Business Movers: Episode 3 – Howard Hughes Blows Up Hollywood | Selling Scandal
Release Date: August 14, 2025
In the third installment of the four-part series on Howard Hughes and his tumultuous tenure at RKO Pictures, "Howard Hughes Blows Up Hollywood | Selling Scandal | 3" delves deep into the audacious maneuvers and controversial strategies that Hughes employed to reshape one of Hollywood's major studios. Hosted by Lindsey Graham and produced by Wondery, this episode uncovers the intricate blend of ambition, scandal, and strategic business decisions that defined Hughes' impact on the film industry.
1. Acquisition of RKO Pictures
The episode opens in April 1948, spotlighting Floyd Odlum, a seasoned business tycoon and major shareholder of RKO Pictures. Odlum's longstanding dealings during the Great Depression set the stage for Howard Hughes' ambitious bid to acquire controlling interest in RKO.
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Howard Hughes' Offer: In a pivotal phone conversation, Hughes offers Odlum $9.50 per share for his 24% stake in RKO, a significant premium over the market price. "[Howard] is willing to pay $9.50 a share... a great offer," notes the narrative, highlighting Odlum's skepticism about Hughes' motives (00:00).
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Closing the Deal: On May 1, 1948, Hughes finalizes the purchase for $8.8 million, securing a controlling stake and marking his aggressive entry into the Hollywood studio system.
2. Hughes’ Leadership and Early Conflicts
Hughes arrives at RKO with grand plans but faces immediate resistance from established figures within the studio.
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Dory Sherry's Confrontation: Dory Sherry, RKO's head of production, expresses concerns over Hughes' casting decisions, particularly his intent to fire leading actress Barbara Bel Geddes. The ensuing conflict culminates in Sherry's resignation, signaling Hughes' uncompromising approach (19:04).
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Boardroom Maneuvers: Recognizing that mere shareholding doesn't grant him full control, Hughes strategically rallies support among other shareholders. His reputation as a record-breaking aviator and his combative nature persuade investors to back his vision, effectively sidelining the experienced board members (05:02).
3. Restructuring RKO: Cost-Cutting and Strategic Changes
Faced with declining profits, Hughes undertakes drastic measures to stabilize RKO.
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Mass Layoffs: He slashes the workforce by three-quarters, eliminating writers, publicists, and administrative staff. Production halts on numerous "message pictures," which were films addressing social issues—a stark move away from RKO's previous repertoire (12:30).
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Shifting Business Model: Hughes negotiates with the Department of Justice to divest RKO's theater business, responding to antitrust pressures and aiming to streamline operations solely around film production. This strategic pivot not only aligns with federal regulations but also opens potential avenues for profit through the sale of theater assets (25:45).
4. The Robert Mitchum Scandal and Its Exploitation
One of Hughes' most controversial strategies involved leveraging scandals surrounding his stars to generate publicity and boost box office returns.
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Robert Mitchum's Arrest: In September 1948, actor Robert Mitchum is arrested for possession of narcotics. Instead of severing ties, Hughes capitalizes on the scandal by promoting Mitchum's upcoming films, ensuring they hit the top of the box office despite the negative publicity. “[Howard] knew reporters would swarm the story,” the narrative explains (19:04).
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Box Office Successes: Mitchum's films, including "Rachel and the Stranger" and "Blood on the Moon," become major hits, demonstrating Hughes' ability to turn controversy into commercial success. These movies not only recoup their costs but also reinforce Mitchum's status as a bankable star (25:50).
5. The Stromboli Affair: Ingrid Bergman's Scandal
Hughes' handling of Ingrid Bergman's affair with director Roberto Rossellini further exemplifies his manipulative use of personal scandals for business gains.
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Affair and Pregnancy: While filming "Stromboli" in Sicily, Bergman’s affair with Rossellini leads to a pregnancy scandal that Hughes exploits to garner media attention for the film. Despite modifying the film's title and promotion to "Raging Passions," "Stromboli" ultimately bombs at the box office, incurring significant losses (32:18).
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Impact on Bergman and RKO: The scandal tarnishes Bergman's pristine public image, leading to backlash from religious and women's groups. However, Hughes remains unfazed, viewing the incident as a necessary sacrifice to secure Bergman's involvement in future projects (32:50).
6. RKO’s Mixed Fortunes Under Hughes
Despite Hughes' bold tactics yielding short-term successes, RKO struggles to achieve sustained profitability.
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Financial Struggles: By 1950, RKO faces colossal losses amounting to $12.4 million, a stark decline from its prior successes. The studio's market share plummets by 77%, and it falls out of the top five grossing studios (32:50).
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Hughes’ Relentless Push: Undeterred by financial setbacks, Hughes continues to pursue his vision, believing in his instincts and planning to capitalize on further controversies to revive RKO's fortunes. His approach, though innovative, often comes at the expense of stable, long-term growth (33:00).
7. Conclusion: Hughes’ Impact on RKO and Hollywood
"Business Movers" illustrates Howard Hughes as a complex figure whose maverick strategies both revitalized and destabilized RKO Pictures. His willingness to embrace scandal, cut costs ruthlessly, and challenge industry norms left an indelible mark on Hollywood, setting the stage for future studio dynamics.
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Legacy of Risk-Taking: Hughes' tenure at RKO showcases the fine line between visionary leadership and reckless management. While he achieved notable successes by turning scandals into box office gold, his methods ultimately led to significant financial losses and contributed to the eventual decline of RKO as a powerhouse in Hollywood (41:00).
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Foreshadowing Future Episodes: The episode sets the stage for the next installment, teasing Hughes' obsessive search for Communists and the mounting lawsuits that would further jeopardize RKO's stability.
Notable Quotes with Timestamps:
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Howard Hughes on Mayo Scandal (04:12):
Howard Hughes: "Person in your life who just can't stand Mayo? Call them dramatized. Call them close minded."
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Robert Mitchum’s Arrest Scene (19:05):
Robert Mitchum: "Hey."
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Director Roberto Rossellini on "Stromboli" (32:18):
Roberto Rossellini: "It's obvious that Howard hasn't read a word, but he's the one holding the purse strings."
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Ingrid Bergman's Response to Howard Hughes (32:32):
Ingrid Bergman: "No, it's not that kind of picture. This is about real people living simple, difficult lives, seeking comfort in a hostile world."
Key Takeaways:
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Aggressive Acquisition: Howard Hughes' strategic purchase of RKO Pictures marked the beginning of a transformative yet tumultuous era for the studio.
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Controversial Leadership: Hughes' unorthodox methods, including leveraging personal scandals, redefined traditional studio management but also led to significant financial instability.
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Legacy of Scandal-Driven Success: While Hughes successfully turned scandals into box office opportunities, the long-term sustainability of such tactics remained questionable, ultimately contributing to RKO's decline.
For those interested in the intersection of business acumen and Hollywood's golden age, this episode provides a compelling narrative of ambition, strategy, and the high stakes of the entertainment industry.
