RKO was conceived in 1927, when RCA president David Sarnoff approached Joe Kennedy who owned Film Booking Office of America (FBO). RCA was being left out of the sound boom in the film industry and Sarnoff wanted an outlet for the RCA sound systems. What followed was a miriad of financial maneuvers and circumstances.
Kennedy saw opportunity knocking in January 1928, when Orpheum Circuit Inc was formed to consolidate the holdings of the B. F. Keith Corporation, B. F. Keith-Albee Vaudeville Exchange, Greater New York Corporation, Vaudeville Collection Agency, and Martin Beck's Orpheum Circuit. This holding company was to manage the ownership of the the theater chains in the US and Canada with seating capacity of over a million theater seats and move them from vaudeville theaters into film theaters. Orpheum Circuit Inc had acquired American Pathe and Cecil B. DeMille's Producers Distributing Corp. to supply their theaters.
In May 1928, Kennedy acquired controlling interest of Orpheum Circuit Inc. which included their subsidiary, American Pathe Films and by October 1928 the merger of Orpheum Circuit Inc, including the Keith-Albee-Orpheum (KAO) theater chains and their subsidiary American Pathe and DeMille's Producers Distributing Corp (PDC), FBO studios, and Radio Corporation of America's Photophone division to form RKO was announced.
RCA would have controling interest of RKO, with Sarnoff as chairman of the board, and announced that only 'sound' pictures would be made at RKO. Sarnoff made sure that 'Radio' and the broadcast tower were the dominant symbols. In 1929 the name was official changed to Radio Pictures Inc and later RKO Radio Pictures Inc.
RKO started production in the FBO studios with former FBO vice-president Joseph I. Schnitzer over production and distribution and William LeBaron as head of production.
Kennedy wanted DeMille's Culver City studio, so DeMille was bought out and American Pathe moved into the DeMille studios with Kennedy having controlling interest. Undoubtedly, something else either was suppose to happen or didn't happen, because Kennedy became disgruntled and sold out Pathe and the Culver City studio to RKO on Jan. 29, 1931 (with their productions being released as RKO Pathe).
RKO dove heavily into musicals. Initially they were an overwhelming success but by 1931 the taste of the American public had changed and RKO was quickly in a financial bind.
In 1931 Sarnoff hired 29-year-old David O. Selznick to replace LeBaron as production chief. Selznick immediately implemented cost cutting methods and streamlined RKO into lower budget films. Selznick brought in directors George Cukor and Merian Cooper. He also signed Fred Astaire,John Barrymore, and Katherine Hepburn.
By 1932, releases were under the RKO Radio Pictures banner and Pathe was moved to producing newsreels and documentaries only. Selznick made a remarkable turnaround in RKO but the pre Selznick spending sprees were too hard to over come. Selznick only lasted 15 months with his last film that he put into production being King Kong by Merian Cooper.
Merian Cooper became head of production and even though the studio went into receivership, Cooper produced numerous successes especially with the coupling of Rogers and Astaire.
In October 1935, Floyd Odlum lead a syndicate that acquired 50% of RCA's ownership in RKO. Samuel Briskin was named as new head of production, but he only lasted a few months and Pandro Berman became head of production.
At the time, RKO cartoons were being supplied by Van Buren. An important move that the new management did was to drop Van Buren and sign a distribution deal with Walt Disney that would last from 1936 until 1954.
In 1937, Selznick approached RKO for a long term lease of the Culver City studio where Pathe had been headquartered. This set up the production lot for an MGM-Selznick production of Gone With the Wind which was shot primarily on the Culver City lot.
In 1938, George Schaefer would become president of RKO. Schaefer lead RKO through several successes with the top being Citizen Kane in 1941, but Welles sequel would become the undoing of Schaefer with over budgeting and cost overruns.
In June 1942, Scaefer resigned and Odlum bought a larger stake in RKO. Odlum took control of the studio and placed Charles Koerner, former head of the RKO theater chain, as production chief. Odlum signed a distribution deal with Samuel Goldwyn and several others. By 1943, Sarnoff sold off all RCA interest in RKO.
With US involvement in WWII and new management, RKO increased in profit and strength over the next few years.
1946 was a major turning point. There was change in the air with the end of the war and it wasn't good. As an after war reconstruction move, the UK and other European countries put restrictions of US studio involvement in their film industries. Koerner died and was replaced by Dore Schary. Disgruntled, Oldum sold off 40% of his RKO stock and backed away from the studio.
Profits fell across all the studios as McCarthyism ran through the film industry and caused Odlum to put up the remainder of his stock for sale.
Howard Hughes bought controlling interest in RKO in 1948, but it only worsened the situation. Within weeks of the Hughes takeover, Hughes had dismissed three-fourths of the work force. Production was virtually shut down for six months as Hughes ordered investigations into the politics of all remaining studio employees causing a 90% decline in RKO revenue.
To stop the government anti-trust suits that was giving the major studios headaches, Hughes was first to separate production and theaters by dividing them into separate corporations.
Strained production and lack of stability had brought RKO to a complete halt by 1952. Hughes sold his interest to a Chicago based syndicate that couldn't handle it and Hughes re-acquired it again in 1953.
Hughes sold off the Encino production lot with stockholders screaming of mismanagement. Racked with lawsuits, distribution deals including Goldwyn started collapsing. By 1954, Disney was also convinced that RKO was sinking and opened Buena Vista for their own distribution.
Hughes made a bold move to buy out the stockholders which cost him almost $24 million with the idea to sell off pieces to offset some of Hughes losses.
More lawsuits ensued and Hughes final sold RKO to General Tire for $25 million.
General Tire, which owned both radio and television stations, moved the RKO films to television. Even though an effort was made to put the studio back into production by hiring William Dozier as head of production, by 1957 film production was shut down for good and RKO distribution closed. The Culver City studios was sold to Desilu Productions.
In 1959, the word 'Pictures' was removed and the name changed to RKO General absorbing remaining RKO assets.