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By the time the curtain was drawing to a close on the 1970s, the economic model that the movie business had operated on for the previous fifty years was breaking down. Everything was in flux. Up until that point, the major studios survived—and thrived—on a steady diet of box office singles and doubles made on responsible and well-considered budgets. Naturally, there were occasional strikeouts and home runs. But the long-term health of the industry was based on scale and small-but-profitable margins. Then, in the second half of the ’70s, George Lucas and Steven Spielberg came along and upended what had come to be considered business as usual. The dramatic and sudden nature of the change ushered in by these two filmmakers and friends had caught the studios by surprise. And it would lead to a collective sense of panic that would result in skyrocketing budgets, followed by alternating bouts of cuticle-chewing anxiety and fevered gold-rush delusions that would change the industry forever.
The conventional wisdom has always tended to lay the blame for this new supersize movie mentality squarely at the feet of Spielberg’s great white hit Jaws. But in truth, the movie business had been gradually tilting in this direction long before that leviathan landed in theaters on June 20, 1975. The industry had been changing for a while—both on-screen and off. In the late ’60s, the rise of the so-called New Hollywood saw a younger, hipper generation of antiestablishment film school graduates weaned on foreign films, downbeat endings, and a maverick disregard for Tinseltown tradition storming the studio gates. Directors such as Francis Ford Coppola, Dennis Hopper, Hal Ashby, and Martin Scorsese cloaked their ambition—a dirty word at the time, at least in their circles—behind the façade of art and auteur theory. And while Lucas and Spielberg were technically a part of this generation, they weren’t of it. They didn’t think audiences had to meet them at their elevated level. They preferred to meet the audience at theirs. They were populists who just happened to have a Midas touch.
At the same time, a different kind of transition was taking place inside the studios’ boardrooms. The immigrants and old-school rainmakers who had once turned motion pictures into America’s most influential cultural export in the ’30s, ’40s, and ’50s were dying off, handing the reins of power to multinational conglomerates and bean-counting executives who hungered to add a little showbiz glitz to their diverse portfolios. Green lights were now determined less by gut instinct than by ledger books, adding machines, and committees. The demand for bigger and bigger profits became more and more urgent. It was no longer acceptable to merely crank out singles and doubles. These new MBA-wielding corporate overlords wanted home runs every time at bat. And the small handful of directors and movie stars who could reliably provide those home runs became the new centers of power.
Soon, the studios began taking fewer but pricier gambles. Their annual production slates shrank and ballooned simultaneously. There was less room for error. As a result, those slates would soon be filled with presold sequels and extensions of what the public had already shown that it wanted—uninspired retreads like The Concorde: Airport ’79, Moonraker, and Rocky II. These movies had more money funneled to them in terms of their budgets, above-the-line salaries, and shock-and-awe marketing campaigns. But they were no longer carefully sold to audiences gradually, region by region, through the traditional platform-release strategy. They opened everywhere at once, turning their kickoff weekends into do-or-die referendums where three years of work would be judged by three days of box office receipts.
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In the months leading up to Jaws’ release in the summer of 1975, as Universal’s brass were still chugging milk of magnesia and nursing ulcers caused by the costly and seemingly endless ordeal of making it, it was decided to open the film in more than a thousand theaters—an enormous number of screens even for a wide release at the time. After all, within the walls of the studio, the jury was still very much out as to whether the twenty-eight-year-old Spielberg was a genius on the rise or a profligate neophyte in way over his head. During the film’s disastrous shoot on Martha’s Vineyard, Jaws’ budget had mushroomed from $4 million to $9 million and had nearly given its director a nervous breakdown. Even after the film was finally in the can (after going one hundred days over schedule), Universal was so scared—and scarred—it still wasn’t sure what it had on its hands. Their instincts had been replaced by fear. Would Jaws be a summer sensation or a chum-scented flop?
An early test screening in Long Beach, California, would soon make it clear that the studio was sitting on a hit. The public had finally spoken … and gasped and shrieked. At the last minute, the newly bullish studio cut back the film’s play dates by more than half and eventually opened it on a still-massive 409 screens. Within a year, Jaws would soar past The Godfather to become the highest-grossing movie of all time, with $123.1 million in box office rentals during its initial run—a record that Lucas would leapfrog past two summers later with Star Wars. Soon, Spielberg and Lucas would, rightly or wrongly, be blamed in certain quarters for ushering in the modern-day blockbuster era and all the soulless tentpoles that have come in their wake. It was an albatross that, even to this day, Spielberg still can get defensive about. “I disagree when people say Jaws was the first blockbuster,” the director told me. “I just think it made so much money so quickly it caught people by surprise, not the least of which, me. The complaint that Jaws ushered in the summer event film, or the blockbuster, is just something that caught on. It’s more myth than fact.”
Either way, Jaws would turn Spielberg into the most sought-after director in town. And yet, he still came across like a nerdy and slightly awkward man-child in person—one who only seemed comfortable talking about movies or playing video games. But beneath his square, stammering Peter Pan persona lay the calculating mind of a chess grandmaster. He instinctively seemed to understand, better than any of his peers, how both Old and New Hollywood worked. Where power resided and how to grab it. There was nothing naive or childlike about his ambition. He may have tried to maintain an outward air of aw-shucks humility, but deep down, he was well aware of the seemingly limitless creative capital that Jaws’ success had given him. And he was also savvy enough to realize that he may never be in such a position of power again. For the first time in his career, he had leverage … and he had every intention of using it.
After the runaway success of Jaws, Spielberg seemed to be constantly hounded by glad-handing agents, backslapping studio execs, and even his envious coterie of filmmaker friends about what he was going to do for an encore. It was actually a question that he’d been asking himself ever since he left Martha’s Vineyard. And it brought him no small amount of anxiety. On the one hand, he had just delivered the biggest box office phenomenon of all time. On the other, whatever he chose to do as a follow-up couldn’t possibly live up to what he’d just accomplished. It felt like a no-win proposition, a prison with gilded bars. He was terrified that he wouldn’t be able to top it. The one thing that Spielberg did know was that making movies was in his blood and that he had to get back to work.
Realizing that he might never get a better opportunity to make a personal film, Spielberg returned to an idea that he had sold to Columbia back in 1973. That film, which would eventually evolve into Close Encounters of the Third Kind, was still going by the title Watch the Skies—a reference to the 1951 sci-fi classic The Thing from Another World. The roots of Watch the Skies dated back to an indelible moment in Spielberg’s childhood, when he and his father stayed up late together to watch a meteor shower near their New Jersey home. Even in adulthood, it remained one of the most fondly recalled events of his life, a moment to hold and cherish with a father who would ultimately leave him and his mother on their own. It was his Rosebud. At eighteen, Spielberg had turned that precious memory into a home movie called Firelight. Years later, he would revisit it in a short story about a midwestern lovers’ lane where teenagers witness a light show in the sky, titled “Experiences.” This half-formed idea—which blended the seeming safety of suburbia with UFOs and equal doses of fear and wonder—was enough to convince Columbia to give him a development deal before he went off to make Jaws. It was now time to return to the story yet again.
In the mid-’70s, with the nation still bruised and battered from the scandal of Watergate, Spielberg had initially envisioned Watch the Skies as a conspiracy thriller about the government covering up the truth about alien life from its citizens. Which is how he described what he wanted to his friend, screenwriter Paul Schrader (Taxi Driver), when he offered him $35,000 to turn the idea into a script. As for Columbia, it was thrilled to have Spielberg back on its lot. Not only because he had just directed the biggest box office hit of all time (although that was a big part of it) but also because the studio had recently found itself on shaky financial ground that was beginning to feel like quicksand. The studio’s increasingly desperate new head, David Begelman, would welcome Spielberg with open arms. After the director’s seemingly endless ordeal of being on the defensive with certain executives at Universal during the nightmarish making of Jaws, Begelman’s promise of “Whatever you need, Steven” felt like a dream come true.
There was just one problem. In the three years since Spielberg had sent Schrader off to write the screenplay for Watch the Skies, the director’s vision for the story had evolved significantly. The more he thought about the picture, the more it seemed to change. With Watergate now further removed from the headlines and the national psyche, the story he wanted to tell had less to do with paranoia and conspiracies and more to do with obsession, spirituality, and awe. It was becoming less about fear and more about hope. Fortunately, Schrader, whose vision for the film never quite meshed with Spielberg’s and who never really got the assignment to begin with, was relieved to move on to other things and get the project off his plate.
“Paul wrote a screenplay that was really antithetical to what I had been dreaming about all of those years,” says Spielberg. “It was simply not the movie I wanted to make. I figured the only person to tell the story at that point was the person who’s been living with it the longest. So I rented Francis Coppola’s suite at the Sherry-Netherland for about six weeks and wrote half the script there. And for the next ten weeks after that, I wrote back in LA in my living room from 8:00 p.m. to 8:00 a.m. every day. I worked nights and slept days.”
What ultimately emerged from Spielberg’s string of nocturnal writing jags was Close Encounters—a cosmic cocktail of Capra-esque everyman sentimentality and Eisenhower-era drive-in science fiction. Returning from Jaws was Richard Dreyfuss as an Indiana electrical lineman named Roy Neary—an ordinary man who has a firsthand brush with something momentous and otherworldly, following his obsession until he comes face-to-face with the ultimate extraterrestrial light show. Sharing his obsession was Jillian Guiler, played by Melinda Dillon, who was both utterly believable and emotionally devastating as a mother who helplessly watches as her young son is sucked up into the sky by a giant spaceship, setting out on the same quest as Roy.
On paper, Close Encounters may have sounded like a riff on The Day the Earth Stood Still. But Spielberg was now a kid in the world’s most expensive sandbox. And instead of cheap pie-tin flying saucers, his film would be accompanied by the most dazzlingly phantasmagoric special effects Columbia’s money could buy. It was personal filmmaking on a mammoth canvas. When asked if he believed in UFOs at the time, Spielberg would cagily reply that he wasn’t sure. But, he always added, he did believe in people who believed in them. To lend legitimacy and insight to the nascent production, Spielberg hired J. Allen Hynek, a scientist who had worked with the United States Air Force on Project Blue Book (its top-secret UFO program) as a technical consultant. Alarmed by this bit of news, NASA reportedly drafted a twenty-page letter and sent it to Spielberg, warning him that releasing Close Encounters would be “dangerous.” Rather than being scared off, the director took this as a sign that he was onto something, and he forged ahead with a new determination. He would need it.
When principal photography began in earnest in May 1976, the film’s budget was set at a modest $4.1 million. Still haunted by the experience of shooting on Martha’s Vineyard, the director originally intended to film Close Encounters on the soundstages that Columbia shared with Warner Bros. in Burbank. But as Spielberg’s vision for the movie became more and more grandiose, he decided that location shooting would not only be preferable but necessary. Spielberg talked Columbia into turning an abandoned World War II airplane hangar in Mobile, Alabama, into the film’s base of operations. Meanwhile, the director dispatched his trusted Jaws production designer, Joe Alves, to scour the country for a suitable UFO landing site—something both remote and awe-inspiring. Alves found such a place in Devils Tower National Monument, a giant butte of serrated rock that rises out of the prairie like a prehistoric tree trunk near Wyoming’s Black Hills. What had started off as a modest science fiction tone poem was becoming something far bigger … and costlier. Before a foot of film had even been shot, Spielberg’s budget had risen to $5.5 million. Then $9 million. Then $11.5 million. To make matters even more precarious for Columbia, the director still had no clue how much Douglas Trumbull’s special effects would end up costing. So, instead, he just kept feeding the studio phony lowball estimates plucked out of the air.
Alarmed by Spielberg’s ever-spiraling budget, Columbia sent a fleet of nervous production executives to hover around the Mobile hangar while, back in LA, the studio began scrambling to round up outside investors to minimize its financial exposure. That was only the start of the bad news: Tropical storms demolished the sets in Alabama, forcing them to be rebuilt from scratch. Meanwhile, the film’s producer, Julia Phillips, was spiraling deeper and deeper into cocaine addiction and would eventually be fired from the film. And the actors struggled to act opposite optical effects they couldn’t see—and which the director had a hard time articulating since they hadn’t even been conjured yet. But Spielberg’s vision just kept expanding. He now decided that he wanted—no, needed—to send a film crew to India to shoot a chaotic crowd scene where a mass of villagers chant the aliens’ five-note message back to the heavens. When it was all said and done, Close Encounters’ price tag would reach $19.4 million.
Meanwhile, back on the Columbia lot, the studio had bigger problems than Spielberg’s cash-hemorrhaging epic. It was about to get swept into a scandal that would rock Hollywood to its very core. David Begelman, the studio’s motion pictures president since 1973, and Spielberg’s most ardent champion on the lot, had been implicated in a brazen check-forging scheme that, like Watergate, started off relatively small but eventually snowballed into an exposé on Hollywood’s unchecked excess and creative business practices. While Begelman earned a lavish $300,000-a-year salary and drove a luxury car paid for by the studio, his self-destructive inner demons would drive him toward risking everything he’d achieved. It all started in February 1977, when the actor Cliff Robertson noticed that a $10,000 check from Columbia made out to him had been cashed by someone else who had forged his signature. That someone else would turn out to be Begelman. And Robertson’s check was just the beginning. After the studio conducted an internal audit (alongside parallel investigations by the FBI and the LAPD), it turned out that Begelman had embezzled roughly $75,000. That figure may not have amounted to much by the high-stakes standards of Hollywood’s major studios, but the sheer sociopathic self-destructiveness of his crimes—not to mention his repeated denials—turned the Begelman affair into a brush fire of bad press that Columbia needed to extinguish before the big bet of Close Encounters was released on November 16, 1977. The studio’s future, both in terms of its fiscal health and its reputation on Wall Street and in the industry, was riding on Spielberg’s film.
In May 1977, as Spielberg’s eyes were glazing over as he slogged his way through postproduction on Close Encounters, George Lucas threw his friend a sorely needed rescue line. Lucas’s own sci-fi epic, Star Wars, was about to open, and the last place the director wanted to be was Hollywood. If the movie flopped—and he sincerely thought it might—he wouldn’t be able to handle all the awkward embraces and forced hang-in-there smiles. And if the movie turned out to be a hit, well, he didn’t want to be around for that either. All those ass-kissing phone calls and hourly box office updates. He needed to get away. Lucas asked Spielberg if he wanted to escape the Tinseltown pressure cooker with him and his wife, Marcia (who had largely saved Star Wars in the cutting room as the film’s editor), and tag along with them to Maui. Spielberg jumped at the offer.
Blissfully out of touch, the two grown men acted like little boys, building sandcastles on the beach. At one point, Lucas was summoned into his hotel, the Mauna Kea, to take an urgent phone call. When he returned, he told Spielberg that Star Wars was playing to sold-out audiences across the country. It was a hit. One of them, at least, could exhale. Soon, the conversation turned to movies as it always did. Lucas asked his friend what he wanted to direct after Close Encounters. Recalls Spielberg, “I told George that I wanted to make a James Bond movie, if only they’d hire me. Then George said, ‘I’ve got something better than Bond,’ and sat down and told me a story he had cooked up several years before.” That story told the tale of a thrill-seeking archaeologist who goes hunting for the Old Testament’s Ark of the Covenant. He imagined it as an homage to the old Saturday afternoon serials he got lost in as a kid in Modesto. The problem was that Lucas was beginning to think that he was done with directing. He didn’t have the same passion for it that Spielberg had. So he turned to his friend and asked, “Are you interested?” Spielberg jumped at the offer. Lucas told him Raiders of the Lost Ark was his.
Five months later, Columbia was finally ready to unveil Close Encounters for its first test audience in Dallas. Even though Spielberg and Lucas were undeniably tight and cheered each other on, part of their bond included a healthy measure of friendly competition. Spielberg couldn’t help but wonder whether Star Wars’ success would help or hurt his sci-fi movie. And, deep down, he wished that his film had reached theaters first. But even by the time of the October preview in Dallas, Spielberg had to basically have the film pried from his hands with a crowbar. He thought he needed another month or two to get it where he wanted. One of Spielberg’s earliest ideas for Close Encounters was to have Jiminy Cricket’s rendition of “When You Wish Upon a Star” from Pinocchio play on the soundtrack at the end of the film as the alien spaceship ascends to the heavens with Dreyfuss’s Roy Neary aboard. In retrospect, it’s one of those ideas that sounds completely ridiculous after the fact. But Spielberg was dead serious about it despite the studio’s best efforts to dissuade him. In the end, they agreed to let the test audience decide. Two versions of Close Encounters were unspooled at Dallas’s Medallion Theater—one with the song and one without. In the end, the mob had spoken and Spielberg had listened, albeit reluctantly. The song was cut.
The Dallas screenings had gone better than expected. The suits back at Columbia, even though they were still neck-deep in the Begelman scandal, could finally breathe, if just for a moment. Because disaster was about to strike the studio—and Spielberg’s film—once again. It turned out that an enterprising reporter from New York magazine named William Flanagan had managed to sneak his way into one of the Dallas test screenings by swapping driver’s licenses with an audience member and giving him twenty-five dollars for his trouble. Flanagan proceeded to write a venomous takedown of both Spielberg and the boy wonder’s latest opus. If the secrecy around Close Encounters hadn’t been as tightly buttoned up as it had been during its production, it’s likely that the story would have vanished into the ether by the time the next news cycle rolled around. But since information about the film was so hard to come by, the New York article landed with the impact of an atomic bomb.
“In my opinion, the picture will be a colossal flop,” Flanagan predicted. “It lacks the dazzle, charm, wit, imagination, and broad audience appeal of Star Wars.” Only a follow-up piece in Time was able to stanch the bleeding. That magazine’s film critic, Frank Rich, had also managed to wheedle his way into one of the Dallas screenings and had come away with a completely different opinion. “Although the movie is not a sure blockbuster … it will certainly be a big enough hit to keep Columbia’s stockholders happy,” he wrote. “More important, Close Encounters offers proof, if any were needed, that Spielberg’s reputation is no accident. His new movie is richer and more ambitious than Jaws, and it reaches the viewer at a far more profound level than Star Wars.”
When Close Encounters finally opened on November 16, 1977, the vast majority of critics lined up with Rich rather than Flanagan. Sci-fi author Ray Bradbury raved that it was “the most important film of our time,” adding, “Spielberg has made a film that can open in New Delhi, Tokyo, Berlin, Moscow, Johannesburg, Paris, London, New York, and Rio de Janeiro on the same day to mobs and throngs and crowds that will never stop coming because for the first time someone has treated all of us as if we really did belong to one race.” Close Encounters would end up raking in $270 million at the box office.
However, more important than any positive review or breathless testimonial for Spielberg was that he’d finally proven that despite all the naysayers, natural disasters, and nose candy that had plagued Close Encounters, his money-minting reputation was no fluke. Looking back, Spielberg says, “Close Encounters was the first film since my 16 mm short-subject days that I wrote and directed. It made it much more personal for me. I knew the material so well because I had dreamed it up. It was also the first time I’d ever been nominated for Best Director, and it was the greatest reward of my professional life.”
In the immediate afterglow of Close Encounters, Spielberg was once again inundated with directing offers. Some were easy to turn down (Jaws 2); others he seemed to seriously consider (The Bingo Long Traveling All-Stars & Motor Kings). But even then, his wavering bouts of indecision forced studios who were unwilling to wait around to move ahead without him. Instead, Spielberg eventually launched into 1941—a deliriously broad comedy in the vein of It’s a Mad, Mad, Mad, Mad World about Los Angeles in the panicked days after the attack on Pearl Harbor. The project’s original title, The Night the Japs Attacked, probably should have been the first sign that it was a bad idea. But after the backbreaking and emotionally sapping productions of Jaws and Close Encounters, Spielberg thought directing a rat-a-tat comedy full of car crashes and wanton property destruction would be just what the doctor ordered. He thought wrong. The film ended up being a shambles—an unrelentingly juvenile slog.
So why did he do it? Well, in the late ’70s, Spielberg, like the rest of young America, had dialed in to the subversive satire and silly slapstick of National Lampoon, Saturday Night Live, and Animal House. He even began palling around backstage at 30 Rock with John Belushi and Dan Aykroyd. For the first time in his life, the square director finally felt hip and cool in their company. He even gave both of those comedians juicy roles in 1941. But by the time the film wrapped, going way over schedule and even further over budget were becoming as much signature trademarks for Spielberg as his ability to spin celluloid into gold. With its insane final budget of $31.5 million, 1941 would push his benefactors’ patience to the breaking point. And this time, there was no miraculous box office redemption to justify his hubris.
It turned out that Spielberg and comedy were like oil and water. He simply had no aptitude for it. It would be the first time in his career that the director had gambled and lost. And it stung. “1941 was supposed to be a comedy, and it was really two hours of wrecking stuff,” says Spielberg. “I had fun directing it, but it was one hundred seventy-eight shooting days of breaking things—including almost breaking the bank at Columbia and Universal. It was my failed attempt to become a member of the National Lampoon. The fact that it wasn’t a hit didn’t sting as much as the reviews, because by the time the critics got through with it, there was nothing left to sting.”
Fortunately, Spielberg didn’t have to put on a hairshirt and prostrate himself while looking for a job after 1941’s critical butchering. He already had his next project lined up. After their sandcastle summit in Hawaii, where they had first agreed to make Raiders of the Lost Ark together, Spielberg and Lucas reached out to Lawrence Kasdan (who had proven his worth while doing a rewrite on The Empire Strikes Back) to take a crack at the film’s swashbuckling screenplay. Paramount’s Michael Eisner was willing to gamble on the film’s projected $20 million budget after several studios (including Fox and Universal) balked at Lucas and Spielberg’s borderline outrageous demands—massive salaries, unprecedented back-end points, total ownership rights following its release, and handsome bonuses for completing the film under budget. In the end, Raiders would turn out to be the perfect antidote to the crushing responsibilities of adulthood that both men were feeling as newly minted Hollywood moguls. Staging its rip-roaring set pieces would feel like grown-up playdates. They felt as free as kids playing on a beach.
However, they still needed to wrestle Kasdan’s script into shape … and find their leading man. Originally named Indiana Smith, Lucas and Spielberg’s thrill-seeking archaeologist had shape-shifted over time from a playboy and gambler not unlike Ian Fleming’s version of 007 (albeit with a slightly seedy dash of Humphrey Bogart’s Treasure of the Sierra Madre scoundrel Fred C. Dobbs) into Indiana Jones—an outright hero with a bullwhip and a fedora. Their first choice for the role had been Tom Selleck—a young, largely unknown actor who was best known as the TV pitchman of Chaz cologne. But Selleck would be forced to pass on the part after CBS decided to exercise its option on him for its in-development series Magnum P.I. Less than two months before cameras began rolling on Raiders, Spielberg and Lucas offered the role to Harrison Ford, whose Star Wars character, Han Solo, seemed like a not-so-distant relative of Indy’s.
Finally, in June 1980, Spielberg and Lucas headed off to England, and then Tunisia, to begin shooting Raiders. Spielberg brought with him a vast supply of canned baked beans (he didn’t trust the food in North Africa) and the germ of an idea for what would become his next film. It was called Night Skies. But by the time Raiders would wrap and he’d leave the desert behind, it would have a different name: E.T. and Me.
Copyright © 2024 by Chris Nashawaty
