Ster-Kinekor staying alive

Ster-Kinekor CEO Mark Sardi believes cinema has a bright future in South Africa despite headwinds like the popularity of streaming services, load-shedding, and the effect of the Hollywood actor’s strike.

In an interview with 702, Sardi explained that load-shedding impacts Ster-Kinerkor’s operations and can also disincentivise South Africans from visiting movie theatres.

“Last year, despite miraculous periods of no load-shedding, we probably had the most intense period of load-shedding between April and September of last year, and that impacts consumer behaviour,” said Sardi.

“If you got onto the drug of watching a streaming service at home, and you’re worried about travelling through traffic lights that don’t work, to a cinema that may, or may not be on, it does become a bit of a disincentive to go,” he added

“I think with the future looking a bit brighter, I think there is still a lot of work that we can do, but there’s still a very bright future for cinema.”

Sardi said the Hollywood actors’ strike had resulted in a significant gap in Ster-Kinekor’s content.

“It’s like the factory stops, and you don’t have the movies to show,” he said.

“So we’ve got a gap of around six to eight months where all the good stuff that was supposed to drop between January and September, and they have now been kicked out a bit longer.”

Some commentators have also suggested that the cinema chain exited business rescue prematurely, and Sardi acknowledged that some aspects of the business should have been evaluated more closely.

“What business rescue does, is it allows you to reset your cost base. If you think about the way a cinema is configured, a big chunk of your cost base goes to paying film rental,” he said.

“You pay about half about whatever you take in ticket prices to the great and the good of Los Angeles.”

Barbie and Oppenheimer provided a big boost for movie theatre chains in South Africa in 2023

However, he noted that Ster-Kinekor would have been wise to look at its head office costs more closely while in business rescue.

Ster-Kinekor entered voluntary business rescue proceedings in January 2021. It exited business rescue in November 2022.

However, it recently announced plans to slash a large portion of its workforce and shutter several cinemas nationwide.

It noted that factors like the challenging economic environment in South Africa, load-shedding, and the Hollywood strikes had led to significantly lower attendance.

“As these are forces largely out of the business’s control and the financial impact is likely to endure for some time, Ster-Kinekor Theatres has had to review its cost structure to ensure the continued survival and sustainability of its business,” the company said.

On 13 February 2024, it issued affected staff with section 189(3) notices. It plans to retrench 236 of its 728 employees.

Affected positions include those in the CEO’s office, marketing, sales, human capital, business operations, content, finance, head office, regional operations, and information technology.

It also revealed plans to close up to nine cinemas in South Africa’s most populous provinces.

In the Western Cape, only Bayside is set to close. In Gauteng, it will close Cedar Square, Maponya, Matlosana, Southgate, and the iconic Sterland.

Ster-Kinekor aims to close its Boardwalk and Shelly Beach cinemas in KwaZulu-Natal, and Mimosa in the Free State.

It is also reviewing plans to close another eight cinemas, including Secunda, Wonderpark, Bedfordview, Cradlestone, Mooi River, N1 City, Rosebank Nouveau, and Rustenburg.

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Ster-Kinekor staying alive