How does Gawker’s net worth match up to Hulk Hogan’s lawsuit? A jury has awarded the former professional wrestler $115 million in compensatory damages and $25 million in punitive damages. ($15 million of the punitive comes from Gawker itself and $10 million comes from Nick Denton, Gawker’s founder.) Gawker Media Group will appeal the verdict, but can the company afford the verdict if it loses the appeal? Could Gawker go bankrupt? While Gawker works on its appeal, the company may still be required to pay a high bond that numbers in the millions.
Here’s what you need to know.
Gawker Has a Net Revenue of About $45 Million a Year
Gawker’s yearly net revenue is less than Hulk Hogan’s $115 million verdict, which will likely increase once punitive damages are announced next week. In 2014, Gawker had a net revenue of $44 million, making the site itself worth at least $250 million, Business Insider reported. This gave the company an operating profit of $6.5 million in 2014, The Wall Street Journal reported.
The net revenue came from a combination of traditional advertising and e-commerce. In 2014, Gawker Media’s e-commerce revenue grew to $100 million, netting it $10 million in addition to $35 million made in traditional advertising. The company’s overall revenue has been steadily growing every year since 2010.
Last summer, Gawker took an $8 million loan from Silicon Valley Bank to finance its relocation. 2015 was the 10th consecutive year that Gawker saw double-digit revenue growth, including $150 million in gross sales from e-commerce.
Gawker Sold a Minority Stake to Columbus Nova to Help Cover Legal Costs
Gawker was founded in 2002 and has been majority-owned by founder and CEO Nick Denton since the beginning. For the very first time, Gawker accepted an outside investment from Columbus Nova Technology Partners in January, The New York Times reported. (To learn more about Columbus Nova, please see this story.) The exact stake that Columbus Nova would take or the size of its investment wasn’t revealed by Gawker because of the trial. What is known is that the investment gave Columbus Nova a minority stake in the company and, according to Politico Media, the company now has veto power over key Gawker decisions. Jason Epstein, managing director of Columbus Nova, also got a seat on Gawker’s board of directors.
A leaked internal memo revealed that the company needed the investment to build up its “war-chest” in light of the Hulk Hogan lawsuit. Denton told Fortune, regarding the purpose of the outside investment:
It’s about putting Hogan behind us, and the future ahead of us.”
Denton has previously said there was a 1 in 10 chance that he would have to sell a controlling stake in Gawker in order to keep it afloat after a verdict, The New York Times reported.
Jason Epstein, managing director of Columbus Nova Technology Partners, told Fortune that he had no plans to get involved with Gawker’s editorial work. (Note: Some sources say that Columbus Nova invested in Gawker while others say it was Columbus Nova Technology Partners. Both share the same logo and are part of the same company. Epstein is managing director at Columbus Nova Technology Partners and managing partner of Columbus Nova.)
Gawker Will Appeal, But May Have Still Have to Pay a $50 Million Bond
Even if Gawker appeals the verdict, it may still have to pay a bond capped at $50 million while it appeals, CNN reported. Florida law on this can be a little complicated. According to Politico Media, Florida’s original law stated that a defendant like Gawker could get an automatic stay on the judgment, pending appeal, if it paid a “supersedeas bond” in the amount of the judgment plus two years of interest. A newer 2012 Florida statute capped that supersedeas bond at $50 million.
Paying $50 million might still be expensive for Gawker. Because of this, Gawker might ask the court to reduce the bond or even stay the judgment without requiring a bond at all. Courts in Florida have the discretion to do this without requiring any bond payment if the defendant can’t afford the bond.
After Hulk Hogan’s damage award was announced on Friday, Denton released a statement saying that he expects to win the case on appeal, Slate reported. Denton said:
Given key evidence and the most important witnesses were both improperly withheld from the jury, we all knew the appeals court will need to resolve the case. … [I] am confident that we would have prevailed at trial if we had been allowed to present the full case to the jury. That’s why we feel very positive about the appeal that we have already begun preparing, as we expect to win the case ultimately.