Kelly Rogers and David Rosshave sold their half share in New Zealand's biggest arthouse circuit, RialtoCinemas, to mainstream exhibitor Reading and cashed up their distributioncompany in the process.

This means that thecountry's two biggest cinema operators, the other being existing half ownerVillage Skycity, now own most of the 19-screen specialist chain that Rogersestablished. Rogers will still have an executive role, however, and he and Ross have held onto two cinemas.

The deal also sees Readingbuy one third of Rialto Distribution, which releases films in New Zealand andalso Australia. Upcoming Rialto releases include Brick, Tsotsi, C.R.A.Z.Y. and L'Enfer.

Reading managing directorWayne Smith paints the diversification into distribution as being complementaryto the core business of mainstream Australian/New Zealand exhibition, ratherthan a serious shift into the specialist market. But he added that a fewarthouse screens could be in Reading sites in Australia within 18 months.

"Rialto Distribution is asound company with decent earnings and we have had a curiosity aboutdistribution for some time," Smith said.

A year ago Screendaily.combroke the news that Rogers wanted to move into distribution into the US bymid-2005, then into the UK, but this didn't happen. He also talked aboutexpanding the Rialto cinema brand into Australia.

Smith's priority is tostrengthen the Rialto distribution brand in Australia but he didn't discountmoving into the US. Reading has mainstream and arthouse screens there,including the Angelika chain.

"We will test the water aswe go and will not be trying to fix something that is not broken," said Smith,who agreed that most of his Australian cinema screens were not compatible withRialto titles.

Australia's three othermainstream chains already have distribution interests. Village Cinemas and theGreater Union group jointly own Roadshow, and Hoyts moved into this business in2002. Reading has stronger real estate interests than the others, developingretail and entertainment centres rather than leasing cinema venues.

Reading has 144 screens inAustralia at 19 sites, 71 screens in New Zealand and 13 sites and 56 screens inthe US at nine sites.