A terrible weekend is turning into an even worse Monday for Gawker Media founder Nick Denton.
The 49-year-old Denton, who built his privately held company into a multi-million-dollar media enterprise and at one point was said to have an estimated personal net worth of over $100 million, is filing for personal bankruptcy in New York federal court to protect himself from instant penury.
This, after a Florida judge ruled on Friday that Gawker and Denton must start paying celebrity wrestler Hulk Hogan the $140.1 million a Florida jury awarded Hogan (real name: Terry Bollea) in the sensational sex video trial last March.
“On this bitter day for me, I am consoled by the fact that my colleagues will soon be freed from this tech billionaire’s vendetta,” Denton tweeted on Monday morning.
This was a reference to Silicon Valley venture capitalist Peter Thiel, who had been secretly funding Bollea’s lawsuit, among other anti-Gawker litigation, in retaliation for now-defunct Gawker property Valleywag’s report in 2007 that Thiel, like Denton, is gay.
Denton added on Twitter: “Gawker Media Group’s resilient brands and people will thrive under new ownership, when the sale closes in the next few weeks.”
Hours later, in a memo to Gawker Media employees, Denton wrote:
“You may have seen the news that I have, as expected, had to join the company in bankruptcy. Peter Thiel’s legal campaign has targeted individual writers like Sam Biddle, editors such as John Cook, and me as publisher. It is a personal vendetta. And yes, it’s a disturbing to live in a world in which a billionaire can bully journalists because he didn’t like the coverage.
“Still, I’m in a positive frame of mind, because our influential brands will soon be free to thrive under new ownership, and our very existence as an independent entity has been a triumph. For once, the journalistic cliché is appropriate: We’ve spoken truth to power. Sometimes uncomfortable truths. Sometimes gossipy truths. But truths. There is a price to pay for that, and I am paying it now. But we never gave up our souls in the pursuit of an easy life.”
Gawker Media has already filed for corporate bankruptcy protection, and is expected to put itself up for sale in a court-supervised auction later in August.
While other buyers might enter the bidding, Ziff Davis has the inside track, having already agreed to pay $90 million to acquire Denton’s company.
As part of Friday’s ruling—which Denton and Gawker are appealing to Florida state appeals court—Circuit Judge Pamela A.M. Campbell accused Denton of purposely overstating to the court the value of his Gawker stock; when he offered to use the stock as a security for the $50 million bond required by Florida law, Denton valued his holdings at $81 million.
But, the judge argued, he had already agreed in principle to the the Ziff Davis offer, which valued Denton’s shares—30 percent of the company--at less than half the figure he provided to the court.
“Mr. Denton…misled this court in connection with [his] pledge of Gawker Media Group, Inc. stock by concealing material information about the value of that stock which a reasonable person, under the circumstances, should have disclosed,” Campbell declared, according to a press report of Friday’s ruling.
“I have to say that I think the Court really got this one wrong,” Denton said Friday, responding to Campbell’s ruling. “It was already widely reported that Gawker was putting in place a contingency plan to sell its websites. And the $81 million company valuation the court relied on was Hogan’s valuation. We told the Court they did not know what the company’s shares would be worth, especially after it had been pummeled by Hogan and Thiel, but were willing to pledge all of them. There was no misrepresentation.”
After two weeks of testimony from the British-born Denton and Bollea, the St. Petersburg, Fla., jury ordered Denton to personally pay Bollea $10 million—a ruinous figure that, absent personal bankruptcy protection, could result in Denton and his husband, actor Derrence Washington, losing their home among other assets.
Bolea’s attorney, David Houston, expressed zero sympathy for their plight on Monday.
“Following a lengthy trial, a jury verdict and much legal maneuvering, the time has come for Nick Denton to accept responsibility for the decisions he made and the rewards he reaped based on the suffering and humiliation of others,” Houston said in a statement. “Mr. Denton has spent vast amounts of time and money attempting to dodge his responsibility and a judge has subsequently determined that he misled the court in these efforts. The Appellate court, in which he has guaranteed victory over Mr. Bollea, is not the puppet he thought it would be. His bankruptcy has nothing to do with who paid Mr. Bollea’s legal bills, and everything to do with Denton’s own choices and accountability. If even one person has been spared the humiliation that Mr. Bollea suffered, this is a victory.”
The couple has already moved out of their pricey Soho loft to less expensive living quarters on the Upper West Side.
Yet, like the Monty Python tune advises, Denton prefers to look on the bright side of life.
“GMG’s media brands pass 100m global users in July, lifted by news, energy and talent,” he wrote in a separate tweet Monday. “So proud of our people.”
Here is Nick Denton’s memo:
You may have seen the news that I have, as expected, had to join the company in bankruptcy. Peter Thiel’s legal campaign has targeted individual writers like Sam Biddle, editors such as John Cook, and me as publisher. It is a personal vendetta. And yes, it’s a disturbing to live in a world in which a billionaire can bully journalists because he didn’t like the coverage.
Still, I’m in a positive frame of mind, because our influential brands will soon be free to thrive under new ownership, and our very existence as an independent entity has been a triumph. For once, the journalistic cliché is appropriate: We’ve spoken truth to power. Sometimes uncomfortable truths. Sometimes gossipy truths. But truths. There is a price to pay for that, and I am paying it now. But we never gave up our souls in the pursuit of an easy life.
What really lifts my spirits is the way in which we have stood together and just kept on writing, coding, and selling. Our stories reached 12 million more people around the world in July (104m) than they did in April (92m), before the bankruptcy. We were all over the political conventions and Pokémon Go, among other stories.
Eyal just sent round a note saying that last week brought in a million dollars in direct advertising bookings, positioning us well for a further rebound once the future direction of the business is clear. Amazon Prime Day was 63 percent up on last year, with $7m in sales for merchant partners, underlining the unique credibility that brands such as Gizmodo have with consumers.
Every department has kept focus and momentum. The pace of product development is sure and rapid. Our writers are the most productive and effective in digital media. The sales materials are more coherent and professional than they have ever been. Our sites dominate news in categories like technology, cars, and video games.
The brands and the business, which we have built together, are in amazingly robust shape. We’ll go into the final stage of the sale with confidence in our continued momentum, and the knowledge that we’ve all been witnesses to a media miracle.
This is a company founded by a journalist, built around a journalistic mission, beholden only to readers. We can be proud that we survived and prospered as an independent company for more than a decade, and have a second act ahead of us, under the shelter finally of a larger media company.