Chinese-Indian JV to buy Digital Domain

Digital Domain Media Group (DDMG) has received a winning bid of $30.2 million for virtually all its assets from a joint venture led by Beijing-based Galloping Horse Film & TV Co. and Reliance MediaWorks (RMW), based in Mumbai, India. Both Asian media firms already have an existing business relationship with Digital Domain. Chinese firm Galloping Horse, which will hold a majority stake of 70% in the venture, partnered last year with Digital Domain to produce its first animated feature "The Legend of Tembo," while RMW and DDMG joined forces in July 2011 to set up visual effects and 3D studios in Mumbai and London.

The sale is subject to execution of an asset purchase agreement and approval by the U.S. bankruptcy court, which will hold a hearing today (September 24) on this and other matters. According to The Indian Express, Reliance MediaWorks issued a statement saying that the purchase includes DDMG's co-production stake in Ender's Game and that all acquired businesses "will continue to operate in the normal course, with the joint venture assuming ownership upon court approval."

The outcome of this bankruptcy auction is possibly good news for Digital Domain, its remaining businesses and employees. Galloping Horse and RMW are global, strong companies with a combined enterprise value of $25 billion, and the outstanding quality of Digital Domain's visual effects work has never been questioned. However, we don't know how the Ender's Game producers, OddLot Entertainment and Lionsgate/Summit feel about parterning with Chinese and Indian companies for the Ender's Game franchise. If they have concerns they will make those heard at the court hearing today.

Let's not forget that Digital Domain's bankruptcy is a total mess. Approximately $135 million in U.S. taxpayer money has been lost in the process while executive compensation has risen sharply in 2011. The company closed its animation studio in Port St. Lucie, Florida, and laid off 346 workers without a severance package or paying out their vacation benefits. Yet Digital Domain's new CEO Ed Ulbrich is quoted in the LA Times today with saying that the Galloping Horse/Reliance deal puts them "in the strongest financial position that Digital Domain has ever been in."

Let's hope that this newfound financial strength will translate into fair treatment and compensation for the fired staff. Just this Saturday hundreds of former DDMG employees held a yard sale, selling their belongings in an effort to raise enough money to move to California, where most of the country's visual effects industry is located.
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