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Taming the Hydra-Headed Carnivorous Tabloid Beast

The hush-hush deal that made Arnold Schwarzenegger governor

IN 1975, ROBERTA NEIMAN, A STILL PHOTOGRAPHER on the movie set of Stay Hungry, spent an afternoon taking photos of an Austrian bodybuilder named Arnold Schwarzenegger. Neiman described her subject, then a five-time winner of the Mr. Olympia title, who was featured in the film, as being shaped almost like a reverse pyramid. Neiman found this human colossus as charming as he was massive even as she strained to understand his fragmented English. At one point, as she cajoled him into striking a few more poses, he looked up and flashed a confident grin. "You know, you ought to be very nice to me," he said, wagging his finger. "Someday I'm going to be president of the United States."

Now into his tenth month as the governor of California, Arnold Schwarzenegger has proved himself to be a gifted politician. He has won far better reviews for his performance as governor than for any of the roles he has played on the big screen. When his prominence at the Republican National Convention seemed in doubt, he demanded star billing, "If they're smart," he told The New York Times, "they'll have me obviously in prime time." Nonplussed, party leaders gave him a coveted second-night slot following Laura Bush. After all, he had a point: They need him more than he needs them.

Promising "Action! Action! Action!" and declaiming one and all "fantastic," Arnold has disarmed most of his critics. Although his achievements may seem more atmospheric than substantive, well, finding any consensus among the state's Democratic and Republican legislators is no small achievement. Along the way, he introduced the concept of a co-governorship with his wife, Maria Shriver, television star and Kennedy royal. He has also found time to dabble in international diplomacy, attending the state funeral of Austrian president Thomas Klestil, decamping in Israel to honor Holocaust victims, lunching with King Abdullah in Jordan, with a few hours left over to cheer up U.S. troops in Germany.

These days, no one doubts the immensity of Schwarzenegger's ambitions or his reach. No one, least of all himself, is ruling out a Schwarzenegger run for the presidency—notwithstanding that the Constitution would have to be amended to allow him the privilege. It is a considerable hurdle, but as Californians have learned, obstacles are not the same for a former Mr. Universe as they are for lesser mortals. Indeed, Orrin Hatch, the Republican senator from Utah, has proposed just such an amendment.

Consider how a former bodybuilder of admitted steroid use, a high school dropout incapable of properly pronouncing the word California, a man whose father was a member of the Nazi Party, a film star whose Lothario exploits make Warren Beatty and Bill Clinton seem like lovesick amateurs—how this extraordinarily successful social misfit became the poster boy for California's conservative Republican Party and the governor of the state. Sacramento Bee columnist Daniel Weintraub credits Schwarzenegger's success to his "celebrity fumes," while Democrats, seeking consolation, tell themselves that he is a Kennedy Republican. Even The New York Times seems besotted, running a laudatory editorial in May headlined "California's Accidental Governor."

However, a careful examination of Schwarzenegger's life—in this case more than 40 interviews with current and former colleagues, friends, and opponents—demonstrates that his path to the governor's mansion has been anything but accidental. "I was always dreaming about powerful people, dictators, and things like that," Schwarzenegger mused in the 1977 documentary Pumping Iron. "I was always impressed by people who could be remembered ... like Jesus for thousands of years."

Schwarzenegger's unlikely ascension owes almost all to his boundless ambition and wily calculation, which culminated in an exquisitely engineered business deal. It would be a deal that neutralized his most formidable enemies and deprived his detractors of their most potent weapon. It enabled him to prevail in the recall election, and it allowed him to pursue the star turn he so long ago dreamed for himself: to be the Conan of American politics.

SCHWARZENEGGER FORMALLY KICKED off his political career in early 2001 when the California Republican Parry was in disarray. Gray Davis, the Democratic governor, may have been wildly unpopular, but the Republicans had no one among their ranks who could defeat him. The Grand Old Party of Earl Warren and Ronald Reagan had descended into a fractious mess, driven by irreconcilable ideologies and bad blood.

On February 4, 2001, Arnold Schwarzenegger decided to call Los Angeles Times columnist George Skelton from his trailer on the movie set of Collateral Damage. It was his opening salvo, signaling his intention to challenge Davis. Schwarzenegger told Skelton that he was intrigued by a recent column that "had him all pumped up ... 'especially your last sentence when you said we need another Patton up there in Sacramento. That's a really good line.'"

Skelton wrote about the conversation in his next column: "The actor whom many Republicans consider their dream candidate for governor did spend some time knocking [Davis]. Might the former Mr. Universe who once starred in The Running Man run against Davis next year? Here's how he answered.... 'I've thought about it many times because I love politics.... I get such great satisfaction out of helping people.... The bottom line is if Davis goes on the way he is ... I would sacrifice my, you know, $20 million a picture and all those things and forget about that to step in.'"

The phone call had not come out of the blue. Schwarzenegger had been huddling with former governor Pete Wilson and his longtime political strategists Bob White and George Gorton. "I urged him to make the race," says Wilson, "but I said to him and to Maria, 'Look, I have no doubt whatever about your ability as a campaigner. To the contrary, I think you may have the greatest natural gifts as a campaigner that I've ever seen, but before you make the decision, you need to understand that you're going to be under scrutiny of a kind that you've never seen before.'"

The message was clear: If the action star had any dirty laundry it was going to be aired publicly and he needed to clean it up.

Schwarzenegger hunkered down with his advisers, who sifted through the mountains of information likely to make it into an opponent's hands. He decided his candidacy was a risk worth taking. But Schwarzenegger then experienced an unusual streak of bad timing. Just weeks after his call to Skelton, a story appeared in Premiere magazine. Putting into print tales long in circulation, the article was a litany of the star's abusive and boorish behavior toward women, accompanied by photos of him groping two female interviewers. Written by John Connolly, the story detailed Schwarzenegger's use of steroids, his extramarital affairs, and his 1997 heart surgery, in which valves taken from pigs were implanted in his heart.

One would be hard pressed to confect a more devastating article for an aspiring politician. Gray Davis s team couldn't have been more delighted. 'As far as I was concerned, [the Skelton column] put Arnold in the ring," says Garry South, Davis's campaign manager at the time. "If you're going to call up a nationally known political columnist for the biggest paper in California and trash the sitting governor and announce that you're thinking about running against him if he doesn't shape up according to your own dictates, then you're running. And by God, you'd better be ready for what's going to come after you." South sent the Premiere article to "50 to 80 reporters with a smart-ass little cover memo on it that said, Arnold's piggish behavior with women—is it because of the pig valve?' The Arnold camp went bananas."

South was immediately confronted by Schwarzenegger's first line of defense: Martin Singer, the combative attorney, also known as "Mad Dog" Singer, who has represented the star since 1990. Singer's Century City firm, Lavely & Singer, employs 16 lawyers and handles many of Hollywood's bad boys. "Marty Singer sent me a five page letter, threatening to sue me," says South. "This was sent to my office, by the way, in person, and they demanded that somebody sign for the letter. Not only did he threaten to sue me for libel—for e-mailing out an article that anyone could have bought on any newsstand—the last paragraph said, 'Oh, and by the way, this letter is in itself copyrighted, and if you release any part of this letter to the press, I will further sue you for copyright infringement.' Now, I've got to tell you, in my 32 years in politics, I had never gotten a letter like that from anybody."

Singer's letters are legendary, and many reporters and publications have received them, often before publishing a word on Schwarzenegger or other clients, including Sylvester Stallone, Steven Seagal, Eddie Murphy, Jean-Claude Van Damme, and Bruce Willis. No one receives more of those letters than the editors and writers who work for the tabloids.

"I get so many letters from Marty," says David Perel, the editor of The National Enquirer, "he's my pen pal." Singer's partner, Jay Lavely, he says, is "worse because his letters are endless, typically like 9,000 pages long. He sent us a letter a couple years ago. Then he called, and Steve Coz [at the time editorial director of the Enquirer's parent company] picks up the phone and goes, 'Jay, you've got to stop sending these long letters. You're jamming up my shredder.' And Lavely, who has no sense of humor, cracked up."

David LaFontaine, a former writer for The Star, refers to Singer as “Arnold's designated screamer." According to LaFontaine, a Singer phone call would usually begin with the attorney declaring, "I know everything that you're doing, everything you've been up to." Then the rhetoric would escalate, with an occasional burst of profanity and always ending with the threat of litigation. "He's talked to everybody that you've talked to," LaFontaine says, "and everything you're looking into is 'a complete and total lie,' and if you print anything like it, he'll sue you until your teeth fall out. He would be swearing that 'I will have you selling fish to Eskimos' or 'You'll be 90 years old and toothless in a nursing home, and then I'll be suing you for your bedpan.'"

Some tabloid writers attribute Singer's insider knowledge to his employment of private investigator Anthony Pellicano, who is now serving a sentence of 30 months in California federal prison on felony weapons charges. One longtime tabloid editor, who says he dealt with Singer "thousands of times, about twice a week for years," calls the attorney's approach "preventive damage control.” The process, the editor says, invariably begins after "Marty would get a call from a celebrity or his handler that the Enquirer is doing a story, asking, 'Can you stop it?'"

The editor adds that he spoke to Pellicano "about once a month since the early '80s" and estimates that the private investigator was teamed with Singer on "about 50 percent of the celebrity cases, but it's hard to say whether they were working together because Pellicano is such a rogue." He likens the PI's approach to that of a "hoodlum" who would bark, "Don't run that fucking story!"

Federal investigators say that Pellicano, 'along with some top Hollywood lawyers, as yet unnamed, who employed him, will soon face additional charges for illegal wiretapping.

Singer distances himself from Pellicano. "I've never, ever worked with Anthony on any case involving a tabloid or a media issue," he says. "When pressed, though, he concedes that he has employed the private investigator, who, he says, did "a tremendous job in getting results. Pellicano worked with me on a few cases, maybe a half-dozen cases over ten years.... Why would you use a private investigator to try to kill a story? I've been doing this for 20 years, dealing with the tabloids, and I have a practice that's been effective.... I'm not going to discuss how I do things, because that's the reason people come to me rather than other lawyers."

True to form, the Schwarzenegger team tried to get Premiere to "cease and desist" from publishing its story "Schwarzenegger had a PR person calling us almost every day," says Connolly "His lawyers were threatening us every day."

Singer says he sent a letter to the magazine, which he credits with limiting the damage of the article. "A lot of material that we referred to in our letter," he says, "did not wind up in the story." Still, Premiere held its ground and published the piece. In the months that followed, the magazine never ran a retraction or issued an apology. After much huffing and puffing, Singer dropped the matter.

Garry South says that though he was impressed by Singer's firepower, he was not intimidated. "It isn't often that a political operative gets a letter like that," says South. "So I sent out a follow-up email saying I had recently gotten a five page letter, threatening to sue me for libel, from one Martin Singer, the lawyer for Arnold Schwarzenegger, and I would love to be able to share the letter with you, but he also said he would sue me for copyright infringement if I did so, so if you have questions about the letter, please call Marty Singer which really pissed him off."

Despite the Premiere story, Schwarzenegger still hoped to challenge Davis in 2002. Then matters took another bad turn. On February 27, 2001, the star's nemesis, the tabloids, jumped into the fray. The National Enquirer published an "Arnold exclusive," headlined "He's Caught Cheating," predicting his impending divorce from Shriver. A pull quote ran across the page: “Arnold has the worst reputation in Hollywood for groping, grabbing and lewd remarks."

Two months later, the Enquirer announced it had a "world exclusive." The cover story, headlined "Arnold's Shocking 7 Year Affair," chronicled his dalliance with a former child actress named Gigi Goyette and was accompanied by photos of Goyette lounging in a thong bikini and posing with Schwarzenegger. Coming on the heels of the Premiere story, it was a lethal blow; certainly for a candidate who needed the support of the family-values, conservative base of the Republican Party to survive a primary.

The article had blindsided Schwarzenegger, who believed he had already dealt with the detritus of his life. The process of biographical revision had begun in 1991 when Schwarzenegger, for an estimated $1.5 million, bought the film rights to the documentary Pumping Iron and all related materials from its producer-director, George Butler. The 57-page purchase agreement gave Schwarzenegger custody of the film, with its two controversial scenes (one of him smoking marijuana and another in which he admits to being too busy to attend his father's funeral). It gave him ownership of some 90 hours of outtakes (said to include clips of the young bodybuilder extolling the virtues of Adolf Hitler) as well as still photos and any material "which might be 'embarrassing' or which might 'reflect negatively' on the actor's 'professional or private life.'"

Although Schwarzenegger and Singer would accuse the Democrats of resorting to "puke politics," South insists he never ran opposition research on the star. Not out of any virtue, he says, but because he didn't have to. "There was so much out there," says South, alluding to the film star's other worry: the Internet and its capacity for ceaseless replication. Old stories, written when reporters relied on typewriters, can find their way onto the Internet via a $100 scanner. "Arnold is used to operating by a different code of behavior," says South, "having a whole coterie of lawyers, PR flacks, and others around him who bully and threaten people to stop writing had things about him."

The tabloids posed an even bigger problem. There would always be stories about Schwarzenegger as long as supermarkets were ringing up sales with him as a tabloid cover boy. The film star, who is a canny businessman, understood that the tabloids were his most formidable adversaries. Premiere might publish a major piece on him every few years, but the hydra-headed tabloid beast is carnivorous. It hits the supermarket stands every Wednesday. The tabloids posed another problem. One of the less ennobling secrets of the mainstream media is its reliance on the tabs to launder seedy but irresistible stories about celebrities and politicians. Once the story appears in the tabloids, it's not long before it's fodder for TV talking heads and late-night comics. Then, more often than not, it's regarded as fair game for the mainstream media. In the last 15 years, the tabs have earned a reputation for nailing down hard-to-get stories for the simple reason that, unlike the mainstream media, they often pay sources and hire private investigators. The meshing of the tabs and the mainstream media went into high gear during the O.J. Simpson trial and was standard practice by the time of the Clinton-Lewinsky scandal. Schwarzenegger, of course, could have curbed his excessive behavior. But there is scant evidence of this having occurred before 2003.

On May 15, 2001, The National Enquirer published a follow-up story, "Arnold's Dirty Secrets—Why He Can't Run for Governor," that bragged about how the tabloid had stopped the star's political ambitions in their tracks. "Arnold Schwarzenegger terminated his plans to run for governor of California just hours after he found out the Enquirer was publishing a story about his affair with sexy Gigi Goyette," gushed the tab, "because he didn't want even more scandals uncovered if he made a bid for public office!" Lest anyone forget, the tab ran reminders of its conquest of the film star for the rest of the year, updated with salacious tidbits.

Schwarzenegger happens to be an accomplished chess player. But it didn't take a genius to realize that he had a serious tabloid problem, and that if he didn't get a handle on it, he was not going to have a political career.

THE FIRST TABLOID, THE NEW YORK Enquirer, was created in 1926 by William Griffin as a Sunday-afternoon paper with a keen interest in horse racing. Griffin had been an ad man in the Hearst Corporation, which joined Griffin in his new venture. According to the esteemed press critic A.J. Liebling, Griffin was partial to incendiary and often bogus headlines such as "Three Girls Rape Queens Bachelor" and "New York Sex Laws Fail to Protect Men." The paper caught a lucky break when Pearl Harbor happened on a Sunday, and it got the story out first.

In 1952, Generoso Pope bought the tabloid for $75,000, partially funded by an interest-free loan of $25,000 from his godfather, the mobster Frank Costello, who also made sure the paper had its proper place on New York newsstands. Pope, who graduated from MIT and briefly worked for the CIA, rechristened his tabloid The National Enquirer. Eccentric and autocratic, Pope drove newsstand sales to a peak of 6.7 minion copies in the late '70s. He moved his headquarters to Lantana, Florida, where he kept a safe with $100,000 in cash to dispense as needed for the right "exclusives." Among Pope's coups were photos of Elvis Presley lying in his coffin (the handiwork of a distant cousin, who was paid $18,000), the "exclusive pix" of Donna Rice perched on Gary Hart's lap that doomed his 1988 presidential bid (purchased for $60,000), and photos of Jackie Kennedy and Aristotle Onassis cavorting on the Greek tycoon's yacht. After Pope died of a heart attack in 1988, the paper was sold for $413 million to Boston Ventures.

Rupert Murdoch, who had forged his fortune with tabloids in Australia and England, entered the U.S. market in 1974 by launching The Star to compete against the Enquirer. In 1990, facing a financial crunch, Murdoch sold The Star to Boston Ventures. The following year, Boston Ventures went public and later became American Media, Inc. By the end of 1999, AMI owned all the major tabloids in the country—The National Enquirer, The Star, The Globe, and Weekly World News.

The year 2001 would prove to be a terrible year in the tabloid kingdom. On October 2, 2001, AMI's world headquarters, a showy glass-and-steel edifice in Boca Raton, Florida, became the first target of an anthrax attack in the United States. Within the week, AMI's photo editor was dead from anthrax inhalation, another employee was clinging to life, and the property, which only months earlier had been remodeled, was worthless. Everything inside the structures was declared contaminated and untouchable, including a film library of 5 million photographs and a collection of rare books. AMI's chairman, CEO, and president, David Pecker, places the damages at $20 million.

Initially, Pecker was hopeful that the state of Florida would lend a hand in limiting the costs of the first act of terrorism in the state. Governor Jeb Bush, however, thought otherwise. Pecker acknowledges the tabs have run stories certain to have displeased the Bush family. There had been pieces on all three of Jeb Bush's children and their run-ins with the police. Daughter Noelle's drug problems were chronicled. Son Jebby's police report for "sexual misconduct" with a young woman in a parked car also made it into the tabs, as did a police report on his brother George P., a rising political star, who was arrested for skidding across his girlfriend's lawn in his car and breaking into her home.

On the other hand, the tabs were curiously restrained while the mainstream press was abuzz with items about Jeb Bush's alleged philandering. Even after the Florida governor held a press conference in May 2001 in which he volunteered that he had never slept with anyone other than his wife, the tabs had nothing to say. One Globe reporter says he was eager to cover the story and had excellent leads but was told by his editor, "We're not writing about Jeb." The feeling at the tabloid, he says, was that as long as AMI was based in Florida, "Jeb Bush, himself, was off-limits."

If it was true that AMI pulled its punches with the governor, the company got nowhere in the wake of the anthrax attack. The boarded-up facility was sold for $40,000 to a real estate investor, who then leased it to a company headed by Rudolph Giuliani that specialized in decontamination.

AN ACCOUNTANT by trade, David Pecker began his publishing career in 1979 in CBS's magazine division. The division was sold to Hachette Filipacchi Media in 1988, where Pecker was eventually promoted to president, supervising such glossies as Elle, George, and Premiere. He left Hachette in May 1999 after engineering the purchase of AMI for $835 million. Six months later, he scooped up The Globe, The National Examiner, and The Sun for $105 million and became the King of Tabs.

Fifty-four years old, Pecker is a small, intense man with a tidy salt-and-pepper mustache, a permanent tan, and air-blown hair. He is known to his staff as a man with a vast emotional trajectory, capable of extraordinary charm and withering temper, generosity and pettiness. One former AMI editor describes Pecker as "an obsessional control freak." In the reporting of this story, however, he was entirely cooperative, granting numerous interviews in person and on the phone. On his instructions, his staff provided all of the stories AMI had published on Schwarzenegger.

Other reporters have not fared as well. When Jacob Bernstein wrote several media columns in Women's Wear Daily in 2003 that were critical of AMI, Pecker hired a private investigator to track his phone calls and contacts, according to one AMI editor. Although Pecker does not admit he hired a private investigator, he says "it could be very possible."

A 2001 New York magazine story on Pecker never ran after he called Tom Rogers, the head of Primedia, the magazine's then-parent company, according to staffers at New York and AMI. When New York deputy editor Maer Roshan left for Talk magazine, he took the story with him, where it met a similar fate, according to sources, after Pecker called publisher Run Galotti. Pecker does not confirm that he asked Rogers and Galotti to kill the story but acknowledges he "may have talked to them."

Pecker has also not been averse to breaching the "wall" between editorial and business. Most famously, while at Hachette, he killed an article scheduled to run in Premiere about Planet Hollywood, reportedly at the request of Revlon chairman Ronald Perelman, who was an investor in the chain. Two editors resigned in protest. Asked at the time to comment on their departure, Pecker responded, "The last time I looked, I am the CEO of the company" Later, he would express regret, telling The New York Times, "The decision I made at Premiere was a mistake."

Despite his office mantra of "Business comes first, editorial follows," Pecker cares about his journalistic reputation and often cites the tabs' post-O.J. stature. Current and former staffers say that while Pecker chases financial success, he craves respectability. "He wants to be [Conde Nast chairman] Si Newhouse," says a former staffer. "David has always been starstruck," says an AMI editor. "He loves being with celebrities and powerful people, loves being able to say that people like [New York senator] Chuck Schumer and Ron Perelman are his friends."

Pecker maintains that AMI's anthrax attack nearly shattered his business. "Two thousand one was my peak," he says. "We were breaking one story after another, and then [the attack] happened." AMI's insurance company claimed that its policy excluded such calamities, and no government agency was willing to pitch in. (Pecker sued Travelers Insurance, and in early 2004 the company paid an undisclosed settlement to AMI, which reported an "after tax" benefit of $7.6 million.)

"We never got one nickel of help from the state or federal government at all," says Pecker. "I called Jeb Bush's office personally to try to see what help I could get at that time." Bush referred him to his director of health. Pecker heard from neither again. A day later, Bush flew to Boca Raton to visit a post office that was also contaminated, but he declined to stop by AMI. "He never came over to see me or my people," says Pecker. "And I was the only one who lost somebody."

AMI faced an even larger threat than anthrax, though: Its core business was suffering. By 2001, the tabloidization of American culture had reached critical mass. The tabs had spawned a legion of competitors, from People and Us Weekly to Access Hollywood and Entertainment Tonight to dozens of Internet sites like The Drudge Report. They had become victims of their own success and were no longer the cash cows they had once been. Over the past ten years, newsstand sales of the three biggest tabloids have plummeted 50 percent. Faced with these disturbing trend lines, Pecker began to rethink his business.

SIX MONTHS AFTER AMI's anthrax attack, Pecker started to look into buying L.A.-based Weider Publications. Founded by Joe Welder, the legendary bodybuilder who had brought Arnold Schwarzenegger to the United Stares in 1968, the company owned seven titles, including Muscle & Fitness, Shape, Flex, and Men's Fitness. Eighty-three years old, Weider had decided it was time to unload his magazines. They were strong sellers, especially when Schwarzenegger posed for their covers, as he has done more than 50 times, mostly for Muscle & Fitness and Flex. The film star also "penned" the Ask Arnold column, though it was no secret that it was written in-house. Although Schwarzenegger was not paid for his cover appearances, he was well rewarded by the publicity they bestowed on his gyms and the Arnold Classic bodybuilding competition held each year in Columbus, Ohio.

The Weider empire also includes the International Federation of Bodybuilders, which organizes competitions and is run by Joe's 80-year-old brother, Ben; Weider Health and Fitness, a company that manages some 25 bodybuilders who regularly appear in the magazines; and most important, Weider Nutrition International, a public company that grossed $280 million last year and includes Schiff vitamins. Schwarzenegger, who for many years was a spokesperson for Weider products, holds a stake in Weider Nutrition.

"The supplement business makes up more than 70 percent of the ads in Welder magazines," says Eric Welder, Ben's 40-year-old son, who runs much of the Weider empire today: The supplement business also provides about 30 percent of the ads in the tabloids.

For many years, WNI profited handsomely from ephedra, the amphetamine-like substance so popular with bodybuilders and dieters, and from androstenedione, a steroid that the body converts into testosterone. "Steroids have been used since the late '60s," says Joe Weider, who questions the evidence that steroids can lead to a multitude of health problems, including cancer and heart disease. "They produce less problems than aspirin or anything else." He says that Schwarzenegger took steroids when he was a competitive bodybuilder but adds, "He was doing less than most of the guys, because he was smart."

With the evidence mounting that ephedra could produce serious side effects, the FDA started to investigate the substance in the late '90s. The agency's actions may have been a factor in Welder's decision to sell his publishing company. "The supplement thing had already reared its ugly head by 2000," says one former AMI editor with firsthand knowledge of the negotiations between AMI and Weider. "I knew two media players who backed away from the Welder magazines because they were worried that the supplement thing would blow up." It eventually did. In 2004, the FDA banned all ephedra-based products.

None of this deterred Pecker, who bought the company in November 2002. To the surprise of some media analysts, AMI paid $350 million in cash and stock for the seven magazines, a large photo archive of Schwarzenegger, and offices in Woodland Hills and Manhattan. When evaluating magazines, the standard calculus is not to pay more than ten times a company's cash flow. Weider Publications' cash flow for 2002 was $26.5 million. The two other bids for the company were more in line: one of $260 million from Rodale and the other of $300 million from Hachette. Pecker says he bid so high because it was a blind auction and he didn't want to lose.

Pecker also says he understood that without Arnold Schwarzenegger's participation, the value of the Weider magazine group was considerably diminished. It was not exactly like Martha Stewart Living, without Martha Stewart, but it was a crucial tie. Pecker also understood that losing Schwarzenegger as a tabloid target was no small loss. "Arnold is a reliable tab seller," says one longtime AMI staffer, "especially when the stories involve sex scandals and Maria. Not so much the Nazi stuff, which didn't sell very well. With Arnold, you get celebrity, sex, and the Kennedys, and now as governor, you get the power hit."

In early December 2002, Pecker and his wife had a celebratory dinner at the Peninsula Hotel in Beverly Hills with Joe Weider and his wife, along with Eric Weider. "Joe's asking me, 'How are you going to handle the bodybuilding world?'" recalls Pecker. "'You should know that this is something that's very important to me personally.' I said, 'Yes, I understand that. I know that you have a very close relationship with Arnold Schwarzenegger.'"

Weider says that over dinner he recommended to Pecker that Schwarzenegger become part of AMI—that he should be given "maybe 10 percent of the company as our publicist." He feared, though, that Schwarzenegger was too busy doing movies and concerned about "all the scandal" in AMI's tabloids.

Pecker was enthusiastic about the idea of bringing Schwarzenegger into AMI and tried to allay Weider's concerns that the actor would continue to be a tabloid target: "I said, 'There is one thing that I can tell you. We don't, as a company, rehash old stuff.'" Pecker says he also told Weider, "Anything he does that's newsworthy; we're going to run." Then he added a caveat not usually associated with the tabloids: "If we can validate it."

During the heat of the recall campaign, the New York Daily News reported that Pecker had assured Joe Weider that the tabloids would "lay off" Schwarzenegger. "We're not going to pull up any dirt on him," Weider quoted Pecker as saying. AMI denied such an arrangement. Recently; however, Welder offered a slightly different version of the dinner, one that corresponds with Pecker's account: "David said he knew Arnold was close to me. 'Oh, yes, Arnold is your friend, and I want you to know that we're not going to bring up or print the old stuff. Only what's new.'"

But a funny thing happened soon after the Weider deal closed in January 2003. The tabloids suddenly became Arnold free. Despite Pecker's denials, four sources at AMI say that the Schwarzenegger vanishing act was no accident. "When Weider was being bought," says one senior AMI staffer, "the edict came down: No more Arnold stories."

(AMI employees must sign confidentiality agreements as part of their severance contracts and therefore cannot speak on the record. Those suspected of speaking without approval receive letters apprising them that their severance has been terminated. Similarly, all Schwarzenegger employees, including household staff, business associates, even his political team, sign contracts that prohibit them from discussing Schwarzenegger or his family.)

Long before the Welder purchase, Pecker had come to know the cost of antagonizing Schwarzenegger. With his acquisition of The Globe he had inherited a lawsuit concerning an August 4, 1998, story headlined "Arnie's Heart Crisis—Docs Warn He's a Ticking Tune Bomb." The tabloid accurately reported that Schwarzenegger had undergone heart surgery, but he had not been left debilitated. "Marty Singer sued," Pecker says, rolling his eyes at the mention of the lawyer's name. "It was a pretty big retraction." In January 2000, The Globe published an "Apology to Arnold Schwarzenegger."

"We ran that he was able to do movies, that we were incorrect," says Pecker. "It said that he's back exercising, weight lifting, waterskiing ... and we mentioned the movies that he was working on." This followed an earlier "clarification" published soon after the story ran. In addition, $200,000 was donated to a charity chosen by the star, according to sources close to Schwarzenegger.

AFTER A FLURRY of telephone calls, Pecker flew to Los Angeles on July 11, 2003, to make a direct appeal to Schwarzenegger to stay on board with the Weider magazines. Pecker and Schwarzenegger met at the actor's production office in a building he owns in Santa Monica. It is a spacious office with grand views, decorated with movie posters from Schwarzenegger's career. The two adversaries were joined by the star's financial adviser, Paul Wachter. Also present was Vincent Scalisi, a longtime Schwarzenegger friend and editorial director of Muscle & Fitness and Flex, who served as the point man in handling the agenda arrangements with Pecker.

Schwarzenegger greeted his guest in California-casual attire—Tommy Bahama shirt, shorts, and tan work boots—and offered him hazelnut-flavored coffee, oatmeal cookies, and fruit before getting down to business. Pecker says he found Schwarzenegger engaging and focused. "Arnold said that he had checked with some of the people that knew me, and he heard that I was an okay guy," Pecker recalls. "That was the first thing he said."

Pecker reminded Schwarzenegger of his friendship with Maria Shriver's cousin, the late John Kennedy Jr. Pecker had been CEO of Hachette, which had bankrolled George, the magazine John Kennedy Jr. had founded. "I knew Bobby Shriver [Maria's brother] because of John Kennedy," says Pecker, "so I also had a relationship with her father, Sarge.”

"He went through the long relationship that he had with Joe Weider and with Muscle & Fitness," says Pecker, "and [my offer] was something that he would consider, but he wasn't sure. I said, 'From a lot of research I did, you're really the person who's the icon in bodybuilding.' And then he explained to me about the Arnold Classic because, to be perfectly honest, I never heard of it before. I was very impressed. It was the first time I had met him. He was very articulate about bodybuilding, very articulate about the business side. He was very familiar with the magazines and with exactly how the bodybuilding industry worked."

Pecker then presented Schwarzenegger with his proposal. "I approached him about the concept of having a bigger rote with all of the Weider titles," says Pecker, "but specifically with Muscle & Fitness and Flex."

Pecker says that there wasn't much talk about Schwarzenegger's political plans at the meeting: "Arnold said that he had not yet made up his mind whether he would run for governor, and he said we should keep in touch."

Asked whether Schwarzenegger had commented about the Enquirer articles on the actor's extramarital affairs, which had compelled him to not run for governor in 2002, Pecker grins nervously. "Don't think that I didn't think about that when I came to see him," he says. "I thought he was going to, but he never said a word. Never. Not one word. He never mentioned the Enquirer, never mentioned The Star, never mentioned The Globe, never mentioned anything. Nothing. Talk about wearing two hats."

But what would Schwarzenegger say? He knew he had checkmated Pecker. Of course, Pecker had done quite well himself. He may have lost Schwarzenegger as one of the tabs' favorite targets, but soon he would be able to call the future governor of California "my business partner."

THREE WEEKS LATER, on August 6, 2003, Schwarzenegger stunned the world with his announcement on The Tonight Show that he would be challenging Gray Davis in California's historic recall election. The announcement surprised even his own team of strategists. George Gorton, a principal architect of his campaign, did not find out that the actor had decided to run until he watched the show. It was one of the shrewdest political debuts in modern history. Schwarzenegger had aced out his friend, former Los Angeles mayor Richard Riordan, who had been dawdling in the wings, and he had duped his most formidable rival, Democratic senator Dianne Feinstein, who had taken her name out of consideration in the belief that he would not run. Better yet, the recall offered him an eight-week campaign—hardly enough time to investigate a candidate with a scandalous past.

Still, it could be reasonably expected that the tabloids would have a field day with candidate Schwarzenegger. Californians quickly learned, however, that the AMI tabs were not only laying off Schwarzenegger but were at the forefront of his campaign. One former staffer says that "Pecker ordered David Perel to commission a series of brownnosing stories on Arnold" that would hit the stands during the campaign. "It's not true," says Perel. "That's absurd." In August The Star ran a hill-page story headlined "Vote Schwarzenegger!" and accompanied by a half-dozen flattering snapshots.

No more stories about Arnold's two-hour weekly sessions with his hair colorist to keep the gray out of his hair and eyebrows. No more unflattering photos of his taut face. No more telephoto shots of Arnold and Maria looking less than fit or arguing on a street corner. Instead, The Star followed up with another tribute to "Arnold and Maria's Family Life" and "Arnold: A New American Patriot," in which he was likened to George Washington. In September 2003, AMI published a 120-page glossy special edition titled Arnold, the American Dream. It was sold on newsstands for $4-95, with the cover line "Camelot's Future." To complete the coronation, Weekly World News ran its own "exclusive"—"Alien Backs Arnold for Governor."

Still, Schwarzenegger was concerned that the mainstream press could damage him. Indeed, he fired a preemptive round during his appearance on The Tonight Show. Waving his hand dismissively he warned (incorrectly, as it turned out) that the Davis team would make his extramarital affairs an issue: "I know they're going to throw everything at me.... I'm a womanizer and that I'm a terrible guy ... We all know that Gray Davis can run a dirty campaign better than anyone."

Beginning on October 2, 2003, five days before the recall election, the Los Angeles Times published a series of stories in which 16 women—11 willing to be identified—charged that Schwarzenegger had either groped or sexually harassed them. The Schwarzenegger team went on the offensive, attacking the Times for its "opportunistic" late timing and attributing the stories to the trash politics of the Davis campaign. The Times piece was picked up by the national media and monopolized the news cycle up to Election Day. And still not a murmur from the tabs.

Pecker takes pains to explain why the tabloids supplanted "exposes" on Schwarzenegger with puff pieces. He begins, as he did during his dinner with Joe Weider, by saying that the tabs do not publish "old news." But a casual survey of his publications proves otherwise. Notably, there was the tab's coverage of Laura Bush's driving accident more than 37 years ago, in which she killed the football star of her high school. Most recently, the tabs rehashed the cause of John F. Kennedy Jr.'s fatal plane crash five years ago.

To prove his case, Pecker cites an "Arnold exclusive" that ran in The National Enquirer with the headline "Arnold's Love Child Scandal." The Enquirer posted the story on its Web site on October 5, two days before the recall election, and published a heavily revised version in its print edition 14 days after the election. Certainly it was an incendiary story, but because it was posted so close to the election, the mainstream press had little time to follow up the account and confirm it. As a result, the story remained on the margins. Moreover, the Enquirer article cited as its source a story by a reporter named Wendy Leigh that appeared in the British tabloid The Daily Mail, indicating it was a rift-and-clip job.

The Enquirer story, which was picked up by The Boston Herald, the New York Daily News, and The Drudge Report, claimed that the former bodybuilder had fathered a son with a woman from Orange County. She had worked as a stewardess on his Gulfstream jet for more than a decade. The Daily Mail also mentioned that one of the woman's two sons has the same unusual name as one of Schwarzenegger's film characters. The Daily Mail even ran a photo of the 11-year-old boy. The paper published a denial from the woman that Schwarzenegger was the father. (An attorney representing the woman said in October that he would file a libel suit against The Daily Mail in English court, but the paper has yet to receive a letter demanding a retraction or to be sued.)

Pecker claims the Enquirer's love-child story was not a pickup but the hard-earned effort of the paper's investigative team. He and Perel insist that the tab had been working on the story for more than six months. Perel, who has been with AMI for 18 years, is a tabloid workhorse. He spearheaded the reporting on such Enquirer stories as Rush Limbaugh's addiction to Oxy Contin, former Clinton aide Dick Morris's dalliances with prostitutes, Eddie Murphy's involvement with transvestites, and Steven Seagal's violent relationships with women. All were stories picked up by the mainstream media.

"First of all," Perel says, "the Enquirer has probably broken the biggest story on Schwarzenegger that's ever been run, which is the story of his seven-year affair with Gigi Goyette. As he was running for governor, I was actively working on the existence of the love child. I had one person dedicated full-time to it who has a lot of knowledge and insight, and I probably rotated about two or three others in and out. Wendy Leigh was onto it, but we were onto it, too, and there was a big race. It was the type of story that took a long time, and then time ran out."

When the Enquirer story hit the stands, the names of the woman and her family were omitted. Perel says the story was changed in the Enquirer's print edition after the tabloid received letters and calls from Marty Singer and the attorney representing the woman.

As evidence that the tabloid had been tracking the love-child story for some time, Perel cites the Enquirer's February 2001 "exclusive" headlined "He's Caught Cheating!" The story refers to an incident that dove-tails with The Daily Mail story. A Schwarzenegger "friend" is quoted as saying: "I remember when Arnie was having an affair with a stewardess while we were working on End of Days [in 1999]. She would visit him on the set and was so bold that she'd even bring her little boy along, whom Arnold would bounce on his knee."

Like Pecker, Perel says that neither politics nor business played a role in the tabs' decision not to scrutinize Schwarzenegger. "My position," he says, "is that scandal knows no ideology."

Former AMI staffers dispute Pecker and Perel's account, contending that the tabloid was offered the love-child story in mid-2003 but turned it down. According to one former AMI editor, the story had been brought to the tabloid by John Connolly, the author of the Premiere article on Schwarzenegger. Connolly, a former policeman with close ties to private investigators, has staked a reputation as Schwarzenegger's archenemy (The former staffer also credits Connolly with bringing the 2001 Gigi Goyette story to the tabloid.) There was considerable interest in the story, according to the former staffer, who says Perel worked with Connolly "for a couple of weeks on the story. They said the story was solid. Then Pecker became involved and said, 'We're not doing the story. In fact, we're not doing any more Schwarzenegger stories.'"

Another former AMI staffer also questions Pecker's account. "Connolly brought us that thing in May," he says. "So you've got May, June, July, August, September, October. Are you telling me the Enquirer can't do in six months what Wendy Leigh does? If that's true, it's a pretty sad state of affairs. Here's how to look at it: If the Weider deal hadn't worked out, do you really think the Enquirer would not have done the love child?"

Connolly ended up working on the story with Wendy Leigh of The Daily Mail, who had written a book about the star. "It all came from John," says Leigh. "John came to me. Basically he was my partner on this. He was a silent partner." Connolly confirms Leigh's account, saying he "brought her a much bigger story and the love child became part of it."

Since Schwarzenegger's ascension, the tabs have been a fount of gushy news about him. "Make Arnie President" exhorted the headline of one story soon after his election, with the subhead "All We Have to Do Is Change One Stupid Law." Another, titled "Wisdom of Arnie," offered helpful tips from his movies. And then there were: "Maria & Arnie: White House Bound?" "The Governator," "American Dream: Arnold & Maria's New Life," and "Arnie's Accent Will Soon Be All the Rage," among others. Despite Pecker's denials, AMI is now the press organ of Arnold Schwarzenegger.

PECKER IS CONVINCED that the Weider magazines will continue to thrive and will prove to be a good investment. Purchasing Weider, he says, was "the smartest deal I ever made." A year ago, he hired Bonnie Fuller to be the editorial director of AMI, luring her away from Us Weekly with a $1.5 million annual salary plus generous stock options and bonuses. Three months later, he laid off more than 10 percent of AMI's staff, including such tab veterans as Richard Gooding, who broke the Dick Morris story; Val Virga, AMI's photo editor of 18 years; and Star gossip columnist Jose Lambiet. Fuller's mandate is to remake The Star into a glossy and take on People, Us Weekly, and In Touch. So far the project has cost $54 million. "It's a big bet," concedes Pecker.

One view is that the Welder purchase and the Fuller hire are shrewd moves. Faced with a tabloid business that is struggling, Pecker is trying to reinvent his company. The Weider magazines will bring in solid profits and shore up the tabs. The makeover of The Star is much riskier but offers the potential payoff if it can challenge People.

The other view, held by many former AMI staffers, maintains that the Weider sale and the revamping of The Star are diversionary tactics, or as one former writer put it, "something to churn up a lot of smoke to cover the fact that the tabs have been steadily losing money since Pecker came into the picture."

AMI's earnings reports bear out both interpretations. The latest show a significant decline in the tabs' net income. The company posted $23.6 million in the most recent fiscal year—an $11.8 million drop from the previous year. The poor numbers prompted Moody's Investor Service in June to threaten to downgrade AMI unless there was improvement soon, noting that the company "continues to fall below Moody's expectations." Its report expressed concerns that Pecker's latest moves "may be insufficient to stem the substantial circulation erosion of AMI's tabloid publications."

Two weeks after the recall election, Pecker flew to California for another meeting with Schwarzenegger—now the governor-elect. Pecker was eager to nail down the details of the proposal that he had pitched in early July. Clearly, Pecker had proved his loyalty and usefulness during the recall campaign. The meeting, according to Pecker, went swimmingly.

There would be more talks at the Mr. Olympia bodybuilding competition, owned by the Welders, on October 30 at the Mandalay Bay Hotel in Las Vegas. "Between November and December," says Pecker, "we worked out a thing where there will be editors that will write his [Ask Arnold] column and do everything." The deal was completed in mid December but was not announced until March 2004 at the Arnold Classic in Columbus, Ohio, an event owned by Schwarzenegger and a partner.

At a press conference, Pecker and Schwarzenegger clutched the winner's trophy and beamed. They announced that Schwarzenegger would become the executive editor of Muscle & Fitness and Flex. He would be paid $1.25 million over five years, which he would donate to the Governor's Council on Physical Fitness. He would also receive a $250,000 annual salary from AMI, according to sources close to the governor. Schwarzenegger has not disclosed his AMI salary in any of his filings with the state. According to his spokesman, he has until March 2005 to do so. Despite numerous requests for an interview, the governor declined.

A month later, Pecker was still giddy about the Arnold Classic. "It was my first time I ever went there," he said, sitting in his New York office. "I can tell you that to see 87,000 people in this convention center and then Arnold walks in—I never saw anything like that in my entire life. In the bodybuilding industry, people visualize him as an icon."

"For me, I'm a businessman," he continued, "and having Arnold be the executive editor of the magazines is very important."

In May, AMI announced it had deepened its relationship with Schwarzenegger and Welder, by buying a 50 percent stake in the Mr. Olympia competition. Pecker calls the event "the Super Bowl of bodybuilding."

Pecker still insists that Schwarzenegger does not have tabloid immunity. "Will I send 50 reporters to dig up something on my partner?" he asks. "No. I'm not going to do that. But if anything that's newsworthy comes up, something that we know will sell, we'll publish."

Arnold Schwarzenegger's inauguration as governor of California on November 17, 2003, was a gala affair. Tickets to it were as keenly sought as those to the Oscars. Among the invited was the man who has been one of Schwarzenegger's most formidable foes. Now, however, the two looked forward to a future of collaboration and profit. Arnold Schwarzenegger and David Pecker were finally on the same team.

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