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CRAINSNEW YORK BUSINESS Obamacare’s NYC checkup P. 6 | Commercial real estate’s diversity gap P. 10 | Ramen all alone P. 27 NEW YORK BUSINESS® OCTOBER 24 - 30, 2016 | PRICE $3.00 THICKER THAN WATER Throughout the city, family business owners like Andrew Rosenwach and his son Henry have kept their companies thriving across multiple generations— by putting values first PAGE 14 VOL. XXXII, NO. 43 WWW.CRAINSNEWYORK.COM NEWSPAPER P001_CN_20161024.indd 1 10/21/16 8:41 PM OCTOBER 24 - 30, 2016 CRAINSNEW YORK BUSINESS FROM THE NEWSROOM | MATTHEW FLAMM IN THIS ISSUE Ties that bind 4 AGENDA 5 IN CASE YOU MISSED IT THE SUBJECT of family businesses might seem like a nat- 6 INSTANT EXPERT ural fit for a Crain Communications publication, especially 7 POLITICS Wall Street in 2016: The family-owned company, which publishes this is exporting paper and more than 50 other titles around the world, is 8 ASKED & ANSWERED more jobs out of the city marking its 100th anniversary this year. 9 FINANCE But family ownership is a timely topic in other ways too. 10 REAL ESTATE Sumner Redstone and his daughter Shari recently went 12 VIEWPOINTS through the kind of epic battle for control of Viacom and CBS that should persuade every family business owner to FEATURES pay close attention to succession plans. Around the same 14 ALL IN THE FAMILY time, the Murdochs showed what a new generation can ac- complish when the brothers James and Lachlan took hold There is a growing of a mushrooming sexual harassment scandal and ushered consciousness that Fox News chief Roger Ailes out the door. “ family businesses Our focus, however, is on family businesses closer to home—from a garment district stalwart and a centu- are different and ries-old tugboat operator to a longtime coffee roaster should be studied in Queens and a 90-year-old boiler maker in the Bronx. separately. They’ve all beaten the odds that, according to one study, P. 14 STEFANIE KASSELAKIS suggest a family-owned company has just a one-in-three 24 GOTHAM GIGS chance of surviving to the second generation. Which brings up another aspect of a sector that accounts for more than 60% of all jobs in the U.S.: Business schools 25 SNAPS have turned their attention to it. “There is a growing consciousness that family 26 FOR THE RECORD businesses are different and should be studied separately,” said Belen Villalonga, 27 PHOTO FINISH who teaches family business management at NYU’s Stern School of Business. CORRECTION Family companies tend to think long-term and often focus on their values as Amazon’s Red Oaks filmed in Nassau County. The opposed to just the bottom line, according to Patricia Angus, director of Colum- location was misstated in an earlier version of bia’s Family Business Program, which recently became its own entity within the the article “Success of New York’s TV industry business school. “Businesses talk about this stuff,” she said. “But there’s a way that has soundstage owners scrambling for space,” published online Oct. 16, 2016. families live it that other businesses can learn from.” Families can also be more protective of employees, who in turn are more loyal. And their businesses tend to be more resilient. But not always. “Sometimes they outperform,” said Daniel Van Der Vliet, executive director of the Smith Family Business Initiative at Cornell, which plans to expand its New York City presence next year. “Other times they make weird decisions.” And they get into fights, and agonize over cashing out or finding new leadership when there’s no clear successor. And like much else, family business has gotten more complicated. “We live in a ON THE COVER hyper economic time,” Van Der Vliet said. “There’s a lot more at stake now.” PHOTO: BUCK ENNIS DIGITAL DISPATCHES CONFERENCE CALLOUT NOVEMBER 1 Go to CrainsNewYork.com Getting ready for 9 million New Yorkers READ Nearly 2,000 Stuyve- sant Town tenants who Together with private- and lived in the complex > public-sector leaders, including when Tishman Speyer Mayor Bill de Blasio, owned the buildings Crain’s will explore answers to will be getting more the questions facing money from a 2012 settlement for New York City as it approaches rent overcharges. About $442,000 is a population milestone. still unclaimed from the $68.75 million SHERATON NY judgment against Tishman and MetLife, TIMES SQUARE former owners of Stuy Town, which found 8 a.m. to noon that the companies illegally raised rents [email protected] while receiving a tax break that banned such increases. Vol. XXXII, No. 43, October 24, 2016—Crain’s New York Business (ISSN 8756-789X) is published weekly, except for double n Goldman Sachs is running banner and issues the weeks of June 27, July 11, July 25, Aug. 8, Aug. 22 and Dec. 19, by Crain Communications Inc., 685 Third Ave., audio ads on Spotify in the U.S. and U.K. New York, NY 10017. Periodicals postage paid at New York, NY, and additional mailing offices. Postmaster: Send address to recruit more millennials. This year, the changes to: Crain’s New York Business, Circulation Department, 1155 Gratiot Ave., Detroit, MI 48207-2912. For subscriber service: Call (877) 824-9379. Fax (313) 446-6777. $3.00 a copy, $99.95 one year, $179.95 two years. (GST No. 13676- bank also overhauled the way it seeks to 0444-RT) ©Entire contents copyright 2016 by Crain Communications Inc. All rights reserved. hire college graduates to prevent bias and diversify its staff. The bank recently used Snapchat to lure young prospects. BUCK ENNIS OCTOBER 24, 2016 | CRAIN’S NEW YORK BUSINESS | 3 P003_CN_20161024.indd 3 10/21/16 8:40 PM WHAT’S NEW OCTOBER 24, 2016 AGENDAA second chance to get it right in East Harlem—and beyond n 2003, the city rezoned East Harlem, believing it would spur de- velopment that would create housing and jobs without damaging the character of the neighborhood. But even without an afford- able-housing requirement, little of the hoped-for residential and Iretail construction happened in the years that followed, and the area remains far from reaching its potential. BIG POTENTIAL: Now the city is trying again. But the de Blasio administration’s pro- A rezoning of posed rezoning is about more than just East Harlem. If its plan for the East Harlem could trigger neighborhood is approved, it would be the second such success, follow- development ing one in East New York, Brooklyn, and would pave the way for a slew of 30-story buildings of other such overhauls still on the drawing board. along East Planning a community’s future is no simple task in New York City. 125th Street. Suspicion of developers and government runs high, fear of change bor- ders on paranoia, and idealistic activists inevitably demand more sub- ing, the area will not be able to take advantage of the great opportuni- sidized housing than developers can afford or politicians are willing to ties that lie ahead, notably an extension of the soon-to-debut Second fund. Even though the city’s East Harlem plan hewed closely to the rec- Avenue subway. ommendations of a neighborhood task force that spent a year studying East Harlem’s council member is Melissa Mark-Viverito, who as the matter, at the unveiling of the proposal council speaker understands the rezoning’s last week, one curmudgeonly filmmaker Rezoning in New York City is no easy implications not just for her district but promptly took to social media to defeat it, for the rest of the city. We have no doubt attaching the hashtag #gentrification to his task. Suspicion runs high and fear of that the plan, which is expected to begin posts. change borders on paranoia its formal seven-month public review in the The East New York rezoning was ap- spring, will ultimately win approval. But proved because the local councilman, Ra- how it gets there is important. If the speak- fael Espinal, was brave enough to defy a voluble group that pledged to er and the task force (which she created) can win a broad consensus go door-to-door bad-mouthing him in his district every Saturday for a for such essential elements as tall buildings near mass transit—the East year. The de Blasio administration did throw in goodies, such as a new Harlem plan calls for 30-story structures along East 125th Street—and community center and a new school, and will offer similar enticements the removal of mandates to include parking with new developments, it to East Harlem. If that’s what it takes, so be it. Without the proper zon- will establish that as the paradigm the city needs. — THE EDITORS BUSINESS ON WALL STREET is down, but it looks like this year’s bonuses will be up. At Goldman Sachs, for example, revenue is down by 15%, but the average employee stands to earn about $350,000, roughly $5,000 more than last year. The reason: Goldman’s expenses have fallen even more than its revenue, as the firm let go of about 2,000 people. As a result, there’s more bonus money available for fewer folks to divvy up. BY GERALD SCHIFMAN S T 25 WORDS OR LESS A T INSULAR INDUSTRY? S AS NEW YORK CITY FILM and TV employment swells, a disproportionate number AND Never put an opening of the jobs—even low-skilled ones—are going to native-born workers Projected 2012-22 growth in “ T % city arts and entertainment jobs, date on a subway HE CI 24.5 second highest of any industry advertisement.