Gawker Media Is Seeking Investor Cash
Gawker Media is seeking funding from outside investors and calling an “extraordinary general meeting” of shareholders on Thursday to approve a new class of Series B preferred shares, International Business Times has learned. On Friday, several employees and ex-employees of the company received an invitation to attend the meeting, which a source inside the company confirmed was related to a new round of investment funding.
The resolution put to the shareholders, obtained by IBT, allows for the “authorization, creation and issuance of the Series B Preferred Shares.” Private companies looking to raise money issue different types of stock to different classes of shareholders. In the event of the sale of the company or an IPO, the different classes of shareholders may be paid at different rates or in different order.
It’s the first time the company has courted outside investors to fund its punchy brand of news and views, sources say. Under founder and CEO Nick Denton’s vision, Gawker has long declared editorial and financial independence the guiding principle of the site. Denton, who funded the venture himself, made a killing selling his social-networking site First Tuesday in the early 2000s and used the windfall to bankroll Gawker Media. Since then, Gawker has made its money through traditional ads and sponsored content cooked up by its ad studio.
Representatives for Denton or Gawker Media did not immediately respond to a request for comment.
Venture capitalists like to get preferred shares like the ones Gawker is looking to issue: they can get paid before employees and founders who own common stock, the basic shares, without special protections. At the same time, preferred shares often come with limits on the voting power on the company’s board of directors and therefore the influence those shareholders hold over the business.
The decision to seek outside funding is the second big change for Gawker in recent months after the company announced last fall that it would be converting from a gossip blog to politics site. But the financial move may be the more significant change.
Gawker employees are still hammering out a contract with management following their successful unionization last year with the Writers Guild of America. Leaked documents published by IBT, along with interviews with staff, revealed that newsroom independence and a “firewall” between the editorial and business sides is a top priority for Gawker writers.
The high-profile implosion at the company last summer, over a post that was taken down by Gawker’s executive committee over the protests by the editorial staff, has kept staffers vigilant about the separation of church and state and the value of editorial independence. Introducing outside shareholders into the equation may not jive with the bargaining unit.
But hanging over all of that is the shadow of Terry Gene Bollea, better known as Hulk Hogan, who is still suing Gawker to the tune of $100 million for defamation, loss of privacy and emotional pain over a sex tape published by the site in 2012.
Denton has made some nervous sounds about Gawker’s chances in the lawsuit, even after the trial date was delayed last summer. And a verdict in favor of Hogan would certainly cost the company millions. A new round of investor cash might just be a big bundle of Hulk insurance.