Two months ago Reading stunned the community with news it was pulling the plug on the five-screen cinema following a row over lease negotiations.

On March 27 Mr Smith told the Daily Liberal the decision to cease trading had been driven by economics.

"The high property lease cost significantly impacts the cinema's viability and has done so for a long time," he said.

Mr Smith said his company would sever its relationship with Riverdale and seek alternative premises in Dubbo. He expected the relocation process to take some time.

The community was told the last movie would be screened on April 30 and from May 1 a team of contracted workers would move in to strip the cinema of seats, projectors, carpets, fittings and computers.

Hopes rose when the cinema traded past the closure date. Staff were told the cinema would trade on a weekly basis while lease negotiations continued.

Yesterday Reading confirmed it was staying in Dubbo and planning a major refurbishment.

Writing on the Reading Cinemas Dubbo Facebook page Mr Smith dismissed suggestions his company had been involved in a huge publicity stunt.

"It took a lot of effort by many people for the cinema's change in fortune to occur," he said.

(There are) too many to thank individually but I can start with Charter Hall executives and Dubbo mayor Mathew Dickerson who was the first to call me some time back with an offer of help."

In a statement emailed to the Daily Liberal Mr Smith described the outcome as great for all concerned.

"We are excited about staying in Dubbo and continuing to provide the best entertainment we can," he said.

"Late last year the cinema was fitted out with world class digital projection systems that have greatly improved the film presentation.

"It's a natural progression for the complex to undergo a face-lift and refurbishment which is planned for September this year.

"Reading will host a red carpet film premiere night upon completion of the refurbishment and locals will have an opportunity to win tickets to the event."

Riverdale owner Charter Hall yesterday confirmed the cinema had committed to its existing 2,100sqm of space in the neighbourhood shopping centre for another seven years.

"We are very pleased to be extending our relationship with Reading," Charter Hall fund manager Steven Bennett said.

"The cinema is widely popular within the local community and this is a great result for the centre and importantly for all our shoppers."

Mayor Dickerson echoed that comment.

"Dubbo is a thriving regional City that services a population of 160,000 throughout the Orana region," he said.

"It is pleasing to see that Readings Cinema has invested in the future of Dubbo and renewed their commitment to the city and will continue to provide diversity in our cultural and entertainment experience.

"The Riverdale centre contributes a positive economic impact to our city and is an important shopping destination for residents of the region."

A former cinema executive said lease negotiations had been heated for weeks.

"I am extremely happy Reading is staying," he said.

"The last few months have been very stressful for cinema staff because they didn't know what was happening.

"The staff in Dubbo have been in the firing line of movie-goers voicing concerns. I don't really think the executives at the Reading head office in Melbourne could have handled things any better.

"Reading is an international group. My understanding is that negotiations about the Dubbo lease were happening at a much higher level in the United States."