Rebekah Brooks discussed paying £200,000 a year to PR guru Max Clifford to back out of a civil case, the hacking trial was told.
The disclosure emerged in notes from a meeting of senior executives of News International in January 2010 which were read to the court by prosecutor Andrew Edis QC.
Brooks reported that she had got Clifford to agree £200,000 per annum to "represent the Sun/do business with the Sun" and if that was put in writing, he would call off his lawyers, the Old Bailey heard.
She was advised not to put it in writing ahead of giving evidence to a select committee, but when she was told she no longer had to go, "her view was things could change", Edis said.
During the course of the meeting it was even suggested that she could "physically turn up with cash to see him", the jury was told.
It was felt that the deal with Clifford should be made before private investigator Glenn Mulcaire was ordered to name in court people he had dealt with about phone interception, the court heard.
Reading from the notes, Edis said: "It was 50:50 that the order be made. RB (Brooks) said that in those circumstances it was more like 80:20 against NGN (News Group Newspapers).
"There is enough publicity about this to swing it. You have to think about what is worse – her doing a deal with Max which will be perceived as a cover-up, or indemnifying Mulcaire so that he doesn't say anything about NGN."
Brooks said it would "look terrible" if the company was seen to be "buying off" Clifford, according to the notes.
At a hearing in the civil case in February 2010, Mulcaire was ordered by a judge to disclose the names of those he hacked phones for.
After that, Edis said, a lawyer for Clifford was informed that her client had made an agreement "privately" with Brooks – plus £200,000 legal costs.
In a later email to a NI colleague, Brooks said she was in the "throes of a settlement" with "slippery fish" Clifford, with whom she appeared keen to avoid any more disagreement.
Rebekah Brooks, former News International chief executive, denies conspiring to hack phones, conspiring to commit misconduct in a public office, and conspiring to pervert the course of justice.