Disney plans to vacate storied Fox lot in Century City by year’s end

Two of entertainment’s most famous brands, Fox and Disney, are parting ways in Century City.

Walt Disney Co. acknowledged Tuesday that it will be vacating the storied Fox Studio Lot, where it has been the primary occupant since Disney bought most of Rupert Murdoch’s 21st Century Fox’s entertainment assets in 2019. The $71.3-billion deal did not include the studio real estate. However, it featured a provision that Disney would move in as a tenant for at least seven years.

Disney’s lease for space on Fox’s Pico Boulevard property in Los Angeles expires next March.

The company has no plans to renew its lease and instead plans to leave by year’s end, said Disney insiders who were not authorized to speak publicly.

The move puts pressure on owner Fox Corp. to find new tenants for the soundstages and office space where movies and television shows have been made for generations. Famous movies brought to life there include “Miracle on 34th Street,” “The Seven Year Itch” and “The Sound of Music.” The lot also is home to Fox Sports, the Fox broadcast network and the writers’ room for “The Simpsons.”

Fox receives $50 million a year for leasing out the space, according to regulatory filings.

Disney is the largest tenant, but Fox executives say they are bullish on finding new occupants.

“The Fox Lot is second to none in terms of location and premium production and post-production facilities available,” Fox said Tuesday in a statement.

Disney has gradually shed its Fox DNA since the deal. In 2020, Disney retired “Fox” branding from the logos and assets it acquired to minimize confusion with properties that remain part of Murdoch’s empire, including Fox News.

Since the acquisition, dozens of television studio and FX network executives have remained in their longtime offices on the lot — a popular perk for those who live on Los Angeles’ Westside, allowing them to keep their shorter commutes.

For the last six years, Fox’s Building 103, on the lot’s southeast corner, has been a Disney outpost.

But Disney has spent the last year taking steps to relocate teams to Burbank, where Disney has its own historic studio lot and an adjoining complex that houses ABC and Disney Animation.

Disney’s goal is to bring together a creative hub for its television groups, including the executives who had remained on the Fox lot, according to knowledgeable people who were not authorized to comment.

The company declined to comment on its plans for the Disney-owned television productions that remain on the Fox lot, including dramas “9-1-1” and “9-1-1: Lone Star,” produced by Ryan Murphy, Brad Falchuk and Tim Minear.

Early contours of the Disney-Fox transaction — orchestrated by Disney Chief Executive Bob Iger and Murdoch — had envisioned the Century City compound as one of the assets included in the sale to Disney.

But Murdoch’s oldest son, Lachlan, who serves as chief executive of Fox, insisted his company hold on to the prime real estate where Shirley Temple, Marilyn Monroe and Mel Brooks once worked. (Studio founder William Fox purchased 99 acres of land between Santa Monica Boulevard and Pico Boulevard 101 years ago. Fox, after taking a financial beating on the 1963 film “Cleopatra,” sold off much of its back lot, which now makes up a large swath of Century City.)

Lachlan Murdoch, whose office is in the Art Deco administration building, viewed the Fox lot as part of his company’s beating heart. He also recognized the value of the soundstages and ancillary production facilities, which have been in high demand during the gush of production to support the launch of several streaming services.

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However, production in Los Angeles has not recovered from the 2023 writers’ and actors’ strikes, and many shoots have been lured to other states and countries with generous tax incentives.

The shift comes as Fox has been seeking city approval for a $1.5-billion expansion of its Century City location, a project envisioned to add more than 2 million square feet of building space, including multiple soundstages, postproduction facilities and an office building that fronts Avenue of the Stars.

As part of that redevelopment, four historic bungalows near the center of the lot are scheduled to be moved to a location closer to Olympic Boulevard.

Disney’s departure will not dampen Fox’s ambitious plans for its Century City expansion, according to an executive who was not authorized to speak publicly. The Fox project is in the preliminary approval phase with the city.

Disney scooped up some valuable franchises through the Fox acquisition, including “Avatar,” “Alien” and Marvel’s “X-Men” and “Deadpool.” Disney also gained control of streaming service Hulu, which maintains its home base in Santa Monica.

Still, some analysts and investors say Disney vastly overpaid for the properties, which put the Burbank entertainment behemoth in a weakened position when the COVID-19 pandemic hit in 2020.

That spring, Disney took on additional debt after its theme parks shut down, movie theaters closed and sports leagues called time-out.

Disney has looked to cut costs for the last couple of years.