A Big Shift Southward for Yahoo
Yahoo Inc., making good on its bid to become a force in the entertainment business, has agreed to lease part of a Santa Monica office complex for up to $100 million in one of the largest commercial real estate deals in Los Angeles County in the last year.
The Sunnyvale, Calif.-based Internet company will lease as much as 256,000 square feet in Colorado Center -- soon to be known as Yahoo Center -- for 10 years. The complex is owned by Chicago-based Equity Office Properties.
Yahoo's headquarters will remain in Northern California, but the vast expansion in Santa Monica will split the company's center of gravity between Hollywood and Silicon Valley. Yahoo's newly formed media group, headed by former ABC television network Chairman Lloyd Braun, will be based in Yahoo Center.
That will allow executives to rub elbows with Hollywood deal makers without the hassle of flying in from Northern California, said investment banker Gary Adelson.
"It's certainly an advantage to be close to these guys," said Adelson, managing director of media, sports and entertainment at investment bank Houlihan Lokey Howard & Zukin. "At the very least, you're in the know."
David Garrity, an analyst with investment bank Caris & Co., said it made "eminent business sense" for Yahoo's creative people to be as close to their content peers as possible. "The cross-fertilization possibilities are endless."
A Yahoo spokeswoman declined to discuss details of the lease.
Real estate experts estimate that the company will have enough room for about 1,000 employees at the Santa Monica complex, where tenants include advertising agency Rubin Postaer & Associates, cable broadcaster HBO, Internet security provider Symantec Corp. and the home entertainment division of Metro-Goldwyn-Mayer Inc.
Some Yahoo employees will be relocated from Sunnyvale and New York, and two Yahoo offices on the Westside, on Pennsylvania Avenue and Olympic Boulevard, will be closed by 2006.
Yahoo's courtship of Hollywood accelerated in 2001 when former Warner Bros. co-Chairman Terry Semel took over as chief executive. At the time, Yahoo was losing money and struggling in the dot-com crash.
Semel turned the company around in part by greenlighting key acquisitions, including the online advertising company Overture Services Inc., and persuading the world's biggest advertisers to boost their online spending.
