Howard Hughes Blows Up Hollywood | The Red Scare | 4

0:15It's November 20, 1952, at the Superior Court in Los Angeles, California. A buzz ripples around the courtroom as 46-year-old film producer Howard Hughes steps into the witness stand. Reporters lean forward, pens poised, ready to capture every word of his much-anticipated testimony. The lawyer rises to speak. Now, Mr. Hughes, did you yourself make the decision to fire my client, Mr. Jericho? Howard casts a glance across the courtroom. His former employee, screenwriter Paul Jericho, sits stone-faced, eyes locked on Howard. Yes, it was my call to let Mr. Jericho go. And when exactly did you make that decision?

0:55Was it before or after the Las Vegas story was filmed? I believe it was after filming had wrapped. Thank you, Mr. Hughes. And on what grounds did you make this decision? I fired him because I learned that he's a communist. That's the sort of thing that might fly at other studios, but commies aren't welcome at RKO. I see. And your reasoning was that Mr. Jericho's alleged and unproven political beliefs were a violation of his contract? That's right, the morals clause. Ah, the morals clause. I gather you're quite familiar with that particular part of the contract, aren't you, Mr. Hughes? I'm sorry, I don't know what you're getting at.

1:30The morals clause could have been enacted when Mr. Robert Mitchum was arrested for the possession of and conspiracy to possess illegal narcotics. Did you fire Mr. Mitchum on that occasion? Howard shifts, visibly irritated. That was over four years ago, and no, I didn't fire him, you know that. So why the sudden concern about morality when it comes to my client, Mr. Jericho? Because Bob Mitchum isn't a communist. This is the United States of America. Free enterprise is what makes this country great. So pinkos like him are not going to have any influence in my studio. All right, understood. And moving on, how would you say RKO is doing right now?

2:07Howard hesitates. We are working through a few challenges at the moment. That is one way of putting it, Mr. Hughes. But according to your own books, RKO is losing$100 ,000 a week. That's quite a time to shut down production. I put it to you that your self-appointed so-called crusade to hunt down communists in your organization is just a smokescreen. Aren't you really just trying to stop your studio's financial bleeding? Absolutely not. I'm not making another movie until we figure out who's a Soviet sympathizer and who's not. Even if that means losing millions of dollars in the process? Well, if that's what it takes to clean up Hollywood, then yes, I'll take as long as necessary.

2:47Howard Hughes's anti-communist vendetta did not stop with Paul Jericho. In his zeal to purge Hollywood of leftist influence, RKO ground to a halt and the shutdown came at a steep cost. Howard claimed that there wouldn't be a single communist writer, director, or actor left at RKO when he was finished, But by the time his studio resumed operations, it nearly didn't exist at all.

3:14The Emmy Award-winning HBO series Hard Knocks training cam brings viewers into the preseason with unparalleled access to the reigning Super Bowl champion Seattle Seahawks. Go behind the scenes with Sam Darnold, Jackson Smith, and Jigba, and the legendary Dark Side Defense as they prepare to make another run at the NFL title. See how the best in the world take the hype and pressure head on. Your football fix starts here with the personalities and challenges that define a championship team. Bonds will be built. Bloopers will be captured. Hard Knocks Training Camp with the Seattle Seahawks, Tuesdays at 9 p.m.

3:50on HBO Max. We all have routines. I'm Jabron, and with diabetes, mine was finger sticks. Sometimes, I skip them because it hurt. The Freestyle Libre 3C GM changed that. It gives me glucose insights without finger sticks. Learn more at freestyllibre.us. Finger sticks are required if your glucose alarms or readings do not match symptoms or when you see check blood glucose symbol for the first 12 hours. The views expressed should not be used for medical diagnosis or treatment as a substitute for professional medical advice. Individual circumstances may vary. For prescription only. Safety info found at freestyllibre.us.

4:27From Wondery, I'm Lindsey Graham, and this is Business Members.

4:50In 1948, more than two decades after moving to Hollywood to pursue his goal of becoming a world-famous filmmaker, Howard Hughes bought RKO Pictures. It marked a major shift in his strategy for conquering Hollywood. After years of working on the fringes as an independent producer, Howard had officially joined the establishment. He was now the new owner of one of America's Big Five studios. This was a chance for Howard to elevate his ambitions, but instead the opposite happened. Rather than scaling up, Howard scaled down. RKO's output dropped dramatically after Howard took over, from 35 films in 1947 to just 12 in 1949.

5:31That was the inevitable result of Howard firing hundreds of employees while dozens of senior staff walked out on their own after clashing with their new boss. RKO's only income came from its distribution arm, which released movies on behalf of independent producers, but that alone wasn't enough to break even. The studio's share of box office revenue plummeted 77%, and it recorded a loss of$12.4 million, more than$150 million today. RKO only stayed afloat because Howard could bankroll the losses. His personal accounts were still healthy thanks to his other business interests, the Hughes Aircraft Company and the Hughes Tool Company.

6:11Both of those firms were booming, in large part because Howard delegated their oversight to others. That was not the case with RKO. Even though he was now boss of a major studio, Howard operated like an independent. He wanted to control every aspect of the filmmaking process. He was obsessive about a certain kind of movie, big-budget blockbusters with aggressive promotional campaigns. Howard wanted RKO to be known for thrills and spills on screen, and controversy and scandal off screen. His approach generated headlines, but not profits. After two years, RKO was in desperate need of a turnaround from its self-inflicted slump.

6:51But rather than learn from his mistakes, Howard plunged headlong into a new obsession, one that would bring filmmaking to a grinding halt. This is the last in our four-part series on Howard Hughes and Hollywood, The Red Scare.

7:09It's close to midnight in April 1951 in Hollywood, a year and a half before Howard Hughes takes the stand in his trial against Paul Jericho. 60-year-old Sam Bischoff wakes up with a start as the phone on his bedside table starts to ring. Sam sits up and rubs his eyes. As production chief at RKO, he's just spent a long day on set, and he has another early start tomorrow. But he can't ignore the phone because only one person ever calls this late, Howard Hughes. Sam switches on a lamp and picks up the phone. Uh, this is Sam Bischoff. Sam, what took you so long? It's almost midnight, Howard. I was asleep.

7:48Well, I wouldn't be calling if it wasn't important. Have you heard the news? No, I went straight to bed when I got home. What's going on? One of our writers just got subpoenaed. By who? The House Un-American Activities Committee. For years, politicians in Washington, D.C. have suspected that Hollywood is crawling with secret communists who use movies to indoctrinate Americans with radical left-wing beliefs. Thanks to the investigations of the House Un-American Activities Committee, or HUAC. Several writers and directors have been blacklisted, forcing them out of their jobs. And this probe has set Hollywood on edge, with every high-profile figure fearing that they'll be the next one under the spotlight.

8:28Sam runs a hand through his hair. Oh man, who is it? Paul Jericho. We only brought him in a few months ago for the Las Vegas story. It's still not finished. What do you think we should do? Are you kidding me? Get rid of him. RKO has zero tolerance for communists. Well, don't you think we should wait and give him a chance to testify? You think I'm calling you at midnight because I want to wait and see? No, he's got to go now. What if he's not actually a communist? Where there's smoke, there's fire. The committee knows exactly what it's doing. But what are we going to do with the Las Vegas story?

9:00Get someone else to finish it. I don't want Jericho touching another word on that script or anything else at Archaea, all right? Can him. Sam sighs. He can tell that Howard isn't going of Budge. All right, understood. I'll handle it first thing in the morning. Good. And when you're done throwing him out, make sure everything he wrote ends up in the trash, too. Just days after Howard Hughes fired Paul Jericho, the now unemployed writer went before the House Un-American Activities Committee. There, he pleaded the Fifth and refused to say whether he was or ever had been a member of the Communist Party.

9:35To some, Paul's actions were a brave defiance of federal overreach. But to Howard, it was all the proof he needed that his former writer was guilty. Firing Paul was not the end of Howard's fight against communism. It was just the opening scene.

9:52The House Un-American Activities Committee was created in 1938 to investigate suspected traitors and subversive elements in the federal government. But after World War II came to an end, its remit was expanded. Now it turned its gaze toward American society at large, and it had one group squarely in its sights, communists. As tensions with the Soviet Union escalated into the Cold War, fears of communist infiltration had spread rapidly across the United States, and the wave of suspicion became known as the Second Red Scare. Soviet spies were known to be actively seeking the secrets behind America's atomic bombs.

10:30But beyond espionage, there was a deeper fear that communists were waging a war of ideas, using media and culture to indoctrinate Americans with radical leftist ideology. And the powerful cultural engine of Hollywood was an obvious target. In the fall of 1947, HUAC subpoenaed its first witness to investigate whether communist propaganda was being sneaked into movies. The inquiry soon hit the headlines, and leading industry figures like Ronald Reagan and Walt Disney fanned the flames, arguing that communists had indeed tried to take over Hollywood. But not everyone backed the inquiry. Ten screenwriters and directors refused to answer the committee's questions and were held in contempt of Congress.

11:13In response, the heads of major studios pledged to bar the so-called Hollywood Ten from ever working in movies again. Officially, the studio heads supported the anti-communist crackdown, but Hollywood was not as united as many were led to believe. Behind closed doors, many studio bosses resented Washington meddling in their business. But in the grip of the Red Scare, they didn't dare object. Defending the accused might risk being labeled a sympathizer themselves. But there was one studio boss who didn't share their misgivings. As the owner of RKO, Howard Hughes was fully on board with HUAC. His strident anti-communism wasn't just political, it was personal.

11:54Having inherited his father's million-dollar tool company at the age of 18, Howard had little patience for ideologies that questioned wealth, power, or capitalism. And he saw communism as a direct threat to everything he stood for. So as soon as RKO screenwriter Paul Jericho was subpoenaed by HUAC, Howard invoked the morals clause in Paul's contract and fired him, even before Paul had pleaded the fifth in front of the committee. But Howard didn't stop there. He was determined to make a clear statement that communists were not welcome in his studio. Paul had been hired by RKO to help salvage the Las Vegas story, a crime drama that had become stuck in development.

12:33But even after Paul's departure and the hiring of other writers to finish it, the bulk of the script remained Paul's work, and according to the rules of the Screenwriters Guild, Paul was still entitled to a writer's credit. Howard, though, had no intention of giving recognition to a suspected communist, And when the Las Vegas story premiered in February of 1952, Paul's name was missing from the credits. The Screenwriters Guild protested the omission and threatened to take action against Howard. The Guild's options included a boycott of RKO scripts, even an industry-wide strike. But the Guild was walking a fine line.

13:07It had a duty to protect its members, but like everyone else in Hollywood, the Guild's leaders feared being viewed as communist sympathizers. So in the end, they offered Jericho private legal support, but stopped short of open confrontation with RKO. Howard took advantage of this hesitancy by going on the offensive. He filed a preemptive lawsuit asking a judge to declare that Paul had no right to seek damages. Paul responded with a countersuit seeking damages, claiming that being fired by Howard and RKO had harmed his reputation, and he demanded$350 ,000 in compensation, the equivalent of$4.2 million today.

13:44Still hoping for an amicable settlement, the Screenwriters Guild encouraged the two sides to submit to private arbitration, but Howard had no intention of settling quietly. Instead, he called a press conference and announced that he was fed up with Hollywood dragging its feet in its efforts to root out communists. Drastic action was needed, he said, and Howard was prepared to take it. RKO was firing 100 employees, and they wouldn't be rehired or replaced until Hollywood's communist problem, as he described it, was solved. Outside of the industry, Howard won praise. Senator Richard Nixon applauded his anti-communist zeal.

14:20The American Legion and other veterans groups awarded him with medals for loyalty and patriotism. But inside Hollywood, some suspected a different motive. From the moment he'd taken over RKO, Howard had slashed its workforce. Now he was getting rid of the rest. Some thought that Howard's anti-communist purge was just phase two of a cost-cutting crusade that he'd always intended to carry out. That idea became central to Paul Jericho's case when the lawsuits reached court in November 1952. Under intense questioning, Howard denied that he was using politics to cover up his business decisions. He deflected questions that compared his treatment of Paul to that of actor Robert Mitchum, who may also have run afoul of his morals clause after being busted for drug offenses four years earlier.

15:07Then, when it was time to argue their case, Howard's lawyers sought to shine the spotlight back on Paul Jericho. They berated him over his decision to invoke the Fifth Amendment during his testimony to the House Un-American Activities Committee. And when Paul took the stand, they provoked him into anger, and Paul criticized the committee as an unconstitutional witch hunt. This defiant tone backfired. On November 26, 1952, the judge ruled in favor of Howard Hughes. In the court's eyes, by invoking the Fifth Amendment, Paul was essentially admitting that he was either a former communist, a current communist, or a communist sympathizer.

15:43That meant that Howard was legally justified in invoking the morals clause in Paul's contract to fire him and to ignore his obligation to credit Paul on the Las Vegas story. As a result, Paul Jericho was forced out of Hollywood, and he would spend the next two decades making movies in Europe. But he was not the only loser in the case. RKO's chance of making a recovery took a hit too. While Howard had focused all his attention on his anti-communist crusade, production at his studio had virtually ground to a halt. And by the time this court case came to an end, RKO had only one film scheduled for release.

16:19Blackbeard the Pirate had only survived the cut because shooting had commenced before Howard announced his studio-wide shutdown. RKO finances were already in freefall. Now, Howard Hughes' self-imposed work stoppage had erased any chance of the studio returning to profit And it seemed that Howard knew it, because all the while he was waging a loud public crusade against communism behind the scenes, he was on a covert mission to find a buyer for RKR.

16:50Living your best life means being extra where it counts and skipping the extra where you don't need it. Like in your cleaning products. That's where 7th Generation comes in. Their bio-based cleaning power delivers a powerful clean with nothing extra in the bottle. Need a dish soap that cuts through the tough grease? A detergent that tackles the worst stains and odors? Seventh Generation handles it all without any dyes or artificial fragrances. Real clean doesn't have to come with a long list of add-ons. Upgrade to a powerful clean without anything extra. Look for Seventh Generation Dish Soap and Laundry Detergent wherever you shop for your cleaning products.

17:31I'm Alice Levine. And I'm Matt Ford, and we're the hosts of British Scandal. Yes, indeed. In this series, a Derbyshire couple are bored of their curtain-twitching, lawn-mowing suburban life. So they sell their house, build a yacht, and sail off around the world. Which sort of sounds idyllic until a sperm whale sinks their boat and they begin to starve. Oh, yes, and they didn't bring a radio because real sailors don't use radios. Right? This is the story of Marilyn and Maurice 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.

18:23It's the morning of September 23rd, 1952, at the Beverly Hills Hotel in California, right in the middle of Howard Hughes' court battle with Paul Jericho. Howard presses his fingers to his temples, then surreptitiously puts them in his ears. Across the table, 34-year-old Chicago businessman Ralph Stalkin taps his pen as he reads through a stack of documents, a noise that is driving Howard crazy. Normally, Howard would snap, but he can't afford to antagonize Ralph today of all days because Ralph is about to buy RKO. Still, Howard needs to get Ralph to stop tapping, so he leans forward and clears his throat.

19:00Well, we've gone back and forth over these details a hundred times, Mr. Stalkin. Everything we've agreed is in there. Oh, I believe you, Mr. Hughes, but, you know, as a fellow businessman, I'm sure you understand the importance of due diligence. Oh, sure, I respect that, as long as you can respect my 11 a.m. tea time. I think you can delay your game for$7 million. I'm just checking a few details. Ralph points at one of the documents. This looks like the wage bill, obviously down at the moment, but you say that it's ready to ramp up again? Yeah, sure, we've implemented new screening measures to weed out undesirables.

19:33You could start making movies straight away, and I can guarantee there'll be no communists rewriting the endings. All right, good to know. We have big hopes for RKO. We plan to bring production back to pre-war levels. As you should, and I can assure you that the studio's in a fine position to deliver. You're going to make a killing. Ralph continues reading the contract and starts tapping again. Howard's eye twitches, and he quickly butts in. You're new to Hollywood, right? That's right, born and raised in Chicago. And how'd you make your money? Mail order, catalog, started with a$15 ,000 loan and then turned it into a$3.4 million business.

20:06That's impressive. But the returns you'll get from RKO might make that look like loose change. Yes, I can see that. And everything looks to be in order with the paperwork. Just need to add my mark to it. Ralph signs the bottom paper with a flourish and then slides it across the table. Howard picks it up, folds it carefully, and puts it in his jacket pocket. Well, congratulations, Mr. Stolkin. and you are now the new owner of RKO Pictures. Ralph holds out his hand for Howard to shake, but Howard keeps his firmly by his side. Ralph lets his hand fall. Uh, so what's next for you? New plane? Running for office?

20:42But Howard is already on his feet and heading for the door. Nope, I've already told you. 18 holes of golf. Howard Hughes knew that he was laying it on thick when it came to RKO's rosy prospect for revival. The studio was not ready to restart production, and it certainly wasn't about to make a profit. Still, Howard was prepared to bend the truth to ensure that Ralph Stolkin bought the studio. But he wasn't the only one at the table who hadn't told the truth.

21:13In the fall of 1952, RKO made an announcement that stunned Hollywood. Howard Hughes was selling the studio and walking away from the movie business. Howard's successor as RKO's biggest shareholder was a five-person syndicate headed by Chicago businessman Ralph Stolkin. To pull together the equivalent of nearly$90 million today, Ralph partnered with his father-in-law, two Texas oil barons, and a Los Angeles theater chain owner. Aside from the movie owner, though, no one in the syndicate boasted any experience in the motion picture industry. But that didn't matter to Howard. The syndicate offered him$3 per share above market price, despite the fact that RKO's stock was in a steady decline and the studio had posted losses for four straight years.

21:56Howard was offloading a sinking ship at a premium, thanks in part to the rosy picture he'd painted during negotiations. So on October 2, 1952, Howard cashed a check for the initial payment of$1.25 million. The rest of the money would follow in installments over the next two years. He and two allies resigned from the board. They were replaced by representatives from the syndicate, and Ralph Stalkin was named RKO president. For all intents and purposes, it looked like a clean break. But within only two weeks, the deal began to unravel. In mid-October, the Wall Street Journal published a series of articles that delved into the business history of RKO's new leadership, and the narrative was not flattering.

22:38The expose revealed that the five-man syndicate had links to organized crime. One member had business ties to mobster Frank Costello. Ralph's father-in-law had been indicted by a grand jury in Illinois for insurance fraud. Ralph himself had made a fortune through a mail-order business, but he'd accumulated a host of complaints and investigations, with the Federal Trade Commission citing him for deceptive sales practices and fraud, and U.S. postal authorities issuing him a warning against running an illegal lottery by mail. And with Hollywood already under fire for its supposed communist infiltration, there was little tolerance for even more unsavory headlines.

23:15So the industry turned its back on the new RKO leaders. Studio heads vowed not to work with them, and independent directors and producers said they'd take their pictures elsewhere. So with Hollywood rebuffing them, the syndicate's dreams of making it big in Tinseltown quickly collapsed. Only one month and one day after the deal went through, Ralph resigned from the RKO board. Two other syndicate-appointed directors went with him. But the syndicate remained the largest shareholder, and the remaining board members refused to ratify any new appointees until the messy situation was resolved and the syndicate sold its share.

23:50There was only one person interested in stepping into this chaos, Howard Hughes. In February 1953, Howard agreed to reverse the sale. He took back the shares that the syndicate had bought from him less than three months earlier. No money exchanged hands, but Howard got to keep the initial$1.25 million down payment. Essentially, Howard made the modern equivalent of more than$15 million for only temporarily ceding control of a losing business. But the RKO that Howard returned to was in even worse shape than before. Movie production still hadn't restarted, and now the distribution arm was failing too.