- Media company went bankrupt after losing Hogan sex-tape case
- Univision’s UniModa has agreed to keep 95% of company staff
A bankruptcy judge approved Gawker Media LLC ’s $135 million asset sale to a unit of Univision Communications Inc. under a deal that will allow most employees to keep their jobs while cutting loose the online media company’s founder, Nick Denton.
The takeover builds on Univision’s push to reach a younger, more diverse audience, while steering clear of the kind of controversy that pushed Gawker into Chapter 11. U.S. Bankruptcy Judge Stuart Bernstein approved the deal at a hearing in Manhattan Thursday.
Univision has agreed to keep 95 percent of New York-based Gawker’s employees on current terms and maintain major agreements, according to court papers. The sale includes the female-oriented Jezebel website and technology site Gizmodo.
Flagship Gawker.com, however, will close down. Denton, who founded the celebrity- and tech-focused family of media properties out of his apartment, won’t make the transition to Univision, he said in a staff memo.
While Gawker.com may, “like Spy Magazine in its day, have a second act,” it will for now be mothballed because of what he described as the campaign against “its editorial ethos and former writers.” No investor or media company wanted Gawker.com, he said.
The trip to the auction block began when Gawker posted excerpts of a sex tape featuring Hulk Hogan. The former pro wrestler sued for invasion of privacy in Florida state court -- with financial help from Peter Thiel, the PayPal co-founder and outspoken critic of Denton’s company. Hogan won a $140 million verdict, driving Gawker into Chapter 11 in June. Denton, who was also liable for the verdict, filed for personal bankruptcy this month.
With a lead offer of $90 million from Ziff Davis, Gawker’s assets went up for auction this week. Univision’s UniModa LLC was the highest bidder. Bernstein said he would approve the deal subject to minor changes in the sale agreement.
The sites will complement New York-based Univision’s digital properties. In January, the largest U.S. Spanish-language broadcaster made a minority investment in the owner of the satirical website the Onion. Univision has also acquired the Root, a digital magazine of African-American news and culture.
The Gawker properties, which reach almost 50 million readers a month, will join a part of Univision “that serves the young, diverse audiences that make up the rising American mainstream,” and help it reach 96 million readers overall, the company said in a statement Thursday.
In court Thursday, lawyers told Bernstein that after the sale closes, probably around Sept. 9, the stay that halted proceedings in Hogan’s lawsuit will be lifted. Gawker and Denton have appealed the privacy verdict, but the Florida court said Hogan can try to collect his damages while that appeal is pending. The only thing holding him back for now is the federal law that freezes litigation against bankrupt companies.
Whether creditors can get anything beyond the $135 million in sale proceeds will be determined in a “second phase” of the bankruptcy case, Gawker attorney Gregg Galardi said in court.
According to Gawker, Thiel has had it in for the company since 2007, when it outed him as gay. Thiel, who sits on the board of Facebook Inc., has since publicly acknowledged that he’s gay and called Gawker’s now-defunct blog Valleywag the “Silicon Valley equivalent of al-Qaeda.”
And he’s not backing down from Hogan’s cause.
“I am proud to have contributed financial support to his case. I will support him until his final victory,” Thiel wrote in a New York Times opinion piece Aug. 15. “I would gladly support someone else in the same position.”
For his part, Denton said that he plans to work to make the web a forum for the open exchange of ideas and information but will stay out of the news and gossip business.
The company’s bankruptcy is In re Gawker Media LLC, 16-11700, U.S. Bankruptcy Court, Southern District of New York (Manhattan). The personal bankruptcy case is In re Nicholas G.A. Denton, 16-12239, in the same court.