If Peter Thiels goal was to punish Gawker owner Nick Denton, then the tech billionaire has succeeded. Gawker Media Group filed for Chapter 11 bankruptcy today and it’s being sold to the highest bidder.
The company released a statement saying it had agreed to sell its seven media brands and other assets to Ziff Davis, which owns the video game site IGN and PC Magazine. The sale is through a court-supervised auction, in which other potential owners could offer higher bids. Ziff Davis has said it would pay around $100 million, according to a person familiar with the matter.
Filing for bankruptcy will help Gawker weather defeat in the invasion-of-privacy suit brought by former pro wrestler Hulk Hogan. In March, a jury awarded Hogan $140 million. Gawker is responsible for $130 million of that; Denton personally owes $10 million. Last month, Peter Thiel admitted to funding the lawsuit and others against the company. Denton and a spokesman for Thiel did not respond to requests for comment.
A sale will leave Denton wounded. Proceeds from the sale go into escrow pending the outcome of the appeal of the Hogan case. If Hogan wins, he likely gets the money. If Gawker prevails, Denton could recoup some of his losses. Gawker is trying to protect Denton — its lawyers asked the Manhattan bankruptcy court to not make Denton pay — but it’s not clear if that will work.
No matter the outcome of the appeal, Denton has lost control of the company he built — a brand that is intertwined with his aggressive, snarky style. It’s unclear what his role, if any, would be at the company that buys Gawker. And there’s no guarantee that the caustic heart and tortured soul of Gawker will survive.
“The lesson here is that if youre wealthy you can severely disrupt, if not destroy, a media publication you dislike for any reason, and theres basically nothing anyone can do to stop you, Sam Biddle, a Gawker writer, said in a message. He penned some the company’s most critical stories about Silicon Valley. Its a victory for anyone who is rich and doesnt want people saying bad things about them, anywhere.
Other Gawker writers saw the bankruptcy filing as a defeat. I’m still a little bit reeling from the whole thing, said Brent Rose, who worked for Gizmodo and now freelances for Gawker Media. It’s just insane to me that an individual can have that kind of power to crush a media organization.
Yet today’s events aren’t a clear win for Thiel, said George Triantis, a professor at Stanford Law School. The litigation is a victory, but bankruptcy dulls that victory a little bit. As long as there are new funders willing to step up, the company can restructure and continue to do business — at least until the next big lawsuit, he said.
Its conceivable that a purchaser could shut down the controversial flagship Gawker brand, while keeping popular sites like Gizmodo, Deadspin and Lifehacker. However, in a statement, Ziff Davis defended the Gawker brand. The flagship site itself has shone light on powerful figures from Donald Trump and Hillary Clinton to the new industrialists and investors of Silicon Valley, the statement said.
The sites could become unrecognizable under new management. It comes down to what a potential new owner’s pain threshold is in terms of Gawker’s voice and writing style, said David Uberti, a staff writer for the Columbia Journalism Review. They see themselves as the most free journalists on Earth. They don’t have to worry about business interests or pissing people off.
Another possibility: Denton could be in charge again. If Gawker were to win its lawsuit on appeal, Denton might consider trying to buy back part of his media empire, a person familiar with the matter said.
Other writers and publications may think twice before writing critically and sometimes cruelly about powerful people.
I think Thiel is probably happy, said Karl Olson, a media attorney who has represented the San Francisco Chronicle, the Los Angeles Times and Bloomberg L.P. I’m sure he wanted to send a warning shot across the bow to any publications like them.
With Lizette Chapman
Read more: http://www.bloomberg.com/