The biggest news in the exhibition industry this week was the entry of Sony Pictures Entertainment, via the acquisition of the popular theatre circuit Alamo Drafthouse.
Alamo is the seventh largest movie theatre circuit in the U.S., operating 35 locations in 13 states. The company was founded in 1997 by Texas-based entrepreneur Tim League and has established a reputation for being a preferred venue for movie lovers. Its loyal customer base partakes in an extensive menu of food and drinks paired with Hollywood’s latest releases and a specialty program of independent films catering to cinephiles.
This unique combination has helped Alamo recover after the pandemic more quickly than other traditional exhibitors, with the annual box office growing 30% in 2023 compared to an industry average of 22%.
Despite the success of Alamo’s brand, the circuit has not been immune to the financial pressures weighing down the industry. Alamo was forced into bankruptcy in 2021 and after emerging quickly from that, a large franchisees that controlled six of the Alamo locations in Texas and Chicago declared its bankruptcy only last week.
As with all exhibitors, ticket sales for Alamo have risen and fallen with the fortunes of the industry, including sharp declines during the COVID pandemic and more recently as a result of the relative lack of new movies caused by last year’s writers’ and actors’ strikes.
Alamo has been reported to be seeking a potential buyer for some time and fielded interest from its larger direct competitors such as Cinemark. In the end, it was the studio Sony Pictures Entertainment that came in with the best offer to acquire the circuit, valued at $200 million.
Sony’s move into the theatrical space is groundbreaking, given that studio ownership of exhibitors was forbidden by the 1948 Paramount Consent Decrees until these regulations were allowed to expire in 2020.
Over the past four years, there has been limited action by studios to take over theatres, with Netflix acquiring both the Paris Theater in New York and the Egyptian Theatre in Los Angeles and Amazon Studios moving into a former Arclight location in Culver City outside Los Angeles.
However, Sony’s acquisition of Alamo was a move of a different magnitude, placing the studio in the exhibition space on a much grander scale. It may establish a new paradigm for how a movie studio can benefit from and enhance the exhibition business.