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Why is shutting down next week

Comedy Central Roast Of David Hasselhoff - Show Photo by Kevin Winter/Getty Images, a gossip blog that spawned a multimillion-dollar media empire, is shutting down next week. The decision comes just two days after Univision won an auction to acquire Gawker Media, the parent company of as well as websites like Gizmodo and Lifehacker.

It might seem surprising for Univision to spend $130 million for the company and then immediately shutter its flagship brand. But the business logic behind the decision seems pretty clear:’s brand had become so toxic that continuing to operate the site could have posed significant financial risks.

Shuttering will allow Univision to get a fresh start. Other Gawker Media sites will apparently continue operating, and Univision’s management will be able to focus their full energies on them.

Gawker’s sensationalistic journalism brought about its downfall

Terry Bollea, aka Hulk Hogan, Testifies In Gawker Media Lawsuit
Gawker founder Nick Denton.
Photo by John Pendygraft-Pool/Getty Images

Gawker Media’s path to bankruptcy began with a decision by editors to publish a video of Hulk Hogan having sex — without the permission of either Hogan or his partner. Hogan sued, arguing that this was a violation of his privacy. A Florida jury agreed, awarding Hogan $140 million in damages earlier this year.

Gawker Media didn’t have $140 million, so the company was forced to declare bankruptcy. The company was put up for auction, with the proceeds used to pay part of Hogan’s judgment.

We didn’t know it at the time it was filed, but Hogan’s lawsuit was secretly funded by technology billionaire Peter Thiel. Thiel has borne a grudge against Gawker since 2007, when Gawker published a post titled “Peter Thiel is totally gay, people.” Thiel started to look for opportunities to punish Gawker for what he saw as irresponsible journalism.

These were not isolated incidents. Gawker has outed others, including CNN anchor Anderson Cooper and Shepard Smith of Fox News. In one of its most infamous stories, Gawker reported on a New York media executive soliciting the services of a male escort. The man was not a public figure, and the piece was later removed after founder Nick Denton decided that the story had gone over the ethical line.

In court, 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.

Billionaires funding lawsuits could be a threat to free speech

Republican National Convention: Day Four
Technology billionaire Peter Thiel.
Photo by Alex Wong/Getty Images

Whatever your view of Gawker’s journalism, the case does raise questions about whether billionaire-funded lawsuits could threaten freedom of speech.

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 his 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.

Keeping would have been a big risk for Univision

With its purchase of Gawker Media, Univision got a number of valuable assets. Aside from, Gawker Media operates six other websites. There’s a sports site called Deadspin, a gadget site called Gizmodo, a car site called Jalopnik, and a video game site called Kotaku. The site also published Lifehacker, which focuses on productivity tips, and Jezebel, which covers culture from a feminist perspective. Univision also gains control of the technical and business infrastructure that allows Gawker to sell ads and turn a profit.

One of Gawker’s big downsides is that the site’s sensationalistic style and cavalier attitude toward personal privacy creates a lot of financial risk. There’s the obvious risk that the site could publish another post that subjects Gawker — and the deep pockets of its parent company — to a multimillion-dollar lawsuit. There would also be a risk that a story could create so much controversy that it could poison relationships with advertisers.

Last year’s controversy over the story on a media executive soliciting a male escort is a good example. Multiple advertisers threatened to pull their ad campaigns if the story wasn’t killed. After Denton decided to pull the story, two Gawker editors resigned in protest.

While editorial independence is an important principle, it’s also important that senior editors exercise good judgment and avoid publishing stories that invade people’s privacy. If Univision had kept running, it might have faced the same kind of management headaches Denton has in the past few years.

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