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About The skanner. (Portland, Or.) 1975-2014 | View Entire Issue (Sept. 5, 2018)
Page 8 The Skanner September 5, 2018 News By Jeff Horwitz Associated Press WASHINGTON — The National Enquirer has long explained its sup- port for Donald Trump as a business decision based on the president’s popularity among its readers. But private fi- nancial documents and circulation figures ob- tained by The Associat- ed Press show that the tabloid’s business was declining even as it pub- lished stories attacking Trump’s political foes and, prosecutors claim, helped suppress stories about his alleged sexual affairs. The Enquirer’s private- ly held parent company, American Media Inc., lost $72 million for the year ending in March, the records obtained by the AP show. And despite AMI chairman David Pecker’s claims that the Enquirer’s heavy focus on Trump sells maga- zines, the documents show that the Enquirer’s average weekly circula- tion fell by 18 percent to 265,000 in its 2018 fiscal year from the same peri- od the year before — the greatest percentage loss of any AMI-owned publi- cation. The slide follows the Enquirer’s 15 per- cent circulation loss for the previous 12 months, a span that included the presidential election. More broadly, the doc- uments obtained by the AP show that Ameri- can Media isn’t making enough money to cover the interest accruing on its $882 million in long- term debt and that the company expects “con- tinued declines in circu- lation and advertising revenues” in the current year. That leaves AMI reliant on debt to keep its operations afloat and finance a string of re- cent acquisitions that are AP PHOTO/MARY ALTAFFER, FILE Tabloid That Kept Trump Secrets Faces Losses, Legal Trouble This July 12, 2017, file photo shows the cover of an issue of the National Enquirer featuring President Donald Trump at a store in New York. Confidential documents obtained by The Associated Press show that the National Enquirer’s circulation declined even as it published stories attacking Trump’s political foes and, prosecutors claim, helped suppress stories about his alleged sexual affairs. transforming the tabloid news industry. That creditor backstop- ping AMI is a New Jersey investment fund called Chatham Asset Manage- ment. 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 retire- ment 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. The publisher’s pre- carious financials and reliance on Chatham are a backdrop to the pub- lisher’s growing entan- glement in a federal in- vestigation of allegations of hush money payments and violations of cam- paign finance laws. Trump’s longtime per- sonal lawyer, Michael Cohen, pleaded guilty last week to criminal vio- lations of campaign laws, accepting prosecutors’ claim that he, Trump and the National Enquirer were involved in buying the silence of an adult- film actress and a for- mer Playboy model who claim to have had affairs with Trump. Pecker and his top editorial deputy, Dylan Howard, have both received immunity in ex- change for their cooper- ation. Along with Cohen, they are among the latest longtime Trump loyal- ists to be swept up in the federal investigations engulfing the president and his inner circle. Neither AMI nor com- pany officials have been charged in the case. AMI did not provide an on-the-record re- sponse to detailed ques- tions from the AP sent to Howard, Pecker and its outside spokesman. But a confidential financial document obtained by the AP argues that inves- tors should focus on its current cash flows and not its profitability. Over the last 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 re- finance as much as $450 million in debt. Despite the company’s recent purchases of US Weekly and rival gossip publish- er Bauer Media, reve- nue from AMI’s existing publications continues to drop, the financial re- port obtained by the AP shows. Pecker has long main- tained an aura of abso- lute 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 mag- azine last summer, ex- plaining 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 only a small fraction of AMI, around 8 percent, ac- cording to the company. More than 80 percent of AMI — as well as hundreds of millions of dollars of its debt — be- longs to Chatham Asset Management, with bil- lionaire investor Leon Cooperman owning an additional 7 percent. Chatham declined to address questions about the Enquirer’s relation- ship with Trump or the future of its investment in AMI. But the firm re- leased a statement saying Chatham “has no involve- ment in the editorial pro- cess or the day-to-day business decisions of the company.” David Larcker, a Stan- ford Business School professor who studies private equity and cor- porate governance, said it is normal for a firm like Chatham to give a company like AMI a long leash. But the firm would be expected to investi- gate any time “something large and unexpected happens” at a company it controls on behalf of the investors who are its lim- ited partners. A firm like Chatham “would owe the LPs an explanation,” he said. Among Chatham’s larg- est investors, according to public records, is New Jersey’s public pension fund. Chatham manages investment decisions for more than $300 million in pension holdings for the state. Asked about AMI’s alleged involvement See ENQUIRER on page 11
