Could Amazon's Bezos wreck AMI, owner of National Enquirer, with blackmail charges?
A salacious tabloid newspaper with a conservative owner and a history of unscrupulous methods finds itself under the microscope, forcing a national reckoning about the intersection of journalism, politics, celebrity and sleaze.
That's what happened seven years ago at Rupert Murdoch's News of the World in London. The paper folded in 2012 amid a phone hacking scandal that turned U.K.'s media and political establishment upside down.
But it could also describe – minus the phone hacking – the controversy engulfing the National Enquirer.
The Florida-based supermarket tabloid has mixed celebrity gossip, true crime and conspiracy theories for decades. But its association with President Donald Trump – and its new attacks on Amazon founder and Washington Post owner Jeff Bezos – is shining a harsh light on the underbelly of tabloid journalism.
And now a legal fight with the world’s richest person could prove devastating for a company that has faced financial challenges, including substantial debt and the loss of revenue from print sales confronting even mainstream newspapers.
In a blog post Thursday, Bezos alleged that lawyers for the National Enquirer's parent company – American Media Inc. – tried to blackmail him into getting the Washington Post to drop its investigation into the company's ties to Trump.
More:National Enquirer owner responds to Bezos post, says it 'acted lawfully' in its reporting
Jeff Bezos is taking on the National Enquirer. Here's a look at the key players
Feds investigating Jeff Bezos' claims, examining agreement that shielded AMI from criminal charges
Bezos announced Jan. 9 that he and his wife were divorcing after 25 years of marriage. Later that same day, the National Enquirer published photos and texts showing Bezos involved in an extramarital affair with a former news anchor.
Bezos hired a private investigator to discover how the National Enquirer got his texts.
That wasn't the end of it.
In emails released by Bezos Thursday, the National Enquirer told him that it had even more compromising photos, including what it euphemistically described as a "below-the-belt selfie." It threatened to publish the photos unless Bezos publicly stated that he has "no knowledge or basis for suggesting that AM’s coverage was politically motivated or influenced by political forces."
AMI has denied any wrongdoing, saying it "believes fervently that it acted lawfully in the reporting of the story of Mr. Bezos." In a statement Friday, the company said its board of directors would open an investigation into the allegations.
The company could have criminal or civil liability if it was complicit in illegally obtaining the photos, said Michael Conway, a lawyer who has represented media organizations such as the New York Times and ABC, and now teaches at Northwestern University's Medill School of Journalism.
“The key question here is, did American Media in any way encourage, facilitate or otherwise make an effort to get Bezos’ pictures and emails, which we don’t know,” Conway said. “If they did, then they’re complicit in the crime and the First Amendment doesn’t protect them from publishing it.”
But that's not the only question. Bezos alleged that AMI's threats to publish more embarrassing photos amounted to extortion.
AMI's lawyers proposed a confidential agreement to settle a legal claim. Such non-disclosure agreements are common, said Harry Sandick, an attorney who formerly served as a prosecutor in the Southern District of New York. But "you aren't allowed to threaten to harm someone or their reputation in exchange for something."
Last year, AMI agreed to cooperate with federal prosecutors there who were investigating Trump's payments to women through long-time personal attorney Michael Cohen, who is also cooperating. As part of that agreement, AMI agreed not to commit further crimes, heightening the stakes for the company if it's found to have acted illegally in the Bezos affair.
Federal prosecutors are now investigating whether AMI's dealings with Bezos violated that immunity agreement.
More:Feds investigating Jeff Bezos' claims, examining agreement that shielded AMI from criminal charges
The National Enquirer is only one of AMI's brands, but is its oldest and most iconic.
The Associated Press reported that the National Enquirer's circulation fell 18 percent last year, to 265,000 weekly. But that's just a small fraction of the 2.3 million circulation AMI claims.
Other publications include lifestyle titles like Men's Journal and Muscle and Fitness. along with celebrity fare like In Touch, Us Weekly and Soap Opera Digest.
Last year, it bought up even more publications to form a near-monopoly of the supermarket aisle. Those included Life & Style, Closer. J-14 and GirlsWorld.
The company is privately owned and not traded publicly, so its financials are closely held. But just last month, the company announced that it refinanced $460 million worth of debt.
For example, Gawker declared bankruptcy in 2016 after former professional wrestler Hulk Hogan sued the online gossip site for invasion of privacy after it published a sex tape. Hogan won a $115 million judgment.
Murdoch, whose media empire includes the Wall Street Journal and Fox News, closed the News of the World in 2011 after multiple newspapers staffers were arrested in the phone hacking scandal. While the newspaper illegally obtained voicemails of athletes, celebrities and thousands of others, it was the hacking of a 13-year-old murder victim that most inflamed the British public.
The Bezos battle is just one of the controversies surrounding the tabloid group:
► The National Enquirer's editor, Dylan Howard, reportedly colluded with movie producer Harvey Weinstein to discredit women accusing Weinstein of sexual harassment and rape.
► In the run-up to the 2016 election, the National Enquirer published a string of dubious stories about Hillary Clinton's health, sex life and involvement in various conspiracies.
► AMI admitted paying a $150,000 to former Playboy playmate Karen McDougal as part of a "catch-and-kill" operation to silence her claims to have had an affair with Trump.
AMI Chairman and CEO David Pecker has close ties to Trump, and the New York Times and the Associated Press have reported that Pecker has used that access to leverage business deals in Saudi Arabia. Bezos said it's the Saudi connection that "seems to hit a particularly sensitive nerve."
Reporter Christal Hayes contributed from Washington.
