Howard Hughes Blows Up Hollywood | Selling Scandal | 3

0:15It's late April 1948 on a ranch in Indio, California. 56-year-old business tycoon Floyd Odlin floats in an inner tube, drifting slowly across his heated pool. Floyd spends hours every day in the water, chasing relief from the chronic pain of rheumatoid arthritis. But just because he's floating doesn't mean that he's idle. Floyd made a fortune during the Great Depression, buying, selling, and breaking up companies, and he doesn't like to waste a single minute of the working day. A few years ago, he had a poolside phone installed, and now he often takes calls on the water. He kicks off the wall and glides toward the phone.

0:53Hello, Floyd Odlum. Mr. Odlum, this is Howard Hughes. Hello, Mr. Hughes. I assume you have a new offer for me. For months, Howard Hughes has been circling Floyd for the chance to buy RKO Pictures, a major Hollywood film studio. Floyd owns 24 % of RKO's stock, making him the biggest shareholder, and Howard's heard that he's willing to sell. Cutting to the chase as usual, Mr. Odlum. I respect that. As it happens, I do have a new offer, and I hope it's one that'll please you. Well, we'll see, won't we? I'm willing to pay$9.50 a share. Floyd quickly runs the numbers in his head. Howard's offer is a dollar a share over the market price and adds up to more than$9 million, well above valuation for a studio in slow decline.

1:38It's a great offer, but Floyd narrows his eyes. Either Howard knows something he doesn't, or this is some kind of game, and Floyd has no patience for games. So he hangs up on Howard. But it quickly rings again. Floyd Odlin. I think we got cut off. Hopefully you heard the offer first. Yeah,$9.50 a share. That's right. I was, um, expecting something a little more serious. Well, I know it's above the market rate, but I'm done haggling. I want to make movies. You want out. Let's make a deal. Mr. Hughes, far be it for me to run down my own company. But RKO is not growing. You'll never get funding at that price.

2:15But I don't need any outside investors, Mr. Odlam. I have the cash myself. Look, the bankers might think I'm overpaying, and maybe you do too. But I know what I'm doing. And when I'm done with RKO, it'll seem like the bargain of the century. Floyd shakes his head. You really want a major studio, don't you, Mr. Hughes? Well, I guess you better come on up to India. We'll sign the papers. On May 1, 1948, Howard Hughes bought Floyd Odlum's 24 % share in RKO Pictures for$8.8 million, almost$120 million today. It was enough to give him a controlling stake in one of the major studios in Hollywood. But while RKO was once a jewel in Hollywood's crown, Howard would soon discover what Floyd Odlum already knew, RKO's shine was fading fast.

3:13From Wondery, I'm Lindsey Graham, and this is Business Members.

3:37Two years before buying RKO pictures, Howard Hughes nearly died. At the age of 40, he took the controls of a prototype reconnaissance plane, personally piloting the first test flight of a new model being developed by his aviation firm, the Hughes Aircraft Company. But during the flight, an oil leak caused the plane to lose altitude rapidly, and it crashed into a Beverly Hills neighborhood. Howard dragged himself from the burning wreckage, but he was badly wounded. He had a crushed collarbone, cracked ribs, a collapsed lung, and third-degree burns over much of his body. But Howard survived, and so did his ambition.

4:14Even from his hospital bed, wrapped in bandages and wracked with pain, Howard monitored his business interests. He kept track of the crash investigation, and he also plotted how to return to his first love, movies. Back in the 1920s and 30s, Howard made a name for himself as an independent film producer, and his approach to moviemaking was like nothing Hollywood had seen before. He spent big, producing some of the first blockbusters, despite being unaffiliated with any major studio. He embraced sensationalism and controversy, using sex and violence to create a stir and attract audiences. But for all the buzz, one thing eluded him, making a reliable profit.

4:54Howard blamed his financial losses not on his films, but on interference. He believed that censors, regulators, and the studio establishment had sabotaged his movies. And according to Howard, they did it because he was an outsider. And as an outsider, Howard could work around the system or buy into it, taking over Hollywood from the inside. So when rumors began to circulate that Floyd Odlum wanted out of RKO Pictures, Howard was quick to pounce. But owning a major studio wasn't the easy solution that Howard hoped. It was the opposite, and it would open the door to a whole new set of problems. This is the third episode in our four-part series on Howard Hughes and Hollywood, Selling Scandal.

5:42It's 1 p.m. on a day in late June 1948 in Beverly Hills, California, less than two months after Howard Hughes took control of RKO. 42-year-old Dory Sherry stands awestruck at the door of a sprawling mansion. Dory is a major figure in Hollywood, the head of production at RKO, known for his sharp eye and creative instincts. But a house like this one is far out of his reach. Dory's been summoned here by his new boss, Howard Hughes, and the grand setting feels more like a power move than a welcome. The door opens and Dory recognizes Howard instantly. His face was all over the papers when he shattered a host of aviation records a few years ago.

6:21Since then, Howard's grown a mustache to hide the scars from his plane crash, but he still has the same twinkle in his eye. Howard gestures to Dory to enter. Ah, thanks for heading over, Mr. Sherry. Come on in, come on in. Dory follows Howard into the lavish entrance and down a polished hallway. As they pass a side room, he catches sight of a half-dressed woman fastening her bra on. Dory pretends not to have seen her. Um, a beautiful home you have here, Mr. Hughes? Oh, it's not mine. Belongs to a friend. I'm just looking after it for a while until I find my own. Well, you must have friends in high places, Mr.

6:55Hughes. Well, as a matter of fact, I do. Cary Grant owns this house. Howard leads Dory into a richly furnished parlor. A motion for him to sit. And that's somewhat related. I'd like to get Cary involved with RKO Pictures. Big studio needs big stars, right? But I understand you have some concerns about my casting decisions. Well, I'm afraid I do, Mr. Hughes. I've been making movies for 15 years, and I think I know what works and what doesn't. So I didn't appreciate finding out that you went to fire my leading lady. Barbara Bel Geddes? Yeah, she's a rising star. Well, Miss Bel Geddes is a fine actress, but she's too plain to take the lead.

7:31No star quality. I've personally approved all her roles so far. I think she's perfect. No, she's inexperienced. Breakout stars always are. She just needs the right direction. Well, she's not the only one. I'm not sure I follow. Well, I'm starting to wonder if you can follow directions, Mr. Sherry, because it seems like you don't really want a boss. Well, Mr. Hughes, if I worked in one of your airplane factories, I would follow your orders to the letter. But we're not making fuselages, we're making films. And I know a lot more about the movie business than you do. Howard arches his eyebrows. Well, I'd like to think I know a thing or two as well, so I'll tell you what.

8:08I'll go find a new lead actress for you, and she'll be ten times better than Barbara. Oh, I see. Well, I think I may have seen one of your candidates getting dressed when I came in. Howard leans in. Now, Mr. Sherry, let's not say something we may both regret, right? I appreciate that I am a newcomer at RKO, but I am no stranger to Hollywood. And let me be clear, things around here are going to change. Whether you're part of it or not, that's up to you. A few days later, head of production Dory Sherry resigned from RKO. But Howard Hughes didn't regret the departure. He was determined to reshape RKO and its approach to moviemaking, and anyone who didn't share his vision was free to walk away.

8:51But as Howard molded RKO in his own image, Dory was not the only voice of resistance. In 1948, 42-year-old Howard Hughes was no longer a Hollywood rookie. He'd produced a dozen films and even directed two himself. But despite that track record, Howard's arrival at RKO raised suspicions among its staff. The board of directors was packed with executives with decades of experience in Hollywood, and they saw Howard as a disruptor who didn't really understand the movie industry. And whatever success he had had stemmed more from good luck than good judgment. But in the beginning, the board was not really worried about Howard.

9:31He may have been the largest shareholder, with a quarter of RKO stock, but that alone did not give Howard the power to push through sweeping changes. But Howard had a plan. To him, the equation was simple. Control the board, and you control the company. So over the next few weeks, Howard worked behind the scenes to build support among RKO's other shareholders. His fame as a record-breaking aviator helped get many on his side. So too did the bold claims he made about his success in film. Claims that didn't always align with reality. And for those still on the fence, Howard's reputation for combativeness helped tip the scale.

10:07Most investors didn't want a drawn-out battle with a man known for fighting long after others would have walked away. So fairly quickly, Howard had enough shareholders on his side and then turned his attention to the boardroom. He began picking fights with the directors he wanted to leave, and he began at the top. Nathaniel Peter Rathman had been president of RKO for six years and publicly stated that Howard would best serve RKO as a silent partner. But Howard had no intention of staying quiet, and instead he engineered a confrontation with Rathvin. At the time, major studios routinely tied their stars to exclusive contracts, but Howard saw an opportunity to cash in.

10:47When a rival studio struggled to cast a leading role, Howard offered them the services of one of RKO's top contracted actors for a fee. But Howard made this deal behind Rathvin's back, and the RKO president only discovered the arrangement after it was too late to call off. Rathvin immediately saw the move for what it was, a direct and deliberate challenge to his authority. Howard had made it clear that he wasn't just a silent investor. He wanted to run the show. Knowing that he had been undermined and sensing that Howard would continue to agitate until he was removed, Rathvin resigned. A few days later, Rathvin was followed out the door by the man who'd appointed him.

11:28Floyd Odlam had asked to stay on the board after selling his stock to Howard, but with the departure of his main ally Rathvin, Floyd realized that his position was untenable too. Now Howard could get to work reshaping RKO. He began by scrutinizing the books, and he was troubled by what he saw. RKO was a shadow of the studio that had enjoyed lucrative box office success with King Kong and Citizen Kane. In 1947, profits were down, and 1948 looked even worse. Initial figures suggested that the studio would barely break even, and several films were trending toward a loss. Howard responded swiftly and ruthlessly with a dramatic cost-cutting campaign.

12:08Three-quarters of the workforce were fired, mostly writers, publicists, and administrative workers. And production was abruptly halted on dozens of films that Howard designated as message pictures, inexpensive movies designed to confront social issues like race and class. In their plays, Howard wanted something flashier, a smaller slate of big-budget blockbusters, the kind of movie he gained a reputation for making as an independent producer. He started with a familiar title. Eight years earlier, Howard had begun shooting The Outlaw, a Western that ran into problems with the censors thanks to steamy scenes in promotion featuring lead actress Jane Russell.

12:47The film had been restricted to a limited release in cities with looser censorship rules, but Howard still believed in it. He used RKO's cash to buy the distribution rights from Caddo, his old film company, for$1.6 million, or$20 million today. Next, Howard instructed his producers to scour RKO's archive for forgotten scripts with blockbuster potential. But digging through the slush pile was a slow process. RKO typically released around 30 movies a year, But by the fall of 1948, only 12 movies had been approved for production, and only three had begun shooting. To offset Lost Revenue, Howard auctioned off the rights to 50 old RKO movies.

13:28Some were among the studio's best-loved classics, and Howard allowed them to be licensed as radio plays or for the stage, even to be remade by rival studios. But selling these rights did not bring in the windfall he needed. RKO earned just$1.5 million, not even enough to cover the cost of acquiring the outlaw. Howard concluded that changes to production and distribution alone did not go far enough. If he was going to turn around RKO's fortunes, he needed to completely modify the studio's business model. Ten years earlier, the Department of Justice had launched antitrust proceedings against Hollywood's big five major studios, including RKO.

14:06As far as the federal government was concerned, the major studios wielded too much power in the movie industry. They made movies, they distributed movies, and since they also owned theaters, they supplied movies to the end customer. Together, they collaborated to carve up the country's movie theaters by region, each one holding a virtual monopoly in its own territory. RKO's power base was New York, America's largest market. And this business model was one that federal antitrust prosecutors deemed to be anti-competitive. But for the last decade, the major studios had stonewalled the Department of Justice.

14:41They responded slowly to requests from antitrust lawyers. They dragged their heels when it came to implementing new rules and regulations, hoping that constant delays might drag out the case until a more pliable administration came to Washington. But Howard never had much in common with major studios, and he saw an opportunity in breaking ranks with the rest of Hollywood. He was already under scrutiny for antitrust violations in the aviation industry, and he had hoped that offering an olive branch in Hollywood might help his cause elsewhere. Besides, Howard saw RKO's theater business as a distraction that was dragging the parent company down.

15:17He thought that RKO would be leaner and more profitable if it concentrated solely on production. Not to mention, he could cash in if the theater business was spun off into a separate company and sold. So Howard embarked on secret talks with the Department of Justice, and after just four months, their agreement was made public. RKO was the first of the major studios to agree to sell off its theater business. This announcement sent shockwaves through Hollywood. Howard Hughes had smashed through one of the pillars of the studio system, and in so doing, weakened the united front that the major studios had maintained for years.

15:53But he wasn't finished yet. He had no intention of just tweaking the system. He wanted to blow it up.

16:27This is the story of Marilyn and Morris Bailey. And the 117 days they spent lost at sea. Follow British Scandal wherever you get your podcasts, or listen early and ad-free on Audible.

16:43During World War II, New York communist Julius Rosenberg began spying for the Soviet Union. Soon he was persuading other Americans to betray their country as well. But when his wife's brother joined the Manhattan Project, Julius targeted him as a valuable new recruit and inadvertently set the stage for the ultimate betrayal. Hi, I'm Lindsey Graham, host of Audible's original show, American Scandal. We bring to life some of the biggest controversies in U.S. history. Presidential lies, environmental disasters, corporate fraud. In our latest series, two young New Yorkers meet and fall in love. Julius and Ethel Rosenberg's commitment to each other is matched only by their commitment to communism, and the couple risks everything to help the Soviet Union develop an atomic bomb.

17:26But when they're uncovered, they have to make an impossible choice about where their loyalty truly lies. Follow American Scandal wherever you get your podcasts. Audible subscribers can listen to all episodes of American Scandal The Rosenbergs ad-free right now. Join Audible today by downloading the Audible app.

17:55It's the night of September 1st, 1948, at a police station in Hollywood, California, three months after Howard Hughes bought a controlling interest in RKO. A police officer unclips a set of handcuffs from the wrists of actor Robert Mitchum and waves him toward the booking desk. Just an hour ago, the 31-year-old Robert was lounging in a friend's house, sharing a joint with a 20-year-old actress and a few hangers-on. Then, out of nowhere, the front door was kicked in and cops flooded in. Now, under the harsh lights of a police station, Robert worries that his career is in danger. He stands fidgeting in front of the booking officer, barely seems to notice him.

18:34All right, full name? Robert Charles Derman Mitchum? The officer glances up and pauses as recognition slowly dawns on him. Mitchum? You're that actor guy, right? Yeah, that's me. What was that movie you were in, the one with the private eye? Out of the Past. That's it. I saw it with the wife. You were pretty good. The officer chuckles as he pecks at the keys of a typewriter with two fingers. So, Robert Charles Derman Mitchum. Age? 31. Marital status? Married. The officer smirks and arches an eyebrow. Your wife know whose company you were keeping tonight? I was with friends in the privacy of their home.

19:13I didn't think that was a crime. Well, I'm told the house reeked of marijuana, and around here we call that a Schedule 1 narcotic. Do you understand the nature of the charges? I know two cops burst down the door like they found the Black Dahlia murderer. Well, let me spell it out. You're under arrest for possession of narcotics and conspiracy to possess. You got a lawyer? No, not yet. Well, get one. I assume you can afford it. You really don't want the public defender on a celebrity case. And your mugshot's going to be in every paper by sunrise. Maybe we can get wardrobe and makeup to freshen you up before they take the picture, huh?

19:46Robert sighs and the officer turns his attention back to the typewriter. One last thing, occupation. What should I put here? Screen star, actor, or do you prefer thespian? Robert hesitates, thinking about tomorrow's headlines and the fallout that's sure to follow. Well, I guess you better make that former actor. Being arrested for drug possession was enough to end most actors' career. But Robert Mitchum had luck on his side. He was contracted to RKO, and Howard Hughes was his boss. In the past, Howard had used controversial depictions of on-screen criminality to sell tickets to his movies. And now, he'd use Robert's off-screen brush with the law in the exact same way.

20:30In the year before his arrest, Robert Mitchum had broken into the big time. He'd been grinding away in show business for almost a decade, but rarely landed anything more than a supporting role. That changed in 1947, when he was cast as the lead in two movies, the moody western Pursued and a gritty crime drama Out of the Past. Both were box office hits, and Robert's brooding charisma finally got the recognition it deserved. He was rewarded with a seven-year exclusive contract at RKO, earning$3 ,000 a week, the equivalent of$2.3 million a year today. But Robert's dream job seemed to be over almost as soon as it began.

21:10Like most studio deals, his contract contained a morals clause. And if the star was caught in a compromising situation, the studio had the right to rip up the agreement and walk away without paying a dime. And in post-war Hollywood, where studios usually played it safe in their efforts to avoid government oversight, getting busted for drug possession was just the kind of scandal that condemned an actor to exile. But RKO couldn't afford to fire Robert. The studio already had two films in the can with Robert in major roles. Cutting him loose would mean writing off the modern equivalent of$30 million in sunk production costs.

21:46Given that Howard had already shelved most of RKO's output in a cost-cutting measure, the extra expense of canceling Robert's films could send RKO to the brink. But where other studio bosses would have gone into crisis management mode, Howard saw opportunity. He knew reporters would swarm the story of Robert's arrest. So rather than fire his star, Howard decided to capitalize on the controversy. At the time that Robert was taken into custody, one of his movies was close to completion. Rachel and the Stranger was a Western romance in which Robert had third billing behind co-stars Loretta Young and William Holden.

22:22But now that Robert's name was dominating the headlines, Howard promoted Robert to the top of the bill. And rather than wait for the movie's planned Christmas release, Howard brought it forward and ordered post-production to wrap immediately. So within days of the scandal breaking, Rachel and the Stranger was ready for audiences. But RKO executives warned Howard that the public wouldn't tolerate seeing an alleged drug user on the big screen so soon after his arrest. Howard thought they were just being too prudent, but to ease their concerns, he agreed to test the waters in seven cities. And despite the small number of screenings, Rachel and the Stranger went straight to the top of the national box office chart.

23:02Howard was right. Americans couldn't wait for Robert's next movie. And the following week, Rachel and the Stranger retained the top spot when it went national. It stayed in the top for 10 weeks, bringing in$2.4 million and becoming one of RKO's top-performing movies of the year. Two months later, Robert's other movie, Blood on the Moon, also shot to number one and quickly recouped its costs. Now, Robert Mitchum's films were out, and RKO had a clean exit point. His upcoming trial gave the studio a fresh reason to cut ties. But Howard still had no intention of distancing himself from his troubled star.

23:40Public sentiment was clear. Most Americans were standing by Robert. Crowds packed the courthouse steps at every hearing, and he signed autographs for those lucky enough to get a seat inside. So Howard doubled down in his support of Robert and gave him the best defense money could buy, Jerry Giesler, a defense attorney notorious for getting celebrity clients off the hook. Over the past few years, Giesler had defended Errol Flynn against charges of statutory rape, Busby Berkeley in a vehicular manslaughter case, and Charlie Chaplin in a federal sex trafficking trial. If anyone could make trouble disappear, it was Giesler.

24:16But the evidence against Robert was damning. He'd been caught red-handed and had made no attempt to deny the charges when questioned. That left Giesler only one avenue to dismiss the case, legal procedure. He questioned the veracity of the police reports, cast doubt over whether smoking marijuana in private was a public offense, and even challenged the constitutionality of American narcotics laws. But after the judge rejected every one of Giesler's motions, Robert Mitchum had no choice but to plead no contest. He was sentenced to 60 days in prison. For Robert, it meant two months of drudgery in a state prison.

24:52But for Howard, the sentence was a disruption to his carefully laid plans. In order to take full advantage of the blaze of publicity surrounding Robert's case, Howard had fast-tracked pre-production of his next movie. The Big Steal was a crime thriller in which a U.S. Army lieutenant chased down a double-crossing thief. Fellow RKO actor George Raft was originally cast for the lead role, but he was booted in favor of the new face of the studio, Robert Mitchum. But filming was due to begin in February 1949, right when Robert was locked behind bars. A two-month pause would delay the Big Steel's release date, by which time the public interest in Robert may have moved on.