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Key Berlin Film Festival Venue Set to Close – or Is It?

The announcement that German exhibitor CineStar would close its multiplex at Berlin’s famed Sony Center in Potsdamer Platz has thrown the cinema’s participation as a key venue for the Berlin Film Festival into doubt. Whether it actually shutters, however, remains to be seen.

British-based Vue International is awaiting approval from German antitrust officials on its €221.8 million ($252.7 million) bid to take over CineStar, which operates 57 sites with 438 screens across the country. Vue already owns rival exhibitor Cinemaxx, which has 30 sites – including its own multiplex in Potsdamer Platz – and 257 screens. A merger would create Germany’s biggest cinema operator by far.

CineStar reportedly told its employees at the Sony Center multiplex in April that it would close the site by year’s end, when its lease is set to expire. The company, which declined to comment for this story, has issued no reason publicly for the closure.

But it informed the organizers of the Berlinale of the move, and the festival is “currently looking into all possible options for 2020,” according to its press office, which declined to comment on possible alternative venues or whether it was definitely excluding the Sony Center CineStar from its future plans.

Along with the Berlinale Palast and Cinemaxx, the CineStar multiplex has long been one of the festival’s main venues at Potsdamer Platz. It also boasts Berlin’s only Imax theater, is the city’s premier English-language cinema, and has become its principal setting for major film premieres thanks to the prime location.

CineStar is said to be renegotiating its lease with the Sony Center. At the same time, the company is also currently involved in tough collective-bargaining talks with Verdi, Germany’s biggest service-sector trade union.

Since March, employees at the Sony Center CineStar have gone on strike 27 times as part of a labor dispute that has seen a total of 65 walkouts at four of Berlin’s six CineStar multiplexes during the same period, Verdi official Joerg Reichel said. Local press reports have speculated that the labor dispute may be a factor in CineStar’s decision to shutter the multiplex, but that view is rejected by Reichel, who sees the move as a negotiating tactic by CineStar to wrest a better rental agreement from the Sony Center.

“As a landlord, you have a problem if you are negotiating a new price and you know your renter is already packing his bags,” Reichel told Variety. “That is more of a concrete threat for a property owner. That’s how we see it. It’s about lowering the rental price as much as possible, and that includes being prepared to move out.”

Oxford Properties Management, which represents Sony Center owner Oxford Properties Group, declined to comment.

Reichel warned that CineStar could be playing “a dangerous game.” “You are risking a lot with the Berlinale and you risk a lot with your employees,” he said. “For CineStar, the employees don’t matter. They are a cost factor. But the Berlinale, that is a cultural and political matter, and it’s highly perilous to risk the Berlinale actually pulling out. If the Berlinale finds a better and more attractive venue, then what?”

Reichel believes that CineStar will ultimately reach an agreement with the Sony Center and keep its multiplex open. “The Sony Center can only function economically as an event location,” he said. “You could replace the cinema with offices and restaurants, but then the location would be empty, plain and simple. No one would go there anymore.”

Reichel said that a merger of Cinemaxx and CineStar would allow their owner, Vue, to lower overall costs and operate more efficiently through economies of scale. With more than 80 multiplexes and thousands of seats, the company would be in a stronger position to negotiate better discounts from suppliers, he said.

Observers see a possible problem for film distributors, who, like other suppliers, may soon be dealing with a major exhibitor with the power to dictate prices.

Nevertheless, Germany’s antitrust authority, the Kartellamt, is expected to greenlight the merger. Approval would likely speed up not only CineStar’s lease negotiations with the Sony Center but also its collective-bargaining talks with Verdi. The union is demanding an increase in CineStar’s entry-level positions from the current minimum wage of €9.19 ($10.47) an hour to €11.00 ($12.53) – significantly more than CineStar’s current offer of €9.50 ($10.82).

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