CNYB 11-03-08 A 1 10/31/2008 9:09 PM Page 1 TOP STORIES Change means Time Inc.’s latest a return reincarnation to open comes up short government Alair Townsend PAGE 2 ® Page13 Developers search for cash, answers in the void left VOL. XXIV, NO. 44 WWW.CRAINSNEWYORK.COM NOVEMBER 3-9, 2008 PRICE: $3.00 by Lehman’s fall PAGE 3 Budget hoteliers Budget crisis will cut deep in NYC ramp up building more in cuts from the state, which robbed banks, that’s where the despite slowdown Faces $1 billion must close an unprecedented $12.5 money is.Education alone accounts PAGE 9 in losses; schools, billion budget gap next year. for 29% of state spending, followed The state cuts will be on top of by other local aid at 21% and Med- Off-B’way theater hospitals, nursing ones imposed by the city to address icaid at 15%. homes big targets its own deficit. Mayor Michael New York City, with 40% of the launches $10M Bloomberg is cutting agency budg- state’s population and two-thirds of capital campaign ets and wants to raise property tax- its Medicaid recipients, will shoul- BY ERIK ENGQUIST es by $1.2 billion. City income tax- der much of the burden from any PAGE 37 es could also be increased. cutbacks. The effects could be se- more crowded classrooms.Long- The first proposals to balance vere, because state aid accounts for er waits in emergency rooms. Tax the state budget won’t be unveiled $11.5 billion of the city’s $59 billion REPORT increases. for several weeks, but observers see budget. And state lawmakers may The impact of the state’s budget schools, hospitals and nursing look to spare the struggling upstate BUSINESS buck ennis crisis on New York City will be pro- homes taking the biggest hits. economy, thus increasing the im- OF LAW GOV. DAVID PATERSON wants real, found and will be felt in many ways. That’s because, as Willie Sutton fa- pact downstate,where the economy recurring cuts to close the budget gap. The city could face $1 billion or mously said when asked why he See BUDGET CUTS on Page 8 G Chief Judge Judith Kaye’s unfinished legacy Health care PAGE 19 G Crain’s ranks becomes With No.1 a memory, New York’s top 25 law firms PAGE 27 fallback G Pandit’s Citi struggles Bailout bonanza might be short-lived position PAGE 29 Wounded giant scrambles to cut costs and Sector sees surge AT DEADLINE in job seekers shed troubled assets; rivals seize openings from finance sinking economy, which is exposing Citi to titanic THE CITY REACHED A BY AARON ELSTEIN losses on everything from credit cards to office-build- TENTATIVE AGREEMENT WITH ing loans. Adding to the company’s pain, healthier ri- the Corrections Officers BY GALE SCOTT one year ago this week, the board of a struggling vals Bank of America and J.P.Morgan Chase are ex- Benevolent Association for 4% Citigroup Inc.ousted Chief Executive Charles Prince panding aggressively, in part filling the void left by wage increases in each of the as head of a medical employment in hopes of turning the bank around. Twelve months Citi’s retreat. next two years. Along with agency, Steven Craig has read and $68 billion in mortgage-related losses later, Citi “Citi no longer matters,” says Bill Smith, head of other increases, the new thousands of résumés over the shares have lost 65% of their value, and the company Smith Asset Management,a shareholder in and long- contract amounts to a nearly years. But he has seen something has so many troubled assets that its days as a leader in See TOP RANK on Page 8 10% increase in compensation new in the past U.S. finance appear to be over. for corrections officers and will two weeks: appli- What was once the world’s biggest bank has raise the maximum salary to 17,000 cations for hos- slipped to a position as America’s fourth-largest $76,488.The agreement NURSING JOBS pital jobs from by market value, ahead of Minneapolis-based are unfilled in follows a pattern established NYS; 165,000 people who last U.S. Bancorp. with other uniformed city RNs work worked in finance. Today,Citi CEO Vikram Pandit is furious- employees, including police in the state Partly because ly trying to right his ship by cutting costs, and firefighters. of the needs of an jettisoning risky assets and selling aging population, the stability of nonessentials. Working against him is the MANHATTAN’S MEMORIAL the health care industry is a rare SLOAN-KETTERING CANCER beacon in today’s darkening eco- VIKRAM PANDIT: Citi’s CEO faces a Pandora’s box of problems, ranging from huge losses on credit Center sought state nomic landscape. And, most im- cards and home mortgages to curdled investments. permission last week to open portant for people who work in an outpatient chemotherapy sectors that are contracting, health center in Brooklyn. If the $5.1 care employers are still hiring. million project is approved, it The latest state forecasts sug- will be Memorial Sloan- gest that 45,000 banking and fi- See AT DEADLINE on Page 2 nancial services employees will lose See HEALTH CARE on Page 2 44 5 ELECTRONIC EDITION alana mccarthy NEWSPAPER 71486 01068 0 CNYB 11-03-08 A 2 10/31/2008 9:08 PM Page 1 AT DEADLINE Continued from Page 1 Time Inc.’s tough transition Kettering’s first outpost in a New York City borough. Sloan- Kettering’s move signals the going to restructure the of view,” says Brett Wilson, Ad revenue at the publishing start of a battle for Brooklyn Reorganization brings world’s greatest magazine the former Money pub- unit fell 9% in the second quarter, cancer patients between the titles together but group, this is the perfect lisher who is now head of with operating income plunging world-renowned cancer hospital time to say that digital me- ad sales at USA Today. 15% to $218 million. and Maimonides Cancer draws criticism for dia people [are in “Some of these brands Center, which has the borough’s lack of digital focus charge].” need their own army, or Generating income largest cancer program. Certainly, the compa- they get homogenized.” still, Time Inc. remains a cash ny will look different The reorganiza- cow, generating about 10% of the U.S. ADVERTISING BY MATTHEW FLAMM on paper. Its 24 tion is also hurting parent company’s operating in- EXPENDITURES WILL ENTER U.S. titles will morale. Another come last year, or more than $900 negative territory this year, as time inc. goes through its sec- be grouped major round of million. dipping 1.1%, and will be down ond major restructuring in three into three A Time Inc. spokeswoman says 1.9% next year, according to a years, which is expected to include units: news, CEO ANN MOORE that it’s too early to criticize the re- will need to address forecast from BMO Capital more than 600 layoffs, the publish- which will long-term problems. structuring and that when every- Markets analyst Lee ing giant is trying to create a more thing’s in place, there will be peo- Westerfield.The new report centralized operation that ple dedicated to specific revised an earlier projection that makes the best use of re- brands. had called for 1.8% growth this sources at a difficult time for She also notes that 15% year. Forecasting an ad recession magazines. of profits now come from that will be “unparalleled” in But the flurry of an- the digital side—notably severity and duration, Mr. nouncements last week from CNNMoney.com, Westerfield wrote that he heralding the reorganization SI.com and People.com— doesn’t expect growth to return has met with a cool reception. which is a bigger chunk until 2010, when he foresees ad Some media watchers ques- than at any other traditional spending rising 5%. tion whether Chief Executive publisher. Ann Moore has come up “As far as making a digi- IN A RARE BIT OF GOOD NEWS with an approach that ad- tal person head of one of the FOR MANHATTAN’S SKITTISH dresses long-term problems THINNER ISSUES groups, Ann Moore is run- real estate market, Fitzpatrick at the company, which has ning [the style and entertain- Cella Harper & Scinto inked a struggled to grow in recent ment unit],” the spokes- 15-year lease for four-and-a- years, or if she’s reacting late woman adds. “She’s as much half floors at 1290 Sixth Ave. to a dismal advertising cli- -8% -11% -26% -18% of a digital person as any- People Sports Illustrated Time Entertainment Mark Weiss, a broker at mate and is mainly looking to Weekly one.” Newmark Knight Frank, who cut jobs. Percent change in ad pages year-to-date, compared with year-ago period. Source: Media Industry Newsletter A Time Warner spokes- along with Moshe Sukenik They say that one feature getty images man made clear that the par- represented the tenant, says of the plan—organizing ti- ent company approves. Vornado Realty Trust, the tles by subject matter to foster group include Time,Fortune and Sports Il- cuts is in the works—the fourth “What Ann is doing allows building’s owner, is one of a rare buys with advertisers—has been lustrated; style and entertainment, since 2005—with the toll expected Time Inc.to grow the big brands in subset of landlords that isn’t tried before without success.