Why the Hulk Hogan v. Gawker Sex-Tape Lawsuit Matters

It’s a privacy v. First Amendment argument that could decide the very survival of Nick Denton’s digital media company

Last Updated: March 8, 2016 @ 8:24 PM

Hulk Hogan is finally getting his chance to body-slam Gawker, only freedom of the press may get the wind knocked out of it in the process.

Blame it on the $100 million stakes and the tendency toward drama of the participating parties: While the central issue in Hogan’s defamation suit is garden-variety privacy vs. the media’s obligation to report on public figures, the uncertainty of an unusual jury trial and the potential for extraordinary damages means a verdict against Gawker could deal a crippling blow to the company — and maybe even media at large.

Monday kicked off a long-awaited jury trial in the famed former wrestler’s suit against online-news empire Gawker. Hogan, whose real name is Terry Gene Bollea, is suing the company’s marquee media gossip site for publishing video snippets of him having sex with a woman who was then the wife of friend and radio shock jock Bubba the Love Sponge (real name Todd Clem).

Hogan and his lawyers aren’t disputing Gawker’s right to cover news of the tape, just the site’s publication of the video itself. Gawker argues that Hogan can’t use the courts as a tool to punish outlets for coverage he doesn’t like.

“If ultimately there is a large jury verdict against Gawker, and Gawker has to declare bankruptcy, it’s going to have a chilling effect on the media’s ability to publish a tape like this,” Michael Rothberg, media lawyer in Washington D.C., told TheWrap. He said a $100 million verdict would be “absolutely enormous.”

Rothberg called that a worst-case scenario for Gawker, one that he doesn’t believe would likely be upheld on appeal. But Florida requires those hit with damages to post bond, and that may be more money than the media company can manage. A $100 million award is four times more revenue that all of Gawker Media generated in 2012, the year it published Hogan’s sex tape. It’s just shy of the company’s total revenue from 2012 through 2014 combined.

As a private company, Gawker hasn’t disclosed its financials since 2014. But in girding for the $100 million suit, the company opened itself to an outside investor for the first time in January, raising an undisclosed sum by selling a minority stake to the investment arm of a Russian billionaire’s conglomerate. Until this year, Gawker was entirely owned by founder Nick Denton and Gawker staff.

Before that investment, Denton indicated that a $100 million hit could ruin his empire. In a wide-ranging profile with the New York Times last year, which characterized talk about the case among Gawker staff in “apocalyptic terms,” Denton said: “It’s a $100 million lawsuit … We don’t keep $100 million in the bank, no.”

The Hogan trial is an important First Amendment case because of those survival implications for Gawker, which could reverberate to other outlets considering publishing material that exposes public figures, Rothberg said. Even if Gawker was on the right side of the law, it still may have bet too much too early, pushing it out of the game before it can ultimately play a winning hand.

“What sometimes happens is a jury verdict against the media goes to appeal, and it’s either overturned or an outrageous damages award is reduced,” he said. “There’s some risk in that, even if Gawker is right on the law, by the time that’s established it may be too late.”


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