This article is from the Theatre FAQ, by aku@leland.Stanford.EDU (Andrew Chia-Tso Ku) with numerous contributions by others.
[AW]: Francis Hodge published an article about this in THEATRE SURVEY
in the late 1960's. "Theater" is a result of Noah Webster's efforts
in the 1830s to create an American language purified of English
spellings: that's when we lost "colour" "centre" and a lot of other
words that Noah deemed to be too British for the new American
democracy. Since the American theatre/theater at the time was still
dominated by British actors and managers, along with American actors
and managers trying to suggest that theater/theatre was a high class
art, the practitioners rather stubbornly clung to the British
spelling. There have been a lot of attempts to differentiate usage
ever since, but whatever the market or editor or style sheet will
accept will work.
About the naming of the newsgroup [ELN, comments: firstname.lastname@example.org]:
Back in 1990 or so when I [ELN] proposed creating the newsgroup, I
polled the members of the musicals mailing list as to a preferred
spelling. The overwhelming support was for 'theatre' over 'theater'
for several reasons, among them a) that 'theater' represented the
building and 'theatre' represented the art and b) that Americans were
the only country that spelled the word 'theater', and it would be more
international in flavor to use 'theatre'. It was also said that
'theatre' looked more elegant. Thus the name was submitted for the
discussion as rec.arts.theatre, and when the question came up again
during the pre-vote period it became obvious that the popular support
was still for 'theatre' over 'theater', and it was voted on that way.