Billionaire venture capitalist will sit out sale of dormant blog to avoid potential legal claims against him

The sparring with Peter Thiel was one of the last open issues in Gawker Media’s nearly two-year-old bankruptcy.

The sparring with Peter Thiel was one of the last open issues in Gawker Media’s nearly two-year-old bankruptcy. PHOTO: JONATHAN ERNST/REUTERS

By Jonathan Randles

April 25, 2018 10:31 a.m. ET

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Billionaire investor Peter Thiel has agreed to end his pursuit of Gawker.com to avoid a potential lawsuit over his secretly funding litigation that drove the news and gossip blog’s publisher out of business.

The agreement between Mr. Thiel, his firm Thiel Capital LLC and an adviser liquidating Gawker Media LLC was filed Wednesday in the U.S. Bankruptcy Court in New York. The agreement concludes more than a year of legal wrangling over a possible lawsuit and clears the way for a sale of Gawker, which ceased publishing in 2016 but remains on the web.

Mr. Thiel has agreed to withdraw from the sale process and to provide the eventual buyer a legal release for articles in the Gawker archive. The release also covers writers who wrote articles for the site before the blog shut down, according to the filing.

Lawyers for Gawker Media have asked a judge to sign off on the agreement.

The sparring with Mr. Thiel was one of the last open issues in Gawker Media’s nearly two-year-old bankruptcy. Mr. Thiel funded retired professional wrestler Hulk Hogan’s successful legal case against Gawker over its publishing excerpts from a surreptitiously recorded video of a sexual encounter with the wife of his former friend, radio show host Bubba the Love Sponge.

From the Archives

Peter Thiel, the billionaire who financially backed Hulk Hogan’s lawsuit against Gawker Media, ultimately leading to the media company’s bankruptcy in August, says the site was a “singular sociopathic bully.” Photo: Getty (Originally published Oct. 31, 2016)

A Florida jury awarded Terry Bollea, Mr. Hogan’s real name, a $140 million judgment in March 2016. The award forced Gawker Media into chapter 11 after the publisher was denied an opportunity to appeal. The case was settled in bankruptcy for $31 million. Gawker Media maintained the judgment would have been overturned on appeal.

Mr. Thiel has said he underwrote the case against Gawker because publishing the tape invaded Mr. Bollea’s privacy. The venture capitalist and Facebook Inc. board member has said he wanted to keep his role in the case out of public view so as not to distract from the entertainer’s day in court. Gawker published an article in 2007 identifying Mr. Thiel as gay, which he has said also violated his privacy.

Wednesday’s filing indicates Mr. Thiel continued covering Mr. Bollea’s expenses during the bankruptcy. The agreement says Mr. Thiel was allowed “to continue to pay the legal fees and expenses” of Mr. Bollea including those related to the chapter 11 plan and settlement with Gawker Media.

Mr. Bollea’s settlement entitles him to 45% of the proceeds from the sale of Gawker. Assets for sale include the Gawker domain, social-media accounts and nearly 200,000 published articles including those about Mr. Thiel. The article that was the subject of Mr. Bollea’s case was removed from Gawker as part of the settlement.

Gawker Media objected to Mr. Thiel’s involvement in a sale of the Gawker site. Bankruptcy lawyers had been attempting to build a legal case against Mr. Thiel based on the theory that he had sought to “destroy the business forever.” A judge in June granted Gawker Media permission to look for evidence, if any existed, that could be used to substantiate its theory. The investigation also sought information from Charles Harder, a lawyer who represented Mr. Bollea.

Gawker Media’s bankruptcy lawyers on Wednesday called the settlement with Mr. Thiel pragmatic, saying the investigation “would have been time-consuming and costly” because of the complexity of the legal issues involved. Risks associated with litigating potential legal claims against Mr. Thiel outweighed the likelihood that they would have been successful, the filing said.

Mr. Thiel’s lawyers argued last year that litigation against Gawker was justified and that no basis existed for a new lawsuit. In November, Mr. Thiel revealed that he was interested in acquiring Gawker. His lawyers said at the time that the billionaire is “the most able and logical purchaser” of the website.

The Wall Street Journal first reported in October that the pending sale of Gawker and risk of litigation had put articles on the site at risk of being deleted. Freedom of the Press Foundation, a nonprofit organization supporting journalism, later said it would preserve Gawker’s archive after Mr. Thiel disclosed an interest in acquiring the site. Mr. Thiel made a bid on Gawker in January, the filing said.

The sale of Gawker is the responsibility of Will Holden, a managing director at professional-services firm Dacarba LLC, as laid out in the court-approved liquidation plan for Gawker Media. Advisers in chapter 11 generally seek to obtain the highest value possible for the assets of a bankrupt company.

Gawker Media lawyers argued Mr. Thiel’s involvement would discourage interest in the blog from other possible buyers. A group of former Gawker Media employees launched a crowdfunding campaign late last year to fund a bid for the site but fell well short of their $500,000 goal.

Gawker was founded by Nick Denton who wrote in the blog’s final post, published in August 2016, that the site was popular and profitable before its legal bills mounted which he described as “a fitting conclusion to this experiment in what happens when you let journalists say what they really think.”

Other blogs once published by Gawker Media were sold earlier in bankruptcy to Univision Communications Inc. for $135 million and are now run under the banner Gizmodo Media Group.

(http://www.autoadmit.com/thread.php?thread_id=3959460&forum_id=2#35916621)