The acquisition of Alamo Drafthouse by Sony Pictures explained
Following Sony Pictures' acquisition of Alamo Drafthouse, the main studio will own and run the current 35 open 35 sites spread around the United States.
With its original preview content, great food and drink menu available for ordering from the push of a button from your seat, and rigorous no chat, no text rules usually enforced, Alamo Drafthouse provides a signature experience for movie-goers. Following their purchase of Alamo Drafthouse, Sony Pictures will own and run the current 35 open Alamo Drafthouse sites all throughout the country. The agreement also covers rights to the yearly Fantastic Fest film festival taking place in Austin, Texas since 2005. Alamo launched its streaming service "Alamo On Demand" in 2020, which closed later on.
Why a movie studio hasn't owned a significant theater chain since the 1940s (& how Sony could now)?
Established in 1948 by the U.S. Department of Justice, the Paramount Consent Decrees forbid large studios—including Sony—from outright owning any movie theater chain or exhibition company.
The U.S. Department of Justice created the Paramount Consent Decrees in 1948 in order to stop big studios like Sony from outright controlling any movie theater chains or exhibition organizations. This basically single-handed altered the foundation of the old Hollywood studio system, rendering it illegal for companies to have exclusive distribution and exhibition rights to their own works. Enforcing the United States antitrust rules meant to support fair competition in the entertainment business, the Paramount Consent Decrees helped to maintain them.
Is Alamo Drafthouse a Good or Bad Target for Sony Pictures?
The Paramount Consent Decrees were revoked by the U.S. Department of Justice since the old Hollywood studio system could not be recreated in the present.
First and most importantly entirely legal, Sony Pictures owning and running Alamo Drafthouse is practically unheard of in modern times. Since there is essentially nothing in recent history to compare it to, this complicates the entire matter. Thanks to innovation and streaming disruptors, the Hollywood studio systems are no longer wholly running the entertainment business. Block booking, or "bundling multiple films into one theater license," and circuit dealing—which entails "entering into one license that covered all theaters in a theater circuit"—have led to rules against studios owning theaters implemented for a reason (via The Hollywood Reporter).
With its recent acquisition of the Alamo Drafthouse Cinema chain, Sony Pictures Entertainment marks the first time in more than seven decades a significant Hollywood studio owns a theater chain.
Hollywood and the big studios are still adjusting to the fast changing entertainment scene, which has been severely shaken as internet businesses like Netflix, Amazon, and Apple acquire more and more momentum and importance in both the streaming and theatrical environments. As rivals keep extending their streaming services—which Sony notably does not offer— Sony has pioneered new ground in the twenty-first century.
Under the Paramount Consent Decrees as followed by the United States Department of Justice, Sony's acquisition of Alamo Drafthouse would have been illegal before 2020. Founded in Austin, Texas in 1997, the Alamo Drafthouse theater network has grown to be found in major American cities like Boston, Los Angeles, San Francisco, New York City, Chicago, Houston, Dallas, St. Louis, and Denver. When Alamo Drafthouse filed for bankruptcy in March 2021, some sites closed and development plans were called off. Based to Deadline, Sony Pictures paid Alamo Drafthouse an estimated $200 million to purchase.
The Best News Rising from This Deal
It's not obvious exactly how Sony intends to best use its acquisition of Alamo Drafthouse or how the deal would affect the supplied titles accessible at Alamo's 35 countrywide outlets. Like a streaming service may license some original titles to be screened just through Alamo theaters, Sony will probably not forbid some movies from their rivals from being shown in its theaters, which sounds like it would enter some legal grey areas. In addition, Sony owns and runs its Sony Pictures Classics and could present interesting and limited screenings of some of its finest films, like Call Me by Your Name, Whiplash, and Crouching Tiger, Hidden Dragon.
The best news out of this agreement is that the Alamo Drafthouse movie chain—loved by both casual viewers and movie buffs alike—will not be compelled to close anytime soon. According to Variety, "Alamo has struggled to find a buyer but had been subtly requesting offers over the past few months. Alamo Drafthouse will be run under a newly formed division under its new ownership: Sony Pictures Experiences." Michael Kustermann, the CEO of Alamo Drafthouse, will remain in that post and oversee Sony Pictures Enterprises under new ownership as well.
