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Plan to set Nu Metro on path to profit

Analysts generally applauded the R75m that Times Media Group secured for its loss-making cinema chain Nu Metro, but the market sent its shares down 2.43% to R20.49 on Monday.
Times Media - which owns Business Day among several other newspapers - announced on Monday that it had reached an agreement to sell Nu Metro and its cinema advertising sales unit Popcorn to private equity firm One Fifty Capital. The deal, worth R75m, is a result of the company exiting non-core businesses in a new turnaround strategy.

The cinema chain, which is the second-largest cinema operator in southern Africa‚ operating 17 cinema complexes with 162 screens across South Africa‚ and representing about a third of the local cinema market share, was earmarked as an asset for sale by investment holding group Blackstar when it acquired media group Avusa and converted into Times Media two years ago. It was accounted for as a discontinued operation in last year's results.

Nu Metro contributed a R3m loss on turnover of R414m, Times Media's result for the year ended June showed.

Afena Capital research head Khulekani Dlamini said in the absence of a profitable audience the cinemas were of less importance to Times Media.

Loss maker

"It was a loss maker and they got rid of it. With the advent of new technologies there is a lot of competition for eyeballs, there is decline in viewership and advertisers will shy away from the cinemas in that sense."

Times Media said in its annual report it intended selling Nu Metro because the "cinemas business lacks the required synergies and returns on investment in a media-focused group".

Media Monitoring SA director William Bird said: "It's a bit surprising to dump Nu Metro, which is a platform to market content when content in the next few years will become crucial.

"You look at MultiChoice buying up content - for them to dump is a little surprising."

One Fifty Capital commercial director Julian Kannigan issued a statement yesterday listing some of the new owner's plans to turn Nu Metro to profit.

Non-core asset

"As part of Times Media Group, Nu Metro was a non-core asset. We're taking a fresh approach by making this an 'owner-managed' business that is working hand-in-hand with Nu Metro's existing young and innovative management team."

Kannigan said the first step would be to move Nu Metro's head office "into the trendy, upcoming city neighbourhood of Braamfontein, Johannesburg. The new modern facility will boast state-of-the-art equipment, a trendy lunchtime cafe and is in walking distance of the Joburg Theatre."

One Fifty Capital will be deploying a Nu Metro application for iPhone, iPad, and Android.

"Customers will be able to preview movies, check show times, book tickets and even have their tickets electronically delivered, eliminating the hassle of queues at the cinema, all from their mobile devices and tablets.

"The use of social media has created a loyal culture of South African Nu Metro fans. Our app will please avid social media users by giving the option to share experiences on Facebook and Twitter as well as update friends as to when and where they'll be attending a movie," Kannigan said.

Source: Business Day, via I-Net Bridge


I-Net Bridge
For more than two decades, I-Net Bridge has been one of South Africa’s preferred electronic providers of innovative solutions, data of the highest calibre, reliable platforms and excellent supporting systems. Our products include workstations, web applications and data feeds packaged with in-depth news and powerful analytical tools empowering clients to make meaningful decisions.

We pride ourselves on our wide variety of in-house skills, encompassing multiple platforms and applications. These skills enable us to not only function as a first class facility, but also design, implement and support all our client needs at a level that confirms I-Net Bridge a leader in its field.
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Ali Kibao
The only way out for Nu Metro is to do something remarkable, something worth sharing and talking about. All well and good on paper, but in my opinion buying cinemas now is like buying a newspaper. The way people consume information has changed and will never be the same. The plan seems to have a lot riding on social media. Social media is unpredictable and what Nu metro are going to be doing in the future has already been done by so many other businesses. Every single app we use encourages us to share what we are doing with our friends, there is nothing remarkable about that because at the core of it the our experience with the movie somehow remains the same. What I mean by this is that, the way we watch movies at the cinemas has remained the same for too long now and unless they are willing to change that in an extreme manner, riding in the comfort zone won't make much of a sustainable business.
Posted on 8 Jan 2014 21:06
Eugene Mametse
The business of cinema is a very tricky business and very a biased one too, for one you have audience discerning, new technologies and devices that allow audiences to bring content to their homes or wherever they are. Piracy is another factor to consider is in this day of age. For the Business Strategy to work, factors such as price and affinity could draw audiences back to Nu Metro. Currently the brand is seen as being accessed by certain income groups and colour. The brand is not relevant enough to black affluent audiences who are waiting for Nu Metro to tap onto their pockets. The move to Braamfontein is a positive one, this is a district occupied by Students and the working class...a possible Cinema in town and neighbouring townships such as Soweto, Vaal et al, Joint Ventures with Township Business Owners and Entrepreneurs to bring forth the Outdoor Cinema experience could advance the brand to greater revenue in three years to come. There's hope in what's to come..
Posted on 9 Jan 2014 19:14
Please get McDonalds to run your popcorn and drinks counters. The main reason I hate going to the movies is the frigging long queues. At Nu Metro Montecasino, you are lucky if one of the 10 ticket pick up points is working. At the drinks/popcorn counter, the utterly clueless workers are a sight to behold; not really their problem but the layout is a laugh....drinks at one end, popcorn at the other, cash machine in the middle and ice out of buckets on the floor!! Never again until someone shows me some real improvement.
Posted on 17 Jan 2014 09:39