Sony Pictures Purchases Alamo Drafthouse

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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 until 2020, the U.S. Department of Justice prohibited film distributors from owning an exhibition company under what was known as the Paramount Consent Decrees, which arose from a 1948 U.S. Supreme Court ruling. The decrees essentially dismantled the old Hollywood studio system by forcing the majors to divest of their theater holdings.

At that time, the majors essentially controlled all aspects of filmmaking, from the talent to the productions to the theaters. The decrees forced exhibitors to stop practices like “block booking” (bundling multiple films into one theater license) and “circuit dealing,” (entering into one license that covered all theaters in a theater circuit). The landscape was radically different then, however. There were no multiplexes but one-screen theaters that could play one movie for months; a scenario which played into favoritism.

Sony is the first major Hollywood studio to step forward and test the waters since the decrees were rescinded.

The only major film producers to acquire theaters since 2000 were Netflix and Amazon. Netflix purchased Los Angeles’ Egyptian Theatre and New York’s Paris Theater in order to appease filmmakers who want their films to play on the big screen, as well as to qualify their titles for awards consideration. Amazon had the same aim when buying the old ArcLight location in downtown Culver City in Los Angeles, although that cinema is a first-run theater, meaning Amazon has to book new movies in addition to its offerings. (In a reverse twist, the world’s largest cinema owner, AMC Theatres, got into the distribution business last year when acquiring rights to Taylor Swift’s Eras Tour doc.)

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Wednesday’s announcement stressed that Alamo Drafthouse — an independent chain with 37 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 Kustermann, under a new division that he’ll also be in charge of, Sony Pictures Experiences. Sony said the deal reinforces its long-held commitment to theatrical exhibition and continued initiatives in experiential entertainment.

Kustermann will report to Ravi Ahuja, President and COO 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,” said Kustermann said in a statement. “We were created by film lovers for film lovers. 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.”

Added Tom Rothman, Chairman and CEO of Sony Pictures Motion Picture Group, “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.”

Alamo will continue to operate all 35 of its cinemas across 25 metro areas under the Alamo Drafthouse brand. And the Alamo Drafthouse-owned Fantastic Fest, the world-renowned 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.

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