The Magic Lantern was an independent movie theater that opened in 1965, got raided for obscenity in 1967, and got acquired by Metropolitan Theatres (a local chain) in 1969. This history by Harry Nelson has more details, including: "Later in 1969 the adjacent Red Lion Bookstore went out of business; MTC then converted the bookstore to a second movie theater. Today, the Magic Lantern Theater is used by UCSB as a lecture hall, known as Isla Vista Theater #1, and the smaller Isla Vista Theater #2 is in the converted Red Lion Bookstore."
Since 2004, UCSB has had a program called Magic Lantern that shows inexpensive evening films in IV Theater as an alternative to partying, part of its Isla Vista Arts program. This film program is run by D.J. Palladino, who watched movies in the original Magic Lantern as a young person.
The building has an interesting movie-themed mural above the lobby.