Editing Walter Lantz Productions (section)

=== 1935–1940: The decline of Oswald and new stars ===
Control of Universal by founder Carl Laemmle and his family was slipping away because of financial difficulties and came to an end in 1936. [[John Cheever Cowdin]] became Universal's new president. With the change in management, Lantz seized the opportunity to ask Universal for permission to make his studio independent. Universal agreed, and on November 16, 1935, Lantz broke off and claimed the studio for his own, even though it remained on the Universal lot.

During the mid-to-late 1930s, Oswald's popularity declined, and Lantz experimented with other characters to replace him. After a succession of failed attempts, the 1939 cartoon ''Life Begins for Andy Panda'' became an instant hit, and [[Andy Panda]] became a successful substitute for Oswald, who was retired in 1938. Lantz also switched to all-color production in 1939, shortly before Andy's debut.

In 1940, the Walter Lantz studio was in trouble. Universal once again was facing severe financial difficulties and possible bankruptcy and decided to cut their weekly advance to the now-independent Lantz studio. This left Lantz scrambling for alternative sources for funds, forcing him to shut down the studio for a while. Lantz was able to gain the rights to the characters of his films (including Oswald the Lucky Rabbit) and an Andy Panda cartoon, ''[[Crazy House (cartoon)|Crazy House]]'', was developed into Lantz's first independently financed film. Lantz used the film as a final appeal to the heads of Universal and, in the end, was able to reach a satisfactory settlement with them. By autumn 1940, Lantz's studio was back in business again. The year also marked the debut of Lantz's biggest star: [[Woody Woodpecker]], who debuted in the Andy Panda cartoon ''[[Knock Knock (1940 film)|Knock Knock]]''.