FAO Turnaround Hardly Child's Play
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TOP STORIES REPORT City may turns its back on big builder Guide of low-income to growing housing a business PAGE 2 ® PAGE 21 Fortune bracing for arrival of new competition VOL. XXII, NO. 46 WWW.NEWYORKBUSINESS.COM NOVEMBER 13-19, 2006 PRICE: $3.00 PAGE 3 What Silver and TO DO ASAP Merrill mulls Weiner gained and Deal with budget deficit Fields and D’Amato lost on Election Day Jump on hospitals report downtown exit; THE INSIDER, PAGE 14 Find billions for schools Competition big HQ in play among private Bring political reform to Albany bankers heats up Fix campaign finance practices ing our options, given that we have PAGE 18 Bank hires broker impending lease expiration,” says a bloomberg newsbloomberg as lease expiration Merrill spokeswoman. Exec stepping into At stake is the headquarters of a ELECTION 2006 nears, setting off firm with $48 billion in revenues Tommy Tune’s and with more than 9,000 highly old pad after tristate scramble paid staffers downtown, who are $6M purchase spread out across 3 million square Spitzer’s ‘Day One’ feet of space. Merrill’s lease at the LIVING LARGE, PAGE 52 BY JULIE SATOW World Financial Center, where it occupies all of Tower 4 and a por- will take a while merrill lynch & co. may decide tion of Tower 2,will expire in 2013. BUSINESS LIVES within six months whether to re- Merrill also owns its former head- main in lower Manhattan—where quarters building at 222 Broadway, RETURN TO THE NEST nor’s office last week is the expec- it has been based since its on the other side of Ground Young professionals Runaway victory tation that he will now deliver on founding in 1914—or relo- Zero, where it occupies find it hard to sets reform bar high; what he has promised. cate to midtown or even to 660,000 square feet. strike out on Among the governor-elect’s the suburbs. 3MSQUARE FEET Remaining at the World their own deadlines loom Space that most likely priorities: take action The giant securities Merrill Lynch Financial Center is a possi- PAGE 47 on hospital-closing recommenda- firm has hired a broker,and leases in lower bility, but a problematic tions, prepare a budget that ad- Chief Executive E. Stanley Manhattan one. Merrill has occupied BY ANNE MICHAUD dresses the state’s massive debt O’Neal has met with New the bulk of that space for burden, resolve school funding in- Jersey Gov.Jon Corzine,who is ex- nearly 20 years, and while there the only thing bigger than the equities and champion good-gov- pected to make a strong effort to have been updates to the compa- public appetite for change that ernment reform. lure the company to his state. ny’s cavernous trading floor—a key swept Eliot Spitzer into the gover- See SPITZER on Page 8“We are in the midst of evaluat- See MERRILL on Page 8 AT DEADLINE BOROUGH PRESIDENT HELEN MARSHALL will issue a report Tuesday calling for the FAO t ur na round construction of two hospitals in Queens, even as the Berger commission on hospital closures is preparing to issue a hardly child’s play report on Nov. 28. She cites PricewaterhouseCoopers in the city, perhaps in hot neighbor- findings that 34% of Queens CEO has cut clutter, hoods like Union Square or Park residents hospitalized in 2004 added new toys; Slope, Brooklyn. had to go to facilities in “We want to be New York’s toy Manhattan or Nassau County plans to open two store,” says Mr. Schmults, who because local services weren’t joined FAO last year to help put the available. more NYC stores once-bankrupt retailer back in the black. THE CITY’S FOREIGN STUDENT The additional locations are just POPULATION climbed 2.2% to BY ELISABETH BUTLER part of his strategy. Mr. Schmults 50,542 in the 2005-2006 has also ditched underperforming academic year, according to if fao schwarz’s new chief execu- products; pushed a low-risk, con- figures set to be released today tive gets his way, New Yorkers signment-style selling model; and by the Institute of Interna- won’t have to fight the crowds to added more baby products and toys tional Education. Columbia do their Christmas shopping at that appeal to boys. He believes that University topped the charts FAO Schwarz next year. Edward a well-rounded mix of exclusives See AT DEADLINE on Page 2 Schmults wants the 144-year-old and select mass-market merchan- retailer to open two smaller shops dise, both in-store and online, will return the brand to its legendary status. FAO must work hard to win back ON THE BALL: CEO New Yorkers. Only half of the 2.5 Edward Schmults is million people who visit the Fifth using his marketing and Avenue flagship every year live in Web expertise to ELECTRONIC EDITION revamp FAO Schwarz. the city. Some don’t realize that the store has reopened, and others think NEWSPAPER See TURNAROUND on Page 8 gibbons catherine AT DEADLINE Continued from Page 1 paper’s average weekday with 5,575 students from circulation was up 5.8%, to overseas, followed by New York 53,090 copies, in the six-month University with 5,502.The period that ended Sept. 30. The increase pushes the city’s foreign Sunday edition of El Diario saw student population past 50,000 circulation rise 8.4%, to 36,712 for the first time. copies. Publisher Rossana Rosado credits an improved THE NEW YORK NIGHTLIFE product and an expanded ASSOCIATION is developing a circulation push under owner campaign that will aim to ImpreMedia, which took over discourage underage drinking. It El Diario in 2003. will include outreach to law enforcement agencies, parents VERIZON WIRELESS OPENED ITS and owners of bars and FIRST STORE IN HARLEM last restaurants.The program, to be week.The company says that launched early next year, is part customers who sign up at one of of the association’s response to its stores are more likely to stay the political backlash against with the provider than are city bars and clubs. subscribers who sign up over the Internet or at a non-Verizon THREE LUXURY RETAILERS HAVE retailer. It now has 14 retail LEASED SPACE for temporary locations in Manhattan and 134 stores in the Time Warner in the New York metro area. Center mall. Fine foods purveyor Petrossian, crystal LAST WEEK’S MIDTERM BRONX BUDDIES: Peter producer Swarovski and whiskey ELECTIONS WERE GOOD for Jim Fine (left) and Monsignor maker Johnnie Walker will open Webb’s literary career, not just Sakano have built 296 stores this week and operate his political one. Doubleday affordable units together. them through Jan. 1. Johnnie Broadway is stepping up Walker will use its space strictly promotion of Born Fighting: for promotion, offering How the Scots-Irish Changed engraving for customers who America, which the newly buck ennis bring in a $200 bottle of Blue elected Democratic senator label scotch whiskey they from Virginia first published in purchased elsewhere. The mall 2004. An ad for the paperback will allow other retailers to lease edition of the book will run in pop-up space starting in January. the national edition of The Housing squeeze New York Times this week. EL DIARIO/LA PRENSA IS THE Doubleday is also talking to FASTEST-GROWING NEWSPAPER booksellers about giving Born City may turn its back on low-income developers in New York, according to an Fighting and Mr. Webb’s Audit Bureau of Circulations novels, including The Emperor’s BY JULIE SATOW supplement set to be released General, more prominent today.The Spanish-language placement in their stores. ■ when peter fine and marc altheim launched their business over a decade ago, they CORRECTIONS specialized in building assisted living developments in Westchester and Connecticut. When The name of Benchmark Co. was misstated in the article “Signs of a digital Times” in the Nov. competition got too fierce, they looked elsewhere for inspiration. 6 issue. What they discovered was a little-known city incentive they have used to build 2,200 Also in that issue, the graphic headed “New York’s deep hole” should have given the figures for affordable housing units, mostly in the Bronx.The Bloomberg administration wants to end the state-funded debt in billions of dollars. incentive program, and the partners may have to change direction again. “Affordable housing is the soul of our company, and the city is taking a little bit of our soul away,” says Mr. Altheim, 43. He and Mr. Fine, 45, are the principals of the Atlantic THIS WEEK IN CRAIN’S Development Group. Atlantic finances its projects through the 421-a program, established in 1971 to spur housing GREG DAVID ------------------------------------13 See CITY on Page 11 THE INSIDER------------------------------------14 WEEK IN REVIEW -----------------------16 NEIGHBORHOOD JOURNAL------------------------------------------20 Hospitals ready court push GROWING 53 A BUSINESS GUIDE-----------21 block implementation of recom- in restructuring assistance funds that Bankruptcy filings, mendations made by the hospital the state is promising facilities on REAL ESTATE DEALS--------------42 suits could stave off closing commission. the Berger list.“Bankruptcy is by no The most obvious option for a means a shield,” says David Sand- CLASSIFIEDS ----------------------------------44 closings by state hospital trying to stave off closure is man, executive director of the Com- a bankruptcy filing, which would mission on Health Care Facilities in THE WEEKS AHEAD ----------------45 put it under the control of a the 21st Century. BY BARBARA BENSON BUSINESS LIVES------------------------47 federal judge and theoreti- Nov. 28 The state is also likely to cally out of the reach of state EXPECTED face direct legal tests of its LIVING LARGE----------------------------52 state officials are expecting a officials.