A Brief Correction

I need to make a correction. I've said from the beginning, I'm aiming to find historical truths. I'm not a historian, nor am I particularly knowledgable about business. I've been making an error in saying vertical integration was owning the stars, the lot, and the theaters. I've been thinking about it as "stuff controlled" when it reality it was a business chain. As I said, I don't know business.

Vertical Integration is best defined as owning the means of production, distribution, and exhibition. Production is everything involved in making a movie, including pre and post production. When a film poster says ____ presents a ___ film, the production company is the second blank. Pixar is a production company, Big Beach is a production company, Mandate Pictures. The big studios will be the main producers on a film occasionally, but even then there are few movies with just one company paying for production.

Distribution is the first name. Production involves getting talent (actors, directors, writers) to sign contracts to create films and then contracting the post production companies. Distribution is negotiating the contract with exhibitors over showing a certain film, and making sure the prints for all those exhibitors get made and distributed.

Now I've been saying distribution when I meant exhibition. Fox, Paramount, MGM, Warner Bros, and RKO owned theater chains so it didn't have to negotiate with an exhibitor. They were the exhibitor. So they produced the films, instead of selling the rights they then distributed the films themselves, to be shown in theaters they own.

It's so much different now. Disney, before they bought Pixar, had to negotiate a contract to distribute their films. Disney then had to go to AMC Theaters, Edward Cinemas and other such theater chains, and negotiate a price for exhibition. Even though a company like AMC has a sizable bargaining chip, I can assure you most theater chains make next to nothing on straight ticket sales. That's why popcorn costs $10.

Anyhow, we'll close out the Big Five with MGM, just as soon as I figure out what theaters in Los Angeles were owned by MGM.