Financially strapped American Media Inc., which under the leadership of chief executive David Pecker weaponized the National Enquirer to serve Donald Trump’s presidential campaign and then acknowledged violating federal campaign laws by paying $150,000 in hush money to an alleged Trump mistress, is applying for a taxpayer-backed Paycheck Protection Program loan.
On Tuesday, the company declined to disclose the amount of the loan request, but a knowledgeable media industry source told The Daily Beast that AMI has its hand out for between $5 million and $6 million in government money—much of which can be forgiven under the emergency PPP legislation if the company maintains its current payroll for at least eight weeks.
“American Media made the decision to apply for PPP support in an effort to secure hundreds of jobs that might have been lost as we and other publishers continue to navigate the current economic climate created by the Covid-19 pandemic,” AMI said in a statement to The Daily Beast.
Aside from refusing to disclose the amount of money it seeks, AMI also declined to identify the corporate bank that is applying for the PPP loan to the Small Business Administration on the company’s behalf. A person familiar with the situation said AMI banks with JP Morgan Chase—who is a major tenant of the same downtown Manhattan office building as the tabloid publisher—along with Citibank and Bank of America.
The PPP loan application has provoked outrage among several AMI employees.
“If they get the money they should be called on the carpet,” one AMI staffer told The Daily Beast asking for anonymity for fear of retaliation.
“Their gumption is breathtaking. It’s not right—they would be taking money away from a small business that really needs it. It doesn’t surprise me Pecker is trying this as he’s desperate, but getting money from the government and Trump after all they have done is sickening.”
This person noted how Pecker had tried on multiple occasions to get cash for his ailing empire from Saudi Crown Prince Mohammad bin Salman and the Saudi regime, even trying to win favor—and funding—by producing a sycophantic 102-page special publication entitled The New Kingdom timed for MBS’s 2018 tour of the United States. The glossy special mag was widely seen as flattering propaganda to entice the Saudi ruler—who would later be involved in the murder of journalist Jamal Khashoggi—to dig into his deep pockets and fork over to AMI.
It didn’t work.
“We are not a small business,” another AMI staffer told The Daily Beast. “I can’t see how we qualify for this. People are currently working harder for less money and there’s a lot of anger towards Pecker. The mood is bleak.”
News of the AMI’s cry for help comes a little more than a month after Pecker informed the company’s 450-or-so employees—which, because it is under 500, qualifies the company for a PPP loan—that he was cutting their pay across the board by 23 percent. That draconian reduction came as AMI already faced potential bankruptcy as it entered what was predicted to be a disastrous 2020 fiscal year, and has left many staffers deeply concerned about their finances and their ability to pay their rent and food expenses.
In Pecker’s staff-wide email—launched without warning on a Saturday in March—he claimed that he, too, was taking an unspecified cut from his estimated seven-figure compensation package.
At the time, several AMI veterans said Pecker’s email was a bad omen for a media company apparently on life support from its majority owner, the Chatham Asset Management hedge fund. A Chatham-ordered sale of the National Enquirer for $100 million to Hudson News mogul Jimmy Cohen—announced more than a year ago with great fanfare—still has not closed and media industry observers now doubt that it will.
Jonathan Gasthalter, a spokesman for Chatham, did not respond to repeated requests for comment.
“It’s on a ventilator,” former Enquirer editor in chief Steve Coz said about the company as his former boss, Pecker, was slashing employees’ salaries.
Pecker’s right-hand man and loyal lieutenant Dylan Howard was ousted from the company at the end of March, ending a tumultuous era where the hot-headed Australian became embroiled in the hush-money deals and accepted an immunity deal along with Pecker to avoid federal prosecution from the Southern District of New York.
In a contract brokered by Trump’s then-lawyer, convicted felon Michael Cohen, shortly before the 2016 presidential election, AMI paid $150,000 in a “catch-and-kill” deal with former Playboy playmate Karen McDougal, who claimed to have had a long-term extramarital affair with then-candidate Trump and signed a limited life rights deal giving AMI exclusive ownership of any relationship she has ever had with a “then married man.” The publication never ran her story, and McDougal later sued to be released from the agreement and the matter was settled, freeing McDougal from the contract.
The celebrity-driven tabloid company—whose gossipy publications also include US Weekly, In Touch, the Globe, the Star, OK! Magazine, Closer, and Life & Style—has suffered significant losses in advertising revenue during the COVID-19 pandemic, and newsstand sales have dwindled to near-zero.
Employees have been privately furious about the company’s decision to cut pay across-the-board for all staff. While other media executives have forfeited their salaries or taken larger paycuts than their lower-paid staff, AMI has implemented a percentage salary reduction affecting all staff. As The Daily Beast first reported last month, Pecker slashed staffers' pay by 23 percent as its already precarious financial state became more dire due to the coronavirus outbreak.
AMI is one of several American media companies that have applied for government small business loans over the past several months. Local newspapers including The Seattle Times as well as digital media companies including Bustle Digital Group have successfully applied for and received PPP loans.
The venture capital-backed politics and finance site Axios announced last month that it had received a several million-dollar PPP loan. While the company initially defended its decision to seek a loan despite potential ethical concerns and a shortage of funds for other small businesses, the publication reversed course after a week, saying that it would return the money.
“The program has become divisive, turning into a public debate about the worthiness of specific industries or companies,” founder Jim VandeHei wrote on the site. “While applying for the loan felt like the right and prudent thing to do one month ago to protect our 190 employees, if we knew then what we know now, we would have gutted it out and hoped for the best.”