NEW YORK — Rosie O'Donnell's battle with a German magazine publisher over who sunk the magazine bearing her name has never been pretty. But on Wednesday, one of the senior executives with the company told a rapt Manhattan courtroom just how ugly things got.

"Rosie said, 'Do you know what happens to people who lie?  They get sick and they get cancer and if they keep lying they get cancer again,'" recalled a choked-up Susan Spengler, chief of marketing at Gruner + Jahr USA.

Spengler, a breast cancer survivor who said she'd discussed her cancer with O'Donnell, was so emotional that Supreme Court Justice Ira Gammerman called a 10-minute recess.

Throughout Spengler's testimony, a contrite O'Donnell — who often reacts to testimony by scoffing, turning to her family and friends in disbelief — kept her eyes fixed on her former co-worker.

O'Donnell later told reporters she had apologized for the remark.

At the lunch break, the one-time talk show host seemed to reach out to Spengler as they passed in a hallway outside the court.

"You did good. Did you not believe me? Seriously, you did good," said O'Donnell, patting her heart with a clenched fist. "I'm telling the truth."

The cancer comment, which came on July 16, 2002 — hours after O'Donnell told Spengler and Gruner + Jahr CEO Dan Brewster that she wanted out of Rosie Magazine — wasn't the only made-for-TV moment to surface Wednesday.

Gruner + Jahr is suing O'Donnell for $100 million, saying she sought to "torpedo" the magazine after senior editorial staff thwarted her attempt to turn it into a personal soapbox.  O'Donnell fired back with a $125 million counterclaim, saying the company robbed her of the editorial control her contract guaranteed, defamed her in the media, and cooked the books to prevent her from exercising an exit clause in their agreement.

On Wednesday, faced with a persistent cross-examination over whether he attempted to woo a reluctant O'Donnell into launching the magazine by granting her editorial control, CEO Dan Brewster exploded.

"That, sir, is dead wrong," said Brewster, his face reddening as he rose from his seat and extended a stiff index finger toward O'Donnell's attorney, Matthew Fishbein.  "Absolutely, outrageously, dead wrong."

Gammerman stifled Brewster's ire with a curt request to "move on."

The jurist, a witty doppelganger of Rudolph Giuliani, is the one who will interpret the key "editorial control" passage of O'Donnell's joint venture.

According to the agreement, O'Donnell had "control over the editorial process and editorial staff, subject only to the veto of the Chief Executive Officer of G+J.  R.O. shall relinquish editorial control of each issue of the Magazine during the period one week prior to the editorial close of such issue and resume such control immediately after each editorial close."

Gruner + Jahr has argued that O'Donnell's editorial control is nominal, and rendered impotent by the clauses subjecting it to Brewster's veto.

"We interpreted [the veto clause] as meaning we had ultimate editorial control," said Brewster.

But O'Donnell's attorney, Fishbein, may have scored a key victory with a potentially apt comparision of editorial control at Rosie Magazine to the checks and balances between the U.S. president and Congress.

The president, said Fishbein, has every right to veto a law passed by Congress making Tom Cruise's birthday a national holiday. But the president can't pass a law making John Travolta's birthday a holiday.

The subtle interpretation is crucial to O'Donnell's argument that Gruner + Jahr executives sought to cut off her editorial control after a new editor, Susan Toepfler, was installed in July 2002.

"It may be shocking to Mr. Brewster to learn that I approved everything that was in the magazine but it's a fact that was uncontested by their lead editor, who I hope does not get fired," said O'Donnell outside the courtroom.

"He said, 'We will ruin you,' and he's trying to do it on the stand."

Over the objections of her publicist, O'Donnell told reporters that a settlement is still possible. "There have been talks," she said.

No one else involved with the case would comment on O'Donnell's statement, but a settlement seems unlikely with the courtroom vitriol so high.

O'Donnell is set to testify late Thursday or Friday, after executive vice president Dan Rubin and a magazine consultant are expected to estimate how much money Gruner + Jahr allegedly lost.

Gruner + Jahr lawyers provided a brief preview of O'Donnell's testimony Wednesday by showing clips from a videotaped deposition filmed earlier this year.

In one segment, O'Donnell appears stunned and disappointed when Gruner + Jahr lawyers confront her with a personal letter she wrote to domestic partner Kelli Carpenter-O'Donnell from London in July 2002.

"I need my name off the magazine and I will walk silently," she writes.  "I do not want to be in the magazine business, never truly did."

At the end of the clip, Gammerman joked, "If I don't like the previews, do I have to see the movie?" drawing a chorus of laughs.

"Don't I wish," replied O'Donnell.