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In 1989, this business with its few remaining assets, the trademarks and remake rights to many classic RKO films, was sold to new owners, who now operate the small independent company RKO Pictures LLC. released The Jazz Singer, the first feature-length talking picture.Its success prompted Hollywood to convert from silent to sound film production en masse.and Fox, Hollywood's other vanguard sound studio, were already financially and technologically aligned with ERPI, a subsidiary of AT&T's Western Electric division.

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By the end of the year, RKO was making use of an additional production facility—five hundred acres had been acquired near Encino in the San Fernando Valley as a movie ranch for exteriors and large-scale standing sets.

Following the example of the other major studios, RKO had planned to create its own musical revue, Radio Revels.

The new company's two initial releases were musicals: The melodramatic Syncopation, which actually completed shooting before FBO was reincorporated as RKO, premiered on March 29, 1929.

A few nonsinging pictures followed, but the studio's first major hit was again a musical.

Negotiations resulted in General Electric acquiring a substantial interest in FBO—Sarnoff had apparently already conceived of a plan for the company to attain a central position in the film industry, maximizing Photophone revenue.