Property Flash


April 19 2024 15:10

Ster-Kinekor which is the oldest and largest movie exhibitor in South Africa is feeling more pain two years after private equity groups UK-based Blantyre Capital and Greenpoint Capital acquired the group with a R250m financing facility. The cinema operator which became Ster-Kinekor in 1970, following a merger, was in business rescue and its future looked desperate.

Numerous landlords made contingency plans in case Ster-Kinekor went out of business. But it was bailed out at the end of May 2022. Unfortunately, nearly two years later, it has announced that it has to close nine branches, in Gauteng, KwaZulu-Natal and the Western Cape as it battles with a drop in attendance and that a further eight may be follow.

Ster-Kinekor plans to lay off 236 employees, approximately a third of its workforce, blaming a no growth economy and poor ticket sales. The cinema group has blamed a global conditions where streaming entertainment services have dissuaded people from watching films in theatres.

Ster-Kinekor said it faced a litany of ills in recent years.

The longest Hollywood actors and writers strike in memory affected the film industry globally resulting in limited film releases. Load-shedding also affected the performance of its cinemas on top of low attendance as struggling consumers spent less on entertainment. 

In February the company issued a notice to all staff informing them of the company’s intention to restructure under section 189 of the Labour Relations Act and begin a consultation process.

It listed the Boardwalk, Mimosa and Shelly Beach cinemas in KwaZulu-Natal, Cedar, Maponya, Matlosana, Southgate, Sterland in Gauteng and Bayside in the Western Cape as affected branches that would close in three to six months, affecting 68 employees.

It said that “cinemas will be closed at gradual intervals, conditional on lease negotiation agreements”.

While these branch closures will affect landlords’ malls, the effects will be minimal. Generally cinemas pay among the lowest rent in malls compared with other retailers and take up some of the largest space. The challenge is filling large boxes of retail space and not so much a loss of significant revenue.

The Boardwalk mall is owned by Resilient Reit while the Mimosa and Southgate malls are owned by Pareto. Sanlam owns the Shelly beach shopping complex, Accelerate owns Cedar Square, while Redefine Properties owns Maponya Mall and Matlosana Mall. Sterland is owned by Atterbury Property and Bayside is owned by Growthpoint Properties.

The company said another eight movie theatres including the Bedfordview, Secunda, Wonderpark, Cradlestone, Mooi River, N1 City, Rosebank Nouveau and Rustenburg cinemas were under review for possible closure. This would result in 69 more job cuts. The Gateway Theatre of Shopping cinema in KwaZulu-Natal would have only one role affected. Property Flash recently went past Cinema Nouveau, which originally opened in 1997, and found it was barely operating.

If the cinema resizing plans are executed in totality, an estimated 138 employees will be affected of the total 194 workers at those cinemas. Overall, the layoffs are set to affect up to 237 workers, including those in the CEO’s office, marketing, sales, human capital, information technology, business operations, content, finance, head office, regional operations and cinemas.

A few voluntary severance packages have been requested and accepted so far, according to a presentation to staff.

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