Why Studios Should Leave Hollywood

By Matt Pressberg | The Information

Last fall, CBS put its Television City compound in West Los Angeles on the market, saying that it was worth a lot of money that could be “used better elsewhere.” Other film and TV companies that own vast studio lots in the same area, such as 21st Century Fox, Viacom and Sony, should follow suit. 

These properties, which date to the early days of Hollywood a century ago, are now worth hundreds of millions if not more than a billion dollars each. With the companies facing a sharp slowdown in their businesses, it’s time those riches were realized. Selling the properties could give the companies an infusion of cash. They could either move further out in the L.A. area or rent production facilities as other companies do.

The Takeaway

  • Some Hollywood studio lots could be worth more than $1 billion
  • Companies carrying land on balance sheet at a fraction of true value
  • Sale could provide cash infusion

21st Century Fox, for instance, owns a studio lot in Century City in West Los Angeles that is easily worth more than $1.5 billion, multiple real estate professionals estimated. Fox will retain ownership of the lot after selling most of its assets to Disney, although Disney will lease the property for seven years. But the new Fox company to come out of the deal, basically Fox News, TV stations and a sports channel, won’t need all that property.

CBS’ Television City property in West Los Angeles should be worth $500 million at minimum and could fetch more than $1 billion, real estate professionals said. Meanwhile Viacom’s Paramount Pictures owns 56 acres in the Hollywood section of L.A. while Sony Pictures has 45 acres of land in Culver City. Both of those properties also could command $1 billion or more. (See map below.)

The value of the properties certainly isn’t reflected in the companies’ financial statements or their stock price. Fox, for instance, carries all its land holdings at just $140 million on its balance sheet while CBS is carrying its land at just $193 million.  

Just as cellular phone companies in recent years have sold many of their wireless towers that pick up and transmit calls, leasing space on them, the studios could sell the backlots and lease the stages when they need them.

“One has to really look at what the uses are today on these campuses,” said Christopher Rising, a California developer and the founder and president of Rising Realty Partners. “And whether it makes financial sense to have studios. Is there real value in having a lot today?”