RKO was one of Hollywood's biggest studios. It not only made some of the biggest films, it also had a robust distribution arm that held the valuable contract to distribute Walt Disney's films. If Hollywood insiders had to choose which studio might not survive an industry shakeout, truly RKO would have been on everyone's survival list. Those insiders hadn't counted on Howard Hughes.
In 1948, Howard Hughes, the eccentric multi-millionaire wrested control of RKO. He had previously dabbled in films, producing pricy pictures that rankled the Hayes Office with their sexuality. Hughes' legendary meddling was typically the thing that caused the budget of his films to soar, which caused much worry in Hollywood where one could spend stratospherically as long as the result made it to the screen. Big spending on things that wouldn't be noticeable by the movie going audience was considered suicide. Sadly, RKO's death would, for the most part, be considered a suicide.
At this time, RKO operated like an assembly line. The studio's leaders set the tone for the types of projects they wanted to see and the supervisors would produce the types of films that would satisfy them. Cast, crew and writers were all RKO employees who received weekly pay checks regardless of whether they were working on a project or not. It all worked like a well oiled machine. That is, until Howard Hughes took control. Ever a micro-manager, Hughes stopped production throughout the studio. Only projects personally approved by him could start back up again. It would be the equivalent of barging into an egg processing plant and shutting it all down. What would be the end result? Tons of broken eggs and lost money.
Things were about to get even worse. The United States House of Representatives began convening the House Un-American Activities Committee (HUAC) which sought to remove alleged "communists" from American lives, including Hollywood. It would be a perfect storm of disaster for RKO. Now run by the most paranoid, obsessive compulsive person in Hollywood, RKO had just started getting back to normal when Hughes shut everything down again. This time, he would not permit a production to resume unless he was satisfied that it was completely free of communist influence. This would spell the end of the studio as the Hollywood biggie it had been. The lucrative contract with Walt Disney Productions was ended as Disney went out on its own for distribution. Several big name stars, unhappy with the lack of work, found ways to end their contracts. Mr. Hughes eventually sold the studio to General Tire, where it died an ignominious death. Its studio backlot sold to Desi Arnaz and Lucille Ball for their "Desilu Studios". The film catalog would get sold around town, ending up with Ted Turner and Warner Brothers. Howard Hughes would live out his life as a hermit in Nevada, possibly wondering where it all went wrong.