Shadowy Buyer Emerges in Digital Domain Purchase
This story first appeared in the Aug. 9 issue of The Hollywood Reporter magazine.
Even the most seasoned VFX artists had trouble visualizing this deal.
In an unexpected, byzantine arrangement that caught the global effects industry by surprise, Digital Domain -- the VFX house behind such blockbusters as Iron Man 3 and Titanic -- has come under the ownership of little-known Sun Innovation, a Hong Kong-listed company that specializes in property development and the trading of metal scraps. Digital Domain's new CEO, Sun Innovation exec Daniel Seah, formerly was with Simsen International Financial Group, where he oversaw M&A and investor relations.
So what prompted a company with no ties to entertainment to enter the VFX business? A Hong Kong-based source with knowledge of the July 26 deal tells THR that the purchase likely was driven by a major behind-the-scenes investor who has been "a prominent player in the Hong Kong stock market."
Who is this mystery person? No one is sure, but an official filing on the Sun Innovation website names Che Feng as the owner of Harmony Energy, a company that bought into Sun Innovation in March. Che is a major Chinese investor whose fortune on the mainland is hard to assess, but he has links to the ruling Communist Party elite through his father-in-law, Dai Xianglong, a powerful bureaucrat in charge of the country's social security system and the former head of the Bank of China.
If Che is indeed involved, it's unclear what role he'll play in the future of the company founded in 1993 by James Cameron, Stan Winston and Scott Ross. Digital Domain was acquired in bankruptcy for $30.2 million in September by China's Galloping Horse and India's Reliance MediaWorks. Now Sun Innovation is acquiring Galloping Horse U.S. (which owned 70 percent of Digital Domain 3.0's shares) for $50.5 million.
The deal comes as globalization and big tax incentives continue to reshape the VFX industry. Life of Pi house Rhythm and Hues was sold to India/U.S. player Prana Studios in March after filing for bankruptcy, and India's Crest Animation Studio is said to be struggling for survival.
"My friends at DD are as confused as ever," one artist says. "[There's] a long way to go to reach stability, and that has to start with the artists -- they're the only asset that matters."