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The stage musical On the Town was based on the Jerome Robbins ballet entitled Fancy Free, which opened at the Ballet Theatre in New York in the spring of 1944. In addition to writing the book for the stage version of On the Town and writing the screenplay for the film, Betty Comden and Adolph Green appeared in the stage version in the roles of "Claire" and "Ozzie." News items in Hollywood Reporter in 1945 note that M-G-M purchased the rights to the musical (before it opened) for $250,000, and that $65,000 of that sum was used to finance the Broadway run of the show. A biography of producer Arthur Freed notes the following information regarding the development of the film: Before purchasing the film rights to the musical, M-G-M had assigned George Abbott, the director of the stage show, to direct the film version. According to the Freed biography, Louis B. Mayer and other studio executives disliked the stage show when they saw it and regretted their involvement in the property. By November 1945, the studio had assigned Gene Kelly and Stanley Donen to direct the film, and contracted Comden and Green to rewrite the book with much of Bernstein's original score discarded. The film features only four songs from the original musical, those composed by Leonard Bernstein, and six that were created especially for the screen. According to information contained in the file on the film in the MPAA/PCA Collection at the AMPAS Library, the Breen Office refused to allow the use of the word "helluva" in the song "New York, New York [it's a helluva town]." M-G-M later changed the word to "wonderful." The biography of Freed lists Andrew Marton as the second unit director and Charles Schoenbaum as the second unit photographer. Hollywood Reporter production charts list Clinton Sundberg in the cast, but he did not appear in the released film. A May 1949 Hollywood Reporter news item lists actress Irene Rohan in the cast, but her appearance in the final film has not been confirmed.
According to a June 1949 Hollywood Reporter news item, cameraman Harry Stradling worked on the film briefly, shooting one of the last musical sequences for the film. Various Hollywood Reporter news items indicate that nine days of filming took place at many locations in New York City, including the Brooklyn Navy Yard, Wall Street, the Statue of Liberty, Central Park and Fifth Avenue. The location shooting marked the first time a major studio dispatched a company to film musical numbers in public areas of New York City. Modern sources note that the final cost of the film was $2,100,000, and that is grossed in excess of $4,440,000. Roger Edens and Lennie Hayton received an Academy Award for the film's musical score. On the Town marked the screen debut of actresses Carol Haney and Bea Benaderet.