Peter Thiel is getting closer to his goal: Gawker Media has filed for bankruptcy protection and says it eventually plans to find a new owner for the company.
Gawker and owner Nick Denton are making the Chapter 11 filing today, in order to avoid paying Thiel and Hulk Hogan the $140 million judgment they won in Hogan’s privacy trial earlier this year.
Gawker has told it employees it still plans to fight the Thiel/Hogan case and to operate its publishing business while it does so. But it is also now formally entertaining offers to buy the company and says it has a firm bid from publisher Ziff Davis to buy the entire operation for less than $100 million.
(Update: Gawker has now formally announced the Chapter 11 filing. You can read that press release at the bottom of of this post. And in a memo to employees, Ziff Davis CEO Vivek Shah says his company has an "asset purchase agreement" to buy seven Gawker titles, and says there is a "tremendous fit between the two organizations." It is worth noting that while Shah's memo says he intends to buy Gawker.com, he doesn't list the site when describing Ziff Davis' plans to integrate Gawker Media's other sites.)
Gawker and its banker Mark Patricof assume that the company will eventually see higher bids while it is in bankruptcy protection. Last year, in advance of the Hogan trial, Denton figured his company was worth something in the $250 million to $300 million range.
But in any case the company won’t trade hands until Gawker either beats back Thiel and Hogan or it finishes a court-approved restructuring. Because no one wants to buy an ongoing lawsuit from Peter Thiel.
Ziff Davis itself is a company that has gone through the Chapter 11 process. The company was once a dominant force in the trade and hobbyist magazine business, but its fortunes declined along with the print industry, and it filed for bankruptcy protection in 2008.
Ziff Davis now operates a tech-centric stable of digital titles, including IGN, AskMen and PCMag, that it says reaches more than 100 million readers a month; CEO Shah is a former Time Inc. exec.
In theory, Gawker and Denton are in this position because Gawker published excerpts of a 2012 sex tape featuring Hogan and the wife of one of his friends.
But Thiel, a billionaire who made his fortune by running PayPal, then making an early investment in Facebook, has made it clear that he funded Hogan’s lawsuit to punish Gawker and Denton for a series of posts the publisher made over the years.
"It’s less about revenge and more about specific deterrence," Thiel said last month in an interview with the New York Times. "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."
Funding Hogan’s case, Thiel said, was "one of my greater philanthropic things that I’ve done."
Denton has refused to apologize for the Hogan post and has argued that Thiel’s campaign against him and his company will set a dangerous precedent.
Even with his billions, Thiel will not silence our writers. Our sites will thrive — under new ownership — and we'll win in court.— Nick Denton (@nicknotned) June 10, 2016
Here’s part of Denton’s appearance at the Code Conference earlier this month — the empty chair next to him was reserved for Thiel, who was invited to join him onstage but didn't respond to Recode’s invitations.
And here’s Denton’s entire interview with Recode Executive Editor Kara Swisher:
Here's the Gawker press release:
Gawker Media Group Announces Purchase Agreement with Ziff Davis
Bankruptcy Auction Process Begins
NEW YORK – June 10, 2016 – Gawker Media Group ("GMG") has entered into an asset purchase agreement to sell its seven media brands and other assets to Ziff Davis, a global digital media company which operates in the technology, gaming and lifestyle categories and is a subsidiary of j2 Global, Inc.
Nick Denton, GMG’s founder, said: "We are encouraged by the agreement with Ziff Davis, one of the most rigorously managed and profitable companies in digital media. A combination would marry Ziff Davis’ strength in e-commerce, licensing and video with GMG’s premium media brands."
In order to offer the business free and clear of legal liabilities and maximize value for all stakeholders, GMG subsidiary GM LLC has filed for Chapter 11 protection from creditors. The sale will be conducted through a bankruptcy court supervised auction, in which other bidders may offer a higher price for the company. GMG is being advised by Mark Patricof of Houlihan Lokey.
During the sale process, GMG will maintain normal operations, publishing news and opinion on technology, politics and other interests to its 6 million readers each weekday, and providing advertisers with access to this desirable audience.
The sale and filing are intended to preserve the value of GMG’s pioneering digital news business, safeguard the jobs of journalists and other staff, and allow GMG to fund the appeal against the $130 million judgment in the Hulk Hogan case against the company in a Florida state court.
Gawker Media Group is putting its properties up for sale after a coordinated barrage of lawsuits intended to put the company out of business and deter its writers from offering critical coverage.
The protection afforded by the bankruptcy filing will allow GMG to exercise its rights to due process. The company is confident it will ultimately prevail in the Hogan lawsuit, but was not able today to obtain from the trial court even a brief stay without onerous conditions to seek relief from the appeals court.
With a distinctive commitment to journalism as an honest conversation between writers and readers, GMG is the only interactive media group to have achieved scale and profitability without outside capital. The company is a leader in online commerce, native advertising and online discussion software, but the driving force is its distinctive editorial mission.
Writer for writer, GMG has broken more important and interesting stories than any other digital news venture.
Gizmodo, the company’s technology flagship, has energized the debate about Facebook’s control of the news, for example. Deadspin, which provides sports news without access, has exposed the cover-up by the NFL of domestic abuse allegations against players. Lifehacker is the smartest how-to site on the web. Jezebel has defined modern feminist thinking. Jalopnik and Kotaku are among the web’s leading sources for news and reviews of cars and video games. And 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.
"Authentic writing, whether it takes the form of honest reviews of technology, video games and entertainment, or revelations about the way the system works, is more important than ever," says Nick Denton, the founder of GMG. "We have been forced by this litigation to give up our longstanding independence, but our writers remain committed to telling the true stories that underpin credibility with our millions of readers. With stronger backing and disentangled from litigation, they can perform their vital work on more platforms and in different forms."
Here's the bankruptcy filing:
This article originally appeared on Recode.net.