Exclusive: "Avatar" effects house weighs Digital Domain bid

Film director and Lightstorm Entertainment Chairman James Cameron delivers a keynote address titled ''Renaissance now in imagination and technology'' in front of an image of his recent movie ''Avatar'' during the Seoul Digital Forum 2010 May 13, 2010.

(Reuters) - Prime Focus World, which created some of the visual effects for "Avatar," "Harry Potter" and other Hollywood blockbusters, is contemplating a bid for Digital Domain Media Group, which filed for bankruptcy protection on September 11, according to a person with knowledge of its interest.

Digital Domain, which was started in 1993 by superstar director James Cameron and the late special effects guru Stan Winston, said in a statement it agreed to sell most of its assets to private equity firm Searchlight Capital Partners "subject to the receipt of higher and better offers and court approval."

Prime Focus was started by Bollywood veteran Namit Malhotra in the late 1990s, the company says on its website, and claims its Mumbai facility is one of the one of the busiest special effects and 3D conversion facilities in Asia. It also has offices in Los Angeles and London.

A spokeswoman for Prime Focus was not available for comment. Digital Domain did not make an executive available.

Among Prime Focus' projects, the special effects house created the "holotable" in Avatar at which star Sam Worthington brings up three-dimensional holograms, and converted George Lucas' "Star Wars: Episode One - The Phantom Menace" from 2D to 3D, it says on its site.

The company delivered more than 650 special effect shots for "Dredd," a science fiction action film being released by Lions Gate on September 21, and did the conversion to 3D for "Frankenweenie," Tim Burton's gothic animated film that Walt Disney Co will release on October 5.

Prime Focus built its company through acquisitions in the past, and in 2007 purchased Post Logic Studios to expand to Los Angeles. In May, it named Massoud Entekhabi, a founder of venture firm Zenith Equity Partners, as its chief financial officer.

( This story corrected first paragraph to clarify that Prime Focus World created only some of the visual effects in the movie "Avatar.")

(Reporting by Ronald Grover; Editing by Richard Chang)