies had begun to outstrip supply, they organized the Box Office Attraction Company to begin producing their own movies. In 1915 Fox founded the Fox Film Corporation to produce, distribute, and exhibit movies and moved his operation to California, where he believed the temperate climate would be better suited to film production.

In 1925 Fox Films relocated to its fourth California location when Fox purchased the 250 acres of land in Hollywood which was to become the company's permanent home. In 1929 Fox Films bought 55 percent of Loew's Inc., then the parent company of MGM, but was later forced by the government to sell that interest.

After several years of steady growth, the company experienced a series of shake-ups beginning in 1927, and in 1930 a group of stockholders ousted William Fox. Fox was replaced by Sidney R. Kent in 1932, and two years later Fox Film Corporation merged with Twentieth Century Pictures.

The Rise of the Twentieth Century Company

In 1933 Darryl F. Zanuck, head of production at Warner Brothers, had joined Joseph M. Schenck, head of United Artists, in forming the Twentieth Century Company. With Schenck as the administrator and Zanuck head of production, the Twentieth Century Company made 18 films in 18 months, including The House of Rothschild, The Affairs of Cellini, and Les Miserables. During this time, Twentieth Century began tapping into current news events for subject matter, with releases like the gangster films Little Caesar and Public Enemy. When the company merged with Fox Film Corporation in 1935, Zanuck became vice-president in charge of production of the new Twentieth Century Fox Film Corporation.

The company distinguished itself by producing two Academy Award-winning films during this time, The Grapes of Wrath in 1940 and How Green Was My Valley in 1941. Zanuck served as a lieutenant colonel during World War II, making training and combat documentary films. He was awarded the Legion of Merit for his wartime services.

After the war, Twentieth Century Fox produced such hits as The Snows of Kilimanjaro, Winged Victory, Twelve O'Clock High, The Razor's Edge, and All About Eve. Zanuck also attacked controversial issues in several financially successful movies, proving that audiences would not shy away from such topics as mental illness, race relations, and anti-Semitism with The Snake Pit, Pinky, and Gentleman's Agreement.

Challenges of the 1950s

By the early 1950s Hollywood's heyday was being eclipsed by the advent of television; attendance at movie theaters declined sharply, and film production declined along with it. Studios like Twentieth Century Fox could no longer afford to maintain exclusive contracts with directors and film stars. In 1953 Zanuck began producing all the studio's films in wide-screen CinemaScope, but the attraction of this technology did not compensate for the lack of box office hits. Frustrated, Zanuck left the company in 1956 to become an independent film producer in Paris.

The company replaced Zanuck with Spyros Skouras, a well-known theater owner. Skouras took over the company during a very bleak period. Between 1959 and 1961, Twentieth Century Fox lost $48.5 million; in 1962 it lost $39.8 million on revenues of $96.4 million. One immediate source of trouble was the production of Cleopatra. From an estimated cost of approximately $7 million in 1961, the film's total expenditures ballooned to $41.5 million. The company poured money into the production, even selling 334 acres of land in Los Angeles's Fox Hills section to help finance it, but this still wasn't enough.

In 1962 Zanuck, still one of the company's largest stockholders, persuaded his fellow-stockholders not to liquidate the business and returned to replace Skouras as president. Zanuck's stability and professionalism soon bolstered the company's waning image. More importantly, however, Zanuck brought in quick cash. The Longest Day, an epic film about the D-Day landings at Normandy Beach, made by Zanuck's own production company in Europe, was released through Twentieth Century Fox. A smash hit nominated for an Academy Award, the film brought in enough revenue to allow the company to begin making movies again in 1963.

Blockbusters of the 1960s

That same year Zanuck made his son Richard vice-president in charge of production. Only 28 years old, the younger Zanuck began making pictures with modest budgets, producing 20 movies in 14 months, and once revenues from these films began to accumulate, the company started more expensive productions. Unlike other movie makers at the time, the Zanucks continued to favor big, expensive production extravaganzas. Forgetting the failure of Cleopatra, the two men planned to release as many big pictures in as short a time as they could, hoping for a hit to keep the company solvent. This "blockbuster" strategy was one most other studios had abandoned because of the risk involved.

The release of The Sound of Music in 1964 appeared to vindicate the Zanucks' strategy. The film became one of the top ten box office hits ever, bringing Twentieth Century Fox more than $79 million in revenues. Only a year and a half after its release, the movie had already outgrossed Gone With the Wind, the box office champion for nearly 27 years.

By the mid-1960s, Twentieth Century Fox had also grown into one of the largest television producers. During the 1966-1967 season, Twentieth Century Fox Television placed 12 shows on network TV. The firm also began to distribute its feature films to television. In one of the largest deals of the time, Fox leased 17 pictures to ABC for $19 million, including Cleopatra, The Longest Day, The Agony and the Ecstasy, and Those Magnificent Men in Their Flying Machines.

With revenues garnered from television and The Sound of Music, the Zanucks went on to produce more lavish, big-budget movies such as Hello, Dolly!, Dr. Dolittle, and Tora! Tora! Tora! The success of The Sound of Music had fueled the Zanucks belief that expensive spectaculars were the best way to make money in the industry. In 1969 Darryl Zanuck appointed his son president of Twentieth Century Fox while he remained CEO.

However, Dr. Dolittle and Tora! Tora! Tora! turned out to be two of the biggest box office losers in the history of Hollywood; in 1969 Twentieth Century Fox's operating losses amounted to $36 million, and for the first nine months of the following year losses came to nearly $21 million.

Diversification in the 1970s

The financial strain, as well as creative differences, sparked a proxy fight for control of the company in 1970. Following a family feud, with Richard Zanuck and his mother opposing Darryl Zanuck, Richard was forced to resign. Four months later, Darryl Zanuck himself stepped down as chairman. William T. Gossett, an active boardmember and Detroit lawyer, became chairman. Richard Zanuck went on to produce several blockbuster movies, including Jaws and The Sting, for MCA's Universal Studios.

In 1971 Dennis C. Stanfill, a Twentieth Century Fox vice-president and a former Rhodes scholar, was named chairman and CEO, and later assumed the position of president. With a hands-on approach, Stanfill began a wide-ranging diversification program into the record business, broadcasting, film processing, and theme parks. Twentieth Century Fox's most important acquisitions during this time included a string of theaters in Australia and New Zealand, along with the addition of one NBC and two ABC affiliates to its chain of television stations across the United States.

In 1973 Stanfill hired Alan Ladd, Jr. to head the company's film division. Under Ladd's direction. Twentieth Century Fox produced a number of very successful movies, including The Poseidon Adventure, Young Frankenstein, and The Towering Inferno, a joint release with Warner.

More importantly, however, Ladd also invested $10 million to produce a script that other large studios had turned down. In 1977, Star Wars became the biggest box office hit in film history and made over $200 million by the end of its first year. During the next five years, company profits quadrupled and its movies were nominated for 33 Academy Awards.

With profits from Star Wars, Stanfill accelerated his diversification program, buying Coca-Cola Bottling Midwest for $27 million; Aspen Skiing, the largest ski-resort operator in the United States, for $48 million; and Pebble Beach Corporation, the owner of a resort on the Monterey Peninsula in California, for $72 million. These acquisitions were meant to allow the company to reduce its reliance on film revenues.

Citing differences with Stanfill, Ladd left Twentieth Century Fox in 1979. In January 1980 Sherry Lansing was hired to replace him, becoming the first female to head the production office of a major motion picture studio. She had previously supervised the production of both The China Syndrome and Kramer vs. Kramer at Columbia Pictures. Two weeks before her appointment, Darryl Zanuck died in Palm Springs, California.

The Troubled 1980s

The release of movies like Norma Rae, Breaking Away, Alien, and The Empire Strikes Back made money for the company. However, the company also experienced disappointing box office sales from several films, including The Rose and I Ought To Be in Pictures. In 1980 operating income dropped ten percent and entertainment profits (which accounted for 56 percent of operating income) declined by 18 percent. In late 1980, when outside groups began to purchase large amounts of company stock, Stanfill initiated a management-led leveraged buyout to prevent a hostile takeover attempt.

In early 1981 Stanfill's plan collapsed. In a move that took the film industry by surprise, oil magnate Marvin Davis and silent partner Marc Rich hastily formed a company called TCF Holdings, Inc., which bid $722 million for Twentieth Century Fox. Borrowing heavily, Davis put up only $55 million of his own money. The purchase was completed in June of the same year. Complaining of interference, Stanfill retired in July and sued Twentieth Century Fox for breach of contract. The $22 million suit was settled for $4 million. Vice-chairman Alan Hirschfield replaced Stanfill as chairman.

In the early 1980s Twentieth Century Fox's financial position deteriorated rapidly. Several movies, including Modern Problems, Six Pack, and Quest for Fire, never recouped their production costs. Moreover, Davis burdened the company with $650 million in debt to help pay back the loans TCI had secured to buy Twentieth Century Fox. To reduce this debt. Davis sold the soft drink-bottling subsidiary and the Australian theater chain. He also arranged a joint venture with Aetna Life & Casualty to develop Twentieth Century Fox's real estate properties.

In 1982, the situation went from bad to worse. Sherry Lansing and a number of other top-level officials left the company, reportedly due to Davis's interference in the creative process and his abrupt management style. Disagreements between Davis and Hirschfield also began to increase in intensity. Moreover, Aetna terminated its interest in the joint venture and sued Davis after a deal between Davis and Aetna (unrelated to Twentieth Century Fox) soured.

In October 1984, Davis bought the other 50 percent of TCF from Marc Rich, who had fled to Switzerland following his indictment for tax evasion and fraud. Davis paid $116 million for Rich's share of the company.

During this time, Davis hired Barry Diller from Paramount to replace Hirschfield as chairman, guaranteeing him $3 million salary and a 25 percent interest in the company. Diller inherited a beleaguered company, so bad, in fact, that Diller later threatened to sue Davis, claiming that he misrepresented the studio's difficulties when he was hired. Still, Diller's expertise quickly began to turn the company around, as he mounted a program to increase film production and sought financing from a variety of different sources.

Enter Rupert Murdoch

Then, in March 1985, Australian media mogul Rupert Murdoch advanced Twentieth Century Fox $88 million after buying a half interest in the company for $132 million. Murdoch assumed an active role at the company from the beginning. He acquired seven television stations from Metromedia, Inc. for $2 billion with the intention of drawing on Twentieth Century Fox's extensive library of films and TV shows. When Davis expressed concerns about the company's film operation being tied too closely to a television network, Murdoch offered to buy him out. And so, in September 1985, Davis agreed to sell his interest for $325 million, keeping some of Twentieth Century Fox's valuable real estate.

Twentieth Century Fox Film finally enjoyed some success during the late 1980s. In late 1987 Diller oversaw the release of two big hits--Broadcast News and Wall Street--and his involvement with the studio lured back top talent that had defected elsewhere during the Davis years. A continuing string of successful films like Big and Working Girl boosted the company's earnings by 35 percent. Die Hard, starring Bruce Willis, grossed more than $80 million in 1989, and the film War of the Roses, starring Michael Douglas, Kathleen Turner, and Danny DeVito, was also a big box-office success that year.

Yet, Twentieth Century Fox Film's movie profits were eroded when Diller demonstrated more interest in the television side of the business than in film making. Specifically, Diller concentrated on bolstering the Fox Broadcasting Company to the detriment of film production. As one theatrical agent explained to Forbes, "Barry's been distracted."

The company then hired Joe Roth, a film director, as the studio's head, charging him with making Twentieth Century Fox Film more productive. Roth was indeed successful, producing multimillion-dollar blockbusters such as Home Alone and Edward Scissorhands. Soon Twentieth Century Fox Film placed first among the studios, controlling more than 18 percent of the box-office share in 1991. Roth's hallmark was his ability to produce entertaining films at a low cost. He frequently chose to produce movies rejected by other studios and encouraged overseas sales to conserve costs. The film remained all important to Roth, who told Forbes, "You have to start from the story. Then you manage the math."

Management Shake-Ups in the 1990s

Roth left Twentieth Century Fox in 1992 to become an independent producer for Walt Disney studios. The former president of the Fox Entertainment Group, Peter Chernin, replaced Roth as president. As management changed, confusion resulted regarding the responsibility for making key decisions at the Twentieth Century Fox Film studios. Rupert Murdoch himself suspended production of Steven Seagal's Man of Honor, the actor's directorial debut. Actor Macaulay Culkin's father appeared to be making production decisions on his son's thriller The Good Son. Even new president Chernin stepped in to decline the Madonna film Angie, I Says when its producers would not comply with a re-write request.

More management changes followed when Strauss Zelnick, president and chief operating officer since 1989, resigned after accepting a position as president and chief executive of an entertainment software company in 1993. Bill Mechanic then moved from the Disney studios, where he served as president of the home video division, to assume the presidency of Twentieth Century Fox Film Corporation. As Zelnick's successor, Mechanic came to the studio with an extensive video background. In his new position, Mechanic was responsible not only for Fox's home video activities, but for production, marketing, distribution, international theatrical activities, and pay TV as well.

Exploring New Products and Positions

Unlike some major studios, Twentieth Century Fox Film supported the development of pay-per-view (PPV) television in 1993, a service through which customers could order new movies over the telephone for in-home viewing on their televisions. Although the company was not considering pay-per-view as a venue for new movie releases, the studio developed promotional and marketing strategies for its pay-per-view releases. For example, the company engineered retail tie-ins with the Improv, a comedy club, for the pay-per-view showings of such comedies as Hot Shots! Part Deaux! and Robin Hood: Men in Tights. In 1994, Twentieth Century-Fox Film negotiated a pay-per-view distribution agreement with DirecTV.

Twentieth Century Fox Film also established an "interactive division" that year. Fox's prior experience with video games had met with mixed results, as earlier forays in the pre-Nintendo days fell victim to the video game "crash" of the mid-1980s. Since then, Fox had typically licensed its film properties to video developers. This practice slowed, however, as the announcement of the new interactive division grew closer. One of Twentieth Century Fox Film's first products in this arena was based on its movie The Pagemaster, an animated adventure set in a library. The Pagemaster game product was made available for a variety of platforms, including Sega Genesis, Nintendo Super Entertainment Systems, and Nintendo Game Boy. The company selected Al Ovadia, president of licensing and merchandising for the studio, to lead the new division.

Twentieth Century Fox Film launched another new enterprise in 1994--an animation unit headquartered in Phoenix, Arizona. Called Fox Animation Inc., the new unit expected to issue one animated feature every 18 months or so. The studio recruited exceptional talent to lead its animation division, in particular Don Bluth and Gary Goldman, creators of such animated hits as An American Tail and Land before Time.

A year later, Twentieth Century Fox Film created yet another new division, Twentieth Century Fox Home Entertainment, to distribute its video and interactive programming products. Bob DeLellis assumed the presidency of Twentieth Century Fox Home Entertainment North America, and Jeff Yapp served as president of the division's international operations.

In 1996 Twentieth Century Fox Film received the largest film financing in history through Citicorp, a bank holding company. The studio intended to use the capital for film production and acquisitions. "With the help of Citicorp," explained Simon Bax, chief financial officer of Fox Filmed Entertainment, "we were able to put together an innovative film financing structure on attractive terms. As a major studio and as a part of the News Corporation, we were able to put in place a mechanism for funding our full production slate over the next three years, while providing investors with an attractive return on their investment."

In 1997 Twentieth Century Fox Film's animation unit released its first feature-length production, providing Disney studios with stiff competition. Anastasia, the story of the Russian tsarina thought to have survived the massacre of the Romanovs, received promotion valued at about $200 million from a variety of sponsors. Pictures of characters from Anastasia appeared on the packages of products from Dole Foods, while Hershey manufactured Anastasia-themed chocolate bars. Other products offered toy coupons or movie ticket orders. Anastasia even had a float in the Macy's Thanksgiving Parade that year. Mechanic had great faith in the success of the unit's first feature. "If you said to me I had to put my job on the line for any movie, I would put it on this one," the executive told Fortune. Anastasia made in excess of $58 million at the box office.

Twentieth Century Fox Film distributed Anastasia through pay-per-view television during the summer of 1998. Service providers were pleased with the decision, since it attracted a new audience for them. "Anastasia could be the building block for the distribution of more nontraditional PPV programming in the future," Jamie McCabe, a vice-president of worldwide PPV, told Multichannel News.

In 1998 Twentieth Century Fox Film experienced one of its greatest successes to date, producing the Oscar-winning disaster picture Titanic. Breaking all box-office attendance records, the movie opened a merchandising treasure chest for the studio, which licensed merchandise, such as costumes and life jackets, to be sold through the catalog firm of J. Peterman. Other licensing agreements for t-shirts and collectibles followed, as did some unauthorized material. In fact, Twentieth Century Fox Film initiated litigation against Suarez Corporation Industries, located in Ohio and doing business as Lindenwold Fine Jewelers, for marketing a copy of a necklace featured in the movie.

A Hollywood institution, Twentieth Century Fox Film was likely to produce its share of blockbusters in the future. As technologies progressed, the company also planned to make its mark on other related areas of the entertainment industry, including interactive video games and animation.

Principal Subsidiaries: CBS/Fox Video; Twentieth Century-Fox Film Corp.

Further Reading:

• Benezra, Karen, and T. L. Stanley, "Fox Fire: "Anastasia" Scores Fox $200 Million in Promo Support," Brandweek, July 7, 1997, p. 1.
• Carvell, Tim, "The Fox Vs. the Mouse," Fortune, November 24, 1997, p. 119.
• "Citicorp Arranges Largest Film Financing Ever for Twentieth Century Fox Corporation," Business Wire, August 8, 1996, p. 8081294.
• "DirecTV Announced DBS Distribution Deal with Twentieth Century Fox," Communications Daily, December 28, 1994, p. 6.
• "DirecTV Signed Pay-Per-View Distribution Agreement with Twentieth Century Fox," Communications Daily, December 22, 1994, p. 6.
• Dunne, John Gregory. The Studio, New York: Straus & Giroux, 1969.
• Fitzpatrick, Eileen, "Fox Interactive Leaps Quickly into Game Software Fray," Billboard, June 4, 1994, p. 9.
• Goldstein, Seth, "Twentieth Century Fox Forms Distrib Arm for Growing Biz," Billboard, May 6, 1995 , p. 7.
• Greenstein, Jane, "Fox to Form Game Division Within Months," Video Business, March 18, 1994, p. 1.
• Gubernick, Lisa, "'Barry's Been Distracted'," Forbes, January 8, 1990, p. 42.
• ------, "The Greats of Roth," Forbes, June 24, 1991, p. 132.
• Hettrick, Scott, "Mechanic Moving from Disney to Lead Fox Studio," Video Business, October 8, 1993, p. 1.
• Kilday, Gregg, "Hollywood Shuffle," Entertainment Weekly, November 20, 1992, p. 10.
• ------, "Who's the Boss at Fox?," Entertainment Weekly, December 4, 1992, p. 7.
• Madden, John, "Keeping 'Titanic' Afloat; Digital Images, Intranet Database Help Movie Crew Track Assets, " PC Week, April 6, 1998, p. 27.
• McCullaugh, Jim, "Mechanic Jumps from Disney VID to Rival Fox," Billboard, October 9, 1993, p. 6.
• Ryan, Thomas J., "Studio Sues Suarez over 'Titanic' Necklace Knockoff," WWD, March 13, 1998, p. 5.
• Spring, Greg, "Fox Animation Unit Picks Phoenix for Headquarters; Site Location Was Personal Choice of Unit's Head Men," Los Angeles Business Journal, August 8, 1994, p. 12.
• "Strauss Zelnick," CD-ROM News Extra, August 1993, p. 22.
• Thomas, Tony, and Aubrey Solomon, The Films of 20th Century-Fox: A Pictorial History, Secaucus, N.J.: Citadel Press, 1985.
• Umstead, R. Thomas, "'Anastasia' Set for PPV Distribution," Multichannel News, May 25, 1998, p. 24.
• ------, "Universal, Fox to Back PPV with Marketing Campaign," Multichannel News, November 29, 1993, p. 88.

Source: International Directory of Company Histories, Vol. 25. St. James Press, 1999.

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