This was the first Academy Awards ceremony broadcast in color by ABC Television, since ABC (Hollywood) had installed and was broadcasting in color in the 1965-1966 season. ABC contracted for the remote camera/technical crew coverage. Usually NBC TV had the broadcast rights and previously aired the Oscar Presentation in color. The Oscar Show had been presented from the Pantages Theater located in Hollywood. ABC TV won the lottery network pool by guaranteeing the Film Academy Board of Directors that the proceedings would be broadcast in color! The ABC Prospect-Talmadge studio's Construction-carpenter/Scenic/Special Effects/Drapery shop built and installed the scenery for The Santa Monica Civic Auditorium. This was the first time the Oscar Show had not been presented from Hollywood.
The 38th Academy Awards was conducted at the Santa Monica Civic Auditorium, with Bill Morris designing the main set; and musical segment Oscar Song Category production number scenery. As Production Designer-Art Director, Bill Morris incorporated in the main Oscar set large water ponds with fountains, a variety of staggered levels of ponds, which cascaded on either side of the upstage area, in front of the presentation Oscar Podium. During the telecast, the sounds of the fountains became a sound problem, with the sound department complaining "a lot" about the splashing water sound level! During specific category announcements, the fountains ceased, but were turned on during the Oscar-cast program. The set's color scheme was white and gold. This was the only instance when actual water and fountains were ever used for an Oscar Show on stage set feature.