The prospect of saving SA’s largest cinema chain, Ster-Kinekor, from closure is looking “reasonably” good, says the man in charge of its business rescue plan.
Business rescue practitioner Stefan Smyth said in the latest report, released on Monday: “Given the progress made with implementation of the plan as well as sufficient liquidity for ongoing trading, we remain of the view that there are reasonable prospects of rescuing the company.”
BusinessLIVE reported in March that a R250m offer was made for the business. It stated that London-based Investment firm Blantyre Capital and Cape-Town based Greenpoint Capital were hoping to buy 100% of the loss-making Ster-Kinekor, which has been in the form of bankruptcy protection since January last year.
The Covid-19 pandemic and subsequent lockdowns battered SA’s cinema industry with job cuts and closures of some movie houses.
The restriction on large gatherings, which has since been repealed, also affected them.
According to Smyth, Ster-Kinekor’s June performance was better than May “primarily off the back of the release of Top Gun — Maverick, which has performed better than expected in SA in line with its stellar global performance.
“In addition, Jurassic World and Dr Strange continue to perform well, which is further helping boost monthly attendances.”
Smyth said monthly attendance continued its upward trajectory and would be aided by the recent removal of Covid-19 health regulations restricting attendances.
“Liquidity has remained stable and improved marginally month on month since the publication of the business rescue plan.
“Overall attendances are nevertheless displaying a steady upward trajectory, and this reflects an appetite to go back to cinema backed by stronger content despite consumer spending tightening and load-shedding.”
But he said the move to higher load-shedding levels “may have varying impacts going forward”.
According to MarketWatch, the pandemic accelerated changes that were already happening in the industry, as cinema chains were competing for consumer attention with streaming services and popular video games.
“The rising popularity of Netflix Inc and its resistance to observing the ‘theatrical window’, the period during which films are exclusively available in brick-and-mortar cinemas, was already pressuring the sector and irking Hollywood executives.
“Studios had become more risk-averse about the kinds of films made, relying more heavily on blockbusters and franchises and the teenage audience that attends them in droves,” said MarketWatch.
Internet marketing service Latana said whether streaming services would kill the cinema experience for good, remained to be seen. “But it doesn’t look like a swift death will happen any time soon,” it said.
“While PricewaterhouseCoopers predicts it’ll take five years for box office revenue to return to pre-pandemic levels, if there’s anything we learnt from the last couple of years, it’s that nothing is certain. The desire for an in-cinema experience may be so strong that we see that figure reached in less than half the time.
“If the first two years of Covid-19 didn’t kill movie theatres, what will? It’s hard to imagine a home-viewing experience so immersive, entertaining and socially satisfying that it destroys the desire for the big-screen experience for good.
“Hopefully there’s a bright future for both streaming services and cinemas post-pandemic — but entertainment brands who want to survive will need to get creative to thrive.”
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