Facebook investor secretly bankrolls Hulk Hogan's case against Gawker

Peter Thiel, the Silicon Valley investor who co-founded PayPal helped wrestler Hulk Hogan bankroll his lawsuit against Gawker Media.
Peter Thiel, the Silicon Valley investor who co-founded PayPal helped wrestler Hulk Hogan bankroll his lawsuit against Gawker Media. PHOTO: REUTERS

San Francisco (Bloomberg) - Billionaire investor and Facebook board member Peter Thiel secretly helped bankroll the defamation case that resulted in a US$140 million verdict against Gawker Media LLC, threatening its very existence.

Mr Thiel, the libertarian-leaning venture capitalist who co-founded PayPal, made a financial contribution to the lawsuit brought by former pro wrestler Hulk Hogan against Gawker, a media and celebrity-focused website, according to a person with knowledge of the matter. Hogan, whose given name is Terry Bollea, sued Gawker in 2012 over the publication of a tape showing him having sex with a friend's wife, claiming the publication cost him endorsements and inflicted emotional harm.

Mr Thiel's involvement shows how a well-funded individual can hold sway over the fate of a media organisation in an age when newsroom budgets are stretched thin. Presumptive Republican presidential nominee Donald Trump, also a billionaire, said recently that, if elected, he will change libel laws so it is easier to sue publishers. Casino magnate Sheldon Adelson has filed libel lawsuits against several journalists, despite becoming a newspaper owner himself. The billionaire Koch brothers were reportedly digging into New Yorker writer Jane Mayer's past and falsely accusing her of plagiarism after she wrote an article in the magazine about them that they did not like.

Gawker and Mr Thiel have a contentious history already; the website outed him as gay in 2007. In a post at the time, it said his sexual orientation probably explained his "disdain for convention, his quest to overturn established rules". He has since publicly acknowledged that he is gay. In 2009, he told PE Hub Network that one of Gawker's publications, Valleywag, was the "Silicon Valley equivalent of al-Qaeda".

At the same time, he has also been a major donor to the Committee to Protect Journalists, a nonprofit advocate of press freedom. In a statement, CPJ executive director Joel Simon said that while the group supports a person's right to "seek civil redress in cases of defamation", it does not "support efforts to abuse the process by seeking to punish or bankrupt particular media outlets".

Forbes previously reported Mr Thiel's assistance to Hogan. Hours before that, The New York Times published an interview in which Gawker founder Nick Denton said he believed the case against Gawker was being funded by an unknown third party.

"My own personal hunch is that it's linked to Silicon Valley," Mr Denton was quoted as saying.

Mr Thiel, 48, has supported a number of Republican politicians in the past. In 2012, he donated US$2.6 million to Ron Paul and supported Ted Cruz's senate run. For this election cycle, Mr Thiel provided US$2 million to a super-PAC backing Ms Carly Fiorina, who was a chief executive officer of Hewlett Packard Co. He recently showed up as a California delegate for Mr Trump.

In March, a Florida jury awarded Hogan US$25 million in punitive damages for invasion of privacy, coming on top of US$115 million for economic harm and emotional distress.

"We trust the appeals court will correct the outsized Florida jury verdict and reaffirm the law that protects a free and critical press, which is more embattled and important than ever," Gawker said in a statement.

A Florida judge denied Gawker's motion for a new trial and said the US$140 million jury verdict would not be reduced, the Associated Press reported. Gawker can still proceed to a Florida appeals court.

Neither Mr Thiel nor Mr Charles Harder, the attorney representing Hogan, responded to requests for comment. Mr Harder has brought other cases against Gawker. In one, he is representing Mr Shiva Ayyadurai, whose claims to have invented e-mail were challenged by Gawker and other media. Facebook spokesman Caryn Marooney declined to comment.

Facebook was recently embroiled in controversy over allegations it suppresses conservative viewpoints in a service that shows what news stories are popular among users. Surreptitious efforts by a director to undermine a news organisation may fuel continued questions as to whether Facebook can objectively curate information from an array of different viewpoints and outlets.