KTLA: Lessee might be more
EmptyThe prospective sale of KTLA-TV's historic Hollywood headquarters could benefit the station, not to mention real estate tycoon Sam Zell's ongoing effort to buy out its parent company.
With published reports surfacing Thursday that Chicago-based Tribune Co. is looking to unload the 88-year-old property at 5800 Sunset Blvd., KTLA GM Vinnie Malcolm envisions the station either leasing its current space from the new owner or moving into a new facility.
Either way, Malcolm said, it's a win-win for KTLA.
"This is a landmark property, but the facilities are somewhat outdated," he said. "With all that's going on in terms of the digital transition, it makes sense to modernize the facility. With the potential change in ownership, we can (ideally) build in a way to modernize all our facilities as well."
The complex already has received upgrades in recent years. In 2001, Tribune pledged $10 million to create Tribune Studios by renovating the 10-acre complex into the first U.S.-based all-digital studio lot. The effort resulted in the renovation of several stages and buildings, landscape upgrades and new signage, among other improvements.
After any sale, KTLA is expected to stay on the lot indefinitely as a tenant of the new owner. But if forced to relocate, Malcolm said, the station still would benefit by moving into a new, updated facility, pointing out that other local stations also have begun moving into new facilities.
"We would really like to stay in Hollywood because we are the only ones left," Malcolm added. "Hollywood is the capital of entertainment, but most of the studios aren't in Hollywood anymore."
Tribune did not disclose how much it is asking for the property, but the nearby Sunset Gower Studios, which once housed Columbia Pictures, recently sold for $200 million. Hollywood has begun to rebuild in recent years, resulting in increases in property value.
But Malcolm points out that nothing is going to change immediately.
"We have a viable business here," Malcolm said. "Whatever we do, it will happen with as minimal interruption as possible. ... And it's not going to happen overnight."
Tribune bought the complex in 1986 from Gene Autry's Golden West Broadcasting. Golden West had acquired the lot in 1963 from Paramount Pictures, which bought the property from Warners in 1954. KTLA moved onto the lot in 1956.
The complex also is home to Tribune Entertainment and TV productions including CBS Television Distribution's syndicated court shows "Judge Judy" and "Judge Joe Brown" and Disney Channel's "Hannah Montana." It's also where Warner Bros. filmed "The Jazz Singer," the first movie with sound.
Malcolm said the complex contains about 300,000 square feet of production space and 600,000 square feet of parking space.
The property sale could raise some cash for Zell, who is expected to complete a $8.4 billion -- or $34 per share -- buyout of Tribune in the fourth quarter.
The deal, approved by shareholders in August, is financed with debt, which has been harder to come by amid the current global credit market crunch, and a $315 million cash infusion from Zell. An Employee Stock Ownership Plan will hold all of the company's common stock after the transaction is completed.
Given the recent market turmoil, Wall Street observers have suggested lately that Zell could look to sell additional assets to raise cash.
The entrepreneur at the get-go had announced a sale of the Chicago Cubs baseball franchise, but Tribune CEO Dennis FitzSimons this year said there were no other immediate plans for asset sales.
Given his real estate background, Zell is sure to know that property prices in Hollywood have increased along with the area's recent resurgence (HR 7/13).
Reps for Tribune Entertainment did not return calls by press time.
Kimberly Nordyke reported from Los Angeles; Georg Szalai reported from New York. The Associated Press contributed to this report.