South Africa’s Ster-Kinekor, Africa’s largest cinema group, has filed for voluntary bankruptcy, citing losses due to COVID-19 and related restrictions prohibiting large gatherings in public spaces.
With over 1,4 million cases, South Africa has the continent’s highest number of coronavirus infections.
The country has been in lockdown since March. Restrictions were eased but ramped up again when cases soared following the discovery of a new coronavirus variant suspected of being more infectious.
Business has suffered as consumers were forced to stay home and also faced soaring unemployment.
Ster-Kinekor, which operates 55 commercial cinema complexes in South Africa and seven in neighbouring Namibia, Zambia and Zimbabwe, said in a statement that it had started voluntary business rescue proceedings.
Business rescue is a form of bankruptcy protection. An independent expert is appointed by the distressed company to take over management with the aim of salvaging the business or achieving an acceptable liquidation.
The cinema group said the various stages of lockdown, curfew, restrictions on gathering and delays in releases of blockbuster films had hit revenues hard.
“The continued lack of content for the next 4-5 months means that the business is heading for further operational and cash flow challenges,” the firm said in a statement. “The 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.”
Rival cinema group Nu Metro, which has around 30 percent share of the market, has also reported falling revenues.
In 2019, films released in South Africa earned R1m2 billion (US$79,45 million), according to the National Film and Video Foundation.
As a result of the coronavirus pandemic, resulting lockdowns and stay-at-home culture, the South African box office lost as much as 83 percent of revenues in 2020.
Recession-hit South Africa had (and still has) one of the most severe lockdowns and coronavirus numbers in Africa. While the country tussles to obtain vaccine, a new variant of the virus is reported to be on loose.
Staying home and streaming content became the easier way to get entertainment since social distancing measures are exactly practical in local movies theatres.
As a result of these changes, the National Film and Video Foundation (NFVF) reports that incomes from movies only amounted to US$13,8 million last year, compared to the US$82,8 million that 190 movie titles fetched for the country in 2019.
In 2020, only 96 titles could be released, another reason the revenues generated experienced a rather heavy head dive.
When the first coronavirus wave hit South Africa, the hard lockdown measures that followed effectively closed local theatres for five months.
Also, the pandemic brought film production to a halt not just in the country, but also across the world. Even big titles like the fresh James Bond revamp, “No Time To Die”, was postponed. Much of the content, though, were moved to streaming services.
Except blockbusters return to the screens early, local theatres still have a long time to remain closed. Meanwhile, the effects are already manifesting on the outside.
As it seems, local theatres might have to do more than just show titles to bring viewers back into the cinemas, away from streaming alternatives. – Reuters-Wee Tracker