by Thinus Ferreira
South Africa's struggling cinema chain Ster-Kinekor is set to axe 236 workers - a third of its entire workforce - and close up to nine of its cinema complexes across South Africa as it blames a "significant" decrease in attendance of cinemagoers.
In response to a media query Ster-Kinekor confirmed that it had started section 189 proceedings - known in South Africa as a retrenchment process - telling staff on 13 February that up to a third of the 728 workers it employs will likely lose their jobs.
South Africa's two biggest cinema chains Ster-Kinekor and Nu Metro, along with a sprinkling of independent theatres have struggled to regain their foothold after the Covid-19 pandemic, worsened by the proliferation and adoption of various video streaming services in the country like Netflix, MultiChoice's Showmax, Amazon Prime Video, Disney+, Apple TV+ and a few others.
Ster-Kinekor which is owned by the British-based Blantyre Capital and Greenpoint Capital after exiting business rescue in November 2022, is looking at closing up to nine cinema complexes across the Western Cape, Gauteng and KwaZulu-Natal provinces.
As part of Ster-Kinekor's restructuring deal, the Competition Commission ordered the companies not to retrench any employees for a period of up to 36 months from the start of the deal.
Ster-Kinekor in a statement, said that "In recent
months the business has suffered a significant decline in attendances".
Ster-Kinekor blames the falling cinema attendance on the "result of a challenging economic environment, prolonged and more
intense loadshedding as well as the impact of the Hollywood actors' and
writers' strikes, where content scheduled for release in 2023 and 2024 has been
moved out to 2025".
"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."
"Ster-Kinekor is committed to complying
with all the legal requirements, and will also ensure that employees are kept
abreast of all developments throughout the Section 189 process as it progresses."
The cinema chain didn't respond to questions asking why up to a third of employees are to be retrenched, which specific cinema complexes are earmarked to be shuttered and whether the period of 36 months has lapsed as part of the agreement not to retrench any workers.
Responding to Ster-Kinekor's statement, workers reportedly noted that Ster-Kinekor CEO Mark Sardi in mid-2023 noted that cinemas were equipped with backup electricity at 31 of its cinema complexes to be loadshedding free.
Staff are also asking why there are no retrenchments within upper management levels, whether directors are getting fees for their board positions and whether those will be decreased.
Ster-Kinekor plans to shut down Bayside in the Western Cape and Cedar Square, Maponya, Matlosana, Southgate and Sterland in Gauteng over the next 6 months. In KwaZulu-Natal Ster-Kinekor will shutter its Boardwalk, Shelly Beach and Mimosa complexes.
Ster-Kinekor is considering the shutdown of a further 8 of its cinema complexes at N1 City, Secunda, Wonderpark, Bedfordview, Cradelstone, Mooi Rivier, Rustenburg as well Rosebank Nouveau in Johannesburg.
