Crains New York - September 24, 2012 - (Page 4)

IN THE A global digital biz title debuts MARKETS From its SoHo office Atlantic Media’s Quartz takes aim at FT, Economist BY MATTHEW FLAMM Well-heeled global business professionals, who have no shortage of publications tailored to their needs, can add another title to their iPad reading list. On Sept. 24, Atlantic Media Co. debuts the digital-only Quartz, which has been the most talked-about business publication launch since Condé Nast Portfolio began losing millions in 2007. Fortunately for Atlantic Media, and in contrast to Portfolio, nobody has been talking about the costs. The name, though, has furrowed some brows. It was chosen because the mineral is found worldwide and is linked to tectonic activity. Quartz has drawn attention with high-profile hires from The Wall Street Journal, a “mobile-first and tablet-focused” publishing approach, and its ambition to take on global business giants The Economist and the Financial Times. The Manhattan-based operation is also building on the momentum of its Washington, D.C., parent company, which has become the Little Engine That Could of the media ecosphere. In 2010, fueled by digital spinoffs, the company’s 155-yearold flagship, The Atlantic magazine, turned a profit for the first time in years. Atlantic Media, which also owns National Journal and Government Executive, now derives 60% of its advertising revenue from the Web. Company executives view the shift to a largely digital publishing Financial trial of the century? Nah See QUARTZ on Page 23 I Let’s talk expertise. Hands-on partners with years of technical and industry-specific expertise. Advisors who offer insights and ideas to help you make smarter business decisions. Unmatched integrity. Unsurpassed results. If that’s what you’re looking for in an accounting firm, talk to J.H. Cohn. t’s no trial of the century. It shouldn’t even be the seminal case of the financial crisis, although given the dearth of indictments the past few years, it might have to be. In any case, folks eager to see a Wall Street chief face a jury will have to make do with the trial slated to start next week of former Reserve Management Co. Chairman Bruce Bent (above left) and his son, Reserve President Bruce Bent II. about its problems to Bloomberg News reporters before the company acknowledged the buck had been broken.The government doesn’t admit to tipping off the press, but said “even if ” it did alert a mutual-fund industry trade group,it did so for the purposes of “telling the truth to the investing public,” and after the events that led to the buck-breaking had taken place. In the end, jurors will be asked to decide what was really going on in the Bents’ heads as their firm got caught in the post-Lehman turmoil. The elder Mr. Bent has testified that on the morning of Lehman’s collapse, contrary to the advice of staff, he insisted the fallen investment bank would somehow make at least partially good on its obligations—at least enough so that Reserve wouldn’t break the buck. He told investigators his feeling was based on “47 years of being in the investment business.” Was the Wall Street veteran misleading those around him when he said that? Or was he just stupid? And is this really the biggest fish the government could catch out of the entire financial-crisis pond? However the matter is decided, the Bents will not face jail time. That’s because the trial stems from a civil lawsuit brought by the Securities and Exchange Commission, not a criminal indictment from the Justice Department. Should the Bents lose in court, the worst they face is a fine. We turn expertise into results. Steven Mayer, Regional Managing Partner Joe Torre jhcohn.com 8 7 7. 7 0 4 . 3 5 0 0 To jog your memory, the elder Mr. Bent ran the company, whose flagship service was a $62 billion money-market fund called the Reserve Primary Fund. Alas, Reserve “broke the buck” after Lehman Brothers filed for bankruptcy. The fund’s net asset value fell below the sacrosanct $1 a share because it held $785 million of Lehman debt that immediately had to be written down to zero. That unleashed a full-scale panic throughout the financial world, forcing the U.S. government to guarantee all of the $3.7 trillion parked in money-market funds. It was arguably the darkest hour of the financial crisis. In 2009, the government charged Mr. Bent and his son with hiding key information from customers and board members in the hours after the Lehman bankruptcy to stem a flood of redemptions. The feds alleged the Bents assured investors they would do whatever it took to prevent a breaking of the buck when they knowingly lacked the means to do so. The Bents responded through their lawyers that their actions have to be considered in the context of the Lehman catastrophe, and that the government is pursuing a textbook case of “fraud by hindsight.”The father and son contend they were as blindsided as anyone by the awful consequences of Lehman’s shocking failure, and claim that the government was “secretly fueling the run”at Reserve by leaking information New Yo r k . New Jersey . Connecticut . Massachusetts . California 18.8% RAISING THE ROOF Year-todate gain in the S&P Supercomposite Homebuilding Index as home sales and home construction both show signs of turning around. 4 | Crain’s New York Business | September 24, 2012 patrick mcmullan bloomberg news The most hyped launch since Portfolio fizzled company as only the first chapter in its transformation.The next one begins with Quartz and the 25 editorial employees working out of its SoHo headquarters. (A half-dozen reporters are based overseas.) “Chapter two [involves] taking those skills and creating new digital brands that are going to have no legacy assets, no traditional media associations, but will be the disruptor brands of the future,” said Atlantic Media President Justin Smith, who has led the changes over the past five years with owner David Bradley. “Quartz is our first major initiative in this area.” Mr. Smith has set his sights on what he calls the Economist-FT duopoly on the growing global business audience. Both publications are ripe for disruption, he believes, because their digital models—which include online pay walls and subscription tablet applications—are aimed at protecting their print revenue. Quartz, by contrast, has been designed from the ground up as a 100% by Aaron Elstein http://www.jhcohn.com http://www.jhcohn.com

Table of Contents for the Digital Edition of Crains New York - September 24, 2012

In the Boroughs
In the Markets
The Insider
Business People
Corporate Ladder
Small Business
Opinion
Greg David
Report: Accounting
The List
Classifieds
Real Estate Deals
New York, New York
Source Lunch
Out and About
Snaps

Crains New York - September 24, 2012