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Gawker Media files for bankruptcy, agrees to sell itself to Ziff Davis

Hulk Hogan's victory in court, with a devastating $140 million jury award, pushes the media site to file for bankruptcy protection and put itself on the auction block. A higher bidder could still come along.

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There's no denying it anymore: Gawker Media's legal battle against wrestler Hulk Hogan has crippled the company, as it filed for bankruptcy protection and agreed to sell itself to fellow digital publisher Ziff Davis.

Gawker filed for Chapter 11 bankruptcy in the Southern District of New York. The sale is being conducted through a court-supervised auction, which could see other bidders emerge to offer a higher price. The bid by Ziff Davis, which owns PC Magazine, was said to be worth about $90 million to $100 million.

The headline-grabbing case pitted freedom of the press against a celebrity's right to privacy, but it grew knottier last month when Silicon Valley billionaire Peter Thiel confirmed he was bankrolling legal fees in the Hulk Hogan case. With Gawker's filing for bankruptcy, the case raises questions about whether Thiel's campaign to undo Gawker will have a chilling effect on other publications.

Nick Denton's Gawker Media will fund its appeal of a $140 million judgment against the company with its sale to Ziff Davis.

Nick Denton's Gawker Media will fund its appeal of a $140 million judgment against the company with its sale to Ziff Davis.

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"We have been forced by this litigation to give up our long-standing independence, but our writers remain committed to telling the true stories that underpin credibility with our millions of readers," Gawker Media owner and founder Nick Denton said in an emailed statement.

Gawker's filing lists the pro wrestler, whose real name is Terry Bollea, as its biggest creditor. In March, Bollea won a $140 million jury verdict against Gawker for publishing portions of a tape of him having sex with a friend's wife. Bankruptcy protection will prevent Bollea from seizing Gawker's assets.

Thiel, who was outed as gay by Gawker publication Valleywag in 2007, has said he is fighting a bully that has ruined people's lives. Thiel was one of the founders of PayPal and is a director of Facebook. A representative for Thiel declined to comment on the bankruptcy news.

A week ago, Denton was optimistic about the company's prospects, saying he was "pretty confident" a higher court would rule in its favor or reduce the verdict on appeal. But Friday, a judge denied Gawker's request for a stay that would have let it continue to operate independently while appealing the jury verdict.

In a statement announcing Ziff Davis's potential takeover, Denton called the bidder "one of the most rigorously managed and profitable companies in digital media."

During the sale, Gawker Media will continue operating as normal, the company said. And it isn't throwing in the towel against Bollea yet. Gawker said the sale would allow it to fund its appeal.

Bollea's lawyer, David Houston, said in a statement that the wrestler's camp has "every intention" to continue pursuing its judgement against Gawker and "to hold them accountable for violating Mr. Bollea's privacy whether it be in the bankruptcy court or any other court."

CNET's Rochelle Garner contributed to this report.

Update, 1:41 p.m. PT: Adds statement from Bollea's lawyer.