TOP STORIES SPECIAL ISSUE Slimmer Shearman Annual & Sterling back from hard times Book PAGE 2 ® of Lists 4 proposals to COMING NEXT WEEK create Chinese trade marts face many obstacles VOL. XXII, NO. 51 WWW.NEWYORKBUSINESS.COM DECEMBER 18-24, 2006 PRICE: $3.00 PAGE 2 MAN AND BRAND: The company Tim Zagat The big picture founded almost three decades wants to be a Overhaul on helping the force on the Internet. state’s mentally ill GREG DAVID, PAGE 11 Medicaid, The rewards of in-kind donations; online philanthropy; Spitzer told volunteerism CORPORATE GIVING P. 17 Top adviser targets Megu spreads out maze of spending in spacious spot in midtown, produces centers without three-star meal organized oversight BOB LAPE, PAGE 39 BY GALE SCOTT BUSINESS LIVES governor-elect Eliot Spitzer’s lead health care adviser will recom- mend that the new administration immediately overhaul New York’s $46 billion Medicaid program. Reforming the health insur- ance system for the poor poses an enormous challenge for the in- jennifer chiu coming governor, who takes office LATE-SHOPPING TIPS on Jan.1.The first step is to untan- make within the first 100 days of 10 new stores offer buck ennis gle a maze of departments, agen- his administration.” unique gifts at various cies and divisions that share re- Mr.Tallon lays the groundwork prices PAGE 35 sponsibility for Medicaid, says for centralizing Medicaid’s admin- James Tallon, a former state as- istration in a report to be released Zagat eats up semblyman and member of the this week by the hospital fund, a Spitzer transition team. health care policy nonprofit based AT DEADLINE “This is a call for action,” says in Manhattan. The 58-page Mr. Tallon, president of the Unit- study—the most extensive exami- ELIOT SPITZER’S TOP DEVEL- the competition ed Hospital Fund. “These are nation of its kind—points to a con- OPMENT OFFICIALS will decide changes that the governor can See SPITZER on Page 34 early this week whether to seek a delay in a crucial vote on ing editions for hotels and shop- the Atlantic Yards project.The Huge growth spurt ping. More are sure to come. development is scheduled for a fuels expansion The mood is buoyant at the 27- vote on Wednesday before the year-old company, which has out- Public Authorities Control plans; still working done myriad competitors, most re- Countdown begins Board but could be put off at cently Michelin Guide.The French the request of Assembly on Web strategy firm launched in New York last year Speaker Sheldon Silver, an ally but sold only 150,000 copies, less for city’s retailers of Mr. Spitzer.The governor- BY LISA FICKENSCHER than a quarter of the Zagat eatery elect’s appointees to the guides sold in this city alone. Christmas in New York has a lot Empire State Development are zagat surveys in China and A $31 million investment,made Warm temps help going for it this year. Warmer Corp.—Co-Chairman Patrick India around the corner? Are in 2000, helped Zagat to signifi- some stores, but hit weather held off the snowstorms Foye and President Avi sports car rankings in the works? cantly expand its operations and that interrupted holiday shopping Schick—are rushing to “We’ll probably do those earning power.In the past five years, apparel sellers hard last year,and there’s no hint of a re- familiarize themselves with things,” says Tim Zagat, co- revenue has more than doubled, play of the subway strike that par- Forest City Ratner Co.’s. founder and chief executive of the Mr. Zagat says.Those revenues are alyzed the city for three critical $4.2 billion development. publishing company most famous estimated to be more than $50 mil- BY ELISABETH BUTLER days last December. Tourists flush for its restaurant ratings books. lion, according to InfoUSA.com. with euros are also flooding shops DENNIS RIVERA, THE POWERFUL In fact, just about any topic or Staff has also grown, to 120 full- new york retailers are enjoying here, pushing up sales of electron- HEAD of health care workers location is on the table at Zagat timers, necessitating the lease of a a brighter Christmas shop- ics, bath and body products union 1199 SEIU, is expected Survey these days. The company’s second floor at company headquar- ping season than others and home goods. See AT DEADLINE on Page 2 signature burgundy restaurant ters, at 4 Columbus Circle. around the country. “Tourism trade just guide now has five siblings,includ- Zagat’s business with corporate Following a strong per- 6%INCREASE drives traffic,”says Marshal in foot traffic partners, which buy thousands of formance in November, in New York Cohen, chief analyst at books as promotional giveaways, stores have had 6% more stores so far NPD Group. has mushroomed. Sales of its $25 foot traffic so far in De- in December However, the balmy annual online subscription service, cember than last year, ac- weather has wrecked holi- which gives users access to reviews, cording to trend-tracking firm day sales plans for some apparel re- have tripled since 2001.In fact,less NPD Group. That contrasts with tailers. With temperatures in the ELECTRONIC EDITION than 25% of sales now come from an 11% decline nationwide for the mid-50s and forecasters not pre- See ZAGAT EATS on Page 34same period. See COUNTDOWN on Page 33 NEWSPAPER AT DEADLINE Continued from Page 1 J&R Music World Tuesday as to be named to a new position the store tries to attract classical charged with organizing music fans who previously hospitals and nursing homes shopped at Tower Records. nationwide. Mr. Rivera has built Rachelle Friedman, a co-owner 1199 into a potent force with a of J&R, says she doesn’t usually winning combination of schedule in-store events during political clout and a tight the busy week before Christmas, partnership with hospital but she wants to win some of management. He would the business left behind by the continue to be based in New recent closing of Tower’s York and retain his title of Greenwich Village store. president of 1199, but would leave more of the daily HEMSCOTT GROUP LTD. AND operations to David Gresham, I-DEAL are expected to announce secretary-treasurer. today that they merged to create Ipreo. The new company, based NATIONAL FAST-FOOD CHAINS ARE in Manhattan, would combine RELUCTANT to serve as plaintiffs Hemscott’s data analysis in a potential lawsuit against the products for financial services city over a health department firms and i-Deal’s back-office rule that requires the posting technology for investment of calorie information on banks. Ipreo would have about JOHN MADDEN says restaurant menus. But they are $100 million in revenue. Private Shearman & Sterling asking local franchisees to file equity firm Veronis Suhler probably had more lawyers suits, according to industry Stevenson is the likely majority than it needed. He favors a insiders. owner of Ipreo, with Citibank “targeted approach.” and Merrill Lynch becoming HOTEL INVENTORY IN NEW YORK minority investors. Also, Ipreo buck ennis CITY WILL SOAR next year upon is expected to announce the the opening of 29 hotels and acquisition of Marketpipe, a the addition of 4,157 rooms, U.K.-based financial services according to new data from tech firm. Poaching survivor hospitality experts at PKF Consulting. Twice as many THE MYSTERIOUS DEATH OF rooms will be added in 2007 as FORMER KGB AGENT Alexander were this year. Based on an Litvinenko will be the subject of Shearman & Sterling climbs back from tough times industry standard of one a book by Alan Cowell, London employee per room, the new bureau chief for The New York hotels will add about 4,000 jobs Times. Doubleday Broadway BY HILARY POTKEWITZ citywide. bought rights to Sasha’s Story: The Life and Death of a Russian over the past four years, legal recruiters prowling for talent knew they had a good shot at FAMED CONDUCTOR DANIEL Spy, which will explore the plucking personnel from Shearman & Sterling. BARENBOIM will appear at possible role of Russian A raft of lawyers left for competing firms: Partners in the antitrust, investment ■ downtown electronics retailer President Vladimir Putin. management, employment, intellectual property and tax practices exited, in some cases taking other Shearman attorneys with them.Two managing partners departed for vice chairman posts CORRECTIONS at Wall Street investment banks—Stephen Volk to Credit Suisse First Boston and David Robert Descenza is an executive vice president at Thornton-Tomasetti. His title was misstated Heleniak to Morgan Stanley, both firm clients.The head count in the New York office in the Dec. 4 article “Timing is everything” in the real estate report. Jacky Teplitzky’s last name was misspelled in the Dec. 11 “Business Lives” story on visas. dropped to 430 lawyers last year, down from 545 lawyers in 2002. “For a while, they were viewed as a target,” says Jonathan Lindsey, managing partner at legal recruiter Major Hagen & Africa. “People thought they were having problems, and their See SHEARMAN on Page 31 THIS WEEK IN CRAIN’S NEIGHBORHOOD JOURNAL----------------------------------------------8 THE WEEKS AHEAD --------------------9 One-stop Chinese shopping GREG DAVID ------------------------------------11 could help Chinese manufacturers Four trade marts MART SMARTS A status report on the THE INSIDER------------------------------------12 four proposed Chinese trade marts in navigate the complexities of U.S. for overseas firms various stages of development PAGE 34 customs and connect with retailers REAL ESTATE DEALS--------------13 and distributors. The centers could in development; also facilitate transactions for U.S. 37 WEEK IN REVIEW -----------------------14 many obstacles four proposed projects designed to buyers who don’t have the resources SMALL BUSINESS ------------------- 15 bring Chinese companies together to go to China and U.S.