The Hype That Made New York

NEW YORK â€”  Earlier this month, Mayor Rudolph W. Giuliani blithely asserted that New York City didn’t care if the Grammy Awards show returned to Los Angeles since his city easily could find a replacement. Two years ago, when New York wooed the show from L.A., Giuliani could hardly restrain his glee. This coup, he pronounced, made “the capital of the world the music capital of the world as well.â€� He also used the occasion to take a swipe at the former host city, calling Los Angeles “a city on tapeâ€� compared with New York, which he called a “real city.â€�

Giuliani and his image-makers apparently are so confident of the restoration of their city’s traditional leadership that bashing the competition has become almost unnecessary. To him, New York’s hegemony over media and finance is self-evident; soon, he believes, it will be equally evident in multimedia and entertainment.

But Giuliani has fallen victim to his own hype.

New York’s much-ballyhooed “resurgence� is as much a product of good public relations as economic reality. To be sure, transforming a city long dismissed as dystopic into “America’s city,� according to one poll, is no mean achievement, especially since New York’s overall economy--measured by unemployment, job growth, rate of business start-ups--continues to lag behind most of the nation, including Los Angeles. Economic growth has been particularly anemic in the outer boroughs, where the vast majority of New Yorkers live.

Still, Wall Street’s gravity-defying ascent has set off a bout of conspicuous consumption in core Manhattan. Rents, both commercial and residential, are way up. Hotels are crowded and room charges are rising. Times Square is a sanitized, urbanized Orlando. Compared with the ‘80s boom, this one has been accompanied by a dramatic decline in crime.

These accomplishments have been greatly amplified by the reconsolidation of media power in midtown Manhattan. While jobs, population and technological firepower have drifted south and west over the decades, with the economic trio of California, Texas and Florida producing about one-third of the nation’s new jobs, much of the news media have concentrated in New York. A series of mega-mergers, mostly promoted by and conceived on Wall Street, is largely responsible for reversing what many observers once saw as a promising development--the decentralization of the media. Perhaps most important was last year’s absorption of Ted Turner’s Atlanta-based CNN by Time-Warner, ground zero for what City Journal editor Myron Magnet calls “midtown myopia.� Similarly, the collapse of onetime L.A.-based FNN and its absorption into CNBC in 1991 has reinforced New York’s hegemony over business news and commentary. Even erstwhile L.A. resident Rupert Murdoch’s Fox has placed its nascent national news operations within walking distance of its old rivals in New York.

Not surprisingly, the Manhattan media elite tends to share perceptions growing out of common experiences. “These guys are basically all from the same place. They all read the New York Times and they talk to each other more than anyone else,� says Stanley Rothman, a Smith College professor who has studied media elites for 20 years. “There’s a mutual reinforcement of what people think.�

This symphony of attitudes is important when it comes to evaluating New York’s presumptive rivals. A decade ago, leading intellectuals flocked to the nation’s capital, ground zero of a sharp ideological battle for the future of the country, if not the world. But the end of the Cold War, the GOP’s takeover of Congress, the election of an administration that prides itself on its political dexterity and the scandal-plagued reign of Mayor Marion Barry greatly reduced Washington’s importance. For much of this decade, the Dow Jones industrial average has replaced the president’s spokesperson as the daily media touchstone.

Los Angeles lost its footing as a potential media center in the early 1990s, following a deep recession, riots, fires and the 1994 earthquake. In a matter of years, the city’s expanding news-media infrastructure, which included many new magazines with a national readership, among them California magazine, and FNN, contracted either through buyouts or a shift in editorial policy. The growth of bureaus stalled, and the celebrity profile again became the L.A. story. Meanwhile, media, academic and political leadership often seemed to compete for who could depict the city in the most unfavorable light.

In contrast, New York’s media elite reacted to their city’s equally steep economic fall with a burst of wishful thinking and relentless self-promotion. New York’s media was once renowned for running down the city, recalls Giuliani advisor Howard Rubenstein, owner of one of the city’s most powerful public-relations agencies, but now prefer to trumpet a brighter image for Gotham. Giuliani’s “brilliant� strategy of hectoring the press for its negative coverage, Rubenstein adds, has made the booster’s job easy.

Rubenstein’s efforts have been bolstered by strong financial support from the one corporate group that has come to dominate the city and its politics--the Manhattan real estate industry. “The corporate leadership is a shadow leadership,� says Lew Rudin, head of one of New York’s real estate firms. “They can pick up and move. I can’t move this building to New Jersey.�

For Rudin and other New York real estate interests, a supportive media is an invaluable asset in driving up Manhattan rents and property values. Nowhere has this been more true than in the hyping of the “Silicon Alley� multimedia district in the old financial district. Originally conceived to fill vacant office buildings with “wired� companies, Silicon Alley, through the PR efforts of Rudin, evolved into the “ultimate� multimedia mecca. Within weeks, the “national� press, also based in New York, echoed the enthusiasms of the local press.

This hoopla largely has gone unchallenged even though most studies place New York second, usually third, in the burgeoning, if ill-defined multimedia industry. Forbes recently estimated that New York has roughly one-third the number of multimedia companies and less than half the employees as first-place Los Angeles. “Don’t bother with facts,� jokes Tom Lipscomb, president of Infosafe, a Manhattan-based software firm. “It’s like a cargo cult.�

The media spin so beneficial to New York has proved correspondingly harmful to burgeoning multimedia industries in other cities like Los Angeles, Boston and Dallas. But multimedia is not the only case of “midtown myopia.� Los Angeles’ garment industry, now the nation’s largest, remains largely ignored by a New York-based trade press committed to preserving Seventh Avenue’s role as the prime arbiter of fashion. Similarly, the New York media created a steady drumbeat promoting their city as “the entertainment capital of the world� even though Los Angeles has roughly 10 times the revenue and at least seven times the employment base.

If Angelenos are miffed by the media’s New York focus, it’s as aggravating to economic-development officials in such cities as Houston and Dallas. Some Texas urbanites were especially baffled by Fortune magazine’s annointing of New York as the best city for U.S. business--in spite of the weak economies of its outer boroughs, the nation’s highest taxes, a still suffocating regulatory regime and a severely overstressed infrastructure. “How can you talk about the ‘best’ economies in places that create half the number of new jobs we’ve created here?� groused Jim Kollaer, president of the Greater Houston Partnership, a local economic development group.

All this will likely change. When the bulls on Wall Street retreat, as is inevitable, New York will lose its primary source of propulsion, and its deep-seated social and economic vulnerabilities will reemerge from behind the media hype, just as happened in Los Angeles in the early 1990s and Houston a decade earlier. But at least one can credit the New Yorkers for having the chutzpah for trying to rebuild their image and self-confidence. It’s one New York lesson that other cities could stand to learn.