Sex, lies and legal suits put Gawker on the market

Gawker Media has hired bankers to weigh options after receiving multiple approaches by rivals to acquire the online news group founded by Nick Denton, people familiar with the matter have said.

Before a Florida court ordered Gawker to award $140 million (€126 million) in damages for the online publication of a sex tape involving the wrestler Hulk Hogan, the group received offers of as high as $350 million (€314 million), they said.

Univision, the Spanish-language television network, was among those interested. Penske Media (PMC), a private US media group, which owns Variety and WWD, has also shown interest, according to two people close to the situation.

However, PMC said it had not made an approach.

“At this time, PMC has only been contacted by Gawker’s banker,” it said in a statement.

But the level of interest has been unclear since Peter Thiel, the Silicon Valley investor and Facebook board member, revealed he was financing several lawsuits against Gawker.

There is no active sale process under way, but Houlihan Lokey, a boutique investment bank, has been brought on board by Mr Denton to help him examine options.

In an open letter to Mr Thiel on Thursday, Mr Denton challenged the billionaire to a public debate on “the interplay of media and power”, and asked: “Is your goal to bankrupt, buy, or wound Gawker Media?”

He added: “If Gawker Media was forced to sell the company to pay a bond or fight these court cases, would you and your agents seek to block that transaction?”

Valuation

Mr Denton would prefer not to sell the business, which also owns the Gizmodo, Jezebel and Deadspin websites. Gawker’s valuation is clouded by the court’s damages order, which the company is trying to overturn. But one person close to the company said he would not sell for less than $200 million.

This week, Mr Thiel told the New York Times that he had secretly contributed to the legal expenses of Mr Hogan, whose real name is Terry Bollea, in the case, which was estimated to have cost at least $10 million.

In spite of his insistence that his involvement was “less about revenge and more about specific deterrence”, Mr Thiel’s cash contributions have stoked debate about the motivations of the PayPal co-founder and early Facebook investor. He once described Gawker as the “Silicon Valley equivalent of al-Qaeda” after Valleywag, a technology news and gossip website operated by Gawker until last year, outed him as gay.

Mr Thiel’s admission that he was funding the Gawker lawsuits drew a sharp rebuke from the Committee to Protect Journalists (CPJ), a non-profit group of which Mr Thiel is a board member.

The CPJ said in a statement that Mr Thiel had provided “significant financial support” to the organisation. It supported the right of individuals to seek “civil redress in cases of defamation”, but it added: “We do not support efforts to abuse the [legal] process by seeking to punish or bankrupt particular media outlets”.

Mr Thiel was born in West Germany in 1967and his family moved to California when he was a young boy. He received a bachelors degree in 20th-century philosophy from Stanford University before training as a lawyer there. More than 20 years later, he now runs a controversial fellowship scheme that offers students $100,000 to skip higher education and start companies instead.

Trader

Mr Thiel worked as a trader at

Credit Suisse

before starting a fund of his own,

Thiel Capital

, and soon after co-founded PayPal, the online payments company that was sold to

eBay

in 2002 and then spun off as an independent company last year.

Mr Thiel then launched a hedge fund, Clarium Capital Management, which was less successful as the fund's assets under management fell from a peak of about $6 billion in mid-2008 to below $500 million after the financial crisis.

More lucrative was an early investment in Facebook. The $500,000 Mr Thiel gave Mark Zuckerberg in 2004 made him the company's first outside backer. He sold 20 million shares, worth about $400 million, in August 2012. He has been a Facebook board member since 2005.

That year, Mr Thiel also became a partner of Founders Fund, a venture capital firm. One of its most successful investments is data-mining company Palantir, which made its name working for the CIA. – Copyright The Financial Times Limited 2016