The Alamo Drafthouse Cinema Circuit Is Up For Sale

[Geoff Jones]

The Alamo Drafthouse Cinema Circuit Is Up For Sale

EXCLUSIVE: Several sources tell Deadline that the Alamo Drafthouse Cinema circuit is up for sale.

The news comes about a week and a half before CinemaCon, the major studios and exhibitors’ annual love-in in Las Vegas. I’m told that some studios have heard the sales pitch for the cinephile circuit, which counts 41 locations across 13 states. No bidders as of yet.

Also, there’s no word on an asking price for Alamo Drafthouse. However, the Tim League-founded chain cleared $134M at the 2023 box office, +25% over 2022, per box office intel. That percentile jump is higher than the actual domestic B.O. rise of 22% between those two years; the 2023 B.O. for U.S./Canada hit $9 billion.

Alamo Drafthouse Cinema typically touts a gift store of cinema memorabilia, arcade games and DVD rentals, plus a full bar and killer bistro menu with swanky eats and shakes. Also, let’s not forget about how these movie theaters are destinations for filmmakers doing Q&As in advance of their movies, or during opening weekend. Last spring, A24 had a surprise screening of Beau Is Afraid followed by a NYC-based Q&A with director Ari Aster, moderated by Oscar winner Emma Stone, that was broadcast to other Alamo sites.

The top locations for Alamo Drafthouse last year were NYC’s Brooklyn, Downtown L.A. (which opened pre-pandemic), Alamo Springfield 14 in Missouri, Alamo Manhattan (which opened post-pandemic in July 2022), Alamo Raleigh NC, followed by the circuit’s HQ hometown venue Alamo South Lamar in Austin.

Most of the top-grossing locations are owned by Alamo Drafthouse, but the circuit deal differs in that roughly 17 sites are franchise-owned. Alamo Drafthouse also separates itself from other cinema chains in its overhead: It’s not just a concessions and ticket-taker staff but also waiters and bartenders.

Alamo Drafthouse emerged from bankruptcy coming out of Covid in June 2021, with five new locations opening thereafter along with the shuttering of its Phoenix venue. At the time, the circuit came out of bankruptcy with the completion of a sale to Altamont Capital Partners, funds managed by affiliates of Fortress Investment Group and Drafthouse founder League. Among the new sites that opened, in addition to the Manhattan Financial District locale at 28 Liberty, were an Arlington, Va, D.C.-based Alamo that threw open the doors in October 2022 as well as a kung fu-themed nine-screen cinema and part martial arts museum in Staten Island that featured a collaboration with Wu-Tang Clan founder RZA. That Alamo opened in July 2022.


Last July, Michael Kustermann was named President of Alamo Drafthouse, replacing Shelli Taylor, who retired at the time.

Alamo Drafthouse Cinema did not respond to Deadline’s request for comment about its pending sale.

I have mixed feelings about this. In some areas, Alamo seems like an awesome chain with fantastic programming, but here in Colorado, they're disappointing.

The "Big Show" auditorium at their Westminister location never shows anything but the current new release, and you can always see that title 12 miles away at Harkins Northfield, on a much bigger screen with better sightlines and without waitstaff constantly coming and going. The rest of their auditoriums feature small constant-width screens that aren't worth leaving home for. Sadly, the small auditoriums showing classics are almost always "full" while the 245 seat "Big Show" auditorium sits virtually empty.

Once in a blue moon, the Sloans Lake location shows something different on their biggest screen, which is merely "decent."

They seem to have a penchant for building lots of really tiny screens. Their upcoming Florida location "boasts" a whopping 650 seats in 11 auditoriums, which averages out to 59 seats each. A 60 seat theater isn't going to wow people. It's going to leave many of them scratching their heads and wondering why they didn't just watch at home.

Whoever is in charge of programming at their Northern Virginia locations does an awesome job of showing both old and new releases on their biggest screens, and seems to keep them full. The same is true at their SF location. I've seen a few movies on the big screen at the New Mission and it has been consistently terrific.

[Brad Miller]

However much money Alamo wants to sell the chain for, they have to remember that whoever is going to buy it is going to be out an extra $15 million or so just to fix their mistake of buying Sony projectors.

[Rick Cohen]

However much money Alamo wants to sell the chain for, they have to remember that whoever is going to buy it is going to be out an extra $15 million or so just to fix their mistake of buying Sony projectors.

You would think that exhibitors would have learned their lesson about Sony projection products after the SDDS debacle of the 1990s. But, sadly, no.

[Brad Miller]

I am just waiting for Sony's next cinema adventure, likely direct view screens. Just watch as there will be a bunch of cinema exhibitors jump on that Sony bandwagon yet again.

[Leo Enticknap]

My understanding is that Sony do make direct view screens, but not DCI compliant ones. LG and Samsung basically have that (as yet, pretty niche) market sewn up.

Sony products have a weird habit either of becoming an industry standard that survives for decades (e.g. Trinitron, UMatic, Betacam / Beta SP / Digibeta, 3.5" floppies), or of being stillborn (Elcaset, Betamax, SDDS). There doesn't seem to be any in between with them.

The other challenge that any buyer of ADH will face is that their target audience is the moderately affluent but not super affluent demographic: in short, those who have been whacked particularly hard by the inflation of the last two years. Their business model depends on a flow of customers who are prepared to drop $50-80 a head on a movie ticket and a meal, as distinct from the $20-25 a head for a movie and popcorn at a non-boutique multiplex. I suspect that for the next year or two at least, it will become increasingly difficult to keep that flow of customers up, largely for reasons outside ADH"s control. This could be why the venture capitalists who own ADH want to get rid of it now.

[Steve Guttag]

Alamo also has a mix of company owned and franchised locations. I wonder how it would impact a franchised location? The one we tend to does not have Sony projectors/servers...so there's that!

[Leo Enticknap]

It would be interesting to look at the relative economic situations in the communities where the direct owned sites are, relative to the franchised ones. I'm sure that any potential buyer will. Presumably the franchise agreements are for a fixed term, and can then be renegotiated when that term is up.

AFAIK, ADH began to transition from Sony to Barco pre-pandemic, while Mark Louis and Meghan Bowman were the top tech people there, and when writing appeared on the wall to the effect that Sony was quitting the DCI business. The last site I took part in an install at (El Paso), in the winter of 2020-21, was all Barco Series 4 projectors (with GDC servers and QSC audio). One would hope that the current management have a roadmap for replacing the remaining Sonys before support for them ends.

[Marcel Birgelen]

My understanding is that Sony do make direct view screens, but not DCI compliant ones. LG and Samsung basically have that (as yet, pretty niche) market sewn up.

Sony produces some excellent but extremely expensive LED wall modules, none of them DCI certified. Last time I was at the yearly IBC broadcast convention in Amsterdam they show-boated a 16K "Crystal LED" screen that made everybody's jaw drop for a moment, both in resolution and extreme brightness... Would love to see a cinema screen made from those same tiles.

Sony products have a weird habit either of becoming an industry standard that survives for decades (e.g. Trinitron, UMatic, Betacam / Beta SP / Digibeta, 3.5" floppies), or of being stillborn (Elcaset, Betamax, SDDS). There doesn't seem to be any in between with them.

Don't forget the original red-book audio CD, which was jointly developed with Philips. The cooperation of Philips greatly helped to boost the market acceptance in the European market, where Philips still had a strong footprint back in the early 1980s. Maybe you can put MiniDisc in the categories of niche-de-facto standards that never became big in the eye of the public, but still enjoyed a considerable adaptation within the radio broadcasting industry for a while, especially for stuff like advertisements, jingles, live recordings and "pre-release" singles. As for the Stillborn formats, I guess you can add the MemoryStick to that list, even though that format seems to have survived until this day in some form...

The other challenge that any buyer of ADH will face is that their target audience is the moderately affluent but not super affluent demographic: in short, those who have been whacked particularly hard by the inflation of the last two years. Their business model depends on a flow of customers who are prepared to drop $50-80 a head on a movie ticket and a meal, as distinct from the $20-25 a head for a movie and popcorn at a non-boutique multiplex. I suspect that for the next year or two at least, it will become increasingly difficult to keep that flow of customers up, largely for reasons outside ADH"s control. This could be why the venture capitalists who own ADH want to get rid of it now.

Interesting discussion in itself, because I was under the impression that many chains were moving away from the concept of the multi-megaplexes, while investing into smaller locations, with more boutique-style offerings, like luxury seating, dine-in options, etc. Fewer people tend to flock to the movies nowadays, because it adds too little for them compared to just watching the movie at home. So movie theaters want to "up" the experience and try to extract more dollars from every visit by selling them those "boutique options". This would also be in line with fewer people going out to venues like clubs, but spending considerable more money on big-ticket live events, which happen far less frequently. Looking at the market this way, ADH should actually be in a sweet-spot

[Geoff Jones]

Which locations are owned directly by Alamo and which ones are franchised? Is there a list anywhere, or any way to tell?

I wonder if this distinction could account for the gross discrepancies between how different sites are booked.

[Marcel Birgelen]

There is a Reddit thread about it. Don't know how accurate it is though.

Most companies don't want you to know the difference between franchised organizations and company-owned organization. Often, the only way to find out is by looking at your receipt. The company getting your money is most likely the company operating the place.

[Bobby Henderson]

I cringe at the news of the Alamo Drafthouse chain being put up for sale. It's easy to imagine the chain being bought some jackass private equity group and then being utterly ruined as a result.

That's not to say current Alamo Drafthouse management was making good choices on its own in recent years. As Geoff Jones mentioned earlier, they've been building cinemas with tiny-ass auditoriums. Alamo isn't the only offender; other chains have been doing the same. How can anyone get excited about watching a movie in a little auditorium with well under 100 seats?

I really don't understand this trend of movie theater screens getting smaller. I used to drive considerable distances to see movies at cinemas with auditoriums boasting large seating capacities, huge screens and presentation formats I couldn't see back in my town. I sure as hell won't drive to an Alamo location 200 miles away to sit in a room with 60 seats where the movie is presented in mystery meat digital projection. It's hard to even justify choosing that over watching a movie on the living room HDTV screen, even if the Alamo location was a short drive across town.

Regarding Sony products that were hits or misses, I'm surprised no one mentioned the Playstation platform for the successes list.

Sony isn't a very big player in the LED signage market, at least not as big as companies like Samsung. In the case of Samsung they at least make their own LEDs. I'm still skeptical about LED screens making serious inroads in the cinema market. From a cost standpoint I don't think it's feasible to install a 4K LED screen in a room that seats less than 100 people. How do you make the screen pay for itself with that few seats and ticket sales? I don't even know how that works with the current "conventional" d-cinema hardware.

There are a lot more market applications for these LED boards than just cinema screens. They're big in the sign industry. More billboards are using them. In both of those cases it's rare for any LED displays to reach HD resolution. Such outdoor boards with true HD resolution or better have to be part of a "spectacular" sign, like a display in Times Square. It's common for pro sports stadiums to have giant LED displays with better than HD resolution. There is a lot of corporate and institutional use of indoor LED boards. You'll see them in fancy hotel lobbies, convention centers, airports, board rooms, etc. The movie industry has started using LED walls on sound stages as an alternative to green screens or rear projection screens.

Any application of LED boards for cinema screen use will have to be shared across other kinds of markets. I don't think there is enough sales potential for manufacturers to justify making a customized product line just for cinema screens alone.

If the cost per pixel can come down enough direct view LED screens could be used for outdoor drive-in movie theater screens. The LED images are bright enough movies could be shown in daylight hours.

[Leo Enticknap]

It's easy to imagine the chain being bought some jackass private equity group

My understanding is that a consortium of two private equity groups currently owns it, and that they're the ones trying to offload it.

I really don't understand this trend of movie theater screens getting smaller. I used to drive considerable distances to see movies at cinemas with auditoriums boasting large seating capacities, huge screens and presentation formats I couldn't see back in my town. I sure as hell won't drive to an Alamo location 200 miles away to sit in a room with 60 seats where the movie is presented in mystery meat digital projection. It's hard to even justify choosing that over watching a movie on the living room HDTV screen, even if the Alamo location was a short drive across town.

Their selling point is the hippie, quirky atmosphere (hence the "VHS Vortex" bar in their LA/Bloc location, complete with fuzzy, NTSC 1980s ads projected on the wall), the at seat food and beverage offering, and the choice of movies (mix of mainstream, arthouse/foreign, and rerelease). The LA/Bloc location is the only one I have serviced after the initial install, and so cannot speak for any of the others; but at that site at least, the technical presentation is taken seriously, with regular checks on focus, convergence, Scheimpflug, colors, for blown channels, and for audio levels. In short, ADH's target market is not primarily customers who want the biggest screen above all else.

Regarding Sony products that were hits or misses, I'm surprised no one mentioned the Playstation platform for the successes list.

I wasn't trying to come up with an exhaustive list, but simply trying to make the argument that Sony's attitude to R & D has historically been similar to that of Elon Musk and his spaceships: they don't mind if some of their efforts blow up spectacularly (or, in the case of Elcaset, just fizzle out), if that learning process enables them to come up with other, long term cash cows. The Beta videocassette form factor is a classic case in point. Betamax was over-engineered for the consumer market, with high production costs for cassettes and tape transports, hence the consumer incarnation of it losing to VHS. But it turned out to be very robust and easily scalable, hence Betacam, then Beta SP, Digibeta, and XDCAM, became mainstays of the broadcast industry for two decades.

From a cost standpoint I don't think it's feasible to install a 4K LED screen in a room that seats less than 100 people. How do you make the screen pay for itself with that few seats and ticket sales? I don't even know how that works with the current "conventional" d-cinema hardware.

I was part of a team that just finished installing a cinema LED display, and will be doing another just after Cinemacon. The one we've just done is in the private screening room of a membership organization, and the the one coming up is in a university theater. A third is in prospect for the screening room of a post house. This is currently the core market for them. I agree with you that we aren't going to see these screens in significant numbers in regular, commercial theaters in the immediate, short term future: the math just doesn't add up. A related issue will be maintenance costs and economies of scale. The initial installation costs are way higher than those of installing a conventional projector and screen. If this thing doesn't need to be touched for the next decade, then the technology could start to look viable for commercial theaters if the cost of the hardware can be driven down by economies of scale. But if two techs (and, for the larger screens, a team of riggers) will need to go out once or twice a month to swap out a module with a bad pixel...

For drive-ins, the cost would be staggering. You're looking at LED billboard technology, but 2K or 4K. Even a 2K screen, say, 100ft x 80, would need massive weight bearing capability on the structure it's mounted to, a small substation to power it, and the modules would need to be weatherproofed. And replacing that module with a bad pixel would need a construction crew fully trained to work at heights.

[Ryan Gallagher]

For drive-ins, the cost would be staggering. You're looking at LED billboard technology, but 2K or 4K. Even a 2K screen, say, 100ft x 80, would need massive weight bearing capability on the structure it's mounted to, a small substation to power it, and the modules would need to be weatherproofed. And replacing that module with a bad pixel would need a construction crew fully trained to work at heights.

I agree on the hurdles in terms of cost and infrastructure and weatherproofing. But i'll disagree on the servicing point... An outdoor screen is immensely easier to get at typically because you can usually just drive a cherry picker style genie lift to it. Just need a couple folks familiar with swapping modules and a familiarity or MEWP certification. Basically every video wall IATSE stage tech worth their salt in in the live events world. Any drive-in that owned one would probably perma-lease the man lifts to access it for servicing. More expensive than screen paint on a big billboard structure, but not as expensive as it sounds.

The pool of techs that could service a video wall with modular panels is probably much larger already than the pool DCI cinema techs familiar with screens and projectors, because of that industry overlap mentioned.

[Marcel Birgelen]

Keep in mind that replacement tiles have to be calibrated, in order to get to a uniform color representation, especially since it concerns a cinema screen and not just a random billboard.

[Bobby Henderson]

My understanding is that a consortium of two private equity groups currently owns it, and that they're the ones trying to offload it.

I guess that might explain some of the tiny auditoriums in some of Alamo's more recent cinema builds.

For awhile there were rumors of Alamo Drafthouse opening a location somewhere in the Oklahoma City metro. Then the pandemic hit and the rumor mill went dead. At this point I don't care if they open a theater in OKC. A competing chain, Flix Brewhouse, has a location in OKC. Never been there though.

I wasn't trying to come up with an exhaustive list, but simply trying to make the argument that Sony's attitude to R & D has historically been similar to that of Elon Musk and his spaceships: they don't mind if some of their efforts blow up spectacularly (or, in the case of Elcaset, just fizzle out), if that learning process enables them to come up with other, long term cash cows.

I apologize if it sounded like I was singling you out. It's somewhat popular for people to dump on Sony, in part because they're such a big company with a long history. And Sony does do things to invite that negative criticism. I was not a big fan of SDDS or how Sony marketed the consumer Beta tape format, but I fondly remember working with Sony broadcast video cameras and BetacamSP decks when I worked in TV (over 30 years ago, oh jeez). Funny thing: Sony licensed BetacamSP tech to other broadcast gear manufacturers, but didn't do so with consumer Beta. Ikegami made BetaSP cameras and tape decks. I think there were several others too.

I agree with you that we aren't going to see these screens in significant numbers in regular, commercial theaters in the immediate, short term future: the math just doesn't add up. A related issue will be maintenance costs and economies of scale. The initial installation costs are way higher than those of installing a conventional projector and screen. If this thing doesn't need to be touched for the next decade, then the technology could start to look viable for commercial theaters if the cost of the hardware can be driven down by economies of scale. But if two techs (and, for the larger screens, a team of riggers) will need to go out once or twice a month to swap out a module with a bad pixel...

The mainteance thing is a big issue. That's where paying more for good quality up front makes a difference. We sell a lot of LED boards at my workplace. We prefer selling Daktronics product with Watchfire being a distant second choice. There is a bunch of other LED stuff out there that is unreliable crap, especially this no-name "OEM" garbage sold from fly-by-night outfits in China.

Even with a good quality LED product the screen will need continuous maintenance. Stuck pixels are one thing. Individual driver board tiles may "age" at different rates. Boards that get swapped out for ones with stuck/dead pixels have to be visually attenuated to match all the other existing boards. Otherwise you end up with an odd patch-work quilt appearance to the screen. Various tiles have different levels of brightness, contrast and color depth. Modern LED boards have such a wide range of color and brightness capability that it is do-able to swap out tiles over at least 7 or more years and still have the display looking good.

For drive-ins, the cost would be staggering. You're looking at LED billboard technology, but 2K or 4K. Even a 2K screen, say, 100ft x 80, would need massive weight bearing capability on the structure it's mounted to, a small substation to power it, and the modules would need to be weatherproofed. And replacing that module with a bad pixel would need a construction crew fully trained to work at heights.

I think LED-based outdoor drive-in screens are do-able (at least physically speaking, cost-wise is more doubtful). Most LED displays sold for signage use are made for outdoor environments. They're weather sealed yet ventilated. The only thing different with an outdoor cinema screen would be the scale of the display. A 100' wide outdoor LED screen would certainly need more structural steel support than a 48' X 14' digital billboard on a single pylon. Such a thing is still do-able, even if it means a support structure using 2, 3 or more pylons. Pro sports stadiums have LED displays far larger than 100' in width.

Most outdoor LED signage product lines don't go any tighter in resolution than 6mm between pixel centers. Even with a 6mm pitch, that would translate into a true 4K 4096 X 2160 screen sized at 80' 7.5" wide X 42' 6.25" tall. The screen would certainly cost a lot to buy and install. And it would drink a serious amount of power. Such a display would be a hell of a thing to behold just past sunset on a summer night.