Gawker founder says chances of a 'disaster' over Hulk Hogan sex tape are 1 in 10

Hulk Hogan is taking Gawker Media to court.

The professional wrestler is suing the media company for publishing a “highlights reel” of a leaked sex tape featuring Hogan and Heather Clem, the wife of his friend Bubba the Love Sponge Clem, in 2012.

The lawsuit, which is scheduled in a Florida court for July 6, could cost Gawker up to $US100 million in damages and — in a worst case scenario — force Gawker founder Nick Denton to sell the company or seek outside investment to keep the lights on at Gawker.

According to the New York Times, Denton says the odds of having to seek outside investment to keep Gawker running (or as he calls it, a “disaster”) are one in ten. When the NY Times asked if he was worried about the lawsuit, Denton said: “It’s a $US100 million lawsuit. We don’t keep $US100 million in the bank, no.” Gawker has raised significantly little outside capital to date, and the company has been largely bootstrapped by Denton since the early 2000s.

That one in ten chance is higher than normal. “In an average year, the chance of disaster, some conjunction of events that would compromise the company’s independence and journalistic purpose, is about 1 in 50,” Denton wrote Friday morning on his platform Kinja.”We are currently at heightened risk levels.”

At an all-hands meeting earlier this month, Denton told his staff: “I have way, way less money than people think! … I don’t have hundreds of millions of dollars to kind of bail the company out. If we are in an environment with higher business risk and higher legal risk, then the company is going to need somebody with deeper pockets and hopefully principles in order to keep it both commercially viable and editorially viable.”

Gawker founder Denton told Business Insider on Friday that the likelihood of the Hogan lawsuit sinking his company is “unlikely but possible.”

In some ways, he thinks the lawsuit is actually an advantage for Gawker against its digital media rivals. “To some extent, this is a competitive advantage,” Denton said. “We can bear criticism and intimidation better than most media companies. It’s why we can put out the stories we do.”

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