Alamo Drafthouse Cinema Chain Sold to Sony Pictures Entertainment

Under new management: today Sony Pictures Entertainment announced it is buying the Austin-based Alamo Drafthouse cinema chain. It will become a key component of the company's new Sony Pictures Experiences division, but Sony pledged that it will remain based in Austin. (Photo by John Anderson)

A massive change is in store for the Alamo Drafthouse: The Austin-based cinema chain and its film festival Fantastic Fest, have been acquired wholly and solely by Sony Pictures Entertainment, and will become part of the new Sony Pictures Experiences division.

SPE is buying the Drafthouse outright from the current owners: Altamont Capital Partners, Fortress Investment Group, and Tim League. The Drafthouse was represented by Goldman Sachs & Co. LLC in the negotiations.

League cofounded the Alamo with his wife, Karrie, in 1997 as a single-screen repertory theatre in downtown Austin, and has been involved throughout its growth into the seventh biggest theatre chain in the U.S. Currently serving as executive chairman, League will remain an advisor to the Alamo - just one of many signs of continuity from the new management. In a statement he wrote, “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. ... 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.”

Rumors of a sale began in March, just before industry convention CinemaCon, with the interesting wrinkle that the Drafthouse was in negotiations with an unnamed Hollywood studio. Such a deal would have been impossible for most studios until 2020: For the 71 years prior to that, an antitrust agreement known as the Paramount Decrees had blocked distributors and studios from owning their own theatres. With a federal judge having agreed with the Department of Justice to end that agreement, that has opened the industry up to that kind of crossownership once again. However, Sony and its Columbia Pictures subsidiary were not covered by the decree, and had already dabbled with theatrical ownership, such as the Loews Theatre chain, which it owned between 1988 and 2002. Yet even with the decree out of the way, they remain the only studio to get back in the cinema business.

In the announcement, SPE pledged to keep the Drafthouse's mix of movie watching, movie appreciation, and in-theatre dining. Ravi Ahuja, SPE President and COO, also made it clear that the Drafthouse will not become Sony-exclusive, adding that it "will, of course, continue to welcome content from all studios and distributors.”

Additionally, SPE confirmed that all 35 currently operating Drafthouses will stay open, and that the Drafthouse will remain headquartered in Austin. Also, Fantastic Fest will remain under the Alamo umbrella.

Tom Rothman, chairman and CEO of Sony Pictures Motion Picture Group, said, “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.”

As with many cinema chains, it's been a rough few years for the Drafthouse. The company sought Chapter 11 bankruptcy protection in 2021, which is when the current consortium acquired it, with League as a minority shareholder. However, the private equity era has not been without turmoil or controversy, most recently shown by the closure of all five Drafthouse franchise locations in the Dallas/Fort Worth metroplex and one in Minnesota. However, the Drafthouse has also rebounded from the pandemic better than the rest of the industry.

Sources close to the Drafthouse are very optimistic about the deal, as Sony is seen by many in the industry as the studio most committed to theatrical distribution. There's a particular sigh of relief that the chain is now out of the hands of private equity, which was often seen as a deal with the devil to get through the pandemic.

As for Sony, Ahuja pointed to its increasing commitment to "engaging entertainment fans outside the home," as shown in the recent Wheel of Fortune LIVE! traveling tour, and the opening of Wonderverse, a combination restaurant and entertainment destination in Chicago. Ahuja said, “Alamo Drafthouse’s differentiated moviegoing experience, admired brand and devoted community fit well with this vision. ... We look forward to building upon the innovations that have made Alamo Drafthouse successful."