Gawker Media

What did it do?

Gawker Media was a New York-based internet media company and blog network. Alongside Gawker.com it published sites such as Deadspin, Lifehacker, Gizmodo, Kotaku, Jalopnik and Jezebel. It made most of its money from advertising and was profitable in 2014.

Why did it shut down?

In 2012 Gawker published a short excerpt from a sex tape featuring Hulk Hogan and announced that it would not take it down despite a judge's order to remove it. Hogan, whose real name is Terry Bollea, sued in Florida for invasion of privacy. In March 2016 a jury ordered the company to pay a total of $140 million in damages. Stating that it could not cover this sum or the $50 million bond required to appeal, the company filed for Chapter 11 in June 2016. Its sites were sold at auction to Univision, and Gawker.com was shut down.

The story

On 18 March 2016 a jury in Florida ordered Gawker Media to pay Hulk Hogan $115 million in damages. Three days later $25 million in punitive damages was added, $10 million of it assessed directly against founder Nick Denton. For a profitable but small media company, this was an existential figure.

Denton founded the company in October 2003 as Blogwire; until 2008 it was run from his flat in New York's SoHo district. After Gawker.com, sites such as Gizmodo, Kotaku, Lifehacker, Deadspin, Jalopnik and Jezebel joined the network. Although Denton wrote in 2005 that he doubted the value of blogs as a business, the company grew: revenue rose from $20 million in 2010 to $45 million in 2014, the year it made an operating profit of $6.5 million. Business Insider valued the company at $250 million.

The roots of the break went back to 2012. On 4 October 2012 one of Gawker's editors published a short excerpt from a sex tape featuring Hulk Hogan. Hogan asked for the video to be taken down; Denton refused, citing the First Amendment to the US Constitution, which protects free speech, and the story's news value. A judge ordered the footage removed, and in April 2013 Gawker wrote openly that it would not comply. Hogan, whose real name is Terry Bollea, filed a $100 million lawsuit for invasion of privacy. In May 2016 billionaire Peter Thiel confirmed to The New York Times that he had paid $10 million to cover the costs of several lawsuits brought by others, including Bollea's.

Stating that it could pay neither the $140.1 million judgment nor the $50 million bond required to appeal, the company filed for Chapter 11 on 10 June 2016. On 16 August Univision bought all the sites except Gawker.com at auction for $135 million; Gawker.com closed the following week. In November 2016 Gawker reached a $31 million settlement with Bollea and dropped its appeal. The other sites lived on under the Gizmodo Media Group umbrella.

Gawker's end shows that, at media start-ups, editorial decisions cannot be separated from legal risk management.

Lessons for founders

• In publishing, set up a written legal review process for the line between newsworthiness and personal rights; in Turkey, too, the risk of access bans and damages is high.
• Defying court orders can create a bigger risk than the lawsuit itself.
• Even a profitable media company is vulnerable to a single large lawsuit without a capital buffer; set aside insurance and provisions for legal risk.

Sources

1. Gawker Media (Wikipedia)
2. Gawker, Filing for Bankruptcy After Hulk Hogan Suit, Is for Sale (The New York Times, 2016-06-10)
3. Univision to Buy Gawker Media for $135M (The Hollywood Reporter, 2016-08-16)

This section is compiled from public sources (Wikidata, news archives and company announcements). Figures are given as they appear in those sources; unknown fields are left blank. If you spot a mistake in an entry, you can send us a correction.

Is something in this entry wrong? Request a correction → Method