Gossip biz banks on insider trading

Rumor mill offers big payouts to feed machine

I’ve always been impatient with celebrity self-pity. I found it difficult to empathize with stars who’ve courted fame all their lives, only to complain about the intrusions of the press and the paparazzi.

Now I’m ready to do a 180. Reading the piece in the New York Times titled “The Gossip Machine,” I fully understand why celebrities are hiding in their bunkers. I might join them.

Sure, I knew that in-your-face sites like TMZ and Radar are proliferating, that nurses at hospitals and rehab centers were suddenly making big bucks by supplying “exclusives” and that even the TV networks were finding ways to “pay” for stories in conflict with their own rules.

What’s surprised me is that the numbers are getting out of control, and so are the stories. It’s hard to assimilate the antics of the Schwarzeneggers, Sheens, Gibsons, Spears, Strauss-Kahns or anyone named Lohan without suspecting that someone at TMZ was designing their scenarios.

The Times’ figures the gossip machine now represents a $3 billion revenue stream, and these aren’t fringe players (remember Time Warner owns TMZ). The paydays for Lindsay Lohan effluvia can alone approximate $365,000.

The Times reminds us that a UCLA Medical Center research assistant sold information from private medical files more than 300 times, and a $22,000-a-year employee of the Betty Ford Center found herself in a bidding war when she was lucky enough to have Lohan toss a phone at her (her payoff was either $10,000 or $25,000 depending on which version you believe).

The bidding battles seem understandable in the case of celebrity misbehavior. They become grotesque when they involve Farrah Fawcett’s cancer treatments or even Rihanna’s facial bruises (bad boy Chris Brown did the deed).

While TMZ and Radar often lead the blood-lust pack, the major media organizations are also participants. Networks refuse to pay for interviews, but nonetheless pay licensing fees for photos or video. While covering the story of murder suspect Casey Anthony, ABC paid $200,000 for homevideo and photos from the family (she is accused of killing her 2-year old daughter).

No one knows what payouts were involved in the Schwarzenegger exclusives — Radar revealed the woman’s identity (the Star tabloid seemed to be a co-partner) while TMZ promptly flashed her photos. TMZ then trumped competitors by posting the bank form signed by Schwarzenegger giving his mistress a down-payment on her house.

How much money changed hands? Investigators from the Dept. of Justice are probing serial leaks of celebrity financial and health records.

One reason for the investigation is the growing suspicion that the market for exclusives is manipulated even more blatantly than on Wall Street. One avowed expert in this field is none other than Lohan’s father, Michael; a one-time commodities trader who served time for securities fraud but who nonetheless landed a slot on reality show “Celebrity Rehab.”

Lohan has become a gifted “story broker.” “It’s a business,” he told the Times. “If they want to write stories about me, why shouldn’t I get paid to tell the truth?”

A growing problem facing the gossip business, to be sure, is differentiating the true events from the staged ones. Once you’re in Charlie Sheen or Lohan territory, the whole canvas becomes surreal.

Capitalizing on these “gray areas” are players like Terry Ahern, who heads a self-described “celebrity privacy rights” group called Stoparazzi. Ahern denounces public employees who leak privileged information, yet when Jim Rutenberg of the Times checked Ahern’s web sites, he found that they also offered to pay money for “usable tips on celebrities.” Ahern explained that the site is “never used.”

The bottom line: It’s dangerous out there, folks. Checking into a hospital can be as risky as checking out a nightclub. Even your proctologist might try to peddle the close-ups. At least they would provide relief from assholes like Sheen. Peter Bart

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