Tech Law

Silicon Valley Debates Thiel’s Money Man Role in Gawker Suit

The digital media world was abuzz last week when news surfaced that billionaire Peter Thiel, one of PayPal’s cofounders, had provided financial backing for a defamation lawsuit against Gawker Media.

The suit stemmed from Gawker’s publication of a sex tape involving ex-WWE superstar Terry Bollea, better known as “Hulk Hogan.” A Florida jury awarded Bollea US$140 million in March.

Thiel, a Facebook board member and longtime financial supporter of the Committee to Protect Journalists, confirmed that he backed the Hogan case in part due to his concerns about Gawker Media’s journalism tactics.

Gawker’s former site, Valleywag, outed Thiel as gay in a 2007 series of articles that also affected the lives of many of Thiel’s friends. Although Thiel was a wealthy public figure, the publication drew substantial criticism from media analysts.

Guardian Angel

Thiel’s financial support in the Hogan case was motivated by a desire to deter the publication from causing similar damage to those with fewer resources to respond, he told The New York Times.

The publication was bullying people to get attention in the absence of any public interest, he said.

Thiel provided about $10 million to help finance the Hogan legal case, according to the Times.

Hogan rose to fame as the WWF heavyweight Champion in the 1980s and then starred in several films, including the Rocky series. Although he amassed millions of dollars through his wrestling and entertainment endeavors, his wealth does not approach that of Thiel, who is said to be worth about $2.7 billion.

Silent Partner

Last week’s hubbub followed reports that Gawker founder Nick Denton was looking to sell after a court last week denied the company’s motion to retry the Hogan case and the award amount was allowed to stand.

“We’ve always said we expect to prevail on appeal and we’ve always said we’re exploring contingency plans of various sorts so that’s not new,” Gawker Media said in a statement provided to TechNewsWorld by spokesperson Lexi Georgiadis.

Gawker earlier this year announced a deal to sell a minority stake to Columbus Nova Technology Partners in order to fund growth initiatives and pay for the Hogan defense.

“Everyone take a breath. We’ve had bankers engaged for quite some time given the need for contingency planning around Facebook board member Peter Thiel’s revenge campaign — and that’s how the Columbus Nova investment was arranged,” Gawker Media added. “We recently engaged [Houlihan Lokey Managing Director] Mark Patricof to advise us and that seems to have stirred up some excitement, when the fact is that nothing is new.”

Ethical Questions

It’s not uncommon for the super wealthy to go after media organizations, but Thiel’s secret support in the Hogan case adds a new wrinkle, said Rick Edmonds, media business analyst at the Poynter Institute.

“It’s relatively common for the rich to sue news media just to try to get even, whether or not they have a case,” he told TechNewsWorld. “This is a different twist, finding someone else with a better case and trying to damage the outlet that way. That may be dubious ethically, but I’m pretty sure it’s not illegal nor does it raise a First Amendment issue.”

It’s unlikely that Facebook will be damaged by this, but there’s a slight chance that it could face pressure to part with Thiel, “because he is too hot and divisive” on media-related issues, Edmonds said.

Thiel and the Thiel Foundation provided significant financial support to the Committee to Protect Journalists between July 2008 and January 2013, said Executive Director Joel Simon.

“As a free expression organization, we have a wide variety of supporters with a wide variety of views,” he observed.

As for Thiel backing the Hogan case, “we support the right of individuals in the United States and around the world to seek civil redress in cases of defamation,” Simon added. “However we do not support efforts to abuse the process by seeking to punish or [bankrupt] particular media outlets.”

“The Internet right to publish bad things does have limits,” said Peter S. Vogel, a partner atGardere.

“What Peter Thiel did to fund the Hulk Hogan case is not so unusual,” he told TechNewsWorld, noting that third parties such as the Electronic Frontier Foundation, the Electronic Privacy Information Center and the American Civil Liberties Union often “pursue litigation to help folks.”

David Jones is a freelance writer based in Essex County, New Jersey. He has written for Reuters, Bloomberg, Crain's New York Business and The New York Times.

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