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Digital Domain and the Elusive IPO

It’s not so easy to be like Pixar.  The digitial effects house that Terminator 2: Judgment Day built, is finding private investment offers more appealing than IPO prospects.  Whether that means there’s not enough interest for a decent IPO or that the private offers are really really good depends on the person who’s talking, as Richard Verrier of the Los Angeles Times reports.

But the planned offering didn’t inspire prospective investors, at least those prepared to pay the proposed price of $12 to $14 a share. Among their concerns is Digital Domain’s plan to expand into risky movie and video game production as well as broader market volatility.

Digital effects companies, with the right creative people (directors, writers, etc.), can certainly make animated feature films, television commercials, and team up with game programmers for interactive games.  Given Pixar’s success, it must be tempting for special effects companies to give it a try.

The company stated in a recent filing with the Securities and Exchange Commission that it would use the proceeds from a public offering to pay down debt and transform the company from a work-for-hire commercial and movie effects house into a full-fledged production studio with its own pipeline of computer-animated movies and video games.

Digital Domain executives initially told investors they hoped to go public this week.

But on Friday, co-Chairman John Textor said the company might scrap the IPO and stay private.

“We are positively surprised by the interest from private equity sources,” Textor said. “The real reason this isn’t happening is because we have better opportunities. We received offers that will provide more capital than we originally sought.”

The article and my reference above name T2 director James Cameron, but the company was also co-founded by Scott Ross from Industrial Light & Magic and special effects whiz Stan Winston. Cameron and Winston later left the company.

And of course, the company has done effects for such projects as True Lies, Apollo 13 (no NASA footage, if I recall correctly), T2 3-D: Battle Across Time, Titanic, X-Men, The Lord of the Rings: Fellowship of the Ring, Charlie and the Chocolate Factory, Meet the Robinsons, Pirates of the Caribbean: At World’s End, and Transformers, to name a few.