Sony Pictures Entertainment acquires Alamo Drafthouse Cinema and will manage 35 locations. This is a rare example of a traditional Hollywood studio owning a theater chain.
The deal, announced Wednesday, follows the Justice Department's decision in 2020 to repeal the so-called Paramount consent decree. This is a film distribution rule that has forced the largest Hollywood studios to sell their theatrical holdings since 1949. These regulations were intended to prevent studios from controlling the film business from creation to exhibition.
In 2019, Makan Delrahim, then the Justice Department's antitrust chief, said changes in the entertainment industry “made it virtually impossible for the remaining defendants to restore the cartel.” Sony's move could open the door to similar deals from other major studios. In recent years, leading streaming company Netflix has been purchasing theaters to show its movies.
Alamo, the seventh-largest theater chain in North America, operates theaters in 25 metropolitan areas across the U.S. and has invested in unique programming and catering to lure moviegoers away from the major multiplexes.
Terms of the deal were not disclosed. Sony acquired Alamo from Altamont Capital Partners, Fortress Investment Group and chain founder Tim League. Mr. League said the dine-in cinema chain was “very pleased” with the deal.
This is a financially challenging time for Alamo and the movie theater business as a whole. Several of Alamo's franchise stores filed for bankruptcy and closed this month, making Sony's move a potential lifeline for the struggling chain. Alamo filed for Chapter 11 bankruptcy protection in 2021 before private equity firms intervened.
The theaters will still operate under the Alamo Drafthouse brand, but will be managed by Sony's newly formed division led by Alamo CEO Michael Kustermann, Sony said.
“Alamo Drafthouse has always valued the craft of filmmaking and theatrical experience, which are fundamental shared values between our companies,” said Tom Rothman, CEO of Sony Pictures Motion Picture Group.
The industry has faced several headwinds in recent years. The pandemic has led to sluggish box office receipts, the recent bleak start to the summer blockbuster season, and a Hollywood strike that has reduced the number of movies studios produce. .
So far this year, ticket sales in the U.S. and Canada have totaled just over $2.8 billion, down 26% from the same period last year, according to Comscore.