Sony Pictures acquires Alamo Drafthouse Cinemas in historic deal

Alamo Drafthouse

Heather lea kennedy

In a groundbreaking moment, Sony Pictures Entertainment has acquired Alamo Drafthouse Cinema in a deal that returns a major Hollywood studio to the business of owning a movie theater for the first time in more than 75 years with some exceptions.

From 1948 until 2020, the US Department of Justice prohibited film distributors from owning an exhibition company under what were known as the Maximum Consent Decrees, which arose from a 1948 US Supreme Court ruling. The decrees essentially dismantled the old Hollywood studio system by forcing major To strip her theatrical properties.

At the time, major corporations controlled essentially all aspects of the film industry, from talent to production to theaters. The decrees forced exhibitors to stop practices such as “block booking” (bundling multiple films into a single theater license) and “ring-dealing” (entering into a single license covering all theaters in a theatrical circuit). But the scene was radically different at that time. There were no multiplexes, only single-screen theaters that could run a single movie for months; It is a scenario that plays out in nepotism.

Sony is the first major Hollywood studio to step up and test the waters since Paramount’s edicts were officially rescinded in 2020. The rules were relaxed for some in the 1980s, and studios including Sony and Universal bought various stakes in certain franchises, but the economics ultimately were of no consequence. meaning.

The only major movie producers to take over theaters since 2000 have been Netflix and Amazon. Netflix bought the Egyptian Theater in Los Angeles and the Paris Theater in New York in order to satisfy filmmakers who want to show their films on the big screen, as well as to qualify their titles for awards. Amazon had the same goal when purchasing the old ArcLight location in downtown Culver City, Los Angeles, though that cinema is a first-run theater, meaning Amazon has to book new movies in addition to its showings. (In a twist, AMC Theaters, the world’s largest movie theater owner, got into the distribution business last year when it acquired the rights to Taylor Swift’s film.) Tour of the ages document.)

Alamo filed for Chapter 11 bankruptcy protection in 2021, when it was still reeling amid the COVID-19 pandemic. Altamont Capital, Fortress Investment Group and League emerged as owners after the bankruptcy. Other parties eyeing Alamo include Cinemark and a major exhibitor in Latin America, sources say. Alamo isn’t the only exhibitor to have considered, or are considering, bankruptcy in the wake of the pandemic and writers and actors strikes, which have slowed streaming content to a trickle (year-to-date domestic revenues are down more than 24 percent).

Wednesday’s announcement stressed that Alamo Drafthouse — an independent chain with 35 locations that has been at the forefront of in-theater dining and other consumer-friendly initiatives — will continue to be run by Alamo CEO Michael Kosterman, under a new division he will lead that will also be in charge of Sony. PicturesExperiences. Sony said the deal reinforces its long-term commitment to theatrical exhibition and ongoing initiatives in experiential entertainment.

Kosterman will report to Ravi Ahuja, President and Chief Operating Officer of Sony Pictures Entertainment.

“We are excited to make history with Sony Pictures Entertainment, and have found the right home and partner for Alamo Drafthouse Cinema,” Kosterman said in a statement. “We were created by movie fans for movie fans. We know how important this is to Sony, and it serves as further proof of their commitment to the theatrical experience. Together, we will continue to innovate and provide new and exciting opportunities for our teammates and moviegoers alike.”

Tom Rothman, Chairman and CEO of Sony Pictures Motion Picture Group, added, “Alamo Drafthouse has always held a high regard for the craft of filmmaking and the theatrical experience, which are core shared values ​​between our companies. I’m amazed that our company does this.”

Alamo will continue to operate all 35 movie theaters in 25 metro areas under the Alamo Drafthouse brand. Alamo Drafthouse-owned Fantastic Fest, a world-renowned film festival, was included in the acquisition and will also continue to be operated by Alamo Drafthouse. The company’s headquarters will remain in Austin, Texas.

“We strongly believe in engaging outdoor entertainment enthusiasts in fun and distinctive ways as we recently saw with our Wheel of Fortune LIVE! Travel Tour and the opening of Wonderverse in Chicago,” Ahuja said in a statement. “Alamo Drafthouse’s premium cinema experience, impressive brand and community are well aligned.” The Redeemer does well with this vision. Our Crunchyroll business also aligns well with the interests of its audience. We look forward to building on the innovations that have made Alamo Drafthouse successful and will of course continue to welcome content from all studios and distributors.

Founded in 1997 by Tim and Karrie League as a single-screen mom and pop theater in Austin, Texas, Alamo Drafthouse has grown into a thriving, dynamic dine-in cinema chain beloved by its fans and the industry alike.

As the seventh largest movie theater chain in North America, it releases more movies annually than any other movie theater chain, welcomes more than 10 million guests annually, and has built a highly engaged core audience of 4 million loyal members. Last year, the movie theater chain saw a 30 percent jump in box office revenue compared to the previous year, which was ahead of the industry as a whole.

SPE has acquired Alamo Drafthouse from owners Altamont Capital Partners, Fortress Investment Group and founder Tim League. Goldman Sachs & Co. LLC served as the exclusive financial advisor to Alamo Drafthouse in the transaction.

“We are thrilled to join forces with Sony Pictures Entertainment to expand our company’s vision to be the best cinema that has ever existed, or will exist, in ways we could only ever dream of,” said Tim League. “They have a deep respect and understanding of cinema’s ability to drive growth and create a lasting cultural impact that aligns perfectly with everything Alamo Drafthouse stands for.”

The news is sure to be met with a mixture of relief and concern by the famously loyal fans of the series.

On the one hand, Alamo has been facing serious financial problems since declaring bankruptcy during the pandemic in 2021 and was bailed out by a private equity firm. Last week, five North Texas locations closed amid one franchisee also filing for bankruptcy. Having Sony on board certainly gives the theater chain some strong financial support going forward, and hopefully investment for further expansion.

However, the Alamo — which currently operates theaters in 14 states — is arguably the only theater chain in the country with a very specific, well-polished character, one to which you can trace the company’s roots as a one-room theater founded in downtown Austin.

For example, previews for Alamo are filled with clever, carefully curated archival footage relating to the upcoming film (no ads). The chain invests in ongoing unique programming (such as the popular Master Pancake live parody events). It sometimes hosts daring stunts – like in 2015 star Wars A cinematic endurance marathon where a theater full of fans competed to see who could endure watching the sci-fi epic the longest (the winner lasted 46 hours straight). Alamo also has what is considered the strictest no-talking and no-texting policy in the country, which it pioneered in pre-show ads such as This famous viral example.

One question going forward is: Will Alamo be able to maintain its independent spirit now that it’s under the ownership of a major studio? (Although studios generally aren’t involved in things like advance screening announcements or cinema policies. That’s up to the exhibitors.)

June 12, 4:25 p.m: Updated with an additional date regarding higher decrees and various exemptions.