produced the extremely successful serialised episodes called The Perils of Pauline. By 1918 Pathé had grown to the point where it was necessary to separate operations into two distinct divisions. With Emile Pathé as chief executive, Pathé Records dealt exclusively with phonographs and recordings while brother Charles managed Pathé-Cinéma which was responsible for film production, distribution, and exhibition. 1922 saw the introduction of the Pathé Baby home film system using a new 9.5 mm film stock which became popular over the next few decades. In 1921, Pathé sold off its United States motion picture production arm, which was renamed "Pathé Exchange" and later merged into RKO Pictures, disappearing as an independent brand in 1931. Pathé sold its British film studios to Eastman Kodak in 1927 while maintaining thetheatre and distribution arm.[14]

Pathé was already in substantial financial trouble when Bernard Natan took control of the company in 1929. Studio founder Charles Pathé had been selling assets for several years to boost investor value and keep the studio's cash flow healthy. The company's founder had even sold Pathé's name and "rooster" trademark to other companies in return for a mere 2 percent of revenues. Natan had the bad luck to take charge of the studio just as the Great Depression convulsed the French economy.[15][16]

Natan attempted to steady Pathé's finances and implement modern film industry practices at the studio. Natan acquired another film studio, Société des Cinéromans, from Arthur Bernède and Gaston Leroux, which enabled Pathé to expand into projector and electronics manufacturing. He also bought the Fornier