Gawker Media is selling a minority stake to an outside investor for the first time to gird against a lawsuit filed against it by Hulk Hogan. The deal will be finalized once it receives shareholder approval.
In an email sent out to employees on Wednesday, founder and CEO Nick Denton announced that Gawker had secured investment from Columbus Nova, an investment arm of Russian billionaire Viktor Vekselberg. Denton explicitly tied the funding to the Hogan trial, in which the wrestler (real name, Terry Bollea) is seeking $100 million for Gawker.com’s publication of his sex tape in 2012.
“The funding will strengthen GMG’s financial reserves as we prepare for trial this March in Hulk Hogan’s $100 million invasion of privacy lawsuit, in which we are defending our right to report truthfully on the conduct of public figures,” Denton wrote.
Columbus Nova has previously acquired or invested in troubled media companies like Rock Band maker Harmonix and the music streaming service Rhapsody. The firm’s managing director, Jason Epstein, will join Gawker Media’s board.
Last year was tough for many independent digital publishers, but it was especially tough for Gawker Media. In addition to the Hogan trial troubles, Gawker Media’s editorial chief and the editor of Gawker.com left in the wake of a messy scandal over the summer. Advertising chief Andrew Gorenstein departed in October. The following month, layoffs sent a group of employees packing, the company replaced its COO and Gawker.com pivoted from news, culture and gossip to focusing primarily on politics.
Over Gchat, Nick Denton told Re/code that this investment really is meant to shore up support before the Hogan trial gets under way on March 7, and that the company was able to raise money from a position of strength. About 95 percent of equity at Gawker Media is still held by founders, family and current or former employees, Denton said. He also noted that Rhapsody, one of Columbus Nova’s investments, did pretty well last year.
“[Gawker Media Group’s] global monthly uniques are heading back over 100m; we are much less dependent on Facebook traffic than many of the viral mills; Gizmodo is running 50 percent ahead of The Verge*; and Gawker.com’s politics coverage has given it a 20 percent lift since we made the switch,” Denton said.
Denton added that all the executive changes — importing a new CTO from Google, a new COO from Vox Media, promoting an ex-Hearst executive to run advertising ops and bringing back ex-Gawker.com editor John Cook as editorial lead — were about getting Gawker Media’s house in order.
IBTimes first reported that Gawker Media was looking for outside investment on Tuesday. You can read Denton’s full email to the staff below:
Hey, everybody —
I’m pleased to let you know that Gawker Media Group has agreed to a minority investment from Columbus Nova, a firm with interests in companies such as Rhapsody, Harmonix, 300 Entertainment and Zoom Data — as well as the makers of Everquest.
The transaction is expected to close after formal approval of shareholders, tomorrow. It will be the first time GMG has taken outside capital.
The funding will strengthen GMG’s financial reserves as we prepare for trial this March in Hulk Hogan’s $100 million invasion of privacy lawsuit, in which we are defending our right to report truthfully on the conduct of public figures.
It will position the company’s seven media brands — Gawker in news and politics, Gizmodo for technology, Lifehacker for productivity, Deadspin for sports, Jezebel for the modern woman, Kotaku for video games and Jalopnik for car culture — for expansion deeper into their categories and out into new markets.
Our writers, editors, illustrators, and video producers inspire honest conversations around shared interests and passions, and enjoy unique credibility with a digital generation mistrustful of mainstream institutions and media.
In e-commerce, international markets, events, influencer marketing and video, each property has tremendous untapped potential. Through e-commerce, which drove $150m in sales for merchant partners in 2015, the company has developed a secondary revenue stream to augment its brand advertising business. The company enjoyed its tenth successive year of double-digit revenue growth in 2015.
With 100m users a month in the U.S. and international markets, GMG is the most heavily trafficked digital media company to fund its own expansion. The company has been to this point owned predominantly by founders, journalists and other current and former employees — and our families.
After investing, Columbus Nova Technology Partners will have a minority shareholding and one of five seats on Gawker Media Group’s board of directors. Columbus Nova is fully committed to the editorial integrity that underpins the audience appeal of GMG brands.
I hope many of you will soon have a chance to meet Jason Epstein, managing director of Columbus Nova Technology Partners, who is leading the firm’s investment in GMG.
As you’ll see, Jason has deep experience in media and entertainment: He’s a fan of the brands we have created, and an admirer of the business we have built. He’s a bold and creative thinker, and has already proven himself an invaluable adviser on business and strategic questions.
GMG has competed against behemoths in the media marketplace with flair, boldness and sweat — and the money we made ourselves. With proper financial backing, just imagine what we can do.
This post has lightly updated to include additional comment from Nick Denton.
* The Verge is owned by Vox Media, which also owns this site.
This article originally appeared on Recode.net.