Digital Domain — BrandWiki

Digital Domain

Overview

Digital Domain

type	Private
key people	Daniel Seah (CEO)
industry	Motion picture
services	Visual effects Animation Virtual actor
owner	Digital Domain Holdings Limited
homepage	https://digitaldomain.com
foundation	1993
founders	James Cameron Scott Ross Stan Winston
location city	Playa Vista, Los Angeles, California
location country	United States

Digital Domain (also known as Digital Domain Media Group or DDMG) is an American visual effects, computer animation and digital production company headquartered in Playa Vista, Los Angeles, California.

Digital Domain has produced visual effects and animation for more than 500 films, including Dante's Peak, Titanic, Apollo 13, What Dreams May Come, The Fifth Element, Armageddon, Star Trek: Nemesis and The Day After Tomorrow.

The company is known for creating digital imagery for feature films, episodics, advertising and games, and virtual and immersive experiences from its nine locations across North America and Asia in Los Angeles, Vancouver, Montreal, Hyderabad, Luxembourg, Beijing, Shanghai, Shenzhen, and Hong Kong.[1]

History

The company was founded by film director James Cameron, Stan Winston and Scott Ross in 1993. Ross, the former Senior Vice President of LucasArts Entertainment Company had spent several years working for George Lucas, but had grown frustrated that his boss was focusing on theme parks, video games and real estate after the failures of

Financial difficulties

In 2009, Digital Domain parent company DDMG launched Tradition Studios in Florida to develop and produce original, family-oriented CGI-animated features. The studio moved on January 3, 2012, to a new 115,000 sqft facility in Port St. Lucie, built with the city's incentives.[24] The studio attracted a number of creators, including Aaron Blaise, the director of Brother Bear, and Brad Lewis, co-director of Cars 2, who together were developing an animated feature film The Legend of Tembo for a planned 2014 release.[25][26][27][28]

In November 2011, DDMG completed a successful IPO capital raise for $40 million. Textor's Florida expansion plans did not overcome the continuing negative cash flow of Digital Domain's primary visual effects business. In the summer of 2011, Lydian Private Bank failed.[29] As DDMG's principal lender and major shareholder, this had a major impact during the peak of DDMG's capital consumption. Lydian's sizable stake was sold to a hedge fund affiliated with Florida Power & Light which was then traded to hedge fund and lender Tenor Capital. Tenor Capital engaged in heavy short-selling of DDMG's publicly listed stock as a strategy to pull cash proceeds from the daily trading of DDMG stock.

Once considered critical funding for the future of DDMG, the IPO became the vehicle by which hedge funds could prevent the company from accessing capital while profiting from the decline in DDMG's stock price.[30] Tenor became a stakeholder in DDMG in early May 2012, with DDMG stock price trading at an all-time high,[31] but DDMG would soon be unable to access the cash needed to fund its Venice operations and its Florida studio growth.[32] Documents and emails demonstrate that Digital Domain senior management believed they had options to put cash into the company. However, Tenor Capital had significant weight as a chief lender and, according to Palm Beach Capital and the Tenor strategy, may have been shorting DDMG stock to profit from its failure.[33]

When a deal to fund the company failed on July 31, Tenor Capital cited a violation of a minimum cash covenant and demanded $51 million on August 20 as repayment for its $35 million loan made four months earlier.[30] The lenders appointed Mike Katzenstein as interim chief operating officer of the company who acted without conferring with DDMG senior management,[30] deciding to close the Florida studio, causing Chairman John Textor to submit a letter of resignation "in profound disagreement" with this decision.[34]

On September 7, 2012, it was announced that all of DDMG's Port St. Lucie's operations—including Tradition Studios—were to be shut down, laying off nearly 300 newly trained and recruited employees.[35]

Bankruptcy, financial restructuring, and lawsuits

On September 11, 2012, Digital Domain Media Group Inc. filed for Chapter 11 bankruptcy protection after the company's hedge fund lenders alleged the company defaulted on a minimum cash covenant relating to a $35 million loan. DDMG's lenders proposed a deal to sell its operating businesses–Digital Domain and Mothership—to a private investment firm, Searchlight Capital Partners, for $15 million. At the public auction on September 21, 2012, Digital Domain's visual effects business and its principal animation feature film properties were instead acquired by a joint venture led by a leading DDMG shareholder Beijing Galloping Horse America, LLC in partnership with Reliance MediaWorks (USA) The sale was approved on September 24, 2012.[36]

In July 2013, approximately nine months after Digital Domain filed for bankruptcy, the majority ownership was acquired by Hong Kong listed public company Sun Innovation. This acquisition placed an approximate $3.5 billion valuation on Digital Domain, with Reliance MediaWorks continuing to own the minority stake. Daniel Seah was appointed CEO.[37] Seah spearheaded the bankruptcy acquisition and protection of Digital Domain by DDMG shareholder Beijing Galloping Horse America, LLC.

The bankruptcy and financial restructuring of Digital Domain triggered a number of lawsuits naming John Textor, former Apple CEO John Sculley and the entire Board of Directors, the auditors and others involved in the business and in the IPO offering.