Remember the Alamo Drafthouse
A standoff for one of the last great movie theater chains
Well, this sucks. The news hit this morning that Alamo Drafthouse — perhaps the last best theater chain in the country — was filing for Chapter 11 bankruptcy. Here’s Brent Lang with the news for Variety:
Alamo Drafthouse Cinema, the Texas-based theater chain that has become a favorite with cinephiles for its dine-in service and fan-forward approach to exhibition, has filed for Chapter 11. The bankruptcy filing comes as part of an asset purchase agreement with Altamont Capital Partners, a previous investor in the company, as well as affiliates of Fortress Investment Group, a new backer. The company says that operations will continue as normal and the Chapter 11 process and sale will give it the capital it needs to continue operating as it emerges from a public health crisis that left many of its locations closed for months. The agreement involves “the sale of substantially all its assets.”
Now, Chapter 11 is hardly the end of a company. In fact, it often does help save certain companies as it protects them in a vulnerable time to allow them to restructure finances and get out from under debts. Unfortunately, this almost always means big changes to the underlying operations of said company in order to make said finances work.
The hope would be that this really just has been a year of extraordinary (in the worst way possible) circumstances for the movie theater industry, as we’ve all read about ad nauseam. In a way, it’s a small miracle than any of them are still alive one year into lockdowns. If this was just a blip on the radar, and if Alamo can go back to 2019 levels of business, a record for the company, they can emerge from this relatively quickly and relatively unscathed. Perhaps, one oddly hopes, Altamont (as noted, a previous investor in the company) and Fortress (a new investor) just saw this as a chance to “be greedy when others are fearful” and buy up to give the business time to bounce back as the world corrects itself. Please.
This line remains rather scary, though:
The agreement involves “the sale of substantially all its assets.”
So the investors will basically have complete control. Again, everyone from the CEO (Shelli Taylor, who just joined in April, is staying) and founder (Tim League, who is now Chairman, and is staying) are saying the right things right now:
“Alamo Drafthouse had one of its most successful years in the company’s history in 2019 with the launch of its first Los Angeles theater and box office revenue that outperformed the rest of the industry,” Taylor said in a statement. “We’re excited to work with our partners at Altamont Capital Partners and Fortress Investment Group to continue on that path of growth on the other side of the pandemic, and we want to ensure the public that we expect no disruption to our business and no impact on franchise operations, employees and customers in our locations that are currently operating.”
So the short term concerns seem mild. They will have to close some theaters, and undoubtedly tweak some other things, but again, if the world starts to open up — theaters just started opening in NYC, for example — perhaps there’s a window to do a quick turnaround with relatively little disruption. But the longer term concerns are far less mild. It basically boils down to the fact that investors like to meddle. And it’s human nature to exert your own will on something when you own it. The longer the time horizon, the more likely this becomes (see: Facebook with WhatsApp, Instagram, etc).
You need look no further than what has happened to the Sundance theater chain. The once-great brand changed hands not once, but twice, and was all-but ruined as a result. Now it’s owned by AMC, which is the largest and worst chain. One has to wonder/fear if this isn’t the most likely outcome for Alamo as well. The only thing we can take solace in here is that AMC is in arguably worse shape than Alamo — diamond hands, aside.
But the real fear is even bigger picture: that the theater-going experience is forever changed. And this actually seems likely not only because of the pandemic and fears of future ones, but also because what it has enabled. That is, massive change in the industry at a speed which is remarkable. We now have 17-day windows for new releases in some cases and no windows in others. Netflix is more powerful than ever, and there are now a half dozen other credible streamers buying up rights to movies left and right.
The movie theater industry will come back, but it will come back smaller than it once was. It will be the land of blockbusters more than ever as more nuanced fare goes streaming.
Now, I do believe there is still a place for Alamo in this world. As they were already good at what you need to be good at going forward: the experience of seeing a movie. It’s not just the massive screen (though that’s a big part of it!), but it’s also the food, the drinks, the night out. The two hours away from your goddamn phone.
With its mixture of popular and eclectic movies, Alamo was the best. And they can be again, I’m just really worried both that the meddlers are going to meddle and that the world is forever changed, which hastens the former. I hope I’m wrong, but I fear I’m not.
And thus would be the end of the last great big theater experience in San Francisco. To be clear, there are other nice, small theaters. But you can’t count on them to have the latest popular movie you want. And their aesthetic is often more decidedly old school. This can make for a great experience too — take the Castro Theater with its famous organ, for example — but it’s going to be a challenge to make work in the world we’re entering as we leave COVID behind. Alamo was our last, best hope.¹ Pray.
¹ If the pandemic also ends Electric Cinemas in London, I’m done.
Update 6/4/21: A now, just three months later, Alamo is already in the position to be able to emerge from bankruptcy. Great news.
