Michael Wolff on Hulk Hogan's $115M Verdict and Why Gawker Should Settle the Case

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Hulk Hogan

On Friday, a Florida jury turned in a $115 million verdict against Gawker over its 2012 posting of a Hulk Hogan sex tape.

In a business where we swear by free speech and believe we are protected by it, we journalists are in fact always being second guessed, corrected, modified, having to tone down and restate, and in general being “legaled” to avoid the possibilities of a lawsuit by a disgruntled subject. The principle of free speech is stronger when you avoid testing it.

The Internet, on the other hand, has been used as something of an end run around that pantywaist view of the First Amendment, with Nick Denton’s Gawker issuing some of the most blatant “try and stop us” challenges. On Friday, Gawker found itself on the way wrong end of a $115 million judgment against it for invading the privacy of former wrestling star Hulk Hogan by posting portions of a sex tape featuring Hogan.

Perhaps the most curious aspect of the trial is that there was one. Few traditional publishers would have ever found themselves in this position. Both because the issue would have seemed tenuous enough and dubious enough to avoid — showing a surreptitiously recorded clip of a sexual encounter — or because it would have been settled beforehand. As strong as the publishing industry’s belief in free speech is its belief about never going in front of a jury. It’s always a difficult defense, the great and arrogant power of the press against a naked individual (very naked in the Hogan case).

What’s more, most tabloid and gossip publishers, aware that their profits go hand in hand with the public’s disdain for tabloid and gossip publishing, would be loath to have to defend themselves. Were the Hogan sex tape published by say, TMZ (which in fact wrote abut the tape, but didn’t show it), the National Enquirer or various Murdoch publications, they would have known better than to count on any sympathy, even First Amendment sympathy from the media. 

But Denton’s enterprise is an unlikely combination of principle and scurrilousness. His belief is that the media exists in a partnership with the powerful, ever-inhibiting the real story. One of his ways of taking the media to task was to make it the subject of relentless and often personal scrutiny. Gawker’s position has been that any public person — which it effectively defined as a person with almost any level of success or even ambition for it — might rightfully and profitably be mocked or exposed, with their sex life being the most revealing gotcha storyline. Desire, especially its most ignoble details, is the great leveler. That was the essence of Gawker’s defense against Hogan’s claims of invasion of privacy. In order to fully understand this man and who he is and his position in popular culture, his sex life needed to be exposed.  

Most libel or privacy suits, especially those that get before a jury, represent a perfect storm of bad luck for a publisher. Not only do you need to mortally offend someone, but the offended party has to be bizarrely tenacious in the need to avenge this offense, indeed willing to risk further exposure. And then they have to be able to afford vast legal costs. And then they have to be stubborn enough and gambler enough and, curiously, press-hungry enough to refuse what, in order to avoid a jury, would surely be a generous settlement. But if there was a publisher who invited such a perfect storm, it was Gawker.

It sometimes seemed that Denton was conducting a particular press experiment. In part because of Internet economics he almost exclusively hired the young and inexperienced. And in part because the Internet merely demanded more copy rather than better or more accurate copy, he did not have to supervise his acolytes very much. In order to get his attention at all, you had to reach new levels of causing offense — if you could make Nick wince, you’d succeeded. A.J. Daulerio, the editor who posted the Hogan video, became, at the trial, the Gawker poster child for the staff’s general contempt, utter disregard and propensity for casual mayhem, with Daulerio even joking in a video deposition shown in open court about child pornography. Indeed, one might imagine Daulerio, in the future, bragging about being the guy who brought Gawker down. 

In the end, this trial — whose outcome could hardly have been in doubt — might represent one of the greatest examples of the disconnect between media and public, the former solipsistic and in on an incredible joke, the latter uncomprehending and appalled.

But what about free speech, the issue that Gawker maintains is at the heart of the matter and its defense? Indeed, almost every commentary about the trial has conflated the question of free speech, wherein the government tries to inhibit the press, with an individual's right to protect him or herself from an unfair or abusive media. That recourse is a significant part of media law — a right that has always co-existed with the First Amendment. The Hogan verdict does not particularly reflect an expansion of it. 

The promised appeal will turn on the technical issue of what and whom constitutes a public figure (Hogan almost surely is one based on past Supreme Court cases), and what rights does the public figure have versus the public’s right to know. In fact, there could be some movement here, with courts looking to shave the broad protections granted coverage of public figures — because on the Internet everybody is a public figure.

As likely, the case will be settled before the appeal. Punitive damages, to be set this week, could double or even triple the already-staggering award. That’s not a sword that a $45-million-a-year business can sustain very long over its head. Gawker, before Hogan, was probably — using the recent sale of Business Insider as a business of comparable value — worth a fulsome Internet multiple of nine or 10 times its revenues. But the $400 million to $500 million the company might have been worth is now reduced by the Hogan liability.

Denton took a recent round of financing — the first for the company — in order to help pay for the suit (including the possibility that it might have to post a $50 million bond). But it is hard to imagine that that round does not account for the company’s change in fortunes. The investor isn’t paying for Hogan. 

The actual cost of fighting this through several years of appeals is financially onerous. Even more burdensome and transformative is the mindshare it requires from the company and the limbo it leaves it in. There is a deal to do with Hogan that will change Gawker and, as well, Nick Denton’s net worth; but it will not change the First Amendment or the rules of publishing.

Michael Wolff writes frequently about the media business. His latest book is Television Is the New Television.


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