Alamo Drafthouse
Heather Lea Kennedy
In a groundbreaking moment, Sony Pictures Entertainment has acquired Alamo Drafthouse Cinema in a deal that puts a major Hollywood studio back in the business of owning a movie theater for the first time in more than 75 years.
From 1948 to 2020, the U.S. Department of Justice prohibited film distributors from owning an exhibition company under so-called supreme consent decrees, stemming from a state Supreme Court ruling. -United States of 1948. These decrees essentially dismantled the old Hollywood studio system by forcing the majors to divest their stakes in movie theaters.
At that time, the majors essentially controlled every aspect of cinema, from talent to productions to theaters. The decrees forced exhibitors to put an end to practices such as “block booking” (grouping several films into a single theater license) and “circuit deal” (subscribing to a license covering all the cinemas in a distribution circuit). rooms). But the landscape was radically different then. There were no multiplexes, but rather single-screen theaters that could show a film for months; a scenario that played into favoritism.
Sony is the first major Hollywood studio to step forward and test the waters since the executive orders were overturned.
The only major film producers to acquire theaters since 2000 were Netflix and Amazon. Netflix purchased the Egyptian Theater in Los Angeles and the Paris Theater in New York in order to appease filmmakers who want their films on the big screen, as well as qualify their titles for awards. Amazon had the same goal in purchasing the former ArcLight location in downtown Culver City in Los Angeles, although that theater is a first-run theater, meaning Amazon must book new movies in addition to its offering . (Conversely, the world’s largest theater owner, AMC Theaters, entered the distribution business last year by acquiring the rights to Taylor Swift’s film. Tour of the eras doc.)
Alamo filed for Chapter 11 bankruptcy protection in 2021, while it was still reeling from the COVID-19 pandemic. Altamont Capital, Fortress Investment Group and League became its owners after the bankruptcy. Sources say other parties interested in Alamo included Cinemark and a major exhibitor in Latin America. Alamo is not the only exhibitor to have considered, or is considering, bankruptcy in the wake of the pandemic and strikes by writers and actors, which has slowed the content pipeline (domestic revenue since the beginning of the year is down more than 24%).
Wednesday’s announcement highlights that Alamo Drafthouse — a 35-location independent chain that has pioneered dine-in theaters and other consumer-friendly initiatives — will continue to be led by Alamo CEO , Michael Kustermann, under a new division that he will lead. also in charge of Sony Pictures Experiences. Sony said the deal reinforces its long-standing commitment to theatrical exhibitions and its ongoing experiential entertainment initiatives.
Kustermann will report to Ravi Ahuja, president and COO of Sony Pictures Entertainment.
“We are thrilled to make history with Sony Pictures Entertainment and to have found the perfect home and partner for Alamo Drafthouse Cinema,” Kustermann said in a statement. “We were created by movie fans for movie fans. We know how important this is to Sony and this is further proof of their commitment to the theatrical experience. Together, we will continue to innovate and bring exciting new opportunities to our teammates and movie fans.
Tom Rothman, Chairman and CEO of Sony Pictures Motion Picture Group, added: “Alamo Drafthouse has always held the craft of filmmaking and the theatrical experience in high regard, which are core values shared between our companies. I’m glad our company is doing this.
Alamo will continue to operate its 35 theaters in 25 metropolitan areas under the Alamo Drafthouse brand. And Alamo Drafthouse-owned Fantastic Fest, the world-renowned genre film festival, is included in the acquisition and will also continue to be managed by Alamo Drafthouse. The company’s headquarters will remain in Austin, Texas.
“We strongly believe in engaging entertainment fans outside of the home in fun and distinctive ways, as we saw recently with our Wheel of Fortune LIVE! traveling tour and opening for Wonderverse in Chicago,” Ahuja said in a statement. “Alamo Drafthouse’s differentiated movie experience, admired brand and dedicated community align well with this vision. Our Crunchyroll business also aligns well with the interests of their audience. We look forward to building on the innovations that have made Alamo Drafthouse successful, and of course, we will continue to welcome content from all studios and distributors.
Alamo Drafthouse was founded in 1997 by Tim and Karrie League as a single-screen mom and pop repertory theater in Austin, Texas, and has grown into a thriving and dynamic movie theater chain beloved by its fans and the industry .
As the seventh largest movie theater chain in North America, it streams more movies per year than any other movie channel, welcomes more than 10 million guests each year, and has built a highly engaged audience base of 4 million of loyal members. Last year, the theater chain saw its box office revenue increase 30 percent over the previous year, outpacing the industry as a whole.
SPE acquired Alamo Drafthouse from owners Altamont Capital Partners, Fortress Investment Group and founder Tim League. Goldman Sachs & Co. LLC acted as exclusive financial advisor to Alamo Drafthouse in connection with 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 ever exist in ways we can only dream of,” said said Tim League, founder of Alamo. “They have a deep respect and understanding of cinema’s ability to drive growth and create lasting cultural impact, which aligns perfectly with everything Alamo Drafthouse stands for.”
The news is sure to spark a mix of relief and concern from the channel’s famous and dedicated fans.
On the one hand, Alamo has been struggling with serious financial problems since it declared bankruptcy during the pandemic in 2021 and was rescued by a private equity firm. Last week, five North Texas locations closed their doors while one franchisee also filed for bankruptcy. The arrival of Sony gives the cinema chain certainly strong financial support for the future and, hopefully, an investment for further expansion.
Yet Alamo — which currently operates theaters in 14 states — is arguably the only movie theater chain in the country with a very specific, well-honed personality, one that goes back to the company’s roots as a single-theater theater founded in downtown Austin.
Alamo movie previews, for example, are full of clever, carefully curated archival footage related to the upcoming film (commercial-free). The channel invests in unique, ongoing programming (like its popular Master Pancake live movie mocking events). It occasionally hosts daring stunts, like a 2015 Star Wars film endurance marathon, where a theater full of fans competed to see who could stand watching the sci-fi saga the longest (the winner lasted 46 hours straight). Alamo also has what is considered the strictest movie theater chain in the country, banning speech and texting, a policy it launched with pre-show ads like this famous and profane viral example .
One of the questions going forward is: Will Alamo be able to maintain its independent spirit now that it’s owned by a major studio, even though studios generally aren’t involved in areas such as pre-show advertisements or cinema policies. It depends on the exhibitors.