Sony Pictures is buying Alamo Drafthouse theater chain

Sony Pictures has acquired Alamo Drafthouse, the seventh-largest movie theater chain in North America, the company announced Wednesday.

This is the first time a studio has purchased a theater chain since the Department of Justice's antitrust division terminated a decree that prohibited certain film distributors from owning exhibition companies in 2020.

Enacted in 1948, the Paramount Consent Decrees ordered major studios to divest their cinemas. It was a landmark antitrust decision for the motion picture industry and held firm for more than 70 years.

However the decree only affected some studios. While Warner Bros., 20th Century Fox and MGM were barred from reentering the theater business without court approval, others like Universal, Columbia and United Artists which did not own theaters at the time of the decree were therefore not banned from acquiring them in the future.

Which is why Columbia Pictures, now under the Sony banner, was able to take a minority stake in the Walter Reade Organization, which owned less than a dozen theaters, in the late '80s and later acquired the Lowes Theater. It is also why Disney was permitted to own the El Capitan Theatre and Netflix was able to purchase The Egyptian Theatre and New York's Paris Theater.

Alamo Drafthouse CEO Michael Kustermann will remain at the helm of the dine-in movie theater chain and will report to Ravi Ahuja, president and CEO of the newly formed Sony Pictures Experiences division. The company's 35 cinemas will continue to be operated by Alamo Drafthouse and its headquarters will remain in Austin, Texas.

"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," Ahuja said in a statement.

The cinema company was purchased from owners Altamont Capital Partners, Fortress Investment Group and founder Tim League.

The acquisition comes after Alamo Drafthouse filed for Chapter 11 bankruptcy protection in 2021 due to Covid-19 pandemic disruptions. It was rescued by a private equity firm. However, just last week, five North Texas locations closed after a franchisee filed for bankruptcy.

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