National Enquirer’s Hedge-Fund Owner Dragged Into Fight With Bezos
Bezos’s Bombshell Puts Enquirer Allegiances Back in Spotlight
(Bloomberg) -- The National Enquirer’s hedge-fund owner, Chatham Asset Management, is now at the center of a fight with Jeff Bezos over alleged extortion, racy photos and Donald Trump.
The board of National Enquirer publisher American Media Inc. has agreed to investigate Bezos’ claims that the company tried to blackmail the billionaire with compromising pictures of him and his girlfriend -- including a “below the belt selfie.” Two of AMI’s four directors are Chatham executives, meaning they’ll probably have to help sort out what happened.
“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,” AMI said. “Upon completion of that investigation, the board will take whatever appropriate action is necessary.”
Bezos, Amazon.com Inc.’s chief executive officer, said that AMI’s ties to President Donald Trump suggest the publisher has political motivations. David Pecker, the CEO of AMI, is an old friend of the president, who has frequently criticized Bezos and his Washington Post newspaper.
Chatham founder, hedge fund manager Anthony Melchiorre, also has rubbed shoulders with the president, including at a White House dinner in July 2017. Evan Ratner, a partner and portfolio manager at Chatham, serves on AMI’s board, as does Chatham media and telecom analyst Barry Schwartz. The firm didn’t have an immediate comment.
Pecker is chairman of AMI, and the fourth director is David Hughes, a hospital executive who previously served as chief financial officer of Trump Entertainment Resorts Inc.
Billionaire hedge fund manager Leon Cooperman also has invested in the publisher, though he has a small stake. He said on Friday that he’s also an Amazon investor and a fan of Bezos.
“I am a very small owner and have zero to do with the management of the business,” Cooperman, 75, said in an email.
According to messages shared by Bezos in a blog post, AMI offered to not publish the material if he agreed to back off an investigation of the newspaper company. Bezos included email exchanges in his post, including descriptions of the photos in question.
Divorce News
Last month, Bezos and his wife, MacKenzie, announced that they were divorcing. Later that day, the Enquirer reported that Bezos had been having a relationship with another woman. In the blog, Bezos said that the tabloid had published “intimate text messages from me.”
“I engaged investigators to learn how those texts were obtained, and to determine the motives for the many unusual actions taken by the Enquirer,” Bezos said.
“Any personal embarrassment AMI could cause me takes a back seat because there’s a much more important matter involved here,” he said. “If in my position I can’t stand up to this kind of extortion, how many people can?”
Federal prosecutors are now reviewing the National Enquirer’s actions, according to people familiar with the matter.
The episode brings fresh light to a web of alliances surrounding AMI. The company is cooperating with federal prosecutors looking into its efforts to help the Trump campaign before the 2016 presidential election by killing stories “about the presidential candidate’s relationships with women.” That included a $150,000 payment by AMI to silence former Playboy model Karen McDougal about her alleged affair with Trump.
‘Catch and Kill’
The McDougal payment was part of an agreement by Pecker to buy the rights to damaging stories about Trump and then not publish them -- a practice known as “catch and kill.”
Trump’s former lawyer, Michael Cohen, pleaded guilty to aiding the payment to McDougal and other crimes, for which he’ll begin serving a three-year federal prison sentence next month.
Chatham is the main money behind AMI. Years before Trump ascended to the White House, Melchiorre threw a financial lifeline to Pecker’s company and ended up with about an 80 percent stake.
But as it faced more turbulence last year, AMI sought to raise additional money. And Pecker became more isolated. He resigned from the board of a Canadian newspaper company that has also been backed by Melchiorre’s hedge fund.
Chatham said last year that it had been an investor in AMI since 2010 and had “no involvement in the editorial process or the day-to-day business decisions of the company.”
In its statement, AMI said it believes it acted lawfully in reporting the Bezos story. “Further, at the time of the recent allegations made by Mr. Bezos, it was in good faith negotiations to resolve all matters with him,” the company said.
To contact the reporters on this story: Nick Turner in Los Angeles at nturner7@bloomberg.net;Gerry Smith in New York at gsmith233@bloomberg.net;Bob Van Voris in federal court in Manhattan at rvanvoris@bloomberg.net
To contact the editors responsible for this story: Nick Turner at nturner7@bloomberg.net, Rob Golum
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