The Kinks with a newly hired Dalton in 1969. From left: Dave Davies, Ray Davies, John Dalton, Mick Avory.
British production company Granada TV approached Ray Davies in early January 1969, expressing interest in developing a film or play for television. Davies was to collaborate with writer Julian Mitchell on the "experimental" programme, with a soundtrack by the Kinks to be released on an accompanying LP. Agreements were finalised on 8 January, and the project was revealed at a press release on 10 March. Separately, the Kinks began work on the programme's companion record, entitled Arthur (Or the Decline and Fall of the British Empire). Development of Arthur occurred during a rough period for the band, due to the commercial failure of their previous album The Kinks Are the Village Green Preservation Society and the subsequent single, "Plastic Man", as well as the departure of founding member and bassist Pete Quaife. In early 1969, Quaife had told the band he was leaving, though the other members did not take the remark seriously. When an article in the New Musical Express mentioned Maple Oak, the band he had formed without the rest of the Kinks' knowledge, Davies unsuccessfully asked Quaife to return for the upcoming sessions of Arthur. As a replacement, Davies called up bassist John Dalton, who had previously filled in for Quaife.
Davies travelled to United Recording Studios in Los Angeles on 11 April 1969, to produce American band The Turtles' LP Turtle Soup with engineer Chuck Britz. While in Los Angeles, Davies helped negotiate an end to the concert ban placed on the Kinks by the American Federation of Musicians in 1965. Although neither the Kinks nor the union gave a specific reason for the ban, at the time it was widely attributed to their rowdy on-stage behaviour. After negotiations with Davies, the Federation allowed the group to return to touring in America. Once the main sessions for the Turtles LP were completed, Davies returned to England. While Davies was abroad, the other members of the band had been rehearsing and practising for the upcoming album, as well as lead guitarist Dave Davies' solo album, nicknamed A Hole in the Sock of. When Ray returned, the Kinks regrouped at his house in Borehamwood, Hertfordshire, to rehearse Arthur.