Ster-Kinekor restructuring secures encore from CEO
Struggling cinema group Ster-Kinekor has emerged from restructuring with fewer job cuts than expected and is preparing to diversify its offerings to draw audiences.
CEO Mark Sardi said SA’s largest movie exhibitor averted retrenching 226 staff and shutting nine cinemas as part of its overhaul. Instead, fewer than 60 jobs were cut, mainly at the head office, and only two cinemas were closed.
Sardi said it was thanks to successful talks with landlords and distributors about running alternative, complementary operations at the identified underperforming sites, while cost-cutting measures had also aided efforts.
“We’ve closed down two [cinemas]. We initially thought [about closing] nine. Nine were marginal and those remaining we are still having discussions with landlords and partners to see if there is a different way [of using] what we have and the real estate that we have in those malls,” Sardi said.
“Of our 46 sites, 14 have performed as well or even better than the previous 12 months with all the noise. It’s the 32 [in the] middle that have battled.”
Business rescue
The company was placed under business rescue after lockdown restrictions forced cinemas to remain closed in the early part of the pandemic in 2020. It emerged from the rescue process upbeat about a rapid recovery, noting that there was support for the idea people would quickly return to public venues once lockdown restrictions were lifted.
However, a combination of a weak economy, the Hollywood actors’ and writers’ strike — which resulted in limited film releases — prolonged and intense load-shedding in 2023 and cash-strapped consumers increasingly opting for streaming options and online subscription video-on-demand services weighed hard on the group’s performance, calling for urgent intervention.
Subsequently, in February, management notified all staff of their intention to restructure under section 189 of the Labour Relations Act and to begin the consultation process.
Business Day reported that a quarter of its staff and as many as nine cinemas in Gauteng, KwaZulu-Natal and the Western Cape were on the chopping block.
Resilient industry
With the restructuring and subsequent retrenchments now completed, Sardi said the company’s expansion into new products, services and markets would ensure sustainable income.
“We know that [our] fortunes are going to be restored. The content will come back. This is a resilient industry. We just have to think slightly differently,” he said.
In July, the frenzy surrounding the release of Barbie and Oppenheimer caused Ster Kinekor and its local competitor Nu Metro to record their highest attendance since the Covid-19 pandemic.
Over the next 12 months Ster-Kinekor is on a mission to capitalise on its existing infrastructure and explore ways to repurpose it profitably into alternative spaces for e-gaming, coding and various other uses. Negotiations with stakeholders are continuing.
“So we are working with them to look at things like taking certain screens and repurposing them for e-gaming as an example, where kids can learn to code Monday through Thursday, they can play the Rolls-Royce version of PS5 and watch other kids compete against one another in that environment,” the CEO said.
“You come into a cinema and you walk down, and there is always a stage that you can see, so we are looking at music concerts ... Taylor Swift’s The Eras Tour was phenomenal for us.”
Streaming services have disrupted the global film industry, causing a decrease in overall cinema attendance. However, Sardi said there was scope for cinema and streaming to coexist as both platforms offered unique experiences that audiences relished.
“There’s enough data that suggests that if something launches in our platform first, it will stick longer with the streamers,” he said. “So there is a symbiotic environment where both can exist next to each other, but I don’t think there is a way to replicate what we have in terms of experience.”