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Gawker, Filing for Bankruptcy After Hulk Hogan Suit, Is for Sale Gawker, Filing for Bankruptcy After Hulk Hogan Suit, Is for Sale
(about 5 hours later)
Gawker Media, under pressure from a $140 million legal judgment and facing a determined foe in the Silicon Valley billionaire Peter Thiel, has filed for Chapter 11 bankruptcy and is putting itself up for sale. Gawker Media, the irreverent company that pioneered the wry tone and take-no-prisoners approach that came to embody a certain style of web journalism, put itself up for sale on Friday in an acknowledgment that its future as an independent news organization was in doubt.
The company is beginning an auction, and Ziff Davis, a digital media company, has submitted an opening bid. That bid was for $90 million to $100 million, according to a person briefed on Gawker’s plans, who spoke on condition of anonymity. Gawker said it had filed for Chapter 11 bankruptcy and would conduct a sale through an auction. The company is under significant financial pressure from a $140 million legal judgment in an invasion-of-privacy lawsuit by the former wrestler Hulk Hogan and facing a determined foe in the Silicon Valley billionaire Peter Thiel, who is funding legal cases against it.
Such an offer is known as a stalking-horse bid, meant to set a floor in a court-supervised auction. Ziff Davis, a digital media company, has submitted an opening bid, which a person briefed on Gawker’s plans said was in the range of $90 million to $100 million. The person spoke on condition of anonymity to discuss the sale process. Gawker expects a sale to close by the end of the summer.
Gawker said in a news release that it would “maintain normal operations” during the sales process. Filing for Chapter 11 stays claims from creditors, including court judgments — meaning Gawker would not need to begin paying the $140 million that was awarded in March to the professional wrestler Hulk Hogan, whose name is Terry G. Bollea, in an invasion-of-privacy case involving the publication of a sex tape. It also allows companies more time and more control as they reorganize themselves. The company still plans to appeal the case. But even as Gawker took stock of its next steps, it remained, in typical fashion, defiant.
Weeks earlier, Mr. Thiel acknowledged in an interview with The New York Times that he was financially supporting Mr. Bollea’s lawsuit, as well as other lawsuits against the organization. Mr. Thiel, a founder of Paypal and one of the earliest investors in Facebook, was outed as being gay by one of Gawker’s blogs, the now-defunct Valleywag, nearly a decade ago. He said that article’s headline, “Peter Thiel is totally gay, people,” and articles written about his friends and others “ruined people’s lives for no reason” and prompted his decision to finance cases against Gawker. “Even with his billions, Thiel will not silence our writers,” Nick Denton, Gawker’s founder and chief executive, said on Twitter. “Our sites will thrive — under new ownership — and we’ll win in court.” (Mr. Denton, through a spokesman, declined further comment.)
Since its founding in 2002, Gawker has espoused a conversational tone that came to be mimicked across the internet and on social platforms like Twitter. Gawker and its affiliated sites — including the sports-focused Deadspin and Jezebel, which is aimed at women — have relentlessly and gleefully chronicled the lives of the powerful, and often delivered attention-grabbing, exclusive stories, some of them too over-the-edge for other publications. The company was also an incubator of talent: Employees went on to found websites like The Awl and work at publications like The New Yorker and Time.
Gawker also had many detractors, who said it often went too far and published items with little news value that aimed to embarrass individuals. But over the last year Gawker.com has been going through something of a cultural transformation. Mr. Denton has vowed to make the site nicer and Gawker has shifted to politics and away from coverage of the New York media world and celebrity gossip.
The decision to file for bankruptcy and put itself up for sale is the latest development for a company that has faced a seemingly unending barrage of bad news in the last year. There was the maelstrom last summer after Gawker published, and then removed, an article about a married male media executive who sought to hire a gay escort. That decision led to the resignations of two top editors. More recently, there was the lawsuit by Mr. Hogan, whose real name is Terry G. Bollea, which has roiled the company and raised questions about its path forward.
“It really was an incredibly bad year,” said Hamilton Nolan, a writer who has worked at Gawker for eight years. “I think they’ll study this in journalism schools one day as being the single worst year in media company history.”
In Gawker’s new offices in Manhattan on Friday, the mood was somber. Around noon, Mr. Denton and Heather Dietrick, the company’s president and general counsel, held a meeting to inform employees of the company’s plans and provide reassurance that Gawker would operate as usual during the sale process.
“They emphasized that the future is uncertain, but for now we’re going to keep doing what we do, and that was useful for people to hear,” said Alex Pareene, the editor in chief of Gawker.
Employees said that few people had known before the meeting of the company’s decision to file for bankruptcy. A keg of beer was brought in and pizzas were ordered.
“It was not a raucous or even particularly depressing affair,” Mr. Pareene said. “We’ve had more depressing meetings and we’ve had more argumentative meetings.”
Gawker’s sites published posts assuring readers they were not going anywhere.
Filing for Chapter 11 stays claims from creditors, including court judgments — meaning Gawker will not need to begin paying the $140 million that was awarded in March to Mr. Bollea.
It also allows companies more time and more control as they reorganize themselves. In its bankruptcy filing, Gawker listed $50 million to $100 million in assets and $100 million to $500 million in liabilities. The company still plans to appeal the case.
Also on Friday, a judge in Pinellas County Circuit Court in Florida granted Gawker’s request for a stay of the judgment against it in the lawsuit, pending an appeal. That decision essentially became redundant once Gawker filed for bankruptcy.
Weeks earlier, Mr. Thiel acknowledged in an interview with The New York Times that he was financially supporting Mr. Bollea’s lawsuit, as well as other lawsuits against the organization. Mr. Thiel, a founder of PayPal and one of the earliest investors in Facebook, was outed as being gay by one of Gawker’s blogs, the now-defunct Valleywag, nearly a decade ago. He said that Gawker published articles that “ruined people’s lives for no reason” and prompted his decision to finance cases against the company.
“It’s less about revenge and more about specific deterrence,” Mr. Thiel said of his supporting Gawker’s legal opponents. “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.”“It’s less about revenge and more about specific deterrence,” Mr. Thiel said of his supporting Gawker’s legal opponents. “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.”
The revelation that Mr. Thiel was behind Mr. Bollea’s lawsuit and others has placed Gawker at the center of a First Amendment battle that has captivated the news media and could reshape how news organizations cover celebrities and other individuals. It has also shed light on long-simmering tensions between the media world and Silicon Valley, which has become increasingly secretive and elusive. A spokesman for Mr. Thiel did not return a request for comment on Friday. Gawker is also exploring at least one lawsuit against Mr. Thiel, according to the person briefed on Gawker’s plans.
In a statement, Nick Denton, Gawker’s founder and chief executive, said Gawker was “encouraged by the agreement with Ziff Davis.” The offer by Ziff Davis, whose online properties include IGN, Geek.com and AskMen.com, is what is known as a “stalking-horse bid,” essentially setting a floor in a court-supervised auction. Money from a sale would be held aside to cover creditor claims, including any damages after the appeals process.
Ziff Davis is a once-mighty publisher of computer magazines that struggled with the collapse of the print advertising business and has remade itself as a publisher of tech, gaming and men’s lifestyle websites. Its online properties include IGN, Geek.com and AskMen.com. In an internal memo obtained by The New York Times, Ziff Davis’s chief executive, Vivek Shah, said that under the terms of a potential agreement, the company would acquire Gawker Media’s properties but none of its liabilities. When discussing its plans for Gawker Media, he referred to the benefits of having all of the company’s sites, but conspicuously omitted any mention of Gawker.com.
In an internal memo obtained by The New York Times, Ziff Davis’s chief executive, Vivek Shah, said that under the terms of a potential agreement, the company would acquire Gawker Media’s properties but none of its liabilities. When discussing its plans for Gawker Media, it referred to the benefits of having all of the company’s blogs, but it conspicuously omitted any mention of its flagship site, Gawker.com. He said the auction would most likely take place at the end of July. Other bidders, which will probably include other media publishers, are expected, particularly with the threat of assuming legal claims removed with the bankruptcy filing.
Gawker.com, which published the sex tape featuring Mr. Bollea and made its reputation on its snarky tone and aggressive coverage of any topic it felt was interesting, has often been the target of critics.
Mr. Bollea sued Gawker Media in 2012 over the publication of a black-and-white sex tape that showed Mr. Bollea having sex with a woman who was at the time the wife of a friend of his.
In March, after a two-week trial, a Florida jury awarded $115 million in damages to Mr. Bollea, a figure that exceeded the $100 million he had asked for. A jury later awarded $25 million more in punitive damages, bringing the total to $140 million.
In January, Gawker sold a minority stake in the company to the investment company Columbus Nova Technology Partners, partly in preparation for the lawsuit by Mr. Bollea.In January, Gawker sold a minority stake in the company to the investment company Columbus Nova Technology Partners, partly in preparation for the lawsuit by Mr. Bollea.
Ziff Davis traces its origins to the late 1920s, when William B. Ziff began publishing hobbyist magazines devoted to aviation. In the 1950s, it branched out into electronics magazines. When the computer industry began to take off in the 1980s, it plowed into the market, with a stable of publications like PC Magazine and Computer Shopper that were bursting with advertising at the time. Mr. Bollea sued Gawker Media in 2012 over Gawker.com’s publication of a black-and-white tape that showed Mr. Bollea having sex with a woman who was at the time the wife of a friend of his.
Ownership of the publisher has changed hands many times since the mid-1990s, when it was sold to Forstmann Little, the private equity firm, for $1.4 billion, and later to the Japanese company SoftBank. Ziff Davis was acquired for $167 million in 2012 by j2Global, an internet services company with an assortment of internet fax, online phone, email marketing and other communications services. In March, after a two-week trial, a Florida jury awarded $115 million in damages to Mr. Bollea. A jury later awarded $25 million more in punitive damages, bringing the total to $140 million.
On Friday, some Gawker employees remained hopeful that a new owner might mean a fresh start, but there was also perhaps a tacit acknowledgment that Gawker as everyone knew it could soon be a thing of the past.
“There’s not going to be the magical happy ending to the story,” Mr. Nolan said. “It doesn’t necessarily mean it’s going to be the worst ending to the story, but we’re not just going to go back to everything being how it was.”