20101101-A--0001-NAT-CCI-CN_-- 10/29/2010 7:20 PM Page 1 INSIDE HARLEM IN MICROCOSM TOP STORIES 116TH STREET’S Vornado’s pricey TRANSITION Penney gamble MIRRORS ITS NEIGHBORHOOD’S slows its shares ® PAGE 18 PAGE 2 VOL. XXVI, NO. 44 WWW.CRAINSNEWYORK.COM NOVEMBER 1-7, 2010 PRICE: $3.00 Why Dolans Danny Meyer’s recipe for closing are such down a restaurant tough cable PAGE 3 Did Citi banker trick customers client into paying too much for LBO? As Fox now sees, their PAGE 3 phone, digital, TV deal A phone company keeps users locked in steps up, lest it end up a dead ringer BY MATTHEW FLAMM SMALL BUSINESS, PAGE 16 CABLE OPERATORS have been fighting for years over carriage fees—the amount they pay to carry television net- works on their systems.But there are no BUSINESS LIVES fights like the ones that involve the Brawler from Bethpage, also known as Cablevision Systems Corp. Chief Executive James Dolan and his father, Chairman Charles Dolan, refuse to back down no matter how mad it makes their customers. The latest battle, with News Corp., over payments for Fox 5 and My9, has turned into a watershed event. Those stations and three small cable channels whose contracts were also up were pulled from Cablevision Oct. 16, causing 3 million households to miss World Series and New York Gi- GOTHAM GIGS See CABLEVISION on Page 32 She’s a card-carrying clairvoyant P .. 33 ● ANNE FISHER on how to hand down the TEENS SQUARE family business P .. 33 New guv’s ● MOVERS & SHAKERS Globe-trotting producer Apparel brands swarm strip, draw crowds; budget seeks best for BAM P .. 34 crossroads’ appeal outweighs big rents ● GAEL GREENE says Olé to Bar Basque P .. 35 battles BY ADRIANNE PASQUARELLI State’s dire straits may INDEX ON A RECENT WEEKNIGHT, teens packed Aéropostale Inc.’s new Times Square flagship. Decked out in skinny jeans and Ugg boots, they scooped up graphic New make cuts possible THE INSIDER _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _8 York tees and plaid flannel shirts, and twirled for the video camera that projected their VIEWPOINT with vested interests _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _10 dancing silhouettes onto a 120-foot-long billboard outside. NEIGHBORHOOD JOURNAL _ _ _ _ _ _ _ _ _ _ _ _ _12 Across the street, young pedestrians smiled and waved on competitor Forever 21’s BY ERIK ENGQUIST REAL ESTATE DEALS PLUS _ _ _ _ _ _ _ _ _ _ _ _ _ _ _14 billboard, while a block away, shots of tweens at American Eagle Outfitters appeared CLASSIFIEDS _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _28 on that retailer’s 15,000-square-foot screen. AS BUSY AS Andrew Cuomo and Carl FOR THE RECORD _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _30 Welcome to Teens Square. In the past 12 months, the neighborhood has been Paladino have been in the homestretch HOT JOBS _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _33 transformed into a shopping mecca as Aéropostale, American Eagle Outfitters Inc. of their gubernatorial race, the next few EXECUTIVE MOVES _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _33 See TEEN SQUARE on Page 32 months will be murderous for the win- THE WEEK AHEAD _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _35 ner. Beyond the task of staffing his ad- buck ennis ministration, New York’s new governor must take on a daunting to-do list as soon as the ballots are counted. REPORT: THE LAW BIZ First up: a $130 billion-plus budget plan,due in January,that closes a deficit New financial rules are full-employment act of at least $8 billion and achieves struc- ELECTRONIC EDITION for lawyers with regulatory experience P. 21 tural reform. More than putting figures on paper, that job requires assembling LIST: P. 25 coalitions of industry groups and legis- NEWSPAPER Area’s top law firms See NEW GUV’S on Page 32 20101101-A--0002,0003-NAT-CCI-CN_-- 10/29/2010 7:04 PM Page 1 IN BRIEF Vornado’s odd outside bets THE FINANCIAL DISTRICT AND BATTERY PARK CITY LED THE LIST OF NEIGHBORHOODS WITH the largest year-over-year rent increases, according to a report from The Real Estate weigh heavy on its shares Group NY. Average rents rose 2.8% and 2.5%, respectively, this month from last year—the largest increases among the 15 neighborhoods tracked by the firm, which releases monthly Investment in Penney, not property, seen as distracting statistics on the Manhattan rental market. Additionally, rents for one- and two-bedroom apartments showed a year-over-year BY THERESA AGOVINO improvement for the first time in more than 12 months.They are up 12% in the financial WHILE RIVALS SUCH AS SL Green Realty Corp. and district and 7% in Battery Park City, according Boston Properties have been snapping up office build- to a separate report by Downtown Alliance. ings in fierce bidding wars over the past year, Vornado Realty Trust, New York’s largest publicly traded land- TRAVEL DISCOUNTERS EXPEDIA.COM, lord, has been doing a different type of shopping. PRICELINE.COM AND OTHER ONLINE TRAVEL Since the beginning of 2010, Vornado has pur- bookers lost big when the state Supreme Court chased the ground lease on a big Atlantic City casino, dismissed their suit against a revision of the a 26% slice of mortgage-servicer LNR and a 10% stake city’s hotel tax.The suit targeted a 2009 law in mass-market retailer J.C. Penney Co. that levied a tax on their service fees and forced Vornado has always had an unconventional invest- the online agencies to provide customers with a ment strategy compared with other real estate invest- breakdown of the hotel taxes on their bill.The ment trusts. In the past, it has taken stakes in compa- court’s move means that the online bookers nies ranging from McDonald’s to Toys “R” Us. But must pay the city the full amount of the hotel experts are increasingly skeptical about the wisdom of occupancy tax they collect based upon the room that approach,particularly as Vornado prepares to spin rate quoted to customers rather than a lower off its investment in Toys “R” Us, which appears to room fee agencies might have negotiated with have been a lackluster performer. It also doesn’t help the hotel operator. City Hall estimates that the that in the past year, Vornado’s stock performance has law will generate $14 million in additional hotel ranked No.3 among the top four publicly traded land- tax revenue during the current fiscal year. n lords with a major presence in the city. “The $64,000 question is whether these outside in- vestments are just a distraction,”says Michael Knott,an BY THE NUMBERS analyst at Green Street Advisors. “Some of them make money, but do they really create long-term value?” Weekly shift of the city’s economy Eighty-five percent of Vornado’s earnings come from a portfolio of office and retail space that totals SOONER OR LATER, all those firms reporting robust earnings will start expanding again. In the more than 100 million square feet. The firm has be- é meantime, consumers were less gloomy, and gun lining up investors for a new, $1 billion property fewer people filed unemployment claims. fund and has hired three senior executives with expert- ise in real estate acquisition. Analysts suggest that those moves will likely 13.3% $2.87 2.4% strengthen Vornado’s long-term prospects in its core RISE in 3Q NYC PRICE of gallon PROPORTION of operations, but they wonder about some of its other personal income of gas in NYC as New Yorkers who tax collections, of Oct. 25, up failed workplace holdings. For example, Vornado paid $2.2 billion in vs. a year earlier, 8.3% in a month drug tests in ’09, 2005 for its Toys “R” Us stake. Analysts project that to $5B Source: Energy vs. 2.9% in ’06. the investment, whose spin-off is expected in 2011, Source: NYS Information Source: Quest See VORNADO BETS on Page 31 comptroller Administration.