It’s voting season for the Emmy Awards, which means that electioneering in the form of billboards rising into the haze dominates the Los Angeles skyline. Hollywood’s elite driving down Sunset Boulevard are first beckoned to support Netflix’s Jessica Jones. Next up is Amazon’s Transparent. Towering over them all: A 12-storey banner extolling HBO’s Silicon Valley, which lampoons the culture and excesses of America’s technology industry.
And lording over that advertisement: The Hollywood Hills mansion of billionaire Peter Thiel, an early Facebook investor who also inspired one of the HBO show’s most incisive characters, Peter Gregory, a mix of awkward eccentricity and reserved ruthlessness.
As the past few weeks have shown, the real Thiel is even more eccentric and ruthless than his fictional alter ego.
As Forbes revealed in late May, Thiel is the clandestine financier of numerous lawsuits targeting Gawker Media, the New York-based company whose biting style of journalism has grated on the egos and sullied the reputations of some of the world’s most powerful people. The most damaging lawsuit—an invasion-of-privacy case revolving around a sex tape of the wrestler Hulk Hogan (real name, Terry Bollea)—recently resulted in a $140 million jury award and a national debate on the rights of celebrities versus the rights of a publication to disseminate what it considers to be newsworthy.
The revelation that Thiel paid Hogan’s lawyers—to the tune of about $10 million—has transformed that discussion. Gawker, supported by free-speech advocates like eBay founder Pierre Omidyar and Amazon.com’s Jeff Bezos, has denounced Thiel’s gambit as an attempt to permanently snuff out an unpopular media outlet through aggressive litigation. Thiel, lauded by a host of other Silicon Valley heavy hitters who have felt Gawker’s wrath, from Chris Sacca to Vinod Khosla, has described his efforts as “one of my greater philanthropic things”, helping those who have been wronged by a “singularly terrible bully”.
Thiel has been deliberately vague, granting just one interview—to the New York Times—and refusing to talk to Forbes about this subject. But over the past two weeks, which has included interviews with more than 50 people, Forbes has pieced together the kind of narrative that a site like Gawker used to feast on. Rather than simply play the vigilante, available to help those who have been publicly attacked by a company even the most ardent press advocates must hold their noses to defend, Thiel secretly declared a multifront war against Gawker, seeking to crush it by any means necessary.
Specifically, while Gawker has found itself defending numerous Thiel-backed lawsuits attacking its kind of journalism, there has also been an orchestrated effort to initiate a class-action labour suit against it. Some in the Los Angeles legal community talk openly about a coordinated strategy against Gawker. And at least one Silicon Valley billionaire has quietly pursued the concept of a Gawker buyout by indirectly reaching out to former staffers.
Thiel’s level of involvement in each of these initiatives remains opaque. What isn’t: The impact of this attack on Gawker. The $140 million judgment, which isn’t covered by insurance, could prove fatal to the company if it’s upheld—and could serve as a blueprint for any billionaire who wants to lay siege against a media outlet.
The fateful dance between Thiel and Gawker can be traced back to 2002. That’s the year Nick Denton, a former Financial Times journalist, founded Gawker. That’s also the year Peter Thiel and his legendary “mafia”, which includes Elon Musk and Reid Hoffman, took PayPal public, giving Thiel the kind of cash to be able to shell out $500,000 for 10 percent of a raw startup called Facebook, and then to launch Palantir, the data-mining giant that’s now worth some $20 billion.
But those big successes had yet to take hold with the general public when Gawker.com first made passing mention of Thiel in March 2006. More than two dozen blog posts quickly followed, before the site declared, in a December 19, 2007, headline: “Peter Thiel is totally gay, people.” While some dispute whether the article actually outed the billionaire (Thiel said in past interviews that his friends had known since at least 2003), it certainly broadcast his sexuality to the rest of the world, something those close to Thiel say he was very uncomfortable with.
Over the ensuing years, Thiel’s prominence and wealth—Forbes estimates he’s worth $2.7 billion—rose in lockstep with Gawker’s influence. The website, which had a heavy focus on media and gossip, spawned spinoffs like Deadspin (sports), Jezebel (feminism), Gizmodo (gadgets) and Valleywag (Silicon Valley). All shared the mother ship’s formula of snarky, aggressive commentary, breaking news and click-friendly headlines. At its best, Gawker could prompt a Congressman to resign (Christopher Lee did so after sending shirtless pictures to a Craigslist paramour) or synthesise the assault accusations against Bill Cosby. At its worst, it was a spiteful, bile-fuelled gossip rag whose decisions of questionable newsworthiness included posting a video of a heavily intoxicated woman having sex in a public bathroom and publishing what appeared to be a clumsy attempt by a then obscure—and married—media executive to solicit a gay encounter.
Dating back to January 2013, emails obtained by Forbes show that Harder was actively vetting unpaid interns for a labour case against Gawker. A former journalist named Phil Linsalata was emailing former Gawker interns at the time, saying that he was working on academic research “focusing on labour conditions in digital media”. After speaking with them on the phone, he would send them to Harder’s firm for what he framed as a free “consultation”.
A former Gawker intern, David Matthews, even signed a retainer agreement with Harder Mirell. Ultimately Harder passed the interns off to a New York-based law firm specialising in labour claims, which brought a class action against Gawker in June 2013 that has been privately settled. Matthews claims that the lawyers misrepresented their intentions and now says he feels “the sense of being a pawn or an item in a ledger”.
Harder’s web appears to extend to a federal court in Chicago, where a plaintiff named Meanith Huon, a lawyer and former life insurance salesman, sued Gawker in 2011 for allegedly implying that he had sexually assaulted a woman he had met through Craigslist. He was later acquitted of rape but sought action against legal news blog Above the Law and Gawker-owned Jezebel for suggesting that he was a serial rapist. In a hearing last year, Huon said that he had decided to settle with the former—but continue his crusade against Gawker in a higher court even after a judge dismissed claims of defamation. According to Steve Mandell, an attorney for Above the Law, Huon told the judge in open court that he wasn’t worried about his appeal because he was “getting support from Hulk Hogan’s lawyers in California”. Huon and Harder declined to comment on the case.
Harder takes issue with the idea, circulating in Los Angeles legal circles, that suing Gawker has become his firm’s “bread and butter”. “We represent numerous businesses and individuals in a plethora of legal matters that have nothing whatsoever to do with Gawker.”
Nor would Harder discuss the specifics of his arrangement with Thiel. “If a person has been wronged, he or she is entitled to be made whole. This is true whether the person pays their own legal bill, or has a law firm on contingency, or is represented by a public interest law firm, or an attorney on a pro bono case, or has someone else helping with the costs.”
Silicon Valley is circling Gawker in at least one other way. In January, as numerous executives and editors departed the embattled media company, some former employees were contacted by Scott Sonnenblick, a partner at corporate M&A law firm Linklaters, who said he was looking to discuss the possibility of buying the company. Sonnenblick specifically told some of these ex-employees that he was calling on behalf of at least one Silicon Valley heavyweight.
There’s nothing unusual about making a bid by approaching former executives, who bring insiders’ knowledge and outsiders’ hunger. But having a Silicon Valley billionaire circle a private New York media company under siege from a Silicon Valley billionaire is certainly unusual. Sonnenblick and Thiel’s camp declined to comment.
Regardless, Denton needs help. While Gawker has since been able to secure funding from Russian billionaire Viktor Vekselberg’s Columbus Nova Technology Partners, the company remains under attack. The $140 million verdict, while widely expected to be reduced or eliminated on appeal, hangs over Gawker’s head like a guillotine, and numerous legal expenses are draining its resources.
During an interview with Forbes, Denton says that Gawker recorded revenue of $50 million last year and would have broken even absent legal fees. However, with fees, which have totalled about $10 million in the Hogan case alone, 2015 and likely 2016 will end up in the red. Gawker already initiated a small number of layoffs to reduce costs.
Gawker has changed, post-Thiel. The company has shuttered Valleywag and its celebrity rumour mill, Defamer, and Denton said last November that the Gawker flagship would refocus on politics. “For a long time, the lawsuits seemed like karmic retribution for skating so close to the edge,” says a current Gawker employee. “But for once, Nick Denton’s conspiracy theories turned out to be true.”
In an age where media assets have become a strategic hobby for non-media billionaires, whether they wear white hats (Jeff Bezos and the Washington Post) or black hats (Sheldon Adelson and the Las Vegas Review-Journal), the idea that a media entity can be systematically sued into submission by an aggrieved subject is an ugly long-term prospect.
In the short term, Denton is doing what he needs to do to survive. After sitting down with Forbes, Denton scurries off to his next meeting, garnering sympathetic greetings as he walks to the lobby of a five-star oceanfront resort in Rancho Palos Verdes, Calif. He’s more than ten minutes late by the time he arrives. He quickly extends his hand to Sameer Deen, the senior vice president for digital at Univision—a company reportedly interested in investing in Gawker, headaches and all.
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(This story appears in the 22 July, 2016 issue of Forbes India. To visit our Archives, click here.)