Cox Enterprises buys into special effects firm.

In preparation for the future of interactive cable television, the owners of Venice-based special effects and TV commercial producer Digital Domain announced recently a deal to sell nearly one-third of the company to media giant and cable system operator Cox Enterprises Inc.

The deal adds Cox to what will now be a three-way partnership that controls Digital Domain, a fast-growing player in the exploding industry of digital content creation. While a small percentage of the company is owned by its employees, the bulk of ownership will now be split evenly among Cox, IBM and Digital Domain's co-founders - movie director James Cameron, creature creator Stan Winston and company CEO Scott Ross.

"(Cox's) energy, their resources and their bucks are really going to turbocharge this company. People better get out of the way if they don't have a ramp on their backs, because we're coming," said Cameron, director of special effects-laden action flicks like "The Terminator" and "True Lies."

Before the Cox acquisition, Digital Domain was co-owned by its three founders and IBM, which bought a 50 percent stake in April 1993. Financial terms of last week's deal were not disclosed, although some sources reported a $30 million investment by Cox.

Ross said the partnership with Cox will help launch Digital Domain's products on interactive cable, a platform that currently does not exist. Officials with Digital Domain, IBM and Cox agreed that by 1997, cable modems that allow for rapid transfer of two-way digital information will be commonly available to consumers. Once that happens, Digital Domain will be able to transmit interactive games and other forms of multimedia entertainment directly to consumers using Cox's cable systems, Ross said.

In addition, Digital Domain will help Cox develop entertainment and information sites on the Internet, as well as creating special effects for Cox's television production company, Burbank-based Rysher Entertainment.

Atlanta-based Cox is the 14th largest media company in the U.S., according to Advertising Age.

The Cox deal capped a busy month for Digital Domain, which was nominated for an Academy Award in mid-February for its special effects work on the film "Apollo 13." The company also debuted its first CD-ROM recently at the International Toy Fair in New York.

Digital Domain is quickly growing out of its headquarters in Venice, Ross said, and is scouting for new offices. He expects the 275-employee company to grow to 500 employees by 1997. One possible location is the Playa Vista project being developed by DreamWorks SKG in conjunction with real estate developers Maguire Thomas Partners, Ross said.