The Pinellas County courthouse sits in a rectangular 1960’s glass and concrete structure, the bad execution of International style architecture so prevalent in Florida. The fronds of the royal palms dotting the neighborhood sway slightly in the briny breezes off the Gulf of Mexico, just a few bucolic blocks away.
Not much of national interest happens at the courthouse. Negligence cases arising from fender benders, financial disputes between small businessmen, the occasional divorce. All that changed in October of 2012 when Terry “Hulk Hogan” Bollea brought his privacy case against Gawker to Pinellas County. While the larger Tampa Bay area is chock full of “snowbirds” – the nickname given retirees from the North – local residents don’t think much of clusters of New York lawyers in $1,500 suits. The local residents who made up the jury didn’t think much of publisher Nick Denton and Gawker, either.
Gawker’s business model had long been based on some pretty sleazy principles. Outing gay people, slut-shaming women, stalking children of politicians and worse created buzz and wealth for Denton. Several celebrities, including Rebecca Gayheart, Scarlett Johansson and others had sent their lawyers after Gawker in the past, and Gawker often quietly settled these cases out of court. After all, like Rupert Murdoch, Denton paying a million here and there was just the cost of doing business.
The trial lasted for almost two weeks, and in March the jury decided that Gawker’s history of running stolen sex pictures and video tapes (“revenge porn”) needed to be punished. It came back with damages against Gawker and Denton topping $140 million, one of the largest verdicts ever issued against a media company.
The jury heard from A.J. Daulerio, the Gawker editor who notoriously approved broadcasting a woman allegedly being raped and later told her to “not make such a big deal out of it.” Daulerio had also previously admitted that he had no concerns for anyone’s feelings in publishing the Hogan sex tape, either. “Did you give any consideration prior as to whether publishing the Hulk Hogan sex tape would distress Hulk Hogan,” Hogan’s lawyer asked him when he was on the stand. “No,” Daulerio answered.
Sensing Gawker and Denton’s loathing for the rubes who can’t afford $20 martinis in luxurious SoHo cocktail bars, Hogan’s lawyer went in for the kill: “Can you imagine a situation where a celebrity sex tape would not be newsworthy?” he asked Daulerio. His response seemed simple enough: “If they were a child.” Hogan’s lawyer continued. “Under what age?” attorney Charles Harder asked. “Four,” Daulerio reportedly replied with a smirk and an eye roll. The New York Post among other outlets reported that the jury was shocked and offended.
Gawker desperately sought and found a distraction and turned to one of its time-honored tactics: Tossing out accusations of racism against its enemies and whipping up cybermobs to digitally lynch them.
A few years earlier, Gawker published an admittedly racist joke that was posted to Twitter by a fairly unknown woman named Justine Sacco. Within hours, Gawker had stirred up thousands of keyboard warriors to dig up as much personal information about Sacco and post it to Gawker’s site. It turned out that during the maelstrom, Sacco was on an international flight and couldn’t be reached. Not to be stopped, and with profit-making page views climbing, Gawker promoted a hashtag: #HasJustineLandedYet? And when she finally did land in South Africa several hours later, Sacco was met by photographers, stalkers and self-righteous protestors. Her employer fired her before she had even left the airport, and she had trouble finding a job for years after.
Hogan, it turned out, had used racial slurs in the secretly recorded tapes, specifically the dreaded and toxic “N” word. There could be no better deflection from Gawker’s own bad acts than to show the world what a bad man Hogan was. The tapes were leaked to the National Inquirer, which guaranteed that Gawker and its media allies could publish stories to promote its narrative: Hogan is a racist and a bad man, pay no attention to what we did. While Gawker had access to those tapes which were court records, Gawker’s lawyer and President Heather Dietrick and Publisher Nick Denton have vehemently denied being the Inquirer’s source. However the tapes got out, the deflection worked, and like Sacco, Hogan’s employer, WWE, the entertainment company responsible for professional wrestling, fired him.
Gawker sets itself on fire
Hogan was widely reviled in the press and was forced to apologize. But during the course of the case, Gawker, believing in its own invincibility, had published a story in cahoots with a male escort who was apparently extorting a businessman who worked for Gawker rival Conde Nast. The escort had texts and photos that alleged that the executive (a heterosexually married man with two young children) had offered to buy sex from the escort and later backed out.
The executive, like Sacco, was an unknown, and moreover, his sexual orientation was never a matter of public record, let alone public interest. The escort had threatened to go to the press if not paid, and when the executive refused to be extorted, he found in Gawker a willing taker. Gawker eagerly published the story, named the executive, and ran the texts.
Elite media circles had in the past consistently given Gawker a pass for outing gay people, notably CNN’s Anderson Cooper, who shrugged it off. This time, outing a private man who was not a government official nor running for office drew intense criticism. Reason magazine called it “a dirty bomb of a story.” Gay activist and conservative columnist Milo Yiannopoulos wrote that “Gawker acted as a willing participant in gay extortion. A man’s reputation was held hostage at blogpoint and an editor went ahead and pulled the trigger, perhaps even knowing the story was shaky.” The Intercept’s Glenn Greenwald, himself openly gay and far from gun-shy about publishing controversial material, called it “one of the sleaziest and most repugnant articles seen in quite some time.”
Gawker had poured gasoline all over itself. Reacting to the universal condemnation, its own employees then lit the match. One Gawker writer, Adam Weinstein, immediately and publicly distanced himself from the debacle. The infighting at Gawker over the publication intensified, and two top editors very publicly quit even after Denton and Gawker management came to their senses and removed the article. Denton published an ambiguous explanation – but not exactly an apology – for publishing the story he wanted to be seen as “speaking truth to power.”
Après le deluge: The First Amendment Sky is Falling!
The jury verdict was a bloodbath. Prior to the Hogan case, the largest Florida jury verdict leveled at an internet publisher was $11.3 million in a 2006 defamation case. Here, the damages against Gawker and Denton topped $140 million.
Day after day, Gawker was hammered in stories, most of them blaming Denton himself for the self-inflicted wounds and shrugging off any widespread impact on press freedoms. LawNewz, the blog run by Dan Abrams, the son of First Amendment legend Floyd Abrams and himself a lawyer, wrote a story with a headline of “Even Though Gawker Got Slammed by Hulk, It’s Not a Body Blow to the Media.” Abrams’ blog went on to say “This isn’t some precedent-setting, earth-shattering case with aftershocks that will reverberate throughout time, shaking the foundations of our press’s freedoms. It may be a somewhat close legal call but no matter what the outcome, it could have a chilling impact on one thing, publishing naked pictures or videos.”
Erwin Chemerinsky, Professor of First Amendment Law at the UC Irvine School of Law noted in the Los Angeles Times that “First Amendment absolutists will worry about the ‘chilling effect’ the verdict may have on speech…. But I can imagine a clear rule: No videos of people having sex should be made public unless all of the participants consent. I think the media will survive the restriction.” Gawker had, as blogger Jason Calacanis described it, “collapsed under the weight of Nick Denton’s excessively cruel and cutting philosophy.” CNN legal analyst Paul Callan wrote that “jurors and ordinary American citizens are fed up with out-of-control media that seem to believe that once the title of ‘newsworthy’ is arbitrarily attached to an event or a person, the First Amendment will protect the publication of even the most salacious and offensive material that can be dredged up by sifting through celebrity mud.”
Denton and Dietrick worked with Davidson Goldin, their PR crisis manager to change the narrative. Goldin started working the phones to change the story from “Gawker gets its comeuppance” to “Gawker is the real victim.” Brilliantly, they used the stunning size of the damage award to help Gawker give birth to a new narrative.
Former Gawker editor and co-founder Elizabeth Spiers published an article titled “Against the Death Penalty for Media Companies” which soft-pedaled Gawker’s history and the court’s finding that the sex tape was not in the public interest. Pretending that a sex-tape of Hulk Hogan was the journalistic equivalent of Sy Hersh exposing the My Lai Massacre, Spiers charged ahead and blithely argued that “aggressive reporting involves a higher risk of error.”
The narrative had been established: what Gawker did wasn’t really that bad, it was a “casual mistake” that any newsroom might make; and characterized the damages award as a “death penalty” for a poor brave publisher trying to speak truth to power. Although the “death penalty” argument gained some traction among columnists sympathetic to First Amendment concerns, none would defend Gawker’s history of slut-shaming, outing, and posting revenge porn. After the Conde Nast debacle and the post-verdict schadenfreude expressed by media critics and the public, they needed a game-changer. They needed a villain to blame for their own conduct and they found one in Peter Thiel.
Enter the Billionaire Villain and the New Narrative
In late May, Thiel confirmed to the The New York Times that he had funded the Hogan litigation because he saw Gawker “bullying people even when there was no connection with the public interest…Gawker published articles that were very painful and paralyzing for people who were targeted.” Now Gawker’s Dietrick, Denton and Goldin had just the villain they wanted.
Thiel, a gay billionaire who had been outed previously by Gawker (although Gawker denies outing him because they said “some people” already knew he was gay), had previously expressed disdain for its coverage of Silicon Valley, the source of Thiel’s wealth as a co-founder of PayPal. Moreover, for Gawker, Thiel was a perfect target.
He is worth an estimated $2 billion, so that makes him “greedy.” He does not often give interviews or appear on financial news channels, so that makes him “secretive.” He supports college-aged students to get real-life business experience instead of going to college, so that makes him “kooky.” He has invested in research in the life-extension science of parabiosis, which involves transfusions of blood plasma from donors under 25 years old, so that makes him a “super-villain feeding off the life force of young victims.” He has supported the politically toxic Donald Trump, which makes him downright “evil.” (Never mind that he publicly stated he does not agree with all the platforms of the GOP, and made history as the first openly gay man to address the Republican National Convention).
The new narrative had been established: tapping into an anti-rich, anti-Trump sentiment, this was no longer a story about Gawker breaking the law but a tale about a crazy, vengeful billionaire. Thiel’s funding only allowed for Hogan to get his day in court, but the new narrative ignored that and instead emphasized he was a vengeful prick out to destroy the entire American media.
Op-eds began to appear around the country based on the new narrative. “Thiel Shows Why Tech Billionaires Are the New Robber Barons” howled The Huffington Post, leading with the theme that “throughout history, wealthy industrialists have engaged in vendettas. The venture capitalist Peter Thiel, we now see, is no different.” Inc. Magazine claimed that Thiel “was waging legal jihad against publishers.” One criminal attorney, defending Gawker in a Los Angeles Times editorial, managed to boil down the new narrative to a few sentences: “Few factors deter vengeance by litigation; one is that litigation is impossibly expensive, even for plaintiffs. A billionaire’s support eliminates that barrier and allows angry people to silence speakers they hate.”
Gawker had, as it always has when caught crossing the line, tried to settle the Hogan case. When Hogan refused to settle, Dietrick allegedly broke down in tears at the settlement conference. Gawker couldn’t buy its way out of this one. And for all of Gawker’s high-priced public relations expenditures, not all media observers bought the “Evil Billionaire” narrative. In the end, Thiel had the audacity — and resources — to break Gawker’s old business model of hurting people and then forcing the injured party to settle the case for an amount Gawker could live with.
“The media’s response to the Thiel vs Gawker affair has been to make much of Thiel,” wrote Quilette’s Claire Lehmann. “But the paramount issue is the conduct of the media itself. Journalism fails as a profession when it cannot adequately police itself.” Lehmann went on to scold Gawker’s defenders as far more a threat than Thiel ever could be. “Read enough of these flaccid excuses for bullying from media types and one comes away feeling vaguely sick,” she wrote. “The real threat to freedom of expression is not a lawsuit funded by Peter Thiel. It is a vampiric industry that is ready to suck the blood of the public in an effort to cope with its economic stresses.”
Bloomberg News took the extraordinary step of actually interviewing jurors in the Hogan case, and asked them if Thiel’s sponsorship made any difference. None did. One juror said she wasn’t offended that Thiel used a lawsuit to try to drive Gawker out of business. In her mind, the publisher “broke the law, and not much else mattered.” Another juror said simply that “It wouldn’t have made any difference because it wouldn’t have changed the facts.”
Gawker’s Own Secret Billionaire
Ironically, Denton was quoted in The New Yorker profile as saying that “Hypocrisy is the only modern sin.” He may live to yet regret those words.
In January – long before the verdict and before Gawker trotted out Peter Thiel as the vengeful Emperor Palpatine – Gawker quietly got into bed with a billionaire of its own. And not just any billionaire. Needing a sugar daddy to support his upcoming legal fight, Denton and Dietrick sold a minority stake to a company controlled by Russian oligarch Viktor Vekselberg through a matryoshka doll of holding companies.
An associate and friend of Vladimir Putin, Vekselberg is often described as “one of Russia’s most powerful and connected billionaire barons.” Politico revealed in a barely noticed story that Vekselberg’s Columbus Nova would have veto power over key company decisions at Gawker, despite only owning a small piece of it.
Worth an estimated $11.4 billion, Vekselberg and his business history make Peter Thiel look like a candy-shop proprietor. Vekselberg was fined $38 million in 2009 for violations of Swiss securities laws, but those fines were overturned after the regulators’ attorney mysteriously failed to appear at a key hearing.
Vekselberg’s Wikipedia entry describes his 2008 involvement in a shady deal between Russian and Hungarian governments, buying the former embassy building from Hungary for $21 million and immediately selling it to the Russian government for $116 million, while the market price of the building was estimated at $50 million. That deal became the basis of a Russian criminal investigation.
In 2013, Vekselberg was prevented from addressing an important banking conference because that morning, Federal Security Service officers raided his Renova Group offices in Russia and reportedly questioned him. Vekselberg’s business dealings and brushes with the law feature prominently in “Russian Mafia”, a muckraking website dedicated to tweaking Russia’ oligarchs. Sort of the kind of website Denton might publish if he were in Russia.
Vekselberg’s billionaire lifestyle caught the attention of Forbes in 2013, when it noted that he had become the single most important player in the world aluminum market, calling him “the tin man with the Midas touch.” That year the Bloomberg Billionaires Index listed him as Russia’s richest individual, and the fortieth richest in the world. The Moscow Times reported that three years ago New York’s highest court ruled against Vekselberg’s Renova Group when it stood accused of using armed soldiers and corrupting Russian court proceedings to gain control of a Siberian oilfield. It was also alleged in court that the oilfield company’s offices had been overrun by militia members wielding AK-47 assault rifles.
None of this ever appeared in Gawker. Vekselberg would never appear in the stories published by media elite last week bemoaning Gawker’s demise, either. Indeed, Gawker “covered” Vekselberg only one single time, in a passing 2008 mention of him in a list of ostentatious Russian oligarchs.
Denton Leaves with a Whimper, Not a Bang
Crushed by the jury verdict, on June 10 Gawker sought to escape the judgment by declaring bankruptcy. Denton would himself later declare personal bankruptcy. In a complicated arrangement, Gawker planned to sell its assets in a bidding process kicked off by a $90 million dollar “stalking horse” bid from Ziff-Davis.
Although Denton had bragged that dozens of companies lusted after his media empire, which he valued at more than $250 million, there was only one other bidder at the August 16 auction. That was Univision, which bought Gawker for $135 million. And in a stinging rebuke to Denton — and unlike the Ziff-Davis bid that guaranteed him a leadership role and more than $200,000 a year — Univision has no place for Denton.
Gawker itself announced its flagship site will be shut down entirely this week. Univision wants no part of the toxic Gawker brand. Denton is left looking like a kid staring wistfully into a candy-store window (a candy store he helped build) and his bankruptcy troubles are far from over, according to Recode’s Peter Kafka.
Meanwhile, Fortune magazine did a deep dive into Gawker’s corporate structure and found that while Denton’s websites regularly harpooned tech giants like Google and Facebook for using byzantine schemes to reduce their tax burden, “Gawker Media quietly played the same game.” Gawker, it turned out, would “shovel its profits offshore in order to defer paying U.S. corporate tax. Gawker took that idea one step further—for the lion’s share of its profits, it didn’t just defer its U.S. taxes, but eliminated them altogether.” None of the media elite’s mawkish eulogies for Gawker mentioned that, either.
And more legal questions yet remain. News reports have questioned whether Denton improperly “stashed millions overseas” in preparation for the Hulk Hogan trial. That may further complicate his personal bankruptcy, especially if the United States Trustee in charge of the bankruptcy case launches an investigation into the multi-layered offshore transfers made by Denton and Gawker Media.
Denton Loses Even if He Wins
Gawker Media has vowed that they will appeal the underlying Hogan case. Because Veskelberg’s investment firm Columbus Nova has a say in key company decisions, it is not clear that they will approve throwing another estimated $3 million to $5 million at an appellate process that guarantees no positive result. Even if Gawker were to prevail, there’s no guarantee that a new jury will come to any different conclusion. The six jurors in the Hogan case told ABC News that they had no doubt that Gawker broke the law. “They did something illegal,” one juror said, adding that “Gawker made it clear to everyone that they were all about crossing the line.”
So even if a humiliated Denton is successful in an appeal, he still loses. His hypocrisy and self-aggrandizement have been exposed forever, he inflicted mortal wounds on his own company and its employees, the digital battlefield is littered with the bodies of people he wounded and he no longer sits at the top of the elite New York media food chain. He has been forced to watch Univision, a multinational conglomerate, smother the life out of Gawker.com, the vicious and vengeful monster-child to which he gave birth.
It has become clear throughout the course of this trial and all the subsequent posturing and blame-shifting that Denton repeatedly crossed one of his own lines: “Hypocrisy is the only modern sin.”