The Real Deal New York

Curtains for Reading International?

Shareholders could call for breakup of theater chain with properties in NYC

November 03, 2015 11:11AM

Renderings of 44 Union Square (credit: BKSK Architects)

Renderings of 44 Union Square (credit: BKSK Architects)

The feuding heirs to theater chain Reading International are preparing to sit down at board meeting next week when investors are likely to call for either a break-up or sale of the company’s real estate holdings, which include a number of theaters in New York City.

James Cotter Jr. and sisters Margaret and Ellen Cotter are battling in court over shares representing 70 percent of the Los Angeles-based Reading, which owns theaters in the U.S., Australia and New Zealand.

The company owns several theaters in New York City, including the Angelika Film Center, the Paris Theatre and Village East Cinema. It also owns Cinema 1, 2 & 3 on Third Avenue and the Union Square Theatre, both of which the company is redeveloping.

The bad blood followed the death of patriarch James Cotter Sr. in 2014. Earlier this year the board ousted James Jr. as CEO.

Meanwhile, investors such as Dallas Mavericks owner Mark Cuban have been becoming more active. Cuban, who co-owns the Landmark Theatres chain, is the second-largest holder of Reading’s voting shares with 13.1 percent.

Though he’s stayed mum so far, observers expect him to take a position at the Nov. 10 meeting, when nine directors are up for election.

“The Cotter sibling dispute is likely to result in at least one or more of the heirs favoring a break-up or sale of the company,” activist investor Andrew Shapiro of Lawndale Capital Management wrote in August. “With Mark Cuban potentially on the sidelines with business interests synergistic with Reading’s US operations, and [Dalian Wanda Group Corp. Ltd.’s] new sizable interests in Australia and New Zealand, interesting alliances may form in the future to accelerate the pace of favorable change for Reading shareholders.” [The Deal]Rich Bockmann