Gawker to Pay Hulk Hogan $31 Million to Settle Sex Tape Lawsuit

Hulk Hogan - H 2015
AP Images/Invision

Hulk Hogan - H 2015

Gawker apparently is tapping out.

On Wednesday, Gawker Media's founder Nick Denton published a statement that the company's legal battle with Hulk Hogan over the publishing of an excerpt of a sex tape would be coming to a close.

"After four years of litigation funded by a billionaire with a grudge going back even further, a settlement has been reached," wrote Denton. "The saga is over."

According to bankruptcy papers filed Wednesday, Hogan will be receiving $31 million plus a share of distributions from a contingent proceeds creditor account. He may also be gaining more in a separate deal with Denton.

In October 2012, Gawker published less than a minute of Hogan's sex tape alongside an essay by A.J. Daulerio that opened by musing about how "we love to watch famous people have sex." Little did the publication know then this one post would bring about its demise.

Hogan initially sued in federal court with a copyright claim, but couldn't get a temporary restraining order that removed the video from the website. The former professional wrestler born Terry Bollea then refiled in Florida state court, bringing privacy claims against not just Gawker, but also his partner in the video, Heather Cole, the then-wife of his best friend, Tampa-area radio shock jock Bubba the Love Sponge.

After nearly four years of litigation, which included ample discovery, an FBI investigation into whether Hogan was extorted, and more sex tape leaks showing that Hogan had made racist comments during bedroom banter, the case went to trial in March. He was awarded $140 million in compensatory and punitive damages from Gawker, Denton and Daulerio. The trial judge later upheld the verdict.

Gawker expressed its hope that its First Amendment arguments would lead to a different outcome on appeal, but the verdict created financial pressures on the company. In July, Gawker declared Chapter 11 bankruptcy, and some of the company's blogs — but not its flagship — were sold to Univision for $135 million after an auction.

Meanwhile, the revelation that Silicon Valley billionaire Peter Thiel had secretly provided financial backing to Hogan created another explosive turn. The PayPal co-founder reportedly contributed money not only to Hogan, but also to others like purported email inventor Shiva Ayyadurai to sue Gawker. Many were represented by Hollywood attorney Charles Harder. Thiel was outed as gay by one of Gawker's old tech publications, but he denied that his funding was the result of a grudge. At a recent press conference, Thiel explained that he found Gawker's reporting to be distasteful and commented, "If you’re a single-digit millionaire like Hulk Hogan, you have no effective access to our legal system. It costs too much.”

In bankruptcy court, the parties were prepared to argue about distribution of the Univision proceeds as well as next steps. Gawker was eyeing a possible lawsuit against Thiel. But according to Denton, it's all over.

In a statement titled "A Hard Peace," Denton writes, "Yes, we were confident the appeals court would reduce or eliminate the runaway Florida judgment against Gawker, the writer of the Hogan story and myself personally.... But all-out legal war with Thiel would have cost too much, and hurt too many people, and there was no end in sight."

The parties are due in court Thursday and are expected to discuss the settlement, which calls for Ayyadurai to get $750,000 and journalist Ashley Terrill to get $500,000 to settle their own lawsuits. It's said in the bankruptcy papers that " baseline benefit is higher than the alternative of fully litigating the disputes resolved under the Plan Settlements."

The settlement will require the bankruptcy judge's approval.

David Houston, Hogan's lawyer, commented, "As with any negotiation for resolution, all parties have agreed it is time to move on."