Ster-Kinekor, one of South Africa's oldest movie theatres, is preparing to lay off 236 people, as operational issues hit the company.
It acknowledged today that it had issued a Section 189(3) notice, to trim its workforce. The company currently employs 728 people.
The affected departments are the CEO's office, marketing, sales, human capital, information technology, business operations, content, finance, head office, regional operations and cinemas.
The planned redundancies by Ster-Kinekor come as the online video streaming market has seen exponential growth in recent years, with platforms such as Netflix, Amazon Prime Video, Disney+ and Apple TV+ expanding their services to emerging markets like South Africa.
Ster-Kinekor, which is now managed by UK-based Blantyre Capital and Greenpoint Capital, states that attendance at its theatres had declined significantly in recent months.
“This is largely as a result of a challenging economic environment, prolonged and more intense load-shedding, as well as the impact of the Hollywood actors’ and writers’ strikes, where content scheduled for release in 2023 and 2024 has been moved out to 2025,” Ster-Kinekor says.
It adds: “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.”
Ster-Kinekor says it is committed to complying with all the legal requirements, and will ensure employees are kept abreast of all developments throughout the Section 189 process as it progresses.
Battle for jobs
However, the employees, in statement, disagree with the company, saying claims of power interruptions as a key reason for the lay-offs are unfounded because “75% of Ster-Kinekor's cinemas have generators, and CEO Mark Sardi publicly declared last year that the company considers the effects of power shortages on its operations to be temporary”.
The Ster-Kinekor employees who spoke with ITWeb did not want to be identified for fear of retribution from their employer.
On Ster-Kinekor pointing to the Hollywood strikes as another factor in the anticipated retrenchments, the employees say: “We are of the opinion that the role of the Hollywood strikes may have been particularly over-emphasised on Ster-Kinekor's part – the strikes are over.”
The Hollywood writers' and screen actors' guilds went on strike in the middle of last year, owing largely to studios and production houses' increased push to distribute content via streaming, as well as the advancement of artificial intelligence and its impact on intellectual property rights.
“The writers' strike ended at the end of September last year, while the actors’ strike ended in early November last year,” say Ster-Kinekor employees.
According to the employees, the question at hand now is whether the proposed retrenchments indeed arise from the “operational requirements” of the company.
Blantyre Capital and Greenpoint Capital acquired Ster-Kinekor in 2022 with a R250 million financing facility.
The facility was intended to fund future operations, allow the exit of business rescue, and refinance the current capital structure.
According to the employees, one of the conditions imposed by the Competition Commission was that "the merging parties shall not retrench any employees as a result of the merger for a period of 36 months from the implementation date".
On this, the employees say: “We believe that regardless of whether the merging parties violate the aforementioned employment condition, the job losses may effectively mean that the company is, in fact, unable to comply with many of the other conditions, which would need to be reconsidered, amended and re-agreed upon by the company with the commission.”
They add: “We require the following information: When did Ster-Kinekor management initially mention lay-offs and cinema closures? What is the breakdown of skilled and unskilled personnel planned for retrenchment? What is the race breakdown of the personnel proposed for retrenchment?
“Finally, what is the gender breakdown of the employees proposed for retrenchment? Why are there no retrenchments at the highest management level? Also, do executive and non-executive directors receive fees for their board positions, and if so, will those amounts be reduced?”
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