Beats Deal Brings Apple to L.A. at Last

Apple, which is paying $3 billion for the company founded by Dr. Dre and Jimmy Iovine, has been one of the few holdouts as other Silicon Valley giants flock to Silicon Beach.

A version of this story first appeared in the May 23 issue of The Hollywood Reporter magazine.

Apple's $3 billion-plus purchase of Beats Electronics will do more than just make Beats' founders Dr. Dre and Jimmy Iovine richer. The deal gives the Cupertino, Calif.-based Apple something it never has had: A significant presence in Los Angeles.

The company has been one of the few holdouts as Silicon Valley giants flock to Silicon Beach. Yahoo, Google, Facebook and Twitter all now boast L.A. beachheads, but Apple (which has some employees in L.A., including sales and marketing teams) instead chose Austin for a flashy operations outpost. The Tim Cook-led firm had the opportunity to establish a small Santa Monica office when it acquired software-testing startup Burstly in February, but a source says the company's team instead has relocated north.

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Apple and Beats declined comment (and an official announcement has not been made), but one thing is clear: Beats won't be moving its 300 employees to Cupertino anytime soon. Days before news of the deal for the headphones and streaming music service broke May 8, Beats began to transition staff from Santa Monica to a new campus in Culver City. And a rep for Beats campus developer Hackman Capital Partners tells THR that the company has a multiyear lease in the millions of dollars for more than 100,000 square feet in WorkScapes at the Hayden Tract.

Investor and streaming music expert Peter Csathy says there's "zero chance" Beats will relocate: "The whole point is to be close to the artist community."

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Beats began as a headphone manufacturer but in 2012 acquired music streaming service MOG. The company then received a $500 million cash infusion from Carlyle Group in September and launched Beats Music a few months later, in January this year. 

The $3.2 billion deal for Beats, Apple's largest acquisition to date, would boost the tech giant's efforts in the streaming music space, expanding upon its recently launched iTunes Radio.