After last weeks’s news that Musica stores would all be shut down by the end of March, Ster-Kinekor released a statement that it would be entering Business Rescue…
What does this mean for movies in SA?
According to the release, “All Ster-Kinekor cinemas remain open,” for now.
The cinemas are yet another casualty of the coronavirus pandemic. Lockdown took a toll, and now that cinemas are open, viewers are still wary of sitting in crowded cinemas as the country battles the second wave of Covid-19.
“Business Rescue aims to facilitate the rehabilitation of a company,” said the statement. “Up until February 2020, Ster-Kinekor welcomed millions of movie goers every year to their cinemas. The business was profitable and highly cash generative, with good prospects of future/ ongoing profitability from the pipeline of blockbuster film content that had been scheduled.”
During lockdown in 2020, cinemas were closed from the end of March 2020 to the end of August 2020.
“Since then the Company has been operating under various forms of restriction, including curfews and mandatory limits to the number of guests per auditorium,” said the company.
“In addition, there has been an impact of the rescheduling of blockbuster film contents from the original date. The second Covid wave hit South Africa and other countries in December 2020, with further lockdown measures and curfews reintroduced across the cinemas.”
All of these factors have added up to bring Ster-Kinekor to a point where it’s trading at a loss. “The continued lack of content for the next 4-5 months means that the business is heading for further operational and cash flow challenges.”
50-year legacy on the brink
“Ster-Kinekor holds the largest market share of any exhibitor in South Africa and has been in operation for over 50 years,” says film pundit and movie reviewer, Stephen ‘Spling’ Aspeling. “Having survived the introduction of television to our country in 1976, they’ve been able to stave off changes in media consumption made possible through the Internet.”
However, Aspeling says the brand has not kept up a strong emotional connection with audiences which could be its final downfall.
“The concept of movie-going is now seen as occasional rather than regular, downplaying its focus across media outlets. While escapist blockbuster franchises have spurred box office takings, attendance has been steadily dropping due to high prices and in-theatre niggles.”
Shake-up could be just what they needed, or the end of an era
“It’s not just Ster-Kinekor, that is struggling in the digital era. “It’s the story of old school cinemas across the planet.”
“Let’s hope that enough loyal patrons can step up to help save the iconic Ster-Kinekor brand and other movie theatres, who are also struggling to keep their doors open. Perhaps this much-needed shake up will enable them to deconstruct their business and re-engineer it to last for the next 50 years,” says Aspeling.
Business rescue provides a ‘safe harbour’ until the situation improves
“The Ster-Kinekor board is of the view that the safe harbour that business rescue provides, in terms of providing a legal moratorium, will assist the business to return to profitability, once operating restrictions have been lifted, when international film distributions start to flow again.”
Ster-Kinekor cinemas remain open for now
“For our customers, it is important to note that our cinemas remain open for business,” noted Acting CEO Motheo Matsau.
- Covid protocols apply
- Book tickets through the website, app or in-store
- Temperature checks and hand sanitising takes place on arrival
- Mask wearing is essential
- Every two seats are kept vacant for social distancing
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