Gawker files for chapter 11 bankruptcy; deal in place to sell company to Ziff Davis

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Gawker Media as we know it may soon be no more: The company filed for Chapter 11 bankruptcy Friday, and an agreement is in place to sell the company to Ziff Davis, a publishing and Internet company. The move allows Gawker’s web properties, which include popular blogs Gawker, Gizmodo, Jezebel, and Kotaku, to still function while the sale is finalized.

“We have been forced by this litigation to give up our long-standing independence.”

Friday’s news is also a direct result of the court battle between Gawker and Hulk Hogan, which was funded by billionaire businessman and PayPal co-founder Peter Thiel. Gawker lost that case, so it was set to pay out nearly $140 million as a result.

CEO and founder Nick Denton doesn’t have much of a choice. In order to move on, Gawker needs to make itself a palatable acquisition target. Unlike Chapter 7, which requires a full liquidation of assets, Chapter 11 allows companies to stay in business while restructuring debt. It also separates any legal proceedings from those who wish to take on the company’s debt — in this case Ziff Davis — and gives Gawker and Denton much-needed funds to mount a legitimate appeal.

“We have been forced by this litigation to give up our long-standing independence, but our writers remain committed to telling the true stories that underpin credibility with our millions of readers,” a defiant Denton said in a statement. “With stronger backing and disentangled from litigation, they can perform their vital work on more platforms and in different forms.”

A new home, under Ziff’s roof

While terms of the deal have not been publicly disclosed, it is expected that Ziff Davis will pay at least $100 million to acquire seven Gawker brands, including Gizmodo, Lifehacker, Kotaku, Jalopnik, Deadspin, Jezebel and Gawker. It should be noted that the sale of Gawker Media will come in the form of a court-mandated supervised auction. This means that other bidders may come forward and purchase the brands, but ZiddDavis appears ready to make an aggressive effort to acquire Gawker should the auction find a winning bidder higher than the offer from Davis.

According to Re/code, both Gawker and its banker expect that to happen — Denton even said last year ahead of the trial that he thought the company might be worth $250 million to $350 million.

Ziff-Davis

“There’s a tremendous fit between the two organizations, from brands to audience to monetization,” Ziff Davis CEO Vivek Shah said in a memo to employees. “We look forward to the possibility of adding these great brands — and the talented people who support them– to the Ziff Davis family.”

What does this mean for you, the reader? Not a whole lot. Most of Gawker’s sites have posted messages saying that nothing will change, although it’s not out of the question that we may begin to hear about layoffs as the company is forced to prioritize key business operations.

It might also result in a little less gossipy Gawker, but from Denton’s continued public comments, that doesn’t look too likely.

“Even with his billions, Thiel will not silence our writers,” he said on Twitter Friday. “Our sites will thrive — under new ownership– and we’ll win in court.” But Thiel might not be willing to give up so easily.

Denton and Thiel’s feud goes back about a decade — including a December 19, 2007 post where Gizmodo publicly outed Thiel in a post entitled, “Peter Thiel is totally gay, people.” While Thiel has never directly sued Denton or Gawker Media, an earlier Forbes story claims Thiel was behind several lawsuits against Gawker over the years.

Strange bedfellows

Another bizarre part of this story is Ziff Davis as the potential home for Gawker properties. Ziff’s stable of online publications, including PC Magazine and ExtremeTech, aren’t necessarily known for being too controversial and are a long ways away editorially from the gossipy style of Gawker, Gizmodo, and Jezebel.

It’s also an about-face for a company that until recently seemed as if it was trying to condense its editorial pursuits around a few key brands (like the ones we mentioned above), rather than create a vast media network like it once had. It sold all its business publications including eWeek to an investment firm in 2007, and filed for bankruptcy the following year.

In 2010, another private equity firm headed by current CEO Shah purchased what remained of the business, but even then, its purchases — Computer Shopper that same year, and gaming media giant IGN in 2013 — still kept a rather vanilla editorial standard.

Shah doesn’t seem to see it that way. “In the event we become the acquirer, the additions of Gizmodo, Lifehacker, and Kotaku would fortify our position in consumer tech and gaming,” he told employees. “With the addition of Jalopnik, Deadspin and Jezebel, we would broaden our position as a lifestyle publisher.”

That could be, but it certainly seems an entirely different editorial strategy going forward.

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