3:13pm PT by Eriq Gardner
Univision to Pay Gawker's Nick Denton $16,666 a Month Not to Compete
Univision is soon to be the proud owner of various Gawker Media blogs, but as a condition for closing the sale, it requested and got Nick Denton to agree to a non-compete. In exchange for, among other things, not hiring or soliciting Univision's employees, Denton will receive $16,666 a month for the next two years. On Friday, Denton brought the deal to a bankruptcy judge for approval.
On Thursday, it was announced that Gawker.com would be shutting down. Late in the afternoon, a judge approved Univision's $135 million deal to purchase Gawker assets with reference to how the Hulk Hogan litigation had put a cloud on the company's business.
Soon after, Denton sent a memo to staff stating that he would "move on to other projects, working to make the web a forum for the open exchange of ideas and information, but out of the news and gossip business."
In light of the non-compete agreement, his exit from the news business makes sense, though there could be some wiggle room. A portion of Denton's agreement with Univision is redacted — and it's a secret section that explains which business activities he's allowed to pursue notwithstanding his non-competition and non-solicitation obligations.
What's in it? Maybe there's a clue from an older court document.
The $16,666-a-month precisely matches what Ziff Davis — the other bidder for Gawker — was willing to pay Denton to serve as a consultant for two years. Had Ziff Davis emerged the winner of Gawker, it was also going to obligate Denton to not associate with any other news business enterprise, though interestingly, an exception was carved out for Gawker.com, the flagship that will now be shuttered. This led to some speculation among insiders that Denton would be able to buy Gawker.com from Ziff Davis.
According to Univision's Asset Purchase Agreement, Univision has until three days prior to closing (currently expected no earlier than Sept. 9) to exclude Gawker.com from the assets it is purchasing. This could be meaningful given Denton's hint to staffers in a memo of a potential "second act" for Gawker.com. If Univision chooses to take Gawker.com and shutter it, then it's Univision's call whether to ever activate it from the mothballs. If Univision decides to pass on Gawker.com, it would be left in the debtor's estate, potentially liquidated to another buyer or kept on ice pending the Hulk Hogan appeal.
In the meantime, Denton is making other actions to ensure his financial health.
He's in Chapter 11 too after Gawker was unsuccessful in attempting to extend its bankruptcy shield to cover him from Hogan's collection efforts. The $16,666 a month salary for doing basically nothing might sound a lot, but Denton tells the court in papers filed on Friday that it "will be a material reduction from his current salary."
Denton has more than $1.7 million left in mortgage payments on a SoHo condo in New York with monthly payments of almost $15,000. Plus, he pays condo association fees of more than $3,400 a month. As a result of all of this, he's been seeking to move into a cheaper apartment and now he reports that he's found a potential tenant to lease his residence. The tenant would like to move in next week, so Denton is urging the court to grant approval quickly.