Digital Domain Media Group Files For Chapter 11 Bankruptcy; Searchlight Capital Partners Reaches Agreement To Acquire Digital Domain Productions Digital Domain Media Group Files For Chapter 11 Bankruptcy; Searchlight Capital Partners Reaches Agreement To Acquire Digital Domain Productions

PORT ST. LUCIE, Fla., September 11, 2012 — Digital Domain Media Group, Inc. (NYSE: DDMG) has filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code in the U.S. Bankruptcy Court for the District of Delaware in Wilmington and is additionally seeking ancillary relief in Canada, pursuant to the Companies’ Creditors Arrangement Act in the Supreme Court of British Columbia, Vancouver Registry. DDMG has also entered into a purchase agreement whereby Searchlight Capital Partners L.P. would acquire Digital Domain Productions and its operating subsidiaries in the U.S. and Canada (DDPI), including Mothership Media. The sales agreement, though, remains subject to an auction process where higher offers can be considered and approval of U.S. Bankruptcy Court is required.

During this process, DDPI and Mothership intend to continue to operate without interruption in the ordinary course of business including adhering to and seeing through client contracts.

DDPI and Mothership, with studios in California and Vancouver, are focused on creating digital visual effects, CG animation and digital production for the entertainment and advertising industries and are led by recently promoted CEO Ed Ulbrich.

“We’re excited to begin this new chapter in our history and look forward to partnering with Searchlight,” said Ulbrich, a 20-year veteran of the company. “The capital commitment of Searchlight will enable us to continue to bring our expertise to feature films, advertising, games, and other media experiences, with a focus on what we do best – creating amazing digital productions. We remain on track to deliver all of our clients’ productions on schedule, on budget and at the highest degree of quality that they expect from Digital Domain.”

The Searchlight deal calls for it to acquire the assets of DDPI free and clear of all claims and encumbrances pursuant to section 363 of the U.S. Bankruptcy Code for the purchase price of $15 million.

“We believe in the visual effects business of Digital Domain, led by Ed Ulbrich and his team, and are strongly committed to maintaining the premiere product they create for customers and moviegoers. Upon Searchlight’s consummation of the transaction, we have committed and will continue to commit our strong financial resources and expertise to ensure that this business always remains healthy and vibrant,” said Eric L. Zinterhofer, co-founder, Searchlight Capital Partners L.P.

The senior noteholders, led by Hudson Bay Master Fund Ltd., have agreed to provide DDMG with up to $20 million in debtor-in-possession financing. If approved by the Court, DDMG, DDPI and Mothership will have access to the funds to pay normal operating expenses, such as employee wages and benefits, payments to vendors and suppliers, and other obligations.

As previously disclosed, on August 10, 2012, DDMG retained Michael Katzenstein, a senior managing director with FTI Consulting, who now serves as chief restructuring officer of DDMG and its operating subsidiaries. Katzenstein’s overall responsibilities include managing the day-to-day operations of DDMG, guiding and overseeing these reorganization proceedings and ensuring that the value of the estate is maximized for creditors.

As of June 30, 2012, the Company had total balance sheet assets of approximately $205 million and total balance sheet liabilities in the approximate amount of $214 million.

On September 7, 2012, DDMG announced the initiation of its strategic realignment that will allow it to focus on its core business DDPI. As part of this process, DDMG began the cessation of its Port St. Lucie, Florida operations by reducing virtually its entire Port St. Lucie workforce by approximately 300 employees and retaining approximately 20 employees. In addition, John C. Textor resigned effective September 6 from his positions as CEO and chairman of the board of directors of DDMG and from all other positions as officer and director of DDMG’s subsidiaries.

Searchlight Capital Partners is a private investment firm founded in 2010 by senior partners formerly with industry leading investment management firms. Searchlight Capital Partners currently manages over $860 million, invests in a wide range of industries in North America and Europe, and has offices in New York, London and Toronto.

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