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Tabloid that kept Trump secrets faces big losses and legal trouble
The National Enquirer has long explained its support for Donald Trump as a business decision based on the president’s popularity among its readers. But private financial documents and circulation figures obtained by The Associated Press show that the tabloid’s business was declining even as it published stories attacking Trump’s political foes and, prosecutors claim, helped suppress stories about his alleged sexual affairs.
The Enquirer’s privately held parent company, American Media Inc., lost $72 million for the year ending in March (all figures in U.S. dollars), the records obtained by the AP show. And despite AMI chairman David Pecker’s claims that the Enquirer’s heavy focus on Trump sells magazines, the documents show that the Enquirer’s average weekly circulation fell by 18 per cent to 265,000 in its 2018 fiscal year from the same period the year before — the greatest percentage loss of any AMI-owned publication. The slide follows the Enquirer’s 15 per cent circulation loss for the previous 12 months, a span that included the presidential election.
Pecker resigned this week from his position on the board of Postmedia Network Canada Corp. and its news-publishing subsidiary. More broadly, the documents obtained by the AP show that AMI isn’t making enough money to cover the interest accruing on its $882 million in long-term debt and that the company expects “continued declines in circulation and advertising revenues” in the current year. That leaves AMI reliant on debt to keep its operations afloat and finance a string of recent acquisitions that are transforming the tabloid news industry. That creditor backstopping AMI is a New Jersey investment fund called Chatham Asset Management. Its top executive dined with Pecker and Trump at the White House last year, and the fund has both a history of Republican political donations and ties to the administration of former New Jersey Gov. Chris Christie, which awarded it hundreds of millions of dollars in state retirement funds to manage. AMI’s current debts stem from the declining fortunes of the magazine industry and a series of acquisitions. Chatham has kept this number from ballooning further by converting some of the debt it is owed into shares in the company. AMI’s precarious financials and reliance on Chatham are a backdrop to the publisher’s growing entanglement in a federal investigation of allegations of hush money payments and violations of campaign finance laws. Trump’s longtime personal lawyer, Michael Cohen, pleaded guilty recently to criminal violations of campaign laws, accepting prosecutors’ claim that he, Trump and the National Enquirer were involved in buying the silence of an adultfilm actress and a former Playboy model who claim to have had an affair with Trump. Pecker and his top editorial deputy, Dylan Howard, have both received immunity in exchange for their co-operation. Along with Cohen, they are among the latest longtime Trump loyalists to be swept up in the federal investigations engulfing the president and his inner circle. Neither AMI nor company officials have been charged in the case. AMI did not provide an on-therecord response to detailed questions from the AP sent to Howard, Pecker and its outside spokesman. But a confidential financial document obtained by the AP argues that investors should focus on its current cash flows and not its profitability. Over the past two years, it has generated a combined $12 million cash flow from operations even as it has posted $160 million in overall losses. AMI’s brush with a campaign finance probe comes amid its recently announced efforts to refinance as much as $450 million in debt. Despite the company ’s recent purchases of US Weekly and rival gossip publisher Bauer Media, revenue from AMI’s existing publications continues to drop, the financial report obtained by the AP shows.
Pecker has long maintained an aura of absolute control over the Enquirer and its sister publications, boasting of his willingness to spend AMI’s money to benefit Trump. “The guy’s a personal friend of mine,” he told The New Yorker magazine last summer, explaining why AMI paid former Playmate Karen McDougal $150,000 in a deal that prevented her from going public with her claim that she’d had an affair with Trump. But Pecker owns a small fraction of AMI, about eight per cent, according to the company. More than 80 per cent of AMI — as well as hundreds of millions of dollars of its debt — belongs to Chatham Asset Management, with billionaire investor Leon Cooperman owning an additional seven per cent. Chatham declined to address questions about the Enquirer’s relationship with Trump or the future of its investment in AMI. But the firm released a statement saying Chatham “has no involvement in the editorial process or the day-to-day business decisions of the company.”
While the details of AMI’s financial difficulties described in the confidential document haven’t been previously reported, the prospect that Pecker and AMI might not protect Trump’s secrets forever has long been a concern. Trump and Cohen even discussed the possibility that the ties between Trump and the National Enquirer might someday unravel. In July, Cohen released an audio recording in which the men discussed plans to buy McDougal’s story of an affair with Trump from the National Enquirer. Such a purchase was necessary, they suggested, to prevent Trump from having to permanently rely on a tight relationship with the tabloid. “You never know where that company — you never know what he’s gonna be,” Cohen says. “David gets hit by a truck,” Trump says.
“Correct,” Cohen replies. “So, I’m all over that.” According to the documents accompanying Cohen’s recent guilty plea, Trump’s purchase of McDougal’s story never occurred.