Sony Pictures Buys Alamo Drafthouse
Sony Pictures Entertainment has acquired Alamo Drafthouse Cinema, the theater chain that inspired a passionate following with its creative cocktails, extensive food menu and strict “no talking, no texting” policies. The media company acquired Alamo Drafthouse from owners Altamont Capital Partners, Fortress Investment Group and its founder Tim League.
Under its new ownership, Alamo Drafthouse will be managed under a newly established division, Sony Pictures Experiences. In a press release touting the sale, the company said it “reinforces [Sony Pictures Entertainment’s] long-held commitment to theatrical exhibition and continued initiatives in experiential entertainment.” Alamo has been quietly soliciting offers for the past several months, but had struggled to find a buyer.
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Alamo Drafthouse’s Michael Kustermann will remain CEO of the pioneering dine-in movie theater chain and head Sony Pictures Experiences, reporting to Ravi Ahuja, president and COO of Sony Pictures Entertainment. All 35 of the chain’s cinemas will operate under the Alamo Drafthouse brand. Alamo Drafthouse-owned Fantastic Fest, its popular genre film festival, is included in the acquisition and will also continue to be operated by Alamo Drafthouse. The company’s headquarters will remain in Austin, Texas. It has locations in 25 metro areas.
“We believe strongly in engaging entertainment fans outside the home in fun and distinctive ways,” Ahuja said in a statement. “Alamo Drafthouse’s differentiated movie-going experience, admired brand and devoted community fit well with this vision.”
Sony has also moved more aggressively into the live experiences space. Last year, it launched Wonderverse Chicago, an immersive entertainment space that featured “Ghostbusters” and “Jumanji” virtual reality experiences, “Zombieland”-themed bumper cars, “Bad Boys” racing simulators and other attractions tied to its films. It also announced a “Wheel of Fortune” live traveling tour, based on the much-loved game show that it produces.
Founded in 1997 by Tim and Karrie League as a single-screen repertory theater in Austin, the company has become the seventh-largest theater chain in North America, catering to over 10 million guests annually. Like many theater chains, Alamo was hit hard by the pandemic, with many venues forced to remain shuttered or operating at limited capacity for months. It filed for Chapter 11 in March 2021 and reemerged from bankruptcy less than four months later. The theatrical box office has suffered in recent years, as Hollywood has struggled to produce as many movies due to COVID shutdowns and later the 2023 actors and writers strikes. However, Alamo with its loyal fanbase has fared better than its competition. Last year, the theater chain had a 30% jump in box office revenue from the previous year, a much more substantial improvement than the 21% increase experienced by the industry at large.
“We are beyond thrilled to join forces with Sony Pictures Entertainment to expand our company vision to be the best damn cinema that has ever, or will ever, exist now in ways we could only ever dream of,” said League. “They have a deep respect and understanding of cinema’s ability to both drive growth and create lasting cultural impact which aligns perfectly with everything Alamo Drafthouse stands for.”
Sony Pictures Chairman and CEO Tom Rothman has been one of the movie business’s biggest supporters of the theatrical experience. Even as other major studios moved more aggressively into streaming, shrinking the exclusive window in which their movies were in cinemas or forgoing them entirely, Rothman pushed to keep his films in theaters.
“Alamo Drafthouse has always held the craft of filmmaking and the theatrical experience in high esteem, which are fundamental shared values between our companies. I’m jazzed that our company is doing this,” said Rothman.
Financial terms of the deal were not disclosed. Goldman Sachs acted as exclusive financial advisor to Alamo Drafthouse in the transaction.
Alamo’s Kustermann hailed the deal as historic. And that might not be the case, but it marks a rare time in recent history when a studio has purchased a theater chain. It’s something that was made easier after the Paramount Decree, a 1948 anti-trust Supreme Court decision that prevented film production companies from owning exhibition companies, was allowed to sunset in 2020. But this isn’t the company’s first foray into exhibition. In the 1990’s, as federal regulations loosened, Sony owned and operated the Lowes Theatre chain.
“We were created by film lovers for film lovers,” Kustermann said in a statement. “We know how important this is to Sony, and it serves as further evidence of their commitment to the theatrical experience. Together we will continue to innovate and bring exciting new opportunities for our teammates and moviegoers alike.”
Some streaming companies have previously entered the exhibition business. Netflix has purchased two theaters, the Egyptian in Los Angeles and the Paris in New York, and Amazon bought the venue owned by the ArcLight in Culver City. It’s unclear if the sale of Alamo will entice other entertainment companies to get their own theater chains. The National Association of Theatre Owners, the exhibition industry trade association, struck a note of cautious optimism following the announcement.
“While there are many details to be revealed and better understood, Sony Pictures’ announcement of its investment in Alamo Drafthouse underscores one key thing we already know: theatrical exhibition is an industry worth investing in,” the organization said. “Sony has long been a strong supporter of theatrical exhibition and Alamo is a leader in creating innovative, fun experiences for people who love movies on the big screen. That Sony is making this investment affirms the cultural, experiential and financial value of movie theatres and their place at the center of filmed entertainment.”
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