Madeline Mooney
Alamo Drafthouse has risen from its humble origins (Austin, Texas in 1997, before it was cool) to become one of the country’s trendiest cinema chains.[1] With dozens of locations featuring gourmet popcorn, themed cocktails, and the willingness to actually kick out patrons who talk during the movie, it has a unique identity and a cult following.[2] It should come as no surprise, then, that it caught the eye of Sony. In June 2024, the tech and entertainment conglomerate bought Alamo for an undisclosed amount in an effort to build up its new “Sony Pictures Experiences” division.[3] This makes it the first studio in decades to own a significant theater chain, as antitrust efforts in the 1940s made such vertical integration illegal. Why were studios forbidden from owning theaters, why can Sony make this purchase now, and what does this mean for the future of cinemas?
Prior to the Paramount Consent Decrees in 1948, the film industry was marked by vertical integration: the studios controlled production as well as exhibition through their theater holdings, and independent producers and theaters struggled to compete with the handful of majors.[4] The antitrust investigation began in 1936, and the government chased the noncompliant studios through the federal courts until the Supreme Court finally forced film producers to divest their theater holdings.[5] This decision, along with the rise of television as an alternative form of entertainment, effectively killed the Hollywood studio system, and the path was paved for independent and foreign producers to gain more prominence and distribute some of the twentieth century’s most creative and subversive films.[6]
Throughout the long life of these consent decrees, they were not always strictly followed or enforced: Paramount, Warner Bros., and Sony all purchased some theaters in the 1980s and 1990s, but joint ownership schemes and avoidance of the challenged programming practices allowed them to continue unbothered by antitrust investigations.[7] In 2020, the Paramount Decrees were officially allowed to “sunset.”[8] In an S.D.N.Y. ruling announcing this, Circuit Judge Analisa Torres cited new technological forms as a reason for the decrees’ obsolescence: theatrical exhibition is no longer the only way to distribute a film, so independent producers have more ways to find an audience.[9]
With this barrier eliminated, Sony could easily expand its commitment to in-person “experiences,” which was already evident with entertainment spaces such as “Wonderverse Chicago,” featuring virtual reality stories and rides based on Sony films, and the Wheel of Fortune traveling tour.[10] Notably, Sony had also stayed out of the streaming wars unlike competitors Warner Bros., Disney, and Paramount, which underscores its interest in physical experiences.
In buying a theater chain, Alamo was a good choice for Sony’s goals. Although it had been hit by the pandemic-induced nosedive in theater profits (it had a brief Chapter 11 period in 2021) as well as Hollywood’s strikes in 2023, Alamo has a unique image with appeal to the urban hipster set—a demographic with disposable income.[11] The Alamo ethos is about making moviegoing a better, more comfortable experience, and Sony might hope that its charms will lure customers away from their rivals’ streaming platforms and back into cinemas.
Time can only tell if studio-held theater chains become a trend, and what this could mean for the industry. Netflix and Amazon also both own theaters, but these are large, historic cinemas in New York and Los Angeles which they use for premieres and arthouse screenings.[12] What’s exceedingly unlikely is for Sony or any other studio to completely colonize their exhibitors’ programming with their own films, since such a practice would definitely recapture antitrust attention. Alamo fans can also take comfort in the fact that it seems like preserving the chain’s appeal is essential to its future with Sony: CEO Michael Kustermann will remain in his role and also become the new head of Sony’s experiences division.[13]
[1] History, Alamo Drafthouse, https://drafthouse.com/nyc/about/history (last visited Oct. 27, 2024). [https://perma.cc/8NX3-RHYZ][ https://web.archive.org/web/20241219021010/https://drafthouse.com/nyc/about/history].
[2] About, Alamo Drafthouse, https://drafthouse.com/nyc/about (last visited Oct. 27, 2024). [https://perma.cc/CR89-VFX3][https://web.archive.org/web/20241219021109/https://drafthouse.com/nyc/about].
[3] Brent Lang, Sony Pictures Buys Alamo Drafthouse, Variety (June 12, 2024), https://variety.com/2024/film/news/sony-pictures-buys-alamo-drafthouse-cinemas-1236035292/ [https://perma.cc/AN36-7VP9][https://web.archive.org/web/20241219021218/https://variety.com/2024/film/news/sony-pictures-buys-alamo-drafthouse-cinemas-1236035292/].
[4] Chris Yogerst, The Long Shadow of Antitrust Targets from Hollywood’s Golden Age, The Hollywood Reporter (Sep. 4, 2023), https://www.hollywoodreporter.com/business/business-news/paramount-decrees-antitrust-hollywood-1235581215/ [https://perma.cc/542D-2L8Z][https://web.archive.org/web/20241219021428/https://www.hollywoodreporter.com/business/business-news/paramount-decrees-antitrust-hollywood-1235581215/].
[5] United States v. Paramount Pictures, Inc., 334 U.S. 131 (1948).
[6] See generally Thomas Schatz, The Genius of the System (1989).
[7] Joe Berkowitz, This Might Explain Why Sony Acquired Alamo Drafthouse, Fast Company (June 21, 2024), https://www.fastcompany.com/91143893/why-sony-acquired-alamo-drafthouse-sky-moore [https://web.archive.org/web/20241219021657/https://www.fastcompany.com/91143893/why-sony-acquired-alamo-drafthouse-sky-moore].
[8] Alex Weprin, Justice Department Moves to Terminate Paramount Consent Decrees, The Hollywood Reporter (Nov. 18, 2019), https://www.hollywoodreporter.com/business/business-news/justice-department-moves-terminate-paramount-consent-decrees-1255858/ [https://perma.cc/4V3T-XG9H][ https://web.archive.org/web/20241219021854/https://www.hollywoodreporter.com/business/business-news/justice-department-moves-terminate-paramount-consent-decrees-1255858/].
[9] United States v. Paramount Pictures, Inc., 2020 WL 4573069, 4 (S.D.N.Y. 2020).
[10] Brent Lang, Sony Pictures Buys Alamo Drafthouse, Variety (June 12, 2024), https://variety.com/2024/film/news/sony-pictures-buys-alamo-drafthouse-cinemas-1236035292/ [https://perma.cc/AN36-7VP9][https://web.archive.org/web/20241219021218/https://variety.com/2024/film/news/sony-pictures-buys-alamo-drafthouse-cinemas-1236035292/].
[11] Rebecca Rubin, Alamo Drafthouse Emerges from Bankruptcy, Plans to Open Five New Theaters, Variety (June 1, 2021), https://variety.com/2021/film/news/alamo-drafthouse-bankruptcy-end-1234985368/ [https://perma.cc/VHV2-TKCK][https://web.archive.org/web/20241219022732/https://variety.com/2021/film/news/alamo-drafthouse-bankruptcy-end-1234985368/].
[12] Brent Lang, Sony Pictures Buys Alamo Drafthouse, Variety (June 12, 2024), https://variety.com/2024/film/news/sony-pictures-buys-alamo-drafthouse-cinemas-1236035292/ [https://perma.cc/AN36-7VP9][https://web.archive.org/web/20241219021218/https://variety.com/2024/film/news/sony-pictures-buys-alamo-drafthouse-cinemas-1236035292/].
[13] Id.