05.29.2011 – Martha Stewart Posts (Tasteful) ‘For Sale’ Sign – Week On the Web – CRAIN’S NEW YORK BUSINESS

Martha Stewart posts (tasteful) ‘For sale’ sign

Media and home decor franchise explores options, while Albany decides on a property tax limit and hedge funder David Einhorn invests in the Mets.

By Benjamin J. Spencer
May 29, 2011 5:59 a.m

Bloomberg News

Even DIY craft maven Martha Stewart knows when she needs help. On Wednesday, her limping Martha Stewart Living Omnimedia announced that it had hired Blackstone Advisory Partners to evaluate its options, including a possible sale of the company.

The news sent MSLO shares soaring nearly 30%—to all of $5 each. The value of Ms. Stewart’s famed franchise, nearly $2 billion back in early 2005, was a mere $250 million after the day’s trading.

It’s been a hard few years for the media and home decor franchise. Magazine ad dollars dried up; a merchandising deal with Kmart wasn’t renewed. In January, NBC dropped Ms. Stewart’s morning television show and its related spinoffs, relegating them to Hallmark Channel oblivion. The company’s CEO position has been vacant since 2008; Lisa Gersh, a founder of Oxygen Media, is slated to assume the post June 6.

The company’s announcement came just as 69-year-old Ms. Stewart, who has had the job title of chief editorial officer the past few years, is set to rejoin its board of directors, ending a five-year banishment due to her 2004 federal conviction for obstruction of justice.

TAX-SQUEEZED SUBURBANITES, REJOICE: Gov. Andrew Cuomo and state leaders agreed to impose a 2% limit on annual property tax increases statewide. The guv says property taxes soared 5.5% per year between 1999 and 2009, and the new cap aims to combat economic decline. Still, the state teachers union said limiting tax increases would devastate low-income schools outside of New York City. Legislators seem set to vote on the cap next month. …

HEDGE FUNDER DAVID EINHORN BET $200 MILLION ON THE METS, buying a minority stake in the financially strapped team. Whether that’s enough to buy a championship, or even downplay owner Fred Wilpon’s recent tongue-lashing, remains to be seen. …

THE HUFFINGTON POST IS NOT OFF THE HOOK, YET. A federal judge declined to throw out a lawsuit claiming the media company’s founders, Arianna Huffington and Kenneth Lerer, stole the idea for the online news site from a duo of Democratic political consultants—a charge AOL Huffington Post Media Group said is “pure fantasy.” …

THE FEDS ARRESTED GERARD DENAULT, the lead manager on the controversial CityTime project, and charged him with receiving $5.6 million in kickbacks from a technology subcontractor. Mr. Denault, who oversaw the rollout of the computerized timekeeping system for more than 100,000 municipal workers, could not be reached for comment. His employer, Virginia-based SAIC, has not been charged with wrongdoing. …

TWO MASSIVE, LONG-VACANT BROOKLYN PROPERTIES WERE FINALLY CLEARED for redevelopment. A judge rejected a community group’s lawsuit and green-lighted a $2 billion redo for the former Domino Sugar factory in Williamsburg. The city is now free to rezone the 11-acre site for a mixed-use residential project. And in Sunset Park, a 1.1 million-acre warehouse shut since 2000 gets its own shot at redemption: The city’s Economic Development Corp. tapped Salmar Properties to redevelop the charmingly named Federal Building #2 for light industrial use.

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05.27.2011 – Crowds to Storm NYC for Summer’s Start – CRAIN’S NEW YORK BUSINESS

Crowds to storm NYC for summer’s start

Grab your sunglasses, sunscreen and MetroCard—this Memorial Day weekend promises to be city’s busiest ever.

By Benjamin J. Spencer
May 27, 2011 3:22 p.m.
tour bus

Buck EnniS
Tourism is expected to thrive this Memorial Day weekend.

With fair weather forecast, the start of Fleet Week, and new attractions this year on the waterfront and Governors Island, the city is gearing up for an unusually crowded Memorial Day weekend.

Hotels are at around 88% capacity, according to Chris Heywood, a spokesman for NYC & Co., the city’s marketing and tourism organization.

“Last year was a record” for Memorial Day weekend lodging, he said, “and so far, we’re on track for another record year. Demand is very strong.”

Travelocity, a leading online travel agency, has seen bookings for Memorial Day weekend flights to the city soar in the past few years.

“New York City is the No. 4 destination for Memorial Day weekend, coming in behind Las Vegas, Orlando and South Florida,” said Genevieve Shaw Brown, senior editor at Travelocity. “It also happens to be the most expensive of those, in terms of hotel stays.”

New York was also the No. 4 destination for Memorial Day weekend in 2010 and 2009, Ms. Brown said.

The city is promoting revamped waterfront attractions at Coney Island, with its new Scream Zone, and expanded activities on Governors Island, where officials are hoping two new public sculpture exhibitions and free outdoor concerts will draw crowds.

A new smoking ban took effect this week, for the first time covering city beaches and parks. City Parks Department Commissioner Adrian Benepe said the city introduced the smoking ban partly as a result of public pressure, and partly because cigarette butts, which he said represent up to 70% of the pieces of garbage picked up on beaches, are “a particularly long-lasting and pernicious form of litter.”

Although 19 million visitors crowded New York’s shoreline parks last Memorial Day weekend—three times as many as in 2009—for the first time in years there are enough lifeguards, more than 1,300, to cover all of the city’s beaches and pools, according to Mr. Benepe. The lifeguard jobs pay $13.50 per hour with 48-hour work weeks through the season.

Tourist attractions, businesses and cultural institutions are also launching into high gear.

A spokeswoman for New York Water Taxi and the downtown Circle Line said the company had expanded its popular hop-on, hop-off tours from weekends only to seven days all season amid growing demand, and have also seen especially high interest from resident New Yorkers in the company’s newest tour, “Bike the Brooklyn Bridge/Water Taxi Back.”

And a costume exhibition of Alexander McQueen designs has drawn lines since 10:30 a.m. Friday at the Metropolitan Museum of Art, according to museum spokeswoman Elyse Topalian.

05.23.2011 – NY’s Top Public Companies Are Roaring Back – CRAIN’S NEW YORK BUSINESS

NY’s top public companies are roaring back

Crain’s list shows a collective 75% spike in income last year for the region’s 250 largest public businesses. The group’s $2.44 trillion-with-a-T market cap is now so big that it rivals the GDP of France.

By Benjamin J. Spencer
May 23, 2011 12:15 p.m.
New York Stock Exchange

Buck Ennis
The finance sector was the biggest winner, with companies in the financial field accounting for 47% of all the revenue reported by the Top 250 companies.

Big business in New York is bouncing back from the Great Recession—big time, according to the latest Crain’s ranking of the region’s top publicly held companies.

The total stock-market value of the 250 biggest public companies in the New York metro area, for instance, climbed 11% last year, to $2.44 trillion, compared with a total market capitalization of $2.19 trillion for the top 250 in 2009.

To put that $2.44 trillion figure into perspective: The total market cap for New York’s 250 biggest public companies exceeds the gross domestic of the United Kingdom (around $2.25 trillion last year, according to International Monetary Fund estimates) and comes in just under the GDP of France ($2.58 trillion).

Total revenue for the Crain’s 250 also rose 11% last year, to $1.75 trillion (that would be around the GDP figure for Canada), while overall profits soared 75% to $158.9 billion (somewhere between Peru and Romania).

Revenue winners last year included health care and consumer goods companies, such as Pfizer and PepsiCo, with gains of 35% and 33.8%, respectively.

But the finance sector was the biggest winner, with companies in the financial field accounting for 47% of all the revenue reported by the Top 250 companies, mostly due to stronger markets and more acquisitions than in recent years.

Bank of New York Mellon, mainly a custodian of corporate assets, saw revenues shoot up more than 75%, to around $14.5 billion after its 2010 acquisitions of PNC Financial Services Group and BHF Assets. And at BlackRock, the world’s largest money manager, revenues soared 83.2%, to more than $8.6 billion, in a year that saw BlackRock’s merger with Barclay’s Global Investors finalized.

05.15.2011 – Week on the Web – Hedge Funder Found Guilty – CRAIN’S NEW YORK BUSINESS

Hedge funder found guilty

A jury finds Raj Rajaratnam guilty, while the city debates the cause of an alleged Census undercount and Goldman Sachs takes some heat.

By Benjamin J. Spencer
May 15, 2011 5:59 a.m.
Raj Rajaratnam Galleon

Bloomberg News
A jury last week found Raj Rajaratnam guilty of all 14 counts of conspiracy and securities fraud.

The federal government netted its biggest hedge fund fish yet when a jury found Raj Rajaratnam guilty of all 14 counts of conspiracy and securities fraud. Jurors deliberated the insider-trading case for weeks, after listening to damning testimony from Wall Street bigs such as Goldman Sachs Group Inc. Chief Lloyd Blankfein and former McKinsey & Co. director Anil Kumar. In the end, the government’s unusual wiretaps likely sealed Mr. Rajaratnam’s fate, as jurors repeatedly listened to more than 40 tapes of the defendant milking various industry players for inside information.

The Sri Lanka-born hedge fund executive faces as much as 25 years in prison; sentencing is set for July 29. Mr. Rajaratnam, 53, plans to appeal the verdict and will wear an electronic monitor during his house arrest in the interim.

At the peak of his career, the Galleon Group founder managed more than $7 billion and was revered on Wall Street. In his defense, his lawyers tried to convince jurors that Mr. Rajaratnam was simply well-researched and only moved on information that was publicly available. Prosecutors, however, painted the hedge funder as the very definition of an inside trader.

Undercount debate

A Census official said a “processing issue” was one of many possible causes for a population undercount in the city—not that Tony Farthing, the bureau’s regional director, would confirm said undercount. He spoke at a City Council hearing in response to a Brooklyn councilman’s incredulity over Census-reported apartment vacancies in Bay Ridge. The city, which has yet to officially challenge the 2010 census count, hopes to reclaim 80,000 residents it says were missing from the rolls and thereby boost federal funding by $2.4 billion over the next 10 years.

A tough week for Goldman Sachs

Not only did Goldman get the heads-up that the Commodity Futures Trading Commission might soon charge it with civil fraud relating to its clearing services for a broker-dealer, it also admitted to receiving more subpoenas concerning its ill-fated mortgage product Abacus 2007-AC1. That piece of work has already attracted global scrutiny.

AIG starts selling

Uncle Sam wants to unload a thin slice of its 92% stake in American International Group Inc., offering 200 million shares in a sale that commenced last week. The government’s breakeven point is $28.72. Just 1.6 billion shares to go.

Met names board chairman

Daniel Brodsky was named chairman of the Metropolitan Museum of Art’s board. The developer admits he’s no expert when it comes to art, yet he was a driving force behind Lincoln Center’s recent renovations, and he’s a trustee of not only the Met but also the New York City Ballet and New York University. In his spare time, he manages 6,200 apartments in 68 Manhattan buildings.

Battery Park City residents relieved

Many Battery Park City residents are breathing sighs of relief after their managing agency agreed to cap the neighborhood’s total ground-lease rents at $525 million over the next 30 years. The agreement prevents projected hikes that could have cost the community $279 million more than that. A product of the 1980s, ground leases require tenants to pay a rental fee on the underlying city-owned land, in addition to apartment fees.

A version of this article appeared in the May 16, 2011 print issue of Crain’s New York Business.

04.28.2011 – Refinancings Plummeted in Minority Areas – CRAIN’S NEW YORK BUSINESS

Refinancings plummeted in minority areas

Approvals for refinanced mortgages fell by 14% in New York City neighborhoods with sizeable minority populations while soaring 110% in predominantly white areas at height of recession.

By Benjamin J. Spencer
April 28, 2011 1:57 p.m
The number of mortgage refinancings approved by lenders in New York City’s neighborhoods with sizeable minority populations “plummeted” from 2008 to 2009, the last year for which figures are available, according to report released Thursday by the Neighborhood Economic Development Advocacy Project, a fair housing nonprofit. The drop occurred even as refinancings in predominately white neighborhoods soared.

The figures are drawn from a national report covering seven large urban areas, in which NEDAP partnered with six other urban justice organizations. The groups examined the most current federal Home Mortgage Disclosure Act data, focusing on conventional mortgage refinancings.

Combining the New York City figures with demographic data, the group found that lenders decreased the number of loans made in neighborhoods “of color” by 14%, while loans approved to applicants in predominately white neighborhoods soared by 110%.

“In New York, we’re seeing a step in exactly the wrong direction,” said Sarah Ludwig, a co-director of NEDAP. She said the disparity points to the existence of a “dual credit market that corresponds to the racial composition of neighborhoods.”

In a separate statement, she added that “Fair access to credit is absolutely critical to New York City’s communities of color, which have decidedly borne the brunt of the foreclosure crisis—on top of decades of persistent lending discrimination.”

Caitlyn Brazill of New York University’s Furman Center for Real Estate and Urban Policy said that the rate of housing depreciation could be a factor in lower bank approvals. She pointed to an October 2010 report by the Furman Center focusing on individual borrowers rather than geographic data.

“We did look at home price depreciation across New York City,” Ms. Brazill said, “and there have been greater rates of depreciation in predominately minority areas.”

The NEDAP report also found that loan applications from particularly African-American and Hispanic communities fell even further—by 27%—than approvals from 2008 to 2009, the depths of the recession. During the same period, applications originating from majority white neighborhoods went the other direction, soaring 78%.

Ms. Ludwig said this suggested that banks had not reached out enough to those hardest hit by the subprime mortgage crisis. “There definitely doesn’t seem to be a lot of marketing to these communities,” she said.

The New York Bankers Association did not have an immediate reply.

CLARIFICATION: The report found that approvals for refinanced mortgages fell 14% in New York City neighborhoods with sizeable minority populations. NEDAP partnered with six other organizations nationwide to produce the report, of which New York City numbers were one part, and NEDAP Co-director Sarah Ludwig said banks are not doing enough marketing in minority neighborhoods. These facts were unclear in an earlier version of this article.

04.15.2011 – What Tech Bubble? VC Funding Holds – CRAIN’S NEW YORK BUSINESS

What tech bubble? VC funding holds

Nearly 70 companies in the New York area received more than $580 million in funding, according to a Friday report; funding was down 3% from year-ago quarter.

By Benjamin J. Spencer
April 15, 2011 3:49 p.m.

Despite rumblings of a tech bubble, New York area funding for tech startups held fairly steady in the first quarter.

Some 69 companies in the New York area received more than $580 million in funding, according to a Friday report from PricewaterhouseCoopers and the National Venture Capital Association. Funding slipped 3% from the first quarter of 2010 but was up 6% over the fourth quarter. The number of deals was down 21% over the first quarter of 2010 and down 22% over the fourth quarter.

“Despite recent hype about both funding gaps and bubbles within the venture capital industry, the first quarter demonstrates an investment pace that is reasonable, rational and relevant to the long-term nature of our business,” said Mark Heesen, president of the National Venture Capital Association, in a statement. “What we are not seeing this quarter is just as critical as what we are seeing.”

In New York, startups in software and IT dominated funding in the first quarter, accounting for $198 million, or 34%, of venture capital dollars, according to the report. The life sciences sector, which includes companies specializing in biotechnology and medical devices and equipment, accounted for 33% of funding, or $190 million. Media and entertainment startups received nearly $129 million in funding in the first quarter; recipients there included Beyond Oblivion, a cloud-based music service that snagged a whopping $77 million in the first quarter—the most of any New York-based company—and question-and-answer website Stack Overflow, which received $12.3 million in funding.

David Silverman, managing partner for PwC’s New York emerging-company practice, said the average deal was high this quarter, reflecting a growing business savvy in New York’s Internet and tech sectors. He said business owners who may have developed two or three other successful tech companies since the 1990s are now bringing their experience to the field.

“What we saw 10 to 15 years ago in San Jose, we’re seeing now in New York City,” said Mr. Silverman.

The New York area still trailed California’s Silicon Valley and New England in tech investments during the first quarter, according to the PwC report. In Silicon Valley, 212 companies received $2.5 billion in first-quarter funding; in New England, 90 firms received $639.3 million.

But the Big Apple is gaining traction. According to a separate analysis from CB Insights, New York state received more venture capital dollars in the first quarter than Massachusetts, which due to its Boston tech scene has long been No. 2. New York brought in $379 million in venture capital in the first quarter, according to CB Insights, compared with $227.6 million for Massachusetts. CB Insights’ report includes five sectors: software, Internet, mobile and telecommunications, computer hardware and electronics.

“There’s a lot of optimism surrounding New York right now,” said CB Insights Co-founder Anand Sanwal. He noted that the city’s seed-stage startup accelerators, which help prepare young companies for evaluation by venture capital firms, are helping.

“They churn out some really interesting companies and entrepreneurs,” he said. “There’s a lot of momentum. The ecosystem just kind of feeds on itself.”

04.12.2011 – NY, NY: It’s a Government Town – CRAIN’S NEW YORK BUSINESS

NY, NY: It’s a government town

Bronx is up, Battery’s down, public jobs all over the ground: The six largest employers in NYC are government entities, not private enterprises, according to Crain’s ranking of top employers.

By Benjamin J. Spencer
April 12, 2011 1:50 p.m.

Albany and Washington, D.C., are known as government towns. Maybe New York City should be, too: The six largest employers here are government entities, according to Crain’s latest ranking of the city’s top employers.

The Crain’s list shows that New York City’s top employer is the city itself, with 152,836 full-time employees in 2010, not including the Department of Education, which is second on the list, with 121,255 employees last year.

Ranking third, with 66,240 employees, is the Metropolitan Transportation Authority, even though it shrunk its New York area workforce by 5% last year, more than any government employer in the city.

Rounding out the Top 6 here are the U.S. government (with 52,800 federal workers in the city), the New York City Health and Hospitals Corp. (36,964 employees at such public institutions as Bellevue and King’s County hospitals) and the state of New York (with 26,500 workers in the five boroughs).

The government employers on the Crain’s list of the city’s 40 largest employers together represented 426,408 full-time or full-time equivalent positions—or half of all the local employees counted on the entire list.

In addition, several of the rest of the Top 40 employers are heavily dependent on government funding, including the City University of New York and large private hospitals that survive on Medicaid and Medicare payments.

New York City’s reliance on government work adds an intriguing local economic layer to some of the political debates over public-sector spending in Washington and Albany these past few years.

The recently passed state budget, for instance, calls for $450 million in state workforce cost reductions for the fiscal year that began April 1. If the costs cuts can’t be negotiated with public worker unions, then the state might have to lay off as many as 9,800 employees over the next 12 months.

“We could be seeing the loss of thousands of middle-income jobs in New York City,” said James Parrott, chief economist at the Fiscal Policy Institute, a liberal think tank based in New York.

Cutbacks in public sector jobs could “act as a brake on recovery,” Mr. Parrott warned, adding that “the reduction in state government contracts for social services, senior services and child welfare that go to non-profit organizations are [also] likely to mean job cutbacks in the private sector as well.”

E.J. McMahon, a senior fellow at the conservative Manhattan Institute, downplays such dire talk. The new state budget introduced “not so much cuts as non-growth,” he said, noting that the city’s 100,000-plus job losses during the Great Recession makes 9,800 potential state layoffs a “rounding error.”

“This won’t affect the city at all,” Mr. McMahon said. “The [government] layoffs in the city have to do mostly with people retiring or accepting early retirement.”

The Crain’s survey of top employers found that each of the six public-sector employers reported declines in full-time staff over the last year, from a 2.6% drop in city government ranks to the 5% hit at the MTA.

Public employees weren’t the only ones to feel the economy’s sting, of course. Insurer American International Group Inc., media giant Time Warner and phone and cable company Verizon Communications all posted double-digit job losses last year, even as the local economy began recovering from the impact of the global financial crisis.

And some employers even grew their New York City workforces in 2010.

J.P. Morgan Chase & Co. eclipsed Citigroup Inc. last year to become the Big Apple’s largest private-sector employer. J.P. Morgan reported a 13% increase in employees in the five boroughs, to 24,927 at the end of 2010 from 22,066 at the end of 2009. Meantime, Citigroup held steady with a slight 0.2% rise, to 24,442 last year from 24,393 in 2009.

Other big gainers last year include media company Bloomberg LP, where local jobs grew by 8.6%, and private hospitals North Shore-LIJ Health System (up 7.4%) and NYU-Langone Medical Center (6.3%).