Sony Pictures Entertainment bought movie theater franchise Alamo Drafthouse Cinema for an undisclosed amount, the companies announced today.
Alamo CEO Michael Kustermann will stay in his role and head Sony Pictures Experiences, the newly launched division of Sony Pictures Entertainment. Alamo’s headquarters are set to stay in Austin, Texas, and existing franchisees continue to own and operate their theaters.
Sony bought Alamo from founder Tim League and private equity companies Altamont Capital Partners and Fortress Investment Group.
“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,” 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.”
An acquisition like this wasn’t possible a few years ago, as the United States Depart of Justice barred Hollywood studios from owning movie theaters. The DOJ struck down the rule in August 2020.
Sony is the first Hollywood studio to buy theaters following this change, although Netflix owns a few theaters.
I’m jazzed that our company is doing this,” Tom Rothman, Chairman and CEO of Sony Pictures Motion Picture Group, said in a statement.
This deal follows the news of an Alamo franchisee closing six locations after filing for Chapter 11 bankruptcy protection. Two is One, One is None LLC operated one cinema in Minnesota and five in Texas.
It’s not clear if Sony plans to reopen the closed theaters, but last week Alamo said in a statement that it’s planning to get the impacted theaters “back up and running.”
The franchisor in 2021 filed for Chapter 11 in early 2021 and closed some theaters.
Alamo declined to provide additional comment and Sony did not respond.
Last year, Alamo saw success with the release of top-grossing films “Barbie,” “Super Mario Bros,” and “Oppenheimer.”
The franchisor, founded in 1997, has 35 theaters nationwide. Alamo differentiates itself from bigger theater chains like AMC or Marcus Theaters, offering themed parties and drinks, plus its restaurant with in-theater servers.
Item 19 of Alamo’s 2023 franchise disclosure document is thorough, listing a variety of success measures, such as number of season tickets sold per theater or per-customer sales, but it doesn’t list average unit volume. The average fill rate across 35 units open for the entirety of 2022 was 26.6 percent, and the average per-person spending was $33.64. The initial investment required to open an Alamo cinema ranges from $13.3 million to $16.1 million, not including land costs, if a franchisee owns the venue. For renting, its $5.3- to $8.1 million, according to the FDD.
“We were created by film lovers for film lovers,” Kustermann said in a statement. “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.”