nb41p01.qxp 10/5/2007 7:55 PM Page 1 TOP STORIES REPORT BusinessWeek SMALL redesigns; can the BUSINESS move stem the ad Alternative lenders page slide? shine in credit crunch PAGE 2 ® PAGE 21 MasterCard growth under threat even as shares VOL. XXIII, NO. 41 WWW.NEWYORKBUSINESS.COM OCTOBER 8-14, 2007 PRICE: $3.00 rocket upward PAGE 3 WHAT’S CLICKING Issues loom Chef Michael Psilakis to expand Kefi on the UWS as rail yard NEW YORK, NEW YORK, P. 6 Health insurers bids readied SAKS.COM featured best AMERICANAPPAREL.NET SEPHORA.COM edits its offer plan to cut sellers Ugg boots and Tory has unisex T-shirts in its hot list to show a filtered Burch shoes last week. best-seller section version of its sales report. rates by 20% Housing, credit crisis large number of affordable resi- THE INSIDER, PAGE 14 dential units that will be required? affect pricing as Related LP and The Durst Or- Carolyn Reidy will ganization, which is working with Latest retail fashion: 5 developers ponder Vornado Realty Trust, confirmed write the rules as grand W.Side scheme that they’ll make bids. Tishman new CEO of Speyer, Brookfield Properties online best-seller lists Corp. and Extell Development Simon & Schuster BY THERESA AGOVINO Co. are also expected to put in of- CORPORATE LADDER, P. 37 fers but won’t comment. New Web feature Tory Burch ballet flats and other $501 million. Hudson Rail Yards is Manhat- items that make the list. She re- About the only certainty as de- tan’s last major development site. BUSINESS LIVES tells customers what cently gave them access to the list velopers put the finishing touches The 26-acre tract on the far West WEDDING TRENDS by installing a “Best Sellers”feature on bids for the Hudson Rail Yards Side presents an opportunity to others are buying on Saks.com. is that the offer will top the transform an ugly industri- “We heard over and over again $500 million that the city al plot into an extension of BY ELISABETH BUTLER CORDOVA that the customer wants to know was willing to pay when it $1B midtown, with office tow- what people are buying,” she says. wanted to put a football ESTIMATED ers, residential buildings, a after years in fashion, a retail Now shoppers can scan the site’s stadium there. COST to cultural center and park construct a executive might grow tired of look- most popular items by category. Many questions have platform over space. ing at new trends. Not Denise In- For the last few weeks, Tory yet to be answered. How the rail tracks “It can be another Rock- More and more brides candela. When she scans the Burch’s trendy shoes have been much will a developer be efeller Center,” says Stan- are choosing the fall- week’s list of the best-selling styles, selling like mad, and Juicy Cou- willing to pay the Metropolitan ton Eckstut, the architect who de- foliage month for their she still wants to buy them. ture’s jewelry charms are flying off Transportation Authority for the veloped the master plan for Battery nuptials PAGE 35 Over the summer, Ms. Incan- the shelves, according to the site. rights to the area? Can any devel- Park City. dela, president of direct sales at Saks updates its list every Monday oper find an anchor tenant that will Grand visions are expensive to Saks Fifth Avenue, realized that to show the previous week’s most give it an edge over its rivals? And execute, however. All the develop- her customers might also covet the See BEST-SELLER on Page 8how will a developer finance the See RAIL YARD on Page 8 AT DEADLINE THE PROPORTION OF SUBPRIME LOANS ISSUED in the New CULTURE BATTLES York area increased sharply in 2006, according to newly released federal banking data.The proportion of conventional mortgages priced Textbook lesson more than 3 percentage points above 20-year Treasury bonds increased to 21.6% of total in gentrification loans in 2006 from 18.6% in 2005. Banks issued a total of 19,854 such mortgages in with whites and minorities, rich 2006. Banks also issued 14,513 Brooklyn housing and poor living together.A prover- subprime home-equity loans boom causes clash bial melting pot. in 2006 to help buyers make But in local public schools, it is down payments. Such as new arrivals fanning a cauldron. Incoming par- “piggyback” loans increased reject city schools ents—largely white and well-edu- 27% for the year. cated—are rejecting neighbor- hood public schools en masse. LAGUARDIA COMMUNITY BY ERIK ENGQUIST Parents seeking progressive re- COLLEGE RECEIVED a $250,000 forms are meeting fierce resistance federal grant Friday for its the city’s ballyhooed rezoning from an entrenched school bu- recently launched veterans of Williamsburg and Greenpoint reaucracy. Classrooms are empty- See AT DEADLINE on Page 2 in Brooklyn is supposed to create a ing out as newcomers decline to fill vibrant, integrated community the seats vacated by minorities priced out of the area. “When parents come in and say 41 5 a school’s not good enough for their children, it’s a very sensitive issue,”says Kate Yourke,an activist ELECTRONIC EDITION parent who moved to Williams- burg from the Upper West Side in buck ennis 1985. “Parents were quite naive COMMON CAUSE: NEWSPAPER Kate Yourke, with Coral (in arms) and Olive, says the Education Department See BROOKLYN on Page 10 has no plan for updating schools to meet demand for broader curricula and parental involvement. 71486 01068 0 CNYB 10-08-07 A 2 10/5/2007 7:39 PM Page 1 AT DEADLINE Continued from Page 1 round of investment, which BusinessWeek gets program—one of the most included previous investor significant examples of outside Ascend Venture Group.The financial help for soldiers six-year-old company provides returning from Iraq and businesses with an on-demand Afghanistan and enrolling in emergency alert and response bold new look the City University of New system through devices York’s system (Crain’s, March including landlines, cell phones 19). LaGuardia’s program helps and BlackBerries. veterans who enlisted without Redesign aims for global high school diplomas complete THE GALLEON GROUP SIGNED AN the core subjects they need for a EIGHT-YEAR LEASE for the entire postsecondary education. 24th floor—almost 9,000 square appeal, but can it end CUNY expects a significant feet—of 575 Madison Ave., percentage of the 10,000 New between East 56th and East ad page slide? York area veterans to return 57th streets, according to the from Iraq and Afghanistan over company’s broker, Dirk BY MATTHEW FLAMM the next 18 months to enroll in Hrobsky of CB Richard Ellis the city college system. Inc.The hedge fund’s rent will businessweek is no longer red, average $70 a square foot. It also CREDIT-RATING AGENCIES occupies 25,000 square feet at white and blue. DOWNGRADED the outlook of 590 Madison Ave., between Four years after its last Merrill Lynch & Co. after the East 56th and East 57th streets. redesign, the McGraw-Hill nation’s top brokerage firm flagship publication has dropped warned that it would post its THE WHITNEY MUSEUM OF first unprofitable quarter since AMERICAN ART is launching a the signature blue stripe across 2001. Moody’s, Standard & new patrons group that offers its cover and gone for a global Poor’s and Fitch all lowered the members the chance to meet the look to make it as at home in a firm’s outlook to “negative” from artists at museum shows and European café as it is in a “stable” on Friday after Merrill visit their studios. Memberships said it would write down the in the Artists Council will cost Midwestern office park. value of $4.5 billion in subprime $5,000 a year. Inside the covers, a streamlined mortgage and other structured arrangement takes into account finance holdings. While BETTER HOMES AND GARDENS, virtually all investment banks WHICH HAS ALREADY licensed its the increasing demands on readers’ have recorded big writedowns in name to products ranging from time and the fact that news is light of the credit crisis, home decor to computer available around the clock.The radically Moody’s said Merrill’s software, is extending its brand revamped title hits newsstands Oct. 12. announcement was substantially to real estate agents. Under a worse than it had expected. long-term contract with BusinessWeek joins a host of troubled Realogy Corp., a residential magazines in the quest to revive reader MANHATTAN-BASED TECH FIRM real-estate franchise system interest and keep even more ad dollars SEND WORD NOW is expected to called Better Homes and from fleeing to the Web. announce on Tuesday that it has Gardens Real Estate will arrive raised $8.5 million in financing. on the scene next July, As a charter member of two pressured Southpaw Asset Management Advertising Age reports in this categories—business magazines and in Greenwich, Conn., led the week’s edition. I newsweeklies—78-year-old BusinessWeek has been hit particularly hard. Ad pages david neff david CORRECTION have fallen 17% this year, according to Media Royal Bank of Scotland’s U.S. pretax profits are more than $4 billion. The figure was misstated in the Oct. 1 section on 100 Influential Women. Industry Newsletter. But if it hopes a redesign can reverse the slide, it need only look at fellow struggler, STEPHEN ADLER (left) and Keith Fox say the redesign THIS WEEK IN CRAIN’S Time, which introduced its own radical will appeal to readers and See BW’S NEW LOOK on Page 8 advertisers alike.