By Julie Bykowicz and Lukas I. Alpert
The dust-up between Amazon.com Inc. founder Jeff Bezos and
National Enquirer parent American Media LLC has raised questions
about the media company's connections to Saudi Arabia.
American Media has had plenty of contacts with Saudi Arabia in
recent years, including seeking financial backing from Saudi
investors to fund acquisitions and producing a magazine celebrating
the country's new crown prince.
It also sought advice last year from the U.S. Justice Department
over whether the publisher should register as a foreign agent, a
person familiar with the matter told The Wall Street Journal.
The issue of the ties came up last week when Mr. Bezos took to
the internet to push back against what he said was an extortion
attempt by the National Enquirer against him over an extramarital
affair that the tabloid reported on last month featuring photos and
texts. He said he launched his own probe into how the publication
obtained his texts as well as its motives and wrote that the "Saudi
angle seems to hit a particularly sensitive nerve."
An attorney for American Media Chief Executive David Pecker on
Sunday denied the company had engaged in extortion and said the
source of the information for the coverage "was not Saudi
Arabia."
Adel al-Jubeir, a Saudi government official who was in
Washington Friday, characterized the dispute between Mr. Bezos and
American Media as a "soap opera," Asked whether the kingdom played
a role, he said, "as far as I know: flat no."
In recent years, American Media sought Saudi financial backing
to finance a failed effort to acquire Time magazine, Sports
Illustrated, Fortune and Money, the Journal reported last year.
American Media confirmed the contacts but said the only deal
that has ever been discussed with Saudi investors was the expansion
of the Mr. Olympia bodybuilding competition, which American Media
owns, into the Middle East and North Africa.
The lawyer for Mr. Pecker, Elkan Abramowitz, on Sunday on ABC
said American Media sought financing "from the Saudis, but never
obtained any."
American Media also produced a promotional magazine about Saudi
Arabia. To commemorate Saudi Crown Prince Mohammed bin Salman's
visit to the U.S. in March 2018, American Media published 200,000
copies of a 97-page, advertisement-free glossy magazine titled "The
New Kingdom," promoting the country and its young prince, then 32
years old.
In a sign American Media was concerned its connection to Saudi
Arabia could become an issue, the company sought advice from the
Justice Department last year about whether it should register as a
foreign agent -- a status under which any organization engaged in
public relations under the direction or control of a foreign
government may fall -- according to a Justice Department letter to
the company responding to its inquiry. The publisher wrote to the
Justice Department after several news outlets wrote about the
publication of the pro-Saudi magazine.
The Justice Department posted its response in redacted form.
Although American Media isn't named in the letter, the details
clearly reference the media company.
A person familiar with the matter confirmed American Media wrote
to the Justice Department after publishing the magazine celebrating
Prince Mohammed. "Frankly, it was done to kiss his ass when he came
to visit in the hopes he'd invest in the company and it didn't
work," the person said of the magazine. "There was nothing more to
it than that."
Justice Department officials didn't respond to requests for
comment.
The publisher gave an adviser to Saudi Arabia a draft of the
magazine and followed the adviser's editorial suggestions,
according to the letter, which was dated July 13, 2018.
American Media said in the past that Saudi officials played no
role in the production of the magazine.
The company told Justice Department officials in the letter that
although it followed the editorial and photography suggestions of
the adviser, it wasn't under any contractual obligation to do so.
The publisher also told the Justice Department that it didn't
receive any foreign money to produce the magazine.
Based on those assertions, the Justice Department said the media
company didn't need to register as a foreign agent, noting that
conclusion could change if the facts in the matter "are different
in any way from those depicted in your submission."
The magazine, which hit U.S. newsstands just ahead of Prince
Mohammed's March visit and sold for $13.99, drew attention at the
time because of the close relationship that Mr. Pecker and
President Trump have. The special issue, which remained on sale for
three months, included a glowing editorial about Saudi Arabia by
Kacy Grine, a French financial adviser who people familiar with the
matter said visited Mr. Trump at the White House in July 2017 with
Mr. Pecker and American Media Chief Content Officer Dylan Howard.
Mr. Grine didn't respond to a request for comment.
Asked on "This Week" Sunday if the magazine was published in an
attempt to curry favor with Saudi Arabia, Mr. Abramowitz said it
was published "for journalistic reasons."
At the July 2017 meeting, Mr. Trump alluded to the Enquirer's
positive coverage of his election campaign and presidency.
"Editor man, editor man, how many more covers of the Enquirer
have I been on than Arnold Schwarzenegger?" Mr. Trump asked Mr.
Howard, according to people familiar with the matter.
A White House official said that Mr. Trump recalled the Oval
Office meeting with Mr. Pecker and others and that he called the
American Media CEO a "great guy," the Journal reported last
year.
Mr. Pecker has admitted buying embarrassing stories about Mr.
Trump and burying them, a practice known as "catch and kill." In
exchange for immunity, the publisher and Mr. Pecker last year
agreed to cooperate with federal prosecutors investigating former
Trump lawyer Michael Cohen, who arranged payments during the 2016
campaign to silence two women who alleged sexual encounters with
Mr. Trump. Federal prosecutors in Manhattan are examining whether
the Enquirer's dealings with Mr. Bezos violated the nonprosecution
agreement, according to people familiar with the matter
The crown prince visited Mr. Trump at the White House during his
March 2018 trip.
Since the crown prince's visit, his reputation and the
relationship between the U.S. and Saudi Arabia have frayed. In
October, Washington Post columnist Jamal Khashoggi was killed at a
Saudi consulate in Turkey, which the CIA has concluded was likely
ordered by the crown prince. The Saudi government has contested the
findings.
"The Post's essential and unrelenting coverage of the murder of
its columnist Jamal Khashoggi is undoubtedly unpopular in certain
circles," Mr. Bezos wrote in his blog post Thursday.
Write to Julie Bykowicz at julie.bykowicz@wsj.com and Lukas I.
Alpert at lukas.alpert@wsj.com
(END) Dow Jones Newswires
February 11, 2019 13:29 ET (18:29 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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