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Soon, Laemmle and other disgruntled nickelodeon owners decided to avoid paying Edison by producing their own pictures. In June 1909, Laemmle started the Yankee Film Company with his brothers-in-law[7] Abe Stern and Julius Stern.[8] That company quickly evolved into the Independent Moving Pictures Company (IMP), with studios in Fort Lee, New Jersey, where many early films in America's first motion picture industry were produced in the early 20th century.[9][10][11][12] Laemmle broke with Edison's custom of refusing to give billing and screen credits to performers. By naming the movie stars, he attracted many of the leading players of the time, contributing to the creation of the star system. In 1910, he promoted Florence Lawrence, formerly known as \"The Biograph Girl\",[13] and actor King Baggot, in what may be the first instance of a studio using stars in its marketing.
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 Blind Husbands (1919) and Foolish Wives (1922), but Universal shrewdly gained a return on some of the expenditure by launching a sensational ad campaign that attracted moviegoers. Character actor Lon Chaney became a drawing card for Universal in the mid-1910s, appearing steadily in dramas. However, Chaney left Universal in 1917 because of a salary dispute, and his two biggest hits for Universal were made as isolated returns to the studio: The Hunchback of Notre Dame (1923) and The Phantom of the Opera (1925).[23]
During the early 1920s Laemmle entrusted most of Universal's production policy decisions to Irving Thalberg. Thalberg had been Laemmle's personal secretary, and Laemmle was impressed by his cogent observations of how efficiently the studio could be operated. Promoted to studio chief in 1919, Thalberg made distinct improvements of quality and prestige in Universal's output in addition to dealing with star director Erich von Stroheim's increasing inability to control the expense and length of his films, eventually firing Stroheim on October 6, 1922, six weeks into the production of Merry-Go-Round (1923) and replacing him with Rupert Julian. Louis B. Mayer lured Thalberg away from Universal in late 1922 to his own growing studio, Louis B. Mayer Productions, as vice-president in charge of production, and when Metro-Goldwyn-Mayer was formed in 1924 Thalberg continued in the same position for the new company. Without Thalberg's 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. Still, some of them were exhibited through other independent, foreign-language film distributors based in New York City without the benefit of English subtitles. Nazi persecution and a change in ownership for the parent Universal Pictures organization resulted in the dissolution of this subsidiary.
Although Universal's 1936 Show Boat (released a little over a month later) became a critical and financial success, it was not enough to save the Laemmles' involvement with the studio. They were unceremoniously removed from the company they had founded. Because the Laemmles personally oversaw production, Show Boat was released (despite the takeover) with Carl Laemmle and Carl Laemmle Jr.'s names on the credits and in the film's advertising campaign. Standard Capital's J. Cheever Cowdin had taken over as president and chairman of the board of directors and instituted severe cuts in production budgets. Joining him were British entrepreneurs C.M. Woolf and J. Arthur Rank, who bought a significant stake in the studio.[27] Gone were the big ambitions, and though Universal had a few big names under contract, those it had been cultivating, like William Wyler and Margaret Sullavan, left.
Meanwhile, producer Joe Pasternak, who had been successfully producing light musicals with young sopranos for Universal's German subsidiary, repeated his formula in the United States. Teenage singer Deanna Durbin starred in Pasternak's first American film, Three Smart Girls (1936). The film was a box-office hit and reputedly resolved the studio's financial problems. The film's success led Universal to offer her a contract, which for the first five years of her career, produced her most successful pictures.
The production arm of the studio still struggled. While there were to be a few hits like The Killers (1946) and The Naked City (1948), Universal-International's new theatrical films often met with disappointing response at the box office. By the late 1940s, Goetz was out. The studio returned to low-budget and series films such as Ma and Pa Kettle (1949), a spin-off of the studio's 1947 hit The Egg and I and the inexpensive Francis (1950), the first film of a series about a talking mule, became mainstays of the company. Once again, the films of Abbott and Costello, including Abbott and Costello Meet Frankenstein (1948), 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. Besides Abbott and Costello, the studio retained the Walter Lantz cartoon studio, whose product was released with Universal-International's films.
Although 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. decision. 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 (1950), proved to be a hit, the 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 again changing. The combination of the studio/theater-chain break-up and the rise of television saw the reduced audience size for cinema productions. The Music Corporation of America (MCA), the world's largest 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 360-acre (1.5 km2) studio lot to MCA in 1958 for $11 million, renamed Revue Studios. MCA owned the studio lot, but not Universal Pictures, yet was increasingly influential on Universal's products. The studio lot was upgraded and modernized, while MCA clients like Doris Day, Lana Turner, Cary Grant, and director Alfred Hitchcock were signed to Universal contracts.
At this time, Hal B. Wallis, who had recently worked as a major producer at Paramount, moved over to Universal, where he produced several films, among them a lavish version of Maxwell Anderson's Anne of the Thousand Days (1969), and the equally lavish Mary, Queen of Scots (1971).[30] Although neither could claim to be a big financial hit, both films received Academy Award nominations, and Anne was nominated for Best Picture, Best Actor (Richard Burton), Best Actress (Geneviève Bujold), and Best Supporting Actor (Anthony Quayle). Wallis retired from Universal after making the film Rooster Cogburn (1975), a sequel to True Grit (1969), which Wallis had produced at Paramount. Rooster Cogburn co-starred John Wayne, reprising his Oscar-winning role from the earlier film, and Katharine Hepburn, their only film together. The film was only a moderate success.
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 was sold to French water utility and media company Vivendi, which owned StudioCanal; the conglomerate then became known as Vivendi Universal. Afterward, Universal Pictures acquired the United States distribution rights of several of StudioCanal's films, such as David Lynch's Mulholland Drive (2001) and Brotherhood of the Wolf (2001) which became the second-highest-grossing French language film in the United States since 1980. Universal Pictures and StudioCanal also co-produced several films, such as Love Actually (2003); a $40 million-budgeted film that eventually grossed $246 million worldwide.[39] In late 2000, the New York Film Academy was permitted to use the Universal Studios backlot for student film projects in an unofficial partnership.[40]
In late 2005, Viacom's Paramount Pictures acquired DreamWorks SKG after acquisition talks between GE and DreamWorks stalled. Universal's long-time chairperson, 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. On October 5, 2009, Marc Shmuger and David Linde were ousted, and their co-chairperson jobs were consolidated under former president of worldwide marketing and distribution Adam Fogelson, becoming the single chairperson. Donna Langley was also upped to co-c