White House confidential: Why a Fox News report on Benghazi was a 'huge problem' for Obama administration

This is a rush transcript from "On the Record," May 6, 2014. This copy may not be in its final form and may be updated.

GRETA VAN SUSTEREN, FOX NEWS HOST: Now to Benghazi, and news the State Department is withholding emails. One subject line of one of those emails: FOX News. U.S. officials knew Libya attack was terrorism within 24 hours sources confirm.

FOX News chief intelligence correspondent Catherine Herridge joins us. Catherine, nice to see you.

That email was provided to Judicial Watch in a court lawsuit. How much do we know about it?

CATHERINE HERRIDGE, FOX NEWS CHIEF INTELLIGENCE CORRESPONDENT: What we know is that the original report was here on FOX News September 27th, 2012, and it was based on the reporting by myself and my colleague, Bret Baier. And based on these court documents, this report is a huge problem for the administration because it was directly in conflict with what the president was saying, as well as senior administration officials. And it shows that there was a split. The intelligence community believed it was terrorism from day one. Most of the evidence showed it was premeditated early on, but the administration went down a completely different tact.

VAN SUSTEREN: Why don't we have the content of the emails? What is it the administration says justifies their withholding the content of the emails?

HERRIDGE: Justice Department lawyers have argued to a federal court in the Judicial Watch lawsuit that this is deliberative. So this is talking about what kind of media strategy they're going to develop to deal with this FOX News report. That is their justification for withholding the content of all of those emails that went to the most senior level of this administration, Denis McDonough, who was then the deputy national security advisor, John Brennan, and Ben Rhodes, who was the communication strategic communications person. The question, though, is whether this is going to hold up in the court. And Judicial Watch told me they think it's highly likely the contents will ultimately be released by the federal court.

VAN SUSTEREN: I know this is not your bailiwick. You report facts. You're in the news division. But so often, in this city, things are classified because they're embarrassing to the administrations. They're not truly related to national security or even to the deliberative process, because we want them to be able to talk freely and advise each other, but we also don't want things hidden and chilled. When is this likely to come to some sort of fruition, a decision either way?

HERRIDGE: It probably will take several more months. But you make an excellent point. The contents of this email were unclassified as they were circulated. Now they have stepped back and said we need to protect these contents so we can talk freely in the future. The fact they're unclassified --


VAN SUSTEREN: In the beginning?

HERRIDGE: Yes. Well, I don't want to make guesses, but what we have seen, as a pattern in the documents, is that unclassified emails were then retroactively classified making them more out of reach for the public.

VAN SUSTEREN: Catherine, thank you.

HERRIDGE: Thank you.