The interior of the Alamo Drafthouse cinema.
Alamo Design
Sony photos the company announced Wednesday that it has acquired Alamo Drafthouse, the seventh-largest movie theater chain in North America.
This is the studio’s first purchase of a theater chain since the Justice Department’s antitrust division overturned an executive order barring certain film distributors from owning exhibition businesses in 2020.
Passed in 1948, the Paramount Consent Decrees ordered the major studios to divest their theaters. It was a landmark antitrust decision for the film industry and remained in force for over 70 years.
However, the decree only applied to certain studies. Although Warner Bros., 20th Century Fox, and MGM were prohibited from re-entering the theater market without court approval, other companies such as Universal, Columbia, and United Artists, which did not own theaters at the time of the decree, were therefore not prohibited from acquiring them in the future.
That’s why Columbia Pictures, now Sony, was able to take a minority stake in the Walter Reade Organization, which owned a dozen theaters and later took over the Lowes Theater, in the tardy 1980s. This is why Disney was allowed to own the El Capitan Theater and Netflix was allowed to buy the Egyptian Theater and the Paris Theater in Recent York.
Alamo Drafthouse CEO Michael Kustermann will remain at the helm of the dine-in theater chain and will report to Ravi Ahuja, president and CEO of the newly formed Sony Pictures Experiences division. The company’s 35 theaters will continue to be operated by Alamo Drafthouse, and its headquarters will remain in Austin, Texas.
“We look forward to building on the innovations that have made Alamo Drafthouse a success, and of course we will continue to welcome content from all studios and distributors,” Ahuja said in a statement.
The cinema company was purchased from owners Altamont Capital Partners, Fortress Investment Group and founder Tim League.
The acquisition comes after Alamo Drafthouse filed for Chapter 11 bankruptcy protection in 2021 due to disruptions related to the Covid-19 pandemic. It was rescued by a private equity firm. But just last week, five North Texas locations closed after the franchisee filed for bankruptcy.
“We are excited to make history with Sony Pictures Entertainment and have found the right home and partner for Alamo Drafthouse Cinema,” said Kustermann. “We were created by film lovers, for film lovers. We know how critical this is to Sony and it further demonstrates their commitment to the cinematic experience. Together, we will continue to innovate and provide exhilarating novel opportunities for our team members and viewers alike.”
Correction: This story has been updated to accurately reflect the terms of Paramount’s consent decrees and the date the studios took over the theaters.
