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