4. Kennedy moved to Hollywood to make movies
Kennedy began investing in small movie studios while working as a broker, and in 1926 he moved to Hollywood, to acquire and operate movie studios and invest in films. In the 1920s film studios also owned, through subsidiaries, movie theater chains which showed their films. Kennedy executed a hostile takeover of one such chain, Keith – Albee – Orpheum Theaters Corporation (KAO). The over 700 theaters acquired were in many cases vaudeville houses, which were converted to movie theaters. Kennedy merged his film interests into a new company, Ralph – Keith – Orpheum (RKO) in 1928 in a deal in which he pocketed a large profit through the manipulation of the stocks involved.
During his period of investing in Hollywood Kennedy made an estimated $73 million in today’s money. His brash interactions with the press, particularly Hearst Newspapers, made him nationally famous. He also carried on an affair with the glamorous actress Gloria Swanson for more than three years. She was not his only indiscretion. Most of the money Kennedy made in Hollywood was invested in real estate, including Hialeah Race Track in Florida, the Chicago Merchandise Mart – then the largest building in the world – and commercial properties in New York and Boston. In 1929 the stock market crashed, but Kennedy’s fortune remained intact, and even expanded during the Great Depression.