Gawker Media, the company behind the Gawker.com website as well as sites like Jezebel and Gizmodo, filed for bankruptcy on Friday. The company was forced to take the drastic action after a jury awarded former pro wrestler Hulk Hogan $140 million in damages — a judgment the media company can’t afford to pay.
The bankruptcy process should protect Gawker from its creditors while the company tries to find a long-term solution to its legal and financial woes. That will likely involve selling the company to another media company. According to the Wall Street Journal, the digital media company Ziff Davis is expected to make an initial $100 million bid for the company, and other potential buyers will be invited to make competing offers.
Gawker's bankruptcy represents a devastating blow not only for Gawker founder Nick Denton and the site's other investors but also to the sensationalistic and privacy-hostile style of journalism Gawker represents.
Gawker has aggressively pursued stories about the private lives of celebrities, repeatedly publishing stories that more traditional news outlets would have declined to publish. That culminated with the 2012 publication of a sex tape that Hogan says was made without his knowledge or consent. If Gawker’s loss is upheld on appeal, it will force other media organizations to tread more carefully with these kinds of stories.
Gawker’s bankruptcy also represents a triumph for technology billionaire Peter Thiel. He has borne a grudge against Gawker ever since it revealed that he was gay in 2007, and in recent years he has been secretly funding the Hogan lawsuit and others against Gawker Media. There’s a real worry that Thiel’s tactics could endanger the free press by giving billionaires a new weapon to use against media outlets they don't like — a weapon that has already been used against at least one non-Gawker outlet.
Gawker’s style of journalism shows little concern for privacy
Gawker is infamous for publishing stories about the private lives of the rich and powerful (and, in some cases, people who aren’t particularly rich or powerful) that more conventional media organizations would not have published. In one of its most infamous stories, Gawker reported on a New York media executive soliciting the services of a male escort. The piece was later removed after founder Nick Denton decided that the story had gone over the ethical line.
Outing gay people is something of a specialty for the digital gossip rag. Gawker was one of the first to report that CNN anchor Anderson Cooper was gay in 2009. In 2013, Gawker reported that Fox News anchor Shepard Smith was romantically involved with a male staffer.
And one of the early targets of Gawker's outing campaign was Peter Thiel. A 2007 post called "Peter Thiel is totally gay, people" apparently marked the start of Thiel's vendetta against the site.
Still, the Hogan video represented a new low for Gawker. The video of Hogan having consensual sex with the wife of a radio shock jock (who arranged the encounter and made the videotape) had no obvious news value, but Gawker decided to publish it anyway.
In court, Hulk Hogan's lawyers sought to portray Gawker as an organization without a moral compass. It wasn't a hard argument to make. During one deposition, Hogan's lawyers asked a former Gawker editor if there were any situation in which a celebrity sex tape would not be newsworthy.
"If they were a child," replied the editor, Albert Daulerio. "Under what age?" the lawyer asked.
"Four," Daulerio replied sarcastically.
As a result, arguments about media freedom fell on deaf ears in the jury box. Jurors didn't buy arguments that the First Amendment protected Gawker's right to humiliate random celebrities by publishing video of their most intimate moments.
Bankruptcy will likely mean putting Gawker sites under new management
Gawker is filing for bankruptcy under Chapter 11 of the bankruptcy code, which provides companies with protection from creditors while they reorganize their finances. The company has secured $22 million in debtor financing to give it some breathing room as it looks for a long-term solution.
That long-term solution will likely be a sale to another media company. Ziff Davis will reportedly offer $100 million, and if Hogan ultimately wins the case on appeal — or settles — a lot of that money will go to him.
If all goes well, Gawker and its sister websites will be able to continue operating under new management — and perhaps different editorial standards. Gawker's underlying business seemed to be thriving until it got into legal trouble. A version of Gawker Media that’s more careful about coloring inside the lines could be profitable, perhaps immensely so.
Gawker is at the center of a larger debate about privacy versus free speech
The larger significance of the Gawker case is the role it will play in shaping how journalists weigh the competing interests of privacy and free speech. In recent years, we've seen a number of cases where news sites have published photos, videos, and other private information about famous and not-so-famous people.
The most extreme form of this, known as "revenge porn" has triggered a backlash from privacy advocates and feminists who argue that publishing sexual content without its subjects' consent is a deep violation of their rights. But until recently, it wasn’t clear how the law viewed these claims.
But in the past couple of years, these issues have seen greater attention in the courts. The proprietors of the most egregious "revenge" porn sites have faced criminal prosecution for violating the privacy rights of their non-famous victims.
The Gawker case was different because it involved a prominent media organization and a famous subject, former pro wrestler Hulk Hogan. Gawker argued that Hogan was a public figure, and that his decision to talk about his sex life on programs like The Howard Stern Show made his sexual acts matters of public concern. If Gawker wins the case on appeal, it could give media organizations broad leeway to pierce the privacy of celebrities.
Billionaires funding lawsuits could be a threat to free speech
Whatever your view of Gawker’s journalism — and personally, I think publishing the Hogan tape was indefensible — the case does raise questions about whether billionaire-funded lawsuits could threaten freedom of speech. Hogan didn't fight his case alone; he was aided by a billionaire who was motivated by a broader antipathy toward Gawker’s style of journalism.
And Gawker isn't the only publication to be targeted by a disgruntled billionaire. Last year, the liberal magazine Mother Jones defeated a defamation lawsuit filed by Republican donor Frank VanderSloot. Winning the lawsuit cost Mother Jones, a relatively small nonprofit organization, and its insurance company $2.5 million in legal fees.
If VanderSloot's goal was to punish Mother Jones for writing an accurate but unflattering story about him, a loss was almost as good as a victory. His lawsuit sought $74,999 (staying just under the $75,000 threshold that would have allowed Mother Jones to move the case to federal court and away from an Idaho jury that might have favored the hometown plaintiff). So "winning" the lawsuit cost Mother Jones and its insurance company 30 times as much as the amount they would have had to pay if they had lost.
What was really ominous was what happened after VanderSloot's loss. He "announced that he was setting up a $1 million fund to pay the legal expenses of people wanting to sue Mother Jones or other members of the 'liberal press.'"
As far as I know, no one has taken him up on the offer. But the threat to freedom of the press is obvious. Any news organization doing its job is going to make some enemies. If a wealthy third party is willing to bankroll lawsuits by anyone with a grudge, and defending each case costs millions of dollars, the organization could get driven out of business even if it wins every single lawsuit.
Thiel insists that he has no quarrel with news organizations that conform to mainstream journalistic norms. But the key thing about Thiel’s strategy is that he didn't sue Gawker for outing him — a case he probably would have lost. Instead, he waited for years until he could find other plaintiffs with stronger cases.
That's a tactic that any billionaire could use against any news organization. And because most news organizations cover a wide variety of topics, the story that provoked a billionaire's ire might have nothing to do with the stories that actually trigger a lawsuit funded by that billionaire.
In short, Thiel's war on Gawker could become a template for other extremely wealthy people with personal or ideological scores to settle against news organizations. And that’s something to worry about even if you think Gawker deserves what it’s getting.