How billionaires can destroy journalism
Silicon Valley billionaire Peter Thiel appears to be out to bankrupt Gawker. Media, watch out.
Gawker Media, long known for its acidic and inflammatory publishing, has always needed to carry a big legal shield. That shield has been tested to its utmost of late, when a Florida jury awarded a staggering $140 million in damages after Hulk Hogan sued the company for publishing his sex tape — far more than Hogan himself even asked for. (The case is being appealed.) But now it's being reported that Peter Thiel, a Silicon Valley billionaire and venture capitalist, is gunning for Gawker.
Nick Denton, Gawker Media chief, initially began to suspect that something was afoot due to odd wrinkles in the Hogan case and a number of other strange lawsuits, all from the same lawyer, suggesting a coordinated campaign to ruin the company through massive legal fees. That suspicion was reinforced Tuesday night when Forbes' Ryan Mac and Matt Drange reported, based on anonymous sources, that Thiel funded the Hogan suit (though they did not discover whether or not he was behind the other cases). While Gawker itself often does not inspire a lot of sympathy, this development is extremely alarming for any media company. It provides a template for any sufficiently rich person to ruin publications they dislike.
Prior to Forbes' report, the clearest evidence for a coordinated effort was the fact that Hogan dropped a particular claim, that of "negligent infliction of emotional distress," which would have allowed Gawker to invoke its legal insurance policy to pay for legal defense costs and a potential payout, as Andrew Ross Sorkin reports.
For someone simply seeking damages, this is a very weird move to make. By ruling out the resources of an insurance company that is far, far bigger than Gawker, Hogan might get less money, since he might just bankrupt the company instead. Indeed, given that Gawker Media's total revenue in 2014 was only $44 million, it might be dramatically less.
However, if one were looking to simply destroy Gawker, money be hanged, it makes a lot more sense. As Mac and Drange report:
Thiel, who is gay, has made no secret of his distaste for Gawker, which attempted to out him in late 2007 before he was open about his sexuality. In 2009, Thiel told PEHub that now-defunct Silicon Valley-focused publication Valleywag, which was owned by Gawker, had the "psychology of a terrorist."
"Valleywag is the Silicon Valley equivalent of al Qaeda," Thiel said at the time. [Forbes]
One wonders if Hogan realized he was potentially foregoing tens of millions of dollars by pursuing this strategy.
At any rate, Hogan's lawyer, Charles Harder, has filed several other suits against Gawker. The most prominent is a $35 million suit representing Shiva Ayyadura over two articles disputing his claim that he invented email in 1978. Though Forbes did not confirm that Thiel is behind these suits, given that several other publications have written similar articles and that it's the exact same lawyer, it's a strong circumstantial case. (When asked by Mac and Drange if he there was a benefactor behind the cases, Harder refused to comment.)
This provides a rather alarming template for other wealthy people with an axe to grind. There's even a name for it: strategic lawsuits against public participation, or SLAPP. Twenty-eight states, plus DC and Guam, have anti-SLAPP laws meant to protect individuals (and especially journalists) from being harassed into silence through legal attrition.
But it's unclear if those are that much protection against people with the means to hire the best lawyers in the business. Anti-SLAPP statutes vary quite a lot, and many states still don't have them. (Bills to implement one at the federal level have been proposed, but none has passed.) Indeed, Florida is one of the states with an anti-SLAPP law, and it was no use to Gawker.
Very rich people have long tried to use the media to their own advantage — to silence critics, attack their enemies, and push their own political agenda. Casino billionaire Sheldon Adelson demonstrated a stark example of this several months ago, when he purchased the Las Vegas Review-Journal, and immediately tried to sic its reporters on a federal judge who was overseeing a wrongful termination lawsuit against him. Peter Thiel has apparently outlined another strategy. Media companies, even ones that don't have Gawker's tabloid edge, should be very worried.