Investment Group Buys L.A. Visual Effects Studio for $35 Million

Digital Domain, the pioneering Venice visual effects studio whose computer wizardry created scenes for such films as “Titanic” and “The Day After Tomorrow,” has been sold to a Florida-based investment group that includes director Michael Bay and former NFL great Dan Marino, the company said Monday.

Wyndcrest Holdings, based in Jupiter, Fla., paid about $35 million, said one person familiar with the transaction, who asked not to be named for confidentiality reasons. The sale closed last week, and Digital Domain’s staff was told Monday.

Wyndcrest bought out Digital Domain’s owners, which include IBM Corp. and Cox Enterprises Inc., along with its founders -- director James Cameron, effects legend Stan Winston and Chief Executive Scott Ross.

The sale comes at a time when Hollywood studios are spending increasingly large sums to produce elaborate special effects for movies, creating opportunities and challenges for effects houses such as Digital Domain.

“We saw a gem of a company with some phenomenal employees and technologies that has a history of firsts,” Carl Stork, a former longtime senior executive at Microsoft Corp. and a principal of Wyndcrest Holdings, said in an interview. “This change brings some fresh air to the company and a willingness to invest.”

Stork is replacing Ross, who will consult for the company.

C. Bradley Call will remain president and chief operating officer, and Wyndcrest investor John Textor and Bay will be co-chairmen. Cameron, the Oscar-winning director of “Titanic,” may have some ongoing relationship with the company.

Stork said the company had no plans to cut its 500-employee workforce.

“Our goal is to grow the company,” Stork said. “We’re not talking about taking the company and reducing costs.”

Independent industry analyst Hal Vogel said he was not surprised the company had changed hands.

“Effects have gotten very expensive to generate, and the need for capital has probably never been greater in terms of just supporting all of these efforts,” Vogel said. “Because of that, companies such as Digital Domain need to be better capitalized so they don’t run short.”

The strategy, Stork said, would involve pushing Digital’s core business beyond creating digital effects to include producing animated and live-action feature films under Bay’s direction.

Bay, a veteran commercial director whose feature film credits include “Armageddon,” “The Rock” and “Bad Boys,” has worked with Digital Domain.

“Rapidly evolving digital visual effects technology is going to allow motion picture directors to tell even more compelling and visually stunning stories in the future, and we believe Digital Domain is uniquely positioned to take advantage of these new technologies,” the director said in a statement.

Founded in 1993, Digital Domain also is known for its innovative effects work in commercials, often ones showcased during the Super Bowl broadcast.

In one of its recent work, Digital Domain digitally replaced cornerback Deion Sanders with the Burger King mascot in a clip showing Sanders running an intercepted pass for a touchdown.

Digital Domain is known for working with big-name directors and actors in making TV commercials. The company created a swarm of paparazzi for a Heineken beer commercial starring Brad Pitt that debuted during last year’s Super Bowl. The ad was made by David Fincher, who directed Pitt in “Fight Club.”

Other commercial clients include Nike, Coors and Saab.

Digital Domain also has produced numerous music videos with artists including the Rolling Stones, Nine Inch Nails and Faith Hill.