Whatcha gonna do when Hulkamania runs wild on you? Gawker Media is getting some outside financial help.
As reported by the New York Times, Gawker has sold a minority stake in its company to investment firm Columbus Nova Technology Partners. Gawker CEO Nick Denton cited the need for additional financing to fund the company’s growth as its flagship site shifts its editorial focus to politics from its previous emphasis on New York media and gossip. Columbus Nova managing director Jason Epstein will have a seat on Gawker Media’s board.
According to Denton, Columbus Nova’s funding will facilitate expanding Gawker’s video offerings and e-commerce opportunities. But above all, Gawker Media needed to fund its defense against a lawsuit from Hulk Hogan.
“The funding will strengthen GMG’s financial reserves as we prepare for trial this March in Hulk Hogan’s $100 million invasion of privacy lawsuit, in which we are defending our right to report truthfully on the conduct of public figures,” Gawker Media CEO Nick Denton said in a memo to staff announcing the investment.
The International Business Times originally reported on Wednesday that Gawker was seeking funding from outside investors in preparations for an upcoming trial over Hogan’s $100 million lawsuit against the company. Hogan sued Gawker for publishing clips of a 2012 sex tape he made with the wife of one of his friends, citing defamation, loss of privacy and emotional pain.
Gawker Media called for an “extraordinary general meeting” of shareholders on Thursday to discuss generating additional financing for the company in preparation for the Hogan trial, scheduled to begin in March. In a statement to TechCrunch posted Wednesday, Denton said that its legal defense was being funded by general expenses, but the need for more capital was deemed necessary in preparation for the trial.
According to the IBT report, the plan was to “approve a new class of Series B preferred shares,” offering stock in the company to a different class of investors. That shareholder meeting will now presumably vote to approve the deal with Columbus Nova.
Headquartered in New York City, Columbus Nova has previously invested in Rhapsody and indie record label 300 Entertainment. That would seemingly make the company a strange partner for Gawker, but Epstein told the NYT that Columbus Nova has always been attracted to the website’s editorial aesthetic.
“We have been attracted to the company because of the authenticity with which they approach all storytelling,” Epstein told the Times‘ Ravi Somaiya. “I will have no input on the editorial, or the editorial mix. Any changes will be driven one way or another by Nick and the team.”
The Hogan lawsuit and the risk of the company losing millions of dollars had already changed the way Gawker Media did business. Last July, Denton pulled a controversial story which led to the resignation of executive editor Tommy Craggs and editor-in-chief Max Read. As mentioned, the company recently changed its editorial focus from tabloid material. Prior to that controversy, Gawker secured an $8 million loan from Silicon Valley Bank to fund an expansion and office relocation.
Other investors had reportedly expressed interest in Gawker previously, but preferred to wait until the Hogan trial was resolved.
On Tuesday, the judge presiding over the case recommended that both sides seek mediation, rather than go to trial. According to Politico’s Peter Sterne, judge Pamela Campbell may be suggesting meditation due to questions regarding incriminating DVDs that were seized during a FBI sting operation. The audio on those DVDs differs from the videos that Gawker obtained.