Amazon (AMZN) CEO Jeff Bezos alleged that the National Enquirer tried to extort him, and the billionaire’s backlash over the alleged blackmail comes at a time when the supermarket tabloid is weaker than ever.
The 93-year-old outlet faces three dire issues simultaneously: American Media Inc. (AMI), the privately owned print media portfolio that publishes the National Enquirer, is bleeding readers and money; AMI — including CEO and longtime Trump pal David Pecker — is under scrutiny from federal authorities after the company admitted to paying model Karen McDougal $150,000 to suppress her claimed affair with then-presidential candidate Trump; and the National Enquirer invited the wrath of the world’s richest man.
All things considered, industry experts warn, inviting Bezos’s wrath could become the beginning of the end for the Enquirer.
‘Cheaper substitutes of similar information’
“The main thing is a lot of print publications have lost circulation because of the internet,” Jeffrey McCall, a professor of communication at DePauw University, told Yahoo Finance. “The demographics of people who would read the National Enquirer has skewed older in recent years… [and] you also have social media where a lot of the kind of content where you find in the Enquirer.”
Social media in particular has decommoditized sensational news — making it “easy to find cheaper substitutes of similar information,” Quantum Media Principal Ava Seave told Yahoo Finance. “Now that so many creators on Twitter or Facebook cover what everyone else is saying in media properties like the Enquirer, you don't have to see the actual publication to know the information.”
Seave estimated that the compounded annual growth rate (CAGR) for the Enquirer declined between 1998 and 2017 at a rate of about 11% while daily newspapers in the U.S. decreased by 3% overall.
Basically, the Enquirer has also been losing even more circulation over the past decade than struggling daily newspapers and newsstand sales.
McCall added that the supermarket checkout placement play to encourage impulse buying — which was pioneered by former National Enquirer boss Generoso Pope Jr. and led to the tabloid’s circulation peaking in the 1980s — is fading as “not as many people shop in the places anymore. … The kind of natural ways the Enquirer would have been circulated in the years, it has gone away.”
And after years of weak numbers, the Enquirer’s parent company now faces steep financial losses to the tune of $256 million over the past five and a half fiscal years, according to Bloomberg. “AMI owed about $203 million more than its assets were worth,“ the report noted.
‘The business model ... is not publishing’
The Enquirer was a particularly vocal pro-Trump media force in the 2016 campaign cycle. The tabloid published rumors of Sen. Ted Cruz having multiple affairs (Cruz blamed Trump for the story) and coordinated the now-infamous “catch-and-kill” of McDougal’s story to protect Trump’s electoral chances.
According to AMI’s September 2018 cooperation agreement with the Southern District of New York, Pecker met with then-Trump lawyer Michael Cohen “and at least one other member of the campaign” in August 2015. “At the meeting, Pecker offered to help deal with negative stories about that presidential candidate’s relationships with women by, among other things, assisting the campaign in identifying such stories so they could be purchased and their publication avoided.”
AMI knew this tactic well (along with seemingly making up wild allegations to attract readers and damage targets). In August, the Associated Press reported that the Enquirer had a physical safe in which it stashed documents and records of the hush-money payments as well as other damaging stories it killed in service to Trump (and other celebrities) — often to get something valuable in return.
"As it turns out, the business model of the National Enquirer and AMI is not publishing,” City University of New York journalism professor Jeff Jarvis told Yahoo Finance. “It is as criminal enterprise whose goals include propaganda, collusion, bribery, and extortion.”
Bezos could theoretically buy the Enquirer ‘just to shut it down’
After the Enquirer allegedly threatened Bezos with sexually charged pictures of him and another woman who is not his wife unless the Bezos-owned Washington Post stopped an investigation into the murder of Saudi journalist Jamal Khashoggi, the world’s richest man retained security specialist Gavin de Becker and told him “to proceed with whatever budget he needed to pursue the facts in this matter.”
After Bezos’ surprise blog post, AMI stated: "American Media believes fervently that it acted lawfully in the reporting of the story of Mr. Bezos. Nonetheless, in light of the nature of the allegations published by Mr. Bezos, the Board has convened and determined that it should promptly and thoroughly investigate the claims. Upon completion of that investigation, the Board will take whatever appropriate action is necessary."
George Rush, a former Daily News gossip columnist, told Vanity Fair that for the Enquirer “to put that offer so bluntly and brazenly, to a man who has the intelligence and power to impale you on your own sword, was stupid.”
After Bezos published details of the alleged extortion attempt, federal prosecutors began evaluating whether AMI had violated the September cooperation deal with prosecutors. The agreement stipulated that AMI “shall commit no crimes whatsoever” for three years.
No matter how the Bezos backlash plays out, AMI — and particularly the National Enquirer — is in a world of hurt right now.
Former Daily News Editor-in-chief Martin Dunn noted that the Enquirer “is a shadow of its former self,” adding: “This was a sensational story, and it increased their profile for a short moment, but now it seems to have increased their profile for all the wrong reasons.”
As to speculation that Bezos could easily buy the Enquirer, DePauw University’s McCall offered: “If Bezos had an interest.. [it] would be basically just to shut it down.”
Daniel Roberts contributed to this post.
Aarthi is a reporter for Yahoo Finance. Follow her on Twitter @aarthiswami.
Michael is Yahoo Finance’s head of audience development. Follow him @MichaelBKelley.