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Siege of the Alamo

Sony Pictures Buys Alamo Drafthouse in a Historic — and Unexpected — Move

Sony Pictures Entertainment will operate the dine-in theater chain under a new division, with an eye toward bolstering Crunchyroll.
Alamo Drafthouse Cinema Sony
Alamo Drafthouse Cinema in Crystal City
Bryce Bernier

Alamo Drafthouse Cinema, the dine-in movie-theater chain based in Austin, Texas, has been acquired by Sony Pictures Entertainment (SPE) in a surprising example of a major studio’s film division directly acquiring a brick-and-mortar exhibitor. Financial terms of the deal were not disclosed.

The 35 Alamo Drafthouse locations across 25 cities will still be run by CEO Michael Kustermann and its headquarters will still be in Austin. Sony has also acquired Alamo’s Fantastic Fest genre film festival, which Alamo will continue to run. Sony isn’t even adding its name to Alamo’s to avoid diluting the very established brand. But all of it now will be operated under a new division within SPE. The new division? Also SPE (Sony Pictures Experiences). It’s confusing, we know. Anyway, Kustermann will report to Ravi Ahuja, president and COO of the OG SPE.

Sony says the deal is part of SPE’s “long-held commitment to theatrical exhibition and continued initiatives in experiential entertainment.” In the same press release, Ahuja called out Crunchyroll, Sony’s anime streaming service, as a brand that could plausibly get some increased play or direct exposure in Alamo theaters.

Alamo loves doing marathons, curated events, and Q&As, and that’s perfect for anime fans. The genre is exploding. While Sony sat out this year’s CinemaCon, Crunchyroll made its CinemaCon debut in front of a roomful of exhibitors to fill that void and tout why they should take anime more seriously. Crunchyroll films have gone from being on as few as a couple hundred screens to more recently reaching over 2,000, so while the extra screens won’t hurt, it is not necessarily the main reason to do this.

As to why Sony would do this, the company sees some opportunity in terms of expansion for Alamo, but it is also a way for Sony to go direct-to-consumer and engage with moviegoers that way. Sony doesn’t have its own streaming service, so this is certainly a unique way to go DTC.

But the news is a shock nonetheless. A major studio now owns a major theater chain, full stop. Major media companies have owned major movie-theater chains before, even before the Paramount Consent Decrees, which regulated the Old Hollywood studio system, were officially overturned back in 2020. Sony corporate previously owned Loews for a period in the 1990s, which later merged with AMC. Universal’s then-parent company MCA also owned a stake in Cineplex theaters between the late ’80s and ’90s.

Since the Paramount Decrees were overturned, we’ve seen some small examples of studios (or their parent companies) dabbling with theaters, like Netflix buying the Paris Theater or the Egyptian, or Amazon picking up an old Arclight location, mainly for awards-platforming purposes, which is not necessarily a problem for Sony. But this is an example of a studio film and TV division directly acquiring a major theater chain, not the overarching parent company.

Alamo Drafthouse South Lamar Remodel. / Photo by www.hlkfotos.com
Alamo Drafthouse South Lamar Remodel. / Photo by www.hlkfotos.comPhoto by Heather Leah Kennedy

The old Paramount Decrees model would’ve prevented specialized films from getting increased play in such theaters, but it’s possible such movies (though the release did not mention specialized branch Sony Pictures Classics) could get priority. In both Sony’s (Columbia Pictures) case and Universal’s, those studios didn’t own theaters back in the day and weren’t subject to the Paramount Decrees anyway.

“We believe strongly in engaging entertainment fans outside the home in fun and distinctive ways as seen most recently with our Wheel of Fortune LIVE! traveling tour, and the opening of Wonderverse in Chicago,” said Ahuja. “Alamo Drafthouse’s differentiated movie-going experience, admired brand and devoted community fit well with this vision. Our Crunchyroll business also aligns well with their audience’s interests. We look forward to building upon the innovations that have made Alamo Drafthouse successful and will, of course, continue to welcome content from all studios and distributors.” 

Alamo was rumored to be on the sales block as recently as March, and six franchised locations (operated by a separate company) abruptly closed just last week. But Alamo has performed solidly at the domestic box office, with sales up 30 percent up from 2022 to $134 million.

The news also comes amid the ongoing saga M&A surrounding Paramount, which include Sony at one point. Sony, in partnership with private equity firm Apollo, made a bid to buy the bulk of Paramount Global for $26 billion. It looked like that deal was passed over in favor of a merger between Paramount and David Ellison’s Skydance, but now even that won’t be happening. This acquisition shouldn’t preclude any other M&A, but it remains to be seen whether Sony is still in the running for Paramount.

Alamo Drafthouse was founded in 1997 by Tim and Karrie League as a single-screen mom-and-pop repertory theater in Austin, Texas. Today it is North America’s seventh-largest theater chain in terms of box-office revenue, with 10 million guests per year and 4 million members in the chain’s loyalty program.

Movie Parties at Alamo Drafthouse Cinema.
Movie Parties at Alamo Drafthouse CinemaPhoto by Heather Leah Kennedy

“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,” Tim League said in a statement. “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.”

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

“We are excited to make history with Sony Pictures Entertainment and have found the right home and partner for Alamo Drafthouse Cinema,” Kustermann said. “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.”

Sony Pictures Entertainment acquired Alamo Drafthouse from owners Altamont Capital Partners, Fortress Investment Group, and founder Tim League. Goldman Sachs & Co. LLC acted as exclusive financial advisor to Alamo Drafthouse in the transaction.

Additional reporting by Tony Maglio.

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