Judith Regan's Tape Tale

With its tawdry plot lines involving corporate skullduggery, a steamy extra-marital affair and presidential politics, the legal battle between former publishing doyenne Judith Regan and her ex-employer, Rupert Murdoch's News Corp. seems straight out of a potboiler. Now the tale has taken another intriguing and potentially explosive twist with the sudden emergence of a mysterious tape recording.

Long a controversial figure in the publishing industry, Regan had run her own imprint at News Corp.'s book publishing arm, HarperCollins, for thirteen years before she was fired for allegedly making anti-Semitic remarks not long after controversy erupted over O.J. Simpson's book, "If I Did It." Regan had spearheaded the book, which she billed as a confession to the double murder by the disgraced gridiron star. In November, Regan filed a $100 million lawsuit against News Corp., accusing the company of, among other things, making her a scapegoat in the Simpson controversy, targeting her with a "deliberate smear campaign" and illegally firing her.

But what seemed like a parochial flap within the publishing industry over O.J. Simpson veered off in a sharply different direction with the lawsuit. The latest bombshell: according to media executives familiar with the situation, Regan has a tape recording that presumably helps to buttress her allegations in her suit. The exact contents of the tape remain unknown, as does its origins. No one approached by Newsweek seemed to know of its provenance--or was willing to discuss it.

But word of the tape's existence, if not the tape itself, has reached the highest levels of News Corp., say four sources, who declined to be identified discussing a legally sensitive matter. In fact, the tape may be the catalyst for what publishing executives describe to Newsweek as a recent resumption of negotiations between News Corp. and Regan to settle their battle out of court. News Corp. confirmed that it is again in "conversations" with Regan. Through a spokeswoman, Regan repeatedly declined comment on all aspects of this story.

Of Regan's many assertions in the 70-page lawsuit, perhaps the most incendiary concerns a scenario that would seem like pulp fiction were it not sprinkled with powerful non-fictional personalities. In addition to Regan and Murdoch, perhaps the world's most influential media mogul, it involves a mystery News Corp. executive, former New York City mayor Rudolph Giuliani and his one-time police commissioner, Bernard Kerik.

Kerik was indicted last month on federal corruption charges (he has declared that he is innocent of all charges). In the suit, Regan claims that the News Corp. exec, who isn't identified in court documents, once asked her to "lie to, and to withhold information from," federal investigators who were at the time investigating Kerik. Revealing the information--the executive explained, according to the lawsuit--might damage Giuliani's bid for the Republican presidential nomination in the 2008 campaign. Because of her perceived threat to his political ambitions, she alleges in the lawsuit, News Corp. targeted her. The suit alleges that News Corp. victimized her with a "deliberate smear campaign." (News Corp. has dismissed Regan's allegations as "preposterous.")

Regan's ties to Kerik, once one of Giuliani's most trusted associates, date back at least to 2001 when ReganBooks published Kerik's memoir, "Lost Son." She has acknowledged having an affair with the married and now-disgraced Kerik that began around the time of the November 2001 release of the book.

Apart from whatever else the alleged recording might reveal, Regan could conceivably have been privy to at least some financial information of interest to federal prosecutors in the Kerik case. Federal authorities obstensibly were investigating Kerik in connection with, among other things, money and loans he allegedly received from people eager to do business with New York City. Yet one tax evasion count in his federal indictment concerned $75,000 in income from his ReganBooks memoirs that he allegedly didn't report to the IRS.

The indictment, including the tax-evasion charge related to the publishing income, resulted from a federal grand jury investigation of Kerik lead by the U.S. Attorney in Manhattan. A spokeswoman for the prosecutor declined comment when asked if Regan had testified before the Kerik grand jury. The spokeswoman likewise demurred when asked whether, in light of Regan's allegation in her lawsuit, the prosecutor is currently seeking an audio recording or other evidence from Regan related to Kerik.

The relationship between News Corp. and Giuliani dates back to at least the mid-1990s. When he was mayor, Giuliani aggressively intervened as a Murdoch ally in a bitter business dispute between the mogul and Time Warner, the cable giant and archrival of News Corp. Time Warner was refusing to distribute Murdoch's upstart Fox News Channel in the all-important Manhattan market. The company, which owns CNN, eventually agreed to carry Fox News. Now, almost ten years later, the News Corp. channel has toppled CNN as cable's No. 1 news outlet.

News Corp. officials wouldn't directly answer questions concerning the tape. Discussing the matter on background, another official credits Regan's lawsuit with reopening settlement discussions, saying "the complaint helped resurrect the conversations." When asked if a tape recording was a factor in putting the talks back on track, one official answered that News Corp. and Regan's representatives have discussed "discovery." The "discovery" process, a pre-trial stage of a lawsuit, allows each side to legally require the other to hand over documents or other evidence deemed germane to the case. The response might suggest that News Corp. could be seeking to determine whether there is an audio recording among evidence in Regan's possession.

Other well-placed News Corp. officials say News Corp. is indeed aware of a tape, though these people were unsure whether any company representative had actually seen or heard it.

Regan's spokeswoman declined comment when told of the content of this story, and responded similarly when asked specifically about the tape recording. But publishing industry executives close to Regan insist that she wouldn't have leveled the allegations in her lawsuit without specific substantiating evidence. In a Newsweek interview, one influential publishing executive in Regan's camp firmly declares direct knowledge of the tape. This person, however, claims to have not listened to it, and didn't know whether Regan or her lawyers have told News Corp. about it. Two media executives close to the matter also claim to know one person, a man, who has listened to the tape. They declined to identify him, however.

For years, Regan has enjoyed one of the highest profiles in all of publishing. She ran her imprint, ReganBooks, with a degree of autonomy that many in the industry envied, and she delivered a string of out-of-left-field hits, including "How to Make Love Like a Porn Star" by Jenna Jameson and "Juiced" by Jose Canseco. ReganBooks reportedly generated annual revenues of at least $120 million. "I'm like the road warrior of publishing," she once told Newsweek. Last December, News Corp. abruptly fired her for making what it subsequently described as "anti-Semitic" remarks. Through her attorney, Regan at the time vehemently denied making such utterances.

The episode followed the scandal over the O.J. Simpson book. After the project sparked a public outcry about "blood money" in News Corp. coffers, Murdoch cancelled its publication last November. Regan essentially is claiming now that News Corp. trumped up the anti-Semitic slur as part of its alleged smear campaign.

One near certain outcome of Regan's clash with Murdoch's News Corp. is that it will make for a page-turning chapter in her memoirs someday. But what will make her life story a publishing blockbuster is the title--"If I Taped It."