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Gawker Media Is Exploring a Possible Sale Founder of Gawker Criticizes ‘Vindictive’ Campaign Against Company
(about 2 hours later)
Mired in a continuing legal battle with the professional wrestler Hulk Hogan, Gawker Media has hired a veteran investment banker to help it weigh its strategic options, including a potential sale. A day after Peter Thiel explained why he had given about $10 million to fund multiple lawsuits against Gawker Media, the site’s founder published an open letter to the Silicon Valley billionaire, calling him “thin-skinned” and a “comic book villain” and challenging him to a public debate about the role of journalism in society.
The media company confirmed on Thursday that it had hired Mark Patricof, a senior banker at the firm Houlihan Lokey, to provide financial advice. The letter from Nick Denton, the company’s founder and majority owner, was published Thursday on Gawker, hours after the company acknowledged that it had hired an investment banker in recent weeks to help it explore strategic options, including a possible sale.
Mr. Patricof was hired in recent weeks. In a statement, Gawker said that it had worked with investment bankers for some time and that Mr. Patricof was only the latest. Mr. Denton harshly criticized what he said was a lengthy, unnecessary vendetta Mr. Thiel waged against not only Gawker Media but also individual journalists.
Gawker weighed potential offers earlier this year that were as high as about $350 million, two people with direct knowledge of the matter said. “This vindictive decade-long campaign is quite out of proportion to the hurt you claim,” Mr. Denton wrote on Thursday. In the letter, Mr. Denton made it clear that he would not back down against a billionaire who showed no sign of stopping his involvement in underwriting the lawsuits, even as the future of Gawker remained in question.
Gawker said that word of Mr. Patricof’s hiring “seems to have stirred up some excitement, when the fact is that nothing is new.” On Wednesday, Mr. Thiel, a co-founder of PayPal and an early investor in Facebook, acknowledged in an interview with The New York Times that he had bankrolled lawsuits against Gawker, including one by the wrestler Hulk Hogan, whose real name is Terry G. Bollea. In March, a Florida jury awarded $140 million to Mr. Bollea in his case against the company for publishing a sex tape. The company is expected to appeal the verdict.
The strategic review is in its early stages, and Gawker’s founder and majority owner, Nick Denton, has not made any decisions on how to proceed, the two people with direct knowledge of the matter said. Houlihan Lokey is known for its expertise in mergers and in corporate restructuring. Other lawsuits against Gawker, led by the same lawyer, Charles Harder, representing Mr. Bollea, are still pending.
Still, the news comes a day after Peter Thiel, the Silicon Valley billionaire and venture capitalist, acknowledged in an interview with The New York Times that he had bankrolled lawsuits against Gawker, including one by Terry Gene Bollea, the professional wrestler known as Hulk Hogan. A Florida jury awarded $140 million to Mr. Bollea in his case. The media company is appealing the verdict. Mr. Thiel did not respond to a request for comment on Thursday.
Other lawsuits, led by the same lawyer representing Mr. Bollea, are still pending. In his interview with The Times, Mr. Thiel — who was outed as being gay by Gawker’s Valleywag blog nearly a decade ago — said he did not view his underwriting of the lawsuits as a business venture. “I would underscore that I don’t expect to make any money from this,” he said.
In his open letter, Mr. Denton issued a play-by-play of past stories that drew Mr. Thiel’s ire and of two defamation lawsuits currently pending against Gawker, and criticized what he characterized as an inability by Silicon Valley figures to accept criticism from journalists.
“I can see how tempting it would be to use Silicon Valley’s most abundant resource, a vast fortune, against the harsh words of the writers of a small New York media company,” he wrote. “We have our devices; you have yours.”
Mr. Denton also assured Mr. Thiel that Gawker’s journalists would be reporting on his involvement in lawsuits against the company.
“We, and those you have sent into battle against us, have been stripped naked, our texts, online chats and finances revealed through the press and the courts,” Mr. Denton wrote. “In the next phase, you too will be subject to a dose of transparency.”
Also on Thursday, Gawker confirmed that it had hired Mark Patricof, a senior banker at the firm Houlihan Lokey, in recent weeks to provide financial advice. Houlihan Lokey is known for its expertise in mergers and in corporate restructuring, but the company would not directly address reports that a potential buyer had emerged. (“Everyone take a breath,” began a statement released by Gawker on Thursday.)
In the statement, Gawker said that it had worked with investment bankers for some time, and that Mr. Patricof was only the latest. Gawker said word of Mr. Patricof’s hiring “seems to have stirred up some excitement, when the fact is that nothing is new.”
Gawker’s strategic review is in its early stages, and Mr. Denton has not decided on how to proceed, according to the people with direct knowledge of plans.
The company has been considering its options for months. Gawker had weighed potential offers earlier this year that were as high as approximately $350 million, according to people with direct knowledge of the matter.
Also this year, Gawker agreed to sell a minority stake to the tech venture capital firm Columbus Nova Technology Partners. As part of the deal, Jason Epstein, a managing partner at Columbus Nova, would join Gawker’s board. The companies did not disclose the size of the stake.
Gawker’s legal complications appear to have given pause to some other potential investors. Gawker confirmed in April that it had been in talks with Univision. An acquisition deal was nearly complete, according to two people briefed on the discussions, but discussions cooled after the Hogan verdict was reached.
Last year, Mr. Denton revealed that Gawker Media generated about $45 million in advertising revenue in 2014 and profit of about $7 million. But the prospect of further litigation draining the company’s coffers prompted the media outlet to prepare contingency planning around what the company described as Mr. Thiel’s “revenge campaign.”Last year, Mr. Denton revealed that Gawker Media generated about $45 million in advertising revenue in 2014 and profit of about $7 million. But the prospect of further litigation draining the company’s coffers prompted the media outlet to prepare contingency planning around what the company described as Mr. Thiel’s “revenge campaign.”
In his interview with The Times, Mr. Thiel — who was outed as being gay by Gawker Media nearly a decade ago — said he did not view his underwriting of the lawsuits as a business venture. “I would underscore that I don’t expect to make any money from this,” he said. In the middle of a legal odyssey that threatens to cripple the company, Mr. Denton and Gawker journalists are standing behind their reporting. On Thursday, Gawker posted an article that chronicled the reporting that its and the affiliated tech site Valleywag had done on Mr. Thiel over the years.
This year, Gawker agreed to sell a minority stake to the tech venture capital firm Columbus Nova Technology Partners. As part of the deal, Jason Epstein, a managing partner at Columbus Nova, would join Gawker’s board. The companies did not disclose the size of the stake. “The refusal to engage in public relations or access journalism,” the post read, “is usually the mark of an outlet’s credibility. For Thiel and his peers in Silicon Valley, such a refusal amounts to repudiating their way of life.”
The continuing legal warfare has given pause to some other potential investors. Several months ago, Gawker was in discussions with Univision about a potential sale or partnership, though those discussions eventually faltered, the people with direct knowledge of the matter said. The post’s headline was “This Is Why Billionaire Peter Thiel Wants to End Gawker.”
For his part, Mr. Denton ended his letter with a series of reported questions that challenged points Mr. Thiel had made in the interview with The Times and elsewhere, and questioned whether Mr. Thiel’s personal political opinions had affected his decisions as a board member for Facebook.
He also asked what Mr. Thiel ultimately hoped to achieve.
“Is your goal to bankrupt, buy, or wound Gawker Media?” Mr. Denton wrote. “If you were to own the company after a final judgment in the Hogan case, what would your editorial strategy be?”