Sony is Up, Landmark Theaters are Down: Vertical Integration is Back

Film Twitter woke up shaken by bad news: one of the country's most prominent Art House chains is in a deathwatch. Cohen Realty Enterprises, owner of U.S.-based Landmark Cinemas and Great Britain's Curzon Cinemas, will have its assets auctioned on November 8. The signature business of real-state mogul and cinema lover Arthur Coen defaulted on a $534 million loan from Fortress Credit Corp. 

How far the mighty have fallen. Once upon a time, Landmark Theaters were the best game in town. They successfully applied the multiplex formula to foreign cinema and American indies. But time is merciless, and the movie business is cruel. Upkeep began to falter. Streaming attracted viewers away from the big screen, and then COVID happened. The chain shed some locations desperately trying to stay alive, apparently to no avail. The parties may come to an agreement before the dire date but don't hold your breath.

Cinephiles get attached to the theaters they patronize. I know I do. I have fond memories of the Cambridge Landmark in Boston, which for a couple of years blessed me with a wave of late '90s indies - Wes Anderson's "Rushmore" (1997) and John Sayles' magnificent "Limbo" (1998)-. Anytime I got to Washington DC, I check what's playing at the E Street Landmark. I saw the much-maligned Aretha Franklin doc "Amazing Grace" (2018) there and Scorsese's "The Irish Man" (2019) too - The Merrick Park Landmark in Miami may have been compact. Still, they provided an outlet for the stealth release of Netflix Originals. Yes, David Fincher's "The Killer" (2023) works best on the big screen. I even remember with gratitude a run-down Landmark in Houston, where I caught Pedro Almodovar's "Pain and Glory" (2019).

There was turmoil behind the scenes. Ex-employees report online that it was a terrible workplace, with shady programming moves aiming to break the legs of the competition. Alamo has his dark side, too, with well-documented allegations of harassment, racism, and poor working conditions. The story's lesson is that we must keep rose-tinted glasses in a drawer. Regarding labor practices, some Art Houses are not necessarily better than commercial cinemas.

The Landmark news comes in the coattails of reports of Sony Studios buying Alamo Drafthouse. The Texas-based chain founded by Tim League served a similar market but upped the commercial ante with in-theater dining. Sure, it's distracting, but it turned out to be a lifeline for the business. Competitors rushed to embrace the concept. At least, Alamo compensated with an astringent policy of expelling blabbermouth patrons who did not keep quiet during the movie. Their memorabilia-full lobbies were a signal to nerds everywhere. We love movies, too. We really do. I hope Sony Pictures loves them, too, at least half as much.

Once upon a time, in Hollywood, this was the lay of the land. In the Golden Age, every studio worth its salt had exhibition outposts that guaranteed screens for their releases. It was perfect vertical integration: they would hire talent, lock them in contracts, produce their movies and shoot them in their lots, and finally send them to their own branded palaces. The party ended in 1948 when the Supreme Court resolved the United States v. Paramount Pictures Inc. et al. case against the studios. 

The system had been under scrutiny since the silent era, but it was not until 1938 that the Department of Justice managed to put together a case. It traveled through the legal pipeline for ten years. Vertical integration translated into disloyal competition, strangling independent production and, by extension, innovation in the art form. Studios had no choice but to sell their assets. This turn of events, added to the rise of TV as an accessible and cheap source of family entertainment, laid the ground for a slow, simmering crisis that blew up in the late 60s and 70s when international conglomerates gobbled up the movie-making institutions.

Ruthless Studios found some workarounds. Disney, for example, strongarms theaters into ceding its best screens to its titles, shutting out the competition. If a theater wants its latest animated juggernaut, it has to sign on the dotted line and comply, to the detriment of smaller movies and indie films.

Sony's acquisition of Alamo Drafthouse brought not-quite-true reports that the event represented the end of US v. Paramount. Studios have been inching back to reintegration of theaters for a while. The Department of Justice has green-light acquisitions for years now. In 1986, Tri-Star Pictures - back then owned by The Coca-Cola Company and HBO, which belonged to Time Inc. - bought the Lowes Theater Management Corporation. Eventually, Tri-Star merged with Columbia Pictures. They acquired and built more theaters and companies, increasing Lowes' treasure throve of 300 screens to over 800 screens. In 1989, Sony took over Columbia and all its assets. It dropped the theatrical division like a hot potato in the early Aughts.

So, this is not Sony's first turn at the rodeo. The novelty is that now that US vs. Paramount is dead, other studios may follow. Netflix has bought landmarks like the Paris Theater in New York and The Egyptian Theater in Los Angeles. They keep them running with a combination of its "originals" and classics. Alas, recent announcements that they will develop "immersive experiences" in malls across the United States hint that they are more interested in theme parks than good old-fashioned theaters. Beyond those anchor houses in big coastal cities, smaller markets contend with near-invisible releases of Netflix production in barely promoted screenings at multiplexes. 

What will Sony do with the Alamos? Will Landmark Theaters survive? What does it mean for the Cohen Media Group, with its distribution division and streaming channel? - the sleeper hit "Driving Madeleine" is among their most recent releases - Can AMC coast, along with all those investors that bought shares during the pandemic, in a replication of the Game Spot phenomenon? This drama, full of unexpected twists and turns, will continue. However, a trend is visible. The market can't sustain the number of theaters running now, even if you read glowing headlines celebrating "Deadpool & Wolverine" 's box-office earnings and the casting of former Iron Man Robert Downey Jr. as supervillain Dr. Doom in the third attempt at making a successful franchise out of "The Fantastic Four." 

Movie-going is changing and shrinking right in front of our eyes. Its cultural imprint is diminishing. As the generations that grew up with theater-going as the main entertainment activity fade away, so will the ritual of going to the movies. What can you do? Well, enjoy it while it lasts. Favor your local Art House. Don't sneak in food from outside; buy the overpriced popcorn, candies, and beverages at the concession stand. They keep the projector's lights running.