Revenge and the Future of Media Finances (original) (raw)

Media|Revenge and the Future of Media Finances

https://www.nytimes.com/2016/05/27/business/revenge-and-the-future-of-media-finances.html

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Peter Thiel, a billionaire and co-founder of PayPal, has turned the model of third-party lawsuit funding on its head.Credit...Damien Maloney for The New York Times

May 26, 2016

The Silicon Valley billionaire Peter Thiel has put the future of Gawker Media in doubt by secretly funding a successful lawsuit that threatens to undermine the media company’s finances.

To do it, Mr. Thiel, a co-founder of PayPal, adopted tactics from a strategy used by investment firms and others who are increasingly underwriting lawsuits in the hope of turning a profit on their outcomes. Over the last decade, the types of lawsuits that have attracted outside money range from product liability claims brought by consumers against manufacturers to lawsuits filed by one business against a competitor over commercial issues like copyright violation.

But Mr. Thiel has also turned the model of third-party lawsuit funding on its head. Instead of looking for profits, the entrepreneur had a personal goal: extracting revenge against Gawker and warning others who adopted the website’s ethos that they could face similar legal attacks.

Now, the question running through many media circles is whether other wealthy people upset with news accounts will decide to follow Mr. Thiel’s example and go after other organizations. And if so, to what extent those suits could hurt the financial future of media companies and stifle free speech.

But legal experts said that a lawsuit, regardless of who is funding it, will ultimately succeed or fall based on its merits.

“This case is unusual,” said Michael McDonald, an assistant professor of finance at Fairfield University in Connecticut who also works as a consultant to lawsuit investors.

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