entertainment 3 days ago

Bezos' missive spotlights National Enquirer's controversial tactics

Los Angeles Times — Meg James, Richard Winton and David Ng Los Angeles Times

Feb. 09--Supermarket tabloid National Enquirer has long employed hardball tactics in pursuit of salacious scoops about Hollywood celebrities and politicians, while simultaneously covering up embarrassing stories about its friends, including President Trump and former California Gov. Arnold Schwarzenegger.

But the tabloid may have underestimated the wrath of its latest target: the world's richest man, Jeff Bezos, founder of online behemoth Amazon and owner of the Washington Post.

The National Enquirer last month revealed Bezos had been engaged in an extramarital affair with Lauren Sanchez, a former local Fox TV anchor in Los Angeles and wife of a prominent Hollywood talent agent. Bezos unleashed private investigators, giving them an unlimited budget, to learn how the National Enquirer had gained possession of photos and text message exchanges between him and Sanchez.

The Enquirer bristled over the investigation, and tried to get Bezos to back down. Instead, Bezos published an extraordinary blog post this week, accusing the tabloid and its parent company, American Media Inc., of "extortion and blackmail," alleging it threatened to publish more embarrassing pictures unless he abandoned his investigation of the leaks.

"I think they met their match in Bezos," said Dan Ives, a technology analyst with Wedbush Securities. "This remains a heavyweight fight. The public, the broader tech industry, and D.C. insiders are watching closely."

On Friday, American Media said that it was investigating the billionaire's allegations and that it "believes fervently that it acted lawfully in the reporting" of the Bezos story. Forbes has estimated his net worth at more than $150 billion.

Federal prosecutors in New York also are examining Bezos' allegations, according to two sources familiar with the review but not authorized to discuss it. Prosecutors are looking at whether AMI violated a recent agreement in which AMI pledged not to commit any crimes for three years.

The Bezos drama quickly dragged American Media Chairman and Chief Executive David Pecker, whose close ties with Trump already have come under scrutiny, back into the spotlight. American Media owns numerous supermarket tabloids and gossip magazines, including Us Weekly, the Star, the Globe and Men's Journal.

Bezos' blog post noted that his ownership of the Washington Post may have brought another level of complexity to the situation, and alleged that the coverage of his extramarital affair may have been politically motivated.

"It's unavoidable that certain powerful people who experience Washington Post news coverage will wrongly conclude I am their enemy," Bezos wrote in the post on the Medium website. "President Trump is one of those people, obvious by his many tweets."

Bezos also pointed out connections between Pecker and the Saudi government, and seemed to suggest that the Saudis may be involved, too. Bezos wrote that "The Post's essential and unrelenting coverage of the murder of its columnist Jamal Khashoggi is undoubtedly unpopular in certain circles." Khashoggi was killed at the Saudi consulate in Turkey in October.

Whether American Media, and its controversial accountant-turned-CEO, broke the law is a pivotal question. The company reached a non-prosecution agreement with the U.S. attorney's office in Manhattan in December, but it admitted its role in a scheme that began two months after Trump announced his candidacy in 2015. That's when Pecker offered to help suppress bad stories about Trump's relationship with other women, according to court filings.

That case began after special counsel Robert S. Mueller III, who is leading the investigation into Russian interference in the 2016 presidential campaign, passed along information to the U.S. attorney's office in Manhattan about dealings between Pecker and Trump and his longtime lawyer Michael Cohen. Cohen said Trump ordered him to arrange hush money payments to two women -- the porn star Stormy Daniels and the former Playboy playmate Karen McDougal -- who said they had affairs with him years ago. The payments were made during Trump's presidential campaign.

The tabloid acknowledged using a tactic called "catch and kill," in which it would buy the rights to someone's story and then not publish it.

Cohen pleaded guilty to campaign finance violations, among other crimes, because the payments were intended to influence the campaign and were not properly disclosed. Cohen, who was sentenced to three years in prison, made the $130,000 payment to Daniels. American Media paid $150,000 to McDougal.

The McDougal arrangement is similar to one involving Schwarzenegger more than 15 years ago.

The Los Angeles Times reported in 2005 that days after Schwarzenegger jumped into the race for governor in 2003, American Media promised to pay a Malibu woman $20,000 to keep quiet about an affair she alleged she'd had with the star of "The Terminator." The woman agreed to disclose to no one but American Media any information about her "interactions" with Schwarzenegger during his marriage to Maria Shriver.

Others, including former presidential candidate John Edwards, a Democrat, and the TV hosts of MSNBC's popular "Morning Joe" program, received much different treatment. The Enquirer exposed the former senator from North Carolina's extramarital affair with Rielle Hunter, saying that he had fathered her child.

After Bezos' post, Pulitzer Prize-winning reporter Ronan Farrow said in a Twitter message that he and another journalist "involved in breaking stories about the National Enquirer's arrangement with Trump fielded similar 'stop digging or we'll ruin you' blackmail efforts from AMI."

Legal experts said the National Enquirer has pushed the envelope with its hardball negotiations with Bezos and his legal team, but proving a crime of extortion may be difficult.

"That can be a murky line. The emails released suggest that line may have been crossed," said James Sammataro, head of the media and entertainment group at Stroock & Stroock & Lavan.

High-profile criminal defense attorney Louis Shapiro said, "This isn't your traditional extortion. It is usually if you don't give me something, then I will reveal or report something. The person usually wants money."

Bezos has become prominent in Hollywood amid Amazon Studios' push to become an entertainment leader. Adding to the intrigue is that Lauren Sanchez is married to Patrick Whitesell, co-chief of William Morris Endeavor. And her brother and publicist, Michael Sanchez, has not escaped scrutiny. British tabloids suggested the talent manager leaked information about his sister's affair. But Sanchez, an outspoken Trump supporter who has lived in Los Angeles and Laguna Beach, has denied any involvement in the leak.

The Enquirer has been sued by prominent figures and celebrities before, most notably Clint Eastwood and Carol Burnett. Most of the cases were settled out of court. Fitness guru Richard Simmons sued the Enquirer and its sister AMI publication, RadarOnline, for defamation in 2017 after they claimed that he was transitioning to a woman. Simmons lost that suit.

"There's no reputational risk to the National Enquirer -- it's been the butt of jokes in the media industry for the last century. But there could certainly be some criminal liability," said Gabriel Kahn, a USC Annenberg journalism professor. "Clearly this is a media enterprise that evidence seems to indicate is running an extortion racket."

Like other magazine publishers, American Media has been reeling from a loss of advertising dollars.

The 92-year-old Enquirer now is operating with a skeleton crew and many of its staff writers have been let go amid budget cuts, according to an individual with knowledge of the company. In Los Angeles, the publication has shrunk to just a handful of editorial staff.

The tabloid claims a weekly paid circulation of about 370,000, down from 4.5 million at the peak of its popularity in the 1980s, when it was owned by Florida magnate Generoso Pope Jr. But online sites such as TMZ.com, PerezHilton.com and DailyMail.com have eroded its business.

Pecker, a former accountant at CBS, became chairman of American Media in 1999 and soon began buying up competing tabloids. The Enquirer made its first-ever presidential endorsement in 2016 when it threw its weight behind Trump and published negative stories about Hillary Clinton.

American Media is backed by New Jersey hedge fund Chatham Asset Management. Bloomberg News reported last year that before Trump's ascension, the hedge fund's manager, Anthony Melchiorre, provided a financial lifeline to Pecker's company and now has about an 80% stake. (Last month, AMI said that it had refinanced its outstanding debt by raising $460 million.)

Possible financial difficulties added to the intrigue over AMI's publication of a 100-page glossy magazine last year, titled "The New Kingdom," that extolled the leadership of Saudi Arabian Crown Prince Mohammed bin Salman. The magazine, which circulated in Hollywood, carried no ads.

"Something like that would not have happened without Saudi government involvement," said Shadi Hamid, senior fellow at the Brookings Institution's Center for Middle East Policy. "It's not as if there is an individual American that is so dedicated to Saudi Arabia that they would spend tens of millions of dollars to produce copies of a magazine that says how great Saudi Arabia is."

Adel Jubeir, the Saudi minister of state for foreign affairs, was in Washington on Friday. Asked by reporters about the Bezos-AMI dispute, the Saudi minister called it a "soap opera."

Asked if the Saudis played a role, he said he doubted it. Then, he added, "As far as I know: flat no."

Times staff writers Chris Megerian, Ryan Faughnder, Johana Bhuiyan and Stacy Perman contributed to this report.

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