As Disney’s imminent takeover of key 21st Century Fox assets continues to roil the industry, the real estate aspect of the deal expected to be announced tomorrow had been an intriguing subplot. But questions about the fate of the lot appear to have an answer, as a well-placed source tells Deadline the real-estate portfolio is likely staying put.
The Fox lot on Pico Boulvard had seemed potentially expendable, given that Disney already has its own operation in Burbank. It already shrunk, famously, in the early 1960s as the cash-strapped studio sold off chunks of acreage to pay for Cleopatra overages.
According to official records, the Fox lot is 52.9 acres, or 2.3 million square feet. About 1.8 million square feet of that was developed as of 2015, when Fox submitted a “master plan” to the city to develop another 1.1 million square feet. In June, the Los Angeles County Assessor’s Office put the value of the land and what sits on it at $422.2 million.
One well-placed source with knowledge of the Fox lot and the commercial real estate market estimated that developers would value the parcel at $1.8 billion, but told Deadline it is likely to stay in the Rupert Murdoch portfolio.
The difficulty of securing approval for retail, hotel or other cash-producing uses — all of which would have significant traffic and environmental impact — is one reason Fox will stand pat. The community around the lot mounted significant opposition to other development. “They are very difficult to work with with and will not allow more traffic,” the source told Deadline. “No one can come in and develop it any further, but Rupert will still need it. He’ll need the studio for Fox Sports.”
The broadcast network also has a significant footprint in Century City, and the lot is home to the “antenna farm” that is the hardware backbone of broadcast operations.
This afternoon, Bloomberg reported that real estate would not be part of the Fox deal, citing “people familiar with the matter.”
Selling the high-value land provided short-term relief for Fox in the 1960s but left later generations wondering what might have been had the studio held onto all of the lot.
In the 1960s, pushed to its financial limits by the $44 million Cleopatra and years of poor film results, the studio sold off 260 of its 334 acres to the Aluminum Corp. of America for $43 million, or $346 million today. Alcoa helped develop that large parcel from the studio’s former back lot into what is now Century City, whose value quickly dwarfed what Fox received for the land. (It is said that execs at the Pittsburgh industrial concern were among the few to appreciate the boxy, drab mid-rises that sprouted up in Century City because they represented massive new canvases for Alcoa aluminum sheeting.)
Once derided as a concrete-bound wasteland, Century City has rebounded to desirable status, hosting top-shelf industry entities like CAA and higher-grade restaurants, hotels and gyms. It is surrounded by a range of pricey new commercial real-estate development as investment dollars keeps flowing into the L.A. market. Musty old Trader Vic’s is now a sleek Waldorf Astoria luxury hotel and the Westfield mall’s new $1 billion renovation yielded an L.A. branch of Eataly, the Italian food hall and market.
Fox’s New York City operations, as well as those of sister print-media outfit News Corp. (parent of the Wall Street Journal), are housed at 1211 Avenue of the Americas. The clean-angled office tower across the street from Radio City Music Hall was designed in the mid-20th century along with neighboring headquarters for publishers like Time Inc. and McGraw-Hill. In the summer of 2016, Canadian investment firm Ivanhoe Cambridge (the real estate arm of Quebec’s public pension trust) paid $913 million to gain full ownership of the building, along with partner Callahan Capital Properties.
The presence for Fox in the building isn’t likely to change significantly given that most employees there work for units that aren’t going to Disney. In January, Murdoch’s companies ditched a possible move down to the World Trade Center and said they would instead renovate and expand inside their current 44-story, 2-million-square-foot tower. Over the last two decades, Fox News has put its stamp on the space with a street-level set for Fox & Friends and the red-letter, illuminated “zipper” news crawl spanning the building’s north- and east-facing sides.