Ster-Kinekor CEO Mark Sardi said South Africa’s movie industry is recovering from the Covid-19 pandemic but has yet to reach pre-lockdown levels.
Ster-Kinekor entered voluntary business rescue proceedings in January 2021. The decision was made due to the severe impact of the Covid-19 pandemic and the subsequent economic lockdown measures.
Before the pandemic, Ster-Kinekor was profitable, but the closure of cinemas and ongoing restrictions, including curfews and limited seating capacities, led to significant financial losses for the company.
The rescheduling of film releases and the emergence of a second Covid-19 wave further exacerbated Ster-Kinekor’s challenges.
The board of directors decided to initiate the process to address these issues and take advantage of the legal protections provided by business rescue.
The company successfully exited business rescue in November 2022. The process involved raising R250 million from UK-based asset manager Blantyre Capital and South African asset manager Greenpoint Capital.
The injection, alongside a positive trend in cinema attendance, allowed Ster-Kinekor to complete the business rescue process and save around 800 jobs.
Sardi told BusinessDay TV that the movie industry’s performance relies on third-party content and is therefore used as a metric for the industry’s recovery.
Pre-pandemic, there were about 120 to 130 blockbusters released every year. In 2022, 71 were released; by the end of 2023, this number would have increased to around 105.
“We’re still off the pre-pandemic levels, but I think the view is, by the end of 2024, we’ll be back to that content-rich level,” said Sardi.
The industry also uses two other metrics to measure performance: Foot traffic – or “bums on seats” – and box office revenue.
Pre-pandemic, Ster-Kinekor reached around 10 million admissions a year. Currently, the company has about half that traffic.
While the company was more optimistic about where this number would be, Sardi said it is performing far better from a revenue perspective.
He said that Ster Kinekor’s revenue is up around 27% to 28% compared to the previous year.
While the local movie industry has seen some recovery post-pandemic, Sardi said that compared to the US, the country is lagging.
In the US, box office revenue is tracking around 69% of pre-Covid numbers. Locally, South Africa is tracking at 63%.
However, until December 2022, South Africa’s industry was on par with the US regarding 2019 recoveries. “What’s hurt us between January and June has been load-shedding,” he said.
“Although 75% of our cinemas have generators, the prospect of getting into your car at night, riding through traffic lights which don’t work, and the prospect that potentially a movie house doesn’t have a generator we have found has negatively impacted attendances.”