How Rupert Murdoch's Son Became Art Basel's Savior

before we get into this week's episode I want to make a plug for Art Market minute this is artnet news's new micro podcast hosted by Margaret carrian who is the site's news editor Europe it offers a weekly snapshot of essential Art Market news expertly compiled by the artnet pro editorial team if there's a company that you think is fundamentally on the right track and external circumstances have laid them low this is actually the perfect time to get involved with them hi I'm Andrew Goldstein and this is the art angle a podcast from artnet news where the art World meets the real world bringing each week's biggest story Down to Earth at the start of August an unlikely New Alliance shook up the art industry in a historic way James Murdoch the son of the notorious right-wing media Mogul Rupert Murdoch agreed to invest roughly $80 million in the Bellard company that owns Art bosle arguably the most influential player in the global Art Market to talk about how a billionaire former executive at the company that brought us Fox News just became an art world power broker overnight and why that might actually be a great thing I'm very pleased to have artnet news art business editor Tim Schneider back on the podcast thanks very much for coming back on the art angle Tim thanks for having me Andrew okay so something happened in a boardroom in Switzerland this past Monday that is really kind of a huge deal with implications for the entire next decade of the art industry what happened there what happened is that the MCH Group which is the parent company of art bosel as some listeners probably know the MCH group held one of their extraordinary General meetings anything is possible at the extraordinary general meeting but the thing that really matters here is that there was a vote on a major deal that was proposed by James Murdoch officially through his investment vehicle it's called Lupa systems and it represented an $80 million investment by Lupa systems to become the quote anchor shareholder of the MCH group and the exact percentage that Lup of systems will own at the end of this could be as much as 49% so they won't be a majority owner but they will potentially be as close as you can get and in addition to that lupus systems will get three seats on the MCH board of directors one of which will be James Murdoch himself so these measures came up for a vote of the shareholders and More than 70% of them said yes let's do this and so the MCH group has now rocketed into this new new James Murdoch era of its existence and we'll uh we'll see what happens from here sounds like it may have been the most extraordinary general meeting in the history of the company because when you think about the Murdoch family and Art Basel these are things that seem like oil and water I mean Murdoch is is basically synonimous with the Trump presidency there are times when it seems that Trump's presidential Twitter feed is really a live stream of the commentary on Fox News so how does this make sense how does a Murdoch and an art company of the August stature of art bosel come to get married well the way that I would answer that is to look back at the way that this deal developed when rumors first emerg earlier in the summer of a Murdoch investment interest in the MCH group the immediate fear of a lot of people in the art world was that it was rert Murdoch who was the one who was looking to invest and then what emerged instead was that it was not rert it was his son James and that then led into well isn't James moch just younger version of rert Murdoch and isn't this just as bad and the reality is somewhat different at the same time the MCH group was in such a financial mess that that really even if it had been rert Murdoch who was trying to invest and not James I think that there are people who would still have said like well I hate this but I can understand why they're thinking about it h i mean you mentioned this financial stress and as a matter of fact I believe MCH sent a a message to its board before this meeting took place where they said basically this is our last best chance to survive and and you guys should vote for this and that is a remarkable place for art basel's parent company to find itself because for about the past two decades art basle and its various offshoots have been synonymous with the global expansion of the Art Market so how is it possible that Art Basel could have found itself so humbled and so vastly in need of rescue that it would sell such a big chunk of its business business to James Murdoch in order to answer that question I think that we have to provide some important context here which is that although we in the art world are thinking about this deal specifically through the lens of art bosle the MCH group is much more than just art bosel so the MCH group for all intensive purposes has two core businesses on the one side they have this whole business of producing their own trade fairs and obviously art bosle is one piece of that but they're not the most important piece and we'll come back to that in a second the second Core Business is what they refer to as their live Marketing Solutions Division and this is more or less a Consulting business that has cropped up around the idea of trade fairs so the live Marketing Solutions division will do things like consult with other people about their trade fairs that the MCH group is not producing or they will uh contract to build specific stands at trade fairs or whatever else so you have these two components coexisting under the MCH group and within the business of producing their own fairs as much as art bosel gets the focus on our side the real cash cow is bosel World which is their watch fair that they produce every year in bosel as the name would suggest and bosel world has basically been on a three-year trip through hell and there have been other I would say strategic mistakes miscues that have been made elsewhere in the business on top of that but the whole Avalanche in my mind really begins with a collapse within bosel world I mean that was really set in motion by swatches decision to drop it business and their investment in in basle world was tant amount to about $50 million a year so that's just one entity involved in this train fair and after that it just kind of all seemed to unspool but that's just Basel world what about the trials and tribulations that they've been suffering in the Art Basel division right so even that picture of what happened at bosle world is only a fraction of it you're right the departure of Swatch and all of its Brands was a major major blow that actually very quickly forced out their then CEO but sitting over all this is the fact that before 2017 the MCH group had pumped all of this money into expanding and renovating its main exhibition space in bosel and as a result of the money that they had put into really making this thing the best it could be also ended up raising the fees for exhibitors and that was what precipitated exhibitors at bosle world to start leaving out the front door in between the 2017 edition of bosel world and 2018 Edition about half of the exhibitors left um it went from about 1,300 exhibitors to about 650 but you're right there's actually a lot of other I think problems that emerged over the course of the next couple of years more on the art side the Ledger one of the ones that I think is important to talk about is that around 2017 the MCH group made the Strategic decision to Pivot into Regional art fair so smaller events that are not the global everybody showing up from everywhere types of events that the three Art Basel editions are and so MCH group bought a majority stake in the India art fair and a minority stake in art dorf and they were going to launch a Trade Fair in Singapore called Art SG and what happened was that in between announcing the strategy and embarking on it in 2017 and the fall of 2018 they basically came to the conclusion that they had to reverse course entirely so by November 2018 the MCH group was putting out statements saying that it had to divest of the stakes that it had basically just bought in the India art fair and art Dorf and that it was not going to proceed with art SG and on top of that there were some other events within the MCH group that didn't really work out they had tried to launch a car Fair called Grand Basel and they had one edition of that in Switzerland in 2018 and then it was supposed to expand to Miami Beach and Hong Kong literally following the path of the art bosle editions and none of those other fairs actually happened for all intensive purposes Grand bosel was just sort of folded under H and the the hits just kind of kept coming in September of 2019 our bosle announced that they were going to do this three-day conference in Abu Dhabi called Art bosle inside it was going to be this almost stavos or ted-like conference meeting of the minds there was I think going to be some exhibitions tied to it or specific pop-up installations but but tickets for this thing were going to be $155,000 a pop and in between announcing it in September and late November that got called off too so when you look at all this stuff over the course of 2017 through 2019 you have this huge investment in reshaping this very important venue then you have the most important Trade Fair happening at that venue to start bleeding exhibitors left and right you have this Regional fairs misadventure and these other smaller events that are supposed to bring in some Revenue that don't and this is what we're dealing with all the way up to about New Year's Eve 2019 H and then the Corona virus shows up so what happened to MCH and Art Basel and basa world when the Corona virus broke out as the Corona virus spread and worsen you had the MCH group and again in our case art bosel really trying to go as far as they could toward saying we're not going to cancel these events we don't want to cancel these events until finally we have to cancel these events this is what 2020 has looked like for the MCH group so far in early February they have to cancel art bosel Hong Kong which for reference usually happens the third week of March every year late Fe uary they say that they're postponing bosle World 2020 which usually starts off in May calling it a postponement is a little bit of spin because it's not going to happen now until January of 2021 H end of March art bosle in bosle which of course jumps off every June gets pushed to mid-september for the first time ever April comes around the MCH group lays off 150 people early June the MCH group and our basle come to the conclusion that the postponed art bosle in mid-september can't happen either that gets cancelled so the only event left for 2020 is Art bosle Miami Beach and I happen to look at the Corona virus numbers in Florida and here's what I can tell you about that in the seven days leading up to August 6th which is the the date that we're recording this podcast Florida had more than 51,000 confirmed cases of Corona virus and and within the State of Florida Miami Dade County was the highest case load by far of any other County so things are not going well in Florida right now I would even add to that that in typical December in Miami At Art Basel you're about as likely to catch a cold as you are to see a celebrity it is a perfect petri dish for the spread of easily communic a diseases right and and of course anybody who's been paying attention to the news about the virus at all everyone has been conditioned to this idea that it's going to get worse in the fall it's not going to get better okay so this sounds really bad for art BOS and in comes James Murdoch so who is James Murdoch what is his backstory exactly so James Murdoch is the fourth of rert Murdoch's six children he was born in 1972 in Wimbledon he has been defined most recently in a New Yorker or Talk of the Town piece by Jane Mayer last year as and I quote the smart one in the Murdoch Clan wow he went to private school in New York when he was younger he then went to Harvard where he was a cartoonist for the Harvard Lampoon among other things but he dropped out in 1994 moved back to New York and started an independent hip-hop record label called rockus records with a couple of his Harford friends and this seems like a great kind of breaking away moment right but in reality what ends up happening is that News Corp comes in in 1996 and buys rockus records so James almost forcibly gets brought into the family business at that point and he is given a role in news Corps digital and New Media departments which seems like a really exciting place to be in retrospect but at that point those were just not priorities within the company at all it it really reads like a situation where rert is saying okay James I'm going to give you some young people stuff to play around with just don't make too much trouble but what ends up happening is that James goes out and he makes some pretty Savvy Investments I mean he's not batting a thousand on these things but this ends up changing his trajectory within the News Corp Empire and then the next mil Stone on this journey I think is in 2000 when James is 27 he gets put in charge of star television which is news corpse Asian satellite TV provider and at this point star television is just a tire fire they're allegedly losing as much as 100 million pounds annually and James gets thrust into this role and he manages to turn the company around and he does that by pivoting to India and through investing really heavily in India he manages to stabilize the company and that move ends up catapulting him into the big leagues so to speak so he then gets ported over to where the real Nexus of power is at that point in the newscorp Empire which is back in the UK so James is then put in charge of British Sky broadcasting the UK satellite TV provider Within the News Corp Empire and he's also put in charge of News International which is the publisher of some of the major News Corp print media properties in the UK one of which is the storied and Infamous tabloid the news of the world MH and this becomes a tremendously fateful appointment in the ark of James Murdoch's career right so I think everybody who is at least of a certain age can remember the news of the world Scandal back from 2011 in part because it was a scandal about a tabloid what happened what was this Scandal okay so we could probably do about 90 minutes just on the phone hacking Scandal and that's coming from me as somebody who frankly isn't even that fascinated with British tabloids or British celebrities but here's the gist of it all the way back in November of 2005 the whole thing jumps off because the news of the world World publishes two stories about Prince William one is about him injuring a tendon in his knee and the other is about him borrowing broadcasting equipment from a good friend of his these like barely rise the level of tabloid stories in my mind but they become very important because the Royals huddle together and say wait who the hell leaked this stuff and what they eventually determine is that no nobody leaked it and that the only way that somebody could have actually known about either of these things happening was if they had managed to listen to the private voicemails that Prince William and his friend had left for one another concerning these issues so this leads to an investigation that reveals over the course of several years that the news of the world and operatives for it have been hacking into the voicemails of the Royals of British celebrities and other public figures and using that as a primary source material for a lot of the stories that they're running H and so as with any corporate Scandal the questions very quickly become well who knew about this what did they know and when did they know it and how far up the chain of command does it actually go and it takes several years for everything to come to light so as the Scandal grows and it starts pulling in people like James Murdoch and rert Murdoch where they're testifying before members of parliament and all these types of things it seems like the really really high up people are going to get out okay and this is really important because what's happening simultaneously to the tail end of this entire Saga is that News Corp is barreling towards this really really important deal where they are trying to take a majority stake in B Sky B they they were large shareholders before that I think they owned about 39% of the company but they were trying to fully take it over this is like rert Murdoch's dream acquisition right this is the thing that this would be the jewel in his crown right and it's kind of bizarre to think about it now because the whole thing came down to satellite TV which here in 2020 seems like the most Antiquated possible form of media that you can conjure but at that point News Corp had all of these satellite TV Holdings throughout the world and especially throughout Europe and I think it was somebody who was writing for the telegraph who said something to the effect of this isn't just an important deal for the sake of News Corp if they can't manage to pull this off their entire European satellite TV strategy ceases to make sense so this is a huge huge deal and News Corp launches this bid in 2010 it stretches into 2011 and then the summer gets here July 2011 we learn about Millie Dowler yeah who is Millie Dowler Millie Dowler was a 13-year-old British school girl who disappeared back in March 2002 and about 6 months later she was found murdered and this was of course a huge news story and a huge tabloid story in the UK press while it was going on what emerged in July of 2011 was that the news of the world hadn't just been hacking into the voicemails of public figures someone in News of the World had hacked into Millie dollar mobile phone and had not only listened to her voicemails at the period after which she had disappeared they had actually deleted voicemails which is really really bad for two reasons H one I mean you're literally destroying evidence two put yourself in the position of Millie dollar parents your daughter's disappeared as the weeks go by you are facing up to the possibility that the worst possible thing has happened and then you find out that somebody has gone into her voicemails and has actually deleted some messages if you're looking for any shred of hope that you can possibly come up with that your daughter might still be alive who do you think might have done that you probably think your daughter did it but it wasn't your daughter it was a journalist at the news of the world wow so when this comes out it is such a catastrophe for News Corp that News Corp actually has to back out of the B Sky B deal this Jewel in their strategic Crown collapses I mean and that wasn't all right no I mean that's the the wild thing is that it wasn't even over at that point huh it takes all the way until 2012 for the thing to close up as far as James Murdoch is concerned and what happens from like the end of 2011 then into 2012 is that a couple of really damning pieces of evidence emerge one is that a former attorney for News International testifies that James Murdoch was fully briefed on the fact that this was not the work of one Rogue journalist that the phone hacking was a pretty widespread practice within the news of the world and that he was briefed on it many many years earlier this isn't the final nail in the coffin that appears to be an email that emerges to James Murdock detailing the extent of the phone hacking Scandal all the way back in 20 08 James Murdoch's defense of this is that he didn't read the whole email that's just a classic case of if you're lying it's bad if you're telling the truth guess what it's also bad and it ends up being the type of thing that he ultimately just can't come back James resigns as executive chairman of News International he resigns as chairman of B skyb the only thing that he manages to retain is his title as coo at News Corp but even there he's reassigned he's out of the print media properties entirely and he kind of just disappears from the scene for a while so where can James Murdoch go from there well where James Murdoch goes from there incidentally is Hollywood in 2013 news cor spins off its TV and film assets into a new entity called 21st Century Fox and News Corp itself at that point then is just print media and James Apparently after the heat has died down a little bit is given a seat on the board of both entities and in 2014 he's named the co-ceo of 21st Century Fox the following year he becomes the sole CEO and he starts doing things that are pretty smart and like the company start starts to succeed and he goes on the comeback Trail he even manages to reclaim his chairmanship at B Sky B in 2017 and so it looks like this total corporate Redemption story if you're looking at it purely in terms of was James able to make good on his talents and redeem himself in the eyes of his father then yes absolutely he was so all of this ends up being kind of shortlived 2018 Comcast comes in they buy a majority stake in B Sky B and James leaves after that then in 2019 rert finalizes this Mega deal that has been built up over the course of the previous few years which is that 21st Century Fox sells most of his entertainment assets to Disney for 71.3 billion and this is more or less the moment when rert decides that he's going to hand off the company and so rert gives control of fox corporation which is really all the remaining media properties mostly Fox News he gives control of fox Corporation not to James but to James's older brother Lachlan and of course Lin Murdoch could be the subject of a totally different podcast because he's a fascinating character this black sheep you know tattooed rid motorcycles quit his father's company to go to Australia and kind of go his own way and then the phone hacking Scandal gives him the opening to be re-embraced and and he has very conservative leanings I just want to point out here that this whole thing sounds a lot like succession I don't think that's accidental is it no as probably many people listening to this podcast already know the hugely successful HBO drama succession is widely understood to be based on the Murdoch family drama should also mention at this point that the Jane mayor New Yorker piece that I mentioned earlier is titled no James Murdoch doesn't watch succession which is kind of like saying that Trump doesn't read the New York Times so this kind of becomes the new season lacklin now has his clutches around the Throne of Murdoch and what does James do next as tempting as it is to frame this as James losing the succession battle there is this question of whether or not he really wanted the role that llan has people close to James always the most dubious of sources but people from within james' Circle have said that he never wanted the role at Fox Corporation and that once negotiation between News Corp and Disney really got serious he started lobbying Disney CEO Bob Iger for a prominent role at Disney and that didn't transpire and supposedly one of the reasons that AER didn't want Murdoch to be a part of Disney was that he didn't want the Murdoch name associated with the company it's not a very child-friendly name yeah I mean the idea of of Mickey Mouse in a make America again hat is pretty jarring and of course there are a lot of Echoes here with what we were talking about at the very beginning of this episode in terms of the sheer Association of the Murdoch name in an ostensibly liberal section of the Arts being too much for people to handle and in a way James was living through some of the same thing when the bid was announced for the MCH group I I mean James Murdoch is actually a mega donor to democratic causes is that not right just recently he donated a million dollars to Joe Biden's presidential campaign and over the past several years and really especially since the Trump Administration began he's been willing to make increasingly strong stances that counter what you might expect somebody with the Murdoch last name to make for instance in 2017 when it's worth noting he was still the CEO 21st Century Fox he came out and blasted president Trump for his Infamous there's some very fine people on both sides comment after the alt-right rally in Charlottesville Virginia that's left a peaceful protester dead H James and his wife Katherine also made a $1 million donation to the Anti-Defamation League immediately after that as well and there have just been more and more things like this leaking out over the years earlier in 2020 James and Katherine issued a statement denouncing news corpse Australian media outlets for denying the influence of climate change on the just devastating wildfires that have ripped through that whole continent over the course of the the previous few months and insiders at News Corp and fox dating back to even earlier in James's tenure have said that he was always at odds with the increasingly rightward tilt of the coverage once Roger alss was accused of several instances of sexual harassment of employees James was apparently one of the people behind the scenes who was pushing for his father to finally jettison ALS there was actually one other really recent thing that happened that is relevant to all of this which is that just a few days before the vote at the extraordinary general meeting James resigned from the board of News Corp so there are all these points where it starts to really look like the James Murdoch political stance is significantly different than the rert beroch political stance I think that you could arguably say that one of the clearest places where this is evidenced is in his quad rivium Foundation which he founded with his wife could quote craft effective practical actionable and ambitious policies domestically and abroad to fight illiberal populism basically to fighting disinformation and fake news right and and querium isn't just focused on that they have pumped a lot of money into trying to reverse climate change then uh amplify evidence-based solutions in science and health working on expanding voting rights these kinds of things that frankly to me just seem like Common Sense Centrist positions but in the scope of what politics has become in 2020 seem like shining beacons of liberalism you wrote a column a few weeks ago titled why going to business with James Murdoch should be a no-brainer for art bosel and the MCH group why on Earth though would James Murdoch want to get involved with art bosel right now at this point when it is such a a damaged and and limping company if there's a company that you think is fundamentally on the right track and external circumstances have laid them low this is actually the perfect time to get involved with them and I don't think it's just a pure value play if you start to look at what Lupa systems was already invested in prior to the announcement of the MCH group deal it makes a lot of sense as to how they might fit in especially if MCH group makes some substantial but sensible changes what kind of changes are you talking about if you look at Lupa systems portfolio their current positions prior to the MCH group deal really break out into three particular areas one is Media One is Tech and and the last is environmental sustainability but I think that the way that MCH group should be thought about is that back in the fall of 2019 when the company announced that it was going to have to shift its strategy based on its financial situation and again this is pre-c Corona virus the company said that it really needed to focus on investing in and I quote Innovations digitization and internationalization mhm the idea was to build communities that go beyond the physical event so if we think about that in the context of Art bosle and the MCH group but art bosel specifically yes primarily they are dedicated to putting on these Live Events but of course they have a publishing arm as well they produce video content they've created an app that has become increasingly important to actually participating in the fair in any kind of useful way uh environmental sustainability as you and I know very well Andrew has become an increasing Focus within the art world with people trying to find ways to cut down on emissions and waste and all those types of things and it's not that hard necessarily to imagine a version of the MCH group that starts to combine all of these interests into something of a unified hole where you have media aspects you have Tech aspects you have even potentially some environmental impact that can be had with the way that the company operates and types of behavior might be able to incentivize depending on policies that could be made etc etc so if you combine all that with betting that once we do get to the other side of the pandemic that live events will actually come back and companies that were good at producing Live Events before will actually become hugely valuable again it makes a lot of sense to go after a company like MCH group I'm not saying that that's necessarily what James Murdoch's thinking is I don't know he hasn't called me and invited me to lunch and Spilled his guts to me at any point but it's not that difficult for me to justify an argument so you have written about this twice for the gray Market your weekly art business column that comes out on Mondays what do you think is going to be the next step of this partnership how are we going to start to see things roll out and things improve for MCH and things transform when it comes to its offerings well the first way it's going to transform its offering is just that it's going to stop the tremendous gaping chest wound of cash that it's been leaking for the past several years so that's a big thing and of itself beyond that I think that there really is this question of what on the tech and media side art bosle is going to do and art bosle of course has done a few online viewing rooms at this point from what I've been told people who've participated and and chopped in them frankly haven't been that great all things considered I I think the perception is widely that freeze kind of beat them at their own game so I I would expect a pretty concerted effort to amp that up in the relatively near term and then what they do from there remains to be seen I mean one thing that I can say is that what we've seen from James Murdoch so far is that he's not the type of investor who comes in and immediately starts trying to replace people who were there with his own people I don't think that there's any indication that we should expect any kind of major leadership changes at this point within the MCH group the other thing that I have to think about is India because India hasn't just been an important part of James's career Arc that again that kind of no pun intended star making turn with star television in India but if you look back at the lupus systems portfolio he's invested in two different startups within India itself it's also worth noting that lupus systems has offices in only two cities one is New York and the other is Mumbai wow and when you combine all of that with the idea that India really still is a major major economy that has not gotten anywhere near its full potential I think at this point I think that there is a very real possibility that there could be something more substantial down the line I'm not saying that we should expect Art bosle Mumbai to be a thing anytime soon but I have to wonder about it especially when you consider that one of the major planks in the art bosle platform at this point which is art bosil Hong Kong is in complete political turmoil thanks to these National Security laws that Beijing recently imposed which are basically as Draconian and Troublesome as I think even the worst or even the most pessimistic critics feared so there I think are a lot of questions about what's going to happen with that event in the future and I'm not saying that India is a ready-made replacement for that there are all kinds of major differences between those two places but I think that that's something that's worth keeping in the back of our minds I for one really do hope that they start an art balls of Mumbai and I hope to see you there in the not too distant future Tim so thanks very much for coming back on the show it's always such a pleasure to have you hey thanks for having me well that's it for this week's episode of the art angle if you like what you heard you can subscribe to the show on Apple podcast Spotify or wherever else you get your podcasts also take a moment to rate and review us will help other listeners discover what we're doing the art angle is produced by Tim Schneider and Caroline Goldstein and edited by Nick long thanks for listening and see you next week