Sony Pictures Entertainment is buying Alamo Drafthouse Cinemas, giving it control of the chain's 35 theaters, marking the first time a traditional Hollywood studio has entered the movie theater business in more than half a century.
The deal, announced Wednesday, was made possible by the Justice Department's 2020 decision to repeal the so-called Paramount Consent Decree, a 1949 film distribution rule that forced major Hollywood studios to sell off their theaters. The rule was intended to prevent studios from controlling the movie business, from film production to exhibition.
In 2019, Makan Delrahim, then head of the Justice Department's antitrust division, said changes in the entertainment industry “make it unlikely that the remaining defendants will revive their cartel.” Sony's test of the regulatory change could pave the way for similar deals by other major studios. In recent years, streaming giant Netflix has been buying up movie theaters to show its movies.
Alamo, the seventh-largest cinema chain in North America, operates cinemas in 25 metropolitan areas across the country and is investing in unique programming and food offerings to lure moviegoers away from other theaters. Major multiplex cinemas.
Terms of the deal were not disclosed. Sony acquired the Alamo from Altamont Capital Partners, Fortress Investment Group and the chain's founder, Tim League, who said the dine-in cinema chain was “ecstatic” about the deal.
This comes at a time when the Alamo and the movie theater industry as a whole are in financial difficulty. Several Alamo franchisees filed for bankruptcy and closed this month, making Sony's move a potential lifeline for the struggling chain. The Alamo filed for Chapter 11 bankruptcy protection in 2021 and then had private equity firms step in.
Sony said the cinemas will continue to operate under the Alamo Drafthouse brand but will be run by a newly formed Sony division led by Alamo CEO Michael Kusterman.
“Alamo Drafthouse has always had a strong appreciation for the craft of filmmaking and the theatrical experience, which are fundamental values shared by our two companies,” said Tom Rothman, CEO of Sony Pictures Motion Picture Group.
The film industry has faced a number of headwinds in recent years, including a drop in box office revenues due to the pandemic; A disastrous start to the summer blockbuster movie season: A Hollywood strike has reduced the number of movies studios are making.
Total ticket sales in the U.S. and Canada this year have exceeded $2.8 billion, down 26% from the same period last year, according to Comscore.