Gawker Files for Bankruptcy as Thiel’s Legal War Rages

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Gawker Files for Bankruptcy as Thiel’s Legal War Rages

Post by bentech »

Gawker Files for Bankruptcy as Thiel’s Legal War Rages

GAWKER MEDIA, THE online journalism pioneer now facing a legal onslaught financed by a Silicon Valley tycoon, has filed for bankruptcy and is putting itself up for sale.

The company filed for Chapter 11 bankruptcy today in federal bankruptcy court in Manhattan. The move comes as Gawker appeals a $140 million judgment against it for posting excerpts of a Hulk Hogan sex tape. Last month, famed Silicon Valley investor and PayPal co-founder Peter Thiel revealed that he had funded Hogan’s lawsuit against the site.

Gawker has agreed to sell itself to the tech publisher Ziff Davis, according to a company press release, though the sale would depend on the outcome of a court-supervised bankruptcy auction expected to take place next month. “We are encouraged by the agreement with Ziff Davis, one of the most rigorously managed and profitable companies in digital media,” Gawker founder and chief executive Nick Denton said in a statement.

Gawker isn't afraid to make enemies of some of the tech industry’s biggest names.
Chapter 11 bankruptcy is also known as “reorganization” bankruptcy: businesses reorganize their budgets in order to create a plan for paying off creditors over time, which usually involves cutting costs to funnel money toward debt payments. The filing would stay claims from creditors, including its court judgement from the Hogan lawsuit. It buys the company time for a repayment plan and allows Gawker to continue operating, paying its writers and other staffers, while it finalizes its sale.

The purchase agreement with Ziff Davis, meanwhile, sets the floor price for the bankruptcy auction. Other bidders may still offer a higher price for the company. According to a memo from Ziff Davis obtained by Recode, the publisher sees Gawker Media’s tech-themed sites as assets that would “fortify our position in consumer tech and gaming.” It also points to several other Gawker brands as ways Ziff Davis could expand into lifestyle publishing. The memo does not mention Gawker’s eponymous flagship site.

As part of the filing, Gawker Media will have to fork over all of its assets, liabilities, and other revenue information to the court, along with about $1,700 in court fees. In January, Columbus Nova Technology Partners bought a minority stake in Gawker ahead of its trial with Hogan.

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Gawker first started as a celebrity and media gossip blog back in 2002, founded by former Financial Times journalist Nick Denton and Elizabeth Spiers, the former editor-in-chief of Mediabistro, a journalism jobs board and industry blog. The two connected in New York when Denton—eager to start a new project after making some money off a few social start-ups—noticed Spiers’ caustic blogging tone. Soon after, they got to work shaping the gossip-and-news aggregator that Gawker is today.

Spiers left for New York magazine in 2003 but Denton continued to grow Gawker. Less than a decade later, the Gawker name morphed into a full blown media empire, incorporated by Denton alone and encompassing a network of blogs outside of the original Gawker.com, most notably Deadspin, Lifehacker, Gizmodo, Jezebel, and Valleywag.

The last of these, Gawker’s Silicon Valley gossip site, wasn’t afraid to make enemies with some of the tech industry’s biggest names. In 2007, Valleywag published a piece that revealed Thiel was gay. Thiel reportedly made no secret of his sexuality at the time, but it had also not been widely publicized prior to Valleywag’s piece.

That piece and others led Thiel to undertake an all-out legal campaign against Gawker for journalism that “ruined people’s lives,” Thiel told the New York Times last month. Instead of suing Gawker directly, however, he secretly backed other plaintiffs with grievances against the site.

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Among them was Hulk Hogan. In 2012, Gawker editor A.J. Daulerio posted a video of former pro wrestler Hulk Hogan, whose real name is Terry Bollea, having sex with the wife of his best friend. Bollea sued the site for running the video, saying it was an invasion of privacy. In March, a jury sided with Bollea, levying $140 million in damages against Gawker. Last month, Forbes reported that Thiel was secretly financing Bollea’s suit.

“I saw Gawker pioneer a unique and incredibly damaging way of getting attention by bullying people even when there was no connection with the public interest,” Thiel told The Times in an interview in which he acknowledged his involvement. “It’s less about revenge and more about specific deterrence.”

With today’s bankruptcy filing, it appears he’s getting his revenge anyway.

With additional reporting by Jennifer Chaussee, Madison Kotack, and Gregory Barber.


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