LONDON — Megalomedia, the ambitious British media group headed by advertising millionaire Maurice Saatchi, has become Europe’s largest digital effects company by acquiring London-based Computer Film Holdings, known as CFC.
Megalomedia is paying up to £8.6 million ($14.1 million) to make CFC part of its burgeoning post-production empire, which already includes FrameStore, another London effects house.
CFC, which also has an operation in Los Angeles, is one of the U.K.’s leading providers of digital effects to the international film industry, with recent credits including about 80 compositing shots in “Con Air,” the majority of effects work on “The Saint” and contributions to “Mission: Impossible,” “Nutty Professor” and “Braveheart.”
It is also the lead visual effects house on 20th Century Fox’s “Dr. Doolittle,” tackling between 60 and 70 shots.
The company, which has just doubled its Culver City operation to 10,000 square feet, is looking to staff up by about 25% and expand into 3-D animation, according to Don Fly, CEO of CFC Inc., the allied L.A. company.
Maurice Saatchi and his brother Charles became Britain’s best-known advertising moguls in the 1980s with their agency Saatchi & Saatchi, which came to public notice particularly through its devastatingly effective political campaigns on behalf of then-prime minister Margaret Thatcher.
Now Maurice Saatchi is spearheading Megalomedia’s drive to become “one of the U.K.’s leading networks of media and new media businesses.” Its other assets include Forward Publishing, Graduate Appointments, and a 10% stake in Multimedia Corp., but Saatchi is hunting for new ventures to add to that portfolio.
“In the coming year, we intend to maintain our balance with further acquisitions of complementary, earnings-enhancing businesses, as well as continuing investments in the new media arena,” he said in a statement.
At the same time, Megalomedia, which is publicly quoted on London’s Alternative Investment Market, announced a 440% increase in pre-tax profits for the year ended March, up to $2.74 million. That was largely thanks to the acquisition of FrameStore last August. Group sales grew by a similar amount to $11 million.
“We wanted to have a base in L.A.,” FrameStore CFO William Sargent told Daily Variety. “We decided on this rather than starting from scratch.” FrameStore will now handle commercial work, while its feature film and TV work is shifted to CFC.
The move brings the European company into the highly competitive Hollywood visual effects arena, going up against companies such as George Lucas’ Industrial Light & Magic, James Cameron’s Digital Domain, Rhythm & Hues and Boss Film.
FrameStore’s notable achievements in the past year included work on the NBC miniseries “The Odyssey” and “Gulliver,” with the latter nabbing a special visual effects Emmy last year for FrameStore.
CFC has picked up two Technical Academy Awards in its three years of operation.
CFC, employs 50 people in London and 20 at CFC Inc. in Culver City, reporting sales of $8.5 million and profits of $733,000 last year.
Under the terms of the Megalomedia takeover, CFC’s shareholders, who include directors Terry Gilliam and Paul Weiland, will receive a total cash payment of $4 million plus 2.9 million new shares in Megalomedia, worth $4.2 million at current prices, and the promise of future payments based on CFC’s performance.