Ster-Kinekor slashing jobs, closing cinemas

South African cinema giant Ster-Kinekor has announced plans to lay off 236 employees in a restructuring effort in the face of declining attendance numbers.

This comes just two years after Ster-Kinekor exited business rescue.

Ster-Kinekor said factors like the challenging economic environment, load-shedding, and the impact of the Hollywood strikes had resulted in substantially lower cinema attendance.

It added that the strikes in Hollywood meant titles scheduled for release in 2023 and 2024 were 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,” the company said.

It served staff with a section 189(3) notice on 13 February 2024, beginning the retrenchment of 236 of Ster-Kinekor’s 728 employees.

“Ster-Kinekor Theatres issued a notice to all staff informing them of the company’s intention to proceed with a restructure under Section 189 of the Labour Relations Act, and to begin the consultation process,” the company said.

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

The company, which holds the majority of South Africa’s cinema market share, also revealed plans to shutter up to nine cinemas in South Africa’s most populous provinces.

Mainly Ster-Kinekor’s cheaper theatres, where tickets are between R65 and R75, are affected by this decision.

In the Western Cape, only Bayside is in the firing line. 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.

These closures will happen gradually, over the next six months, the company said.

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

Ster-Kinekor was forced to enter business rescue in January 2021, following the severe impact of the Covid-19 pandemic and associated lockdowns.

The company was profitable before the pandemic hit, although it was under pressure due to the rise of streaming services.

However, the closure of cinemas, limiting seating capacities, and implementation of curfews resulted in substantial financial losses for the company.

The pandemic and lockdowns also saw the rescheduling of film releases, which exacerbated the company’s struggles.

As a result, the board of directors decided to initiate business rescue to address these issues and take advantage of legal protections.

It successfully exited business rescue in November 2022, thanks to an acquisition that would see the company receive a R250 million cash injection from UK-based asset manager Blantyre Capital and South African asset manager Greenpoint Capital.

Despite the rescheduling of releases last year and in 2024, two titles released in 2023 provided a significant boost for Ster-Kinekor and the global cinema market as a whole.

Barbie and Oppenheimer were both released in July 2023. In September 2023, Ster-Kinekor chief marketing officer Lynne Wiley told MyBroadband that Barbie was the top title of the year so far.

“Both Barbie and Oppenheimer have performed extremely well on the Ster-Kinekor circuit,” said Wiley.

“Barbie‘s cinema attendance is number one for the 2023 calendar year to date and has ranked in position 20 in the Southern Africa All Time Top 100 list for Box Office as of August 2023.”

Oppenheimer ranked eighth in attendance for the Ster-Kinekor Circuit Three calendar year at the time. It was also the top IMAX release with the highest attendance of the calendar year.