MCH Shareholder, James Murdoch
“I’m James.” The investor in the polo shirt also gets a glass of water for his guests and raves about the fact that he can travel on the tram for free in Basel with his hotel guest card. Murdoch believes in a successful future for the trade fair and event organizer MCH. But the sword of Damocles hovers over this, that the canton of Basel-Stadt must approve a capital increase of 34 million francs.
Why should an investor buy shares in the MCH Group now?
James Murdoch: As a shareholder I can say that we think the prospects for the group are very good. The Experience Marketing Solutions division is very successful. The recent Dubai Expo was very convincing. As physical trade shows and exhibitions recover from the pandemic, we see potential for growth in these areas over the next few years. The most important thing for us is the ability to gather communities around strong brands. The strongest brand in the group is Art Basel. However, the MCH Group is also able to create some exciting new areas of business.
The other big fair next to it was Baselworld, which was lost to Geneva due to mismanagement. Where do you see a replacement for it?
Everyone is talking about Baselworld here, but I never invested in the company when Baselworld existed, nor because I think Baselworld will come back. Rather, new trade fairs, new communities will come together and new events will become a central part of future business. Art Basel is a model to think about how to anchor something global here in Basel that generates activity, commerce and excitement for visitors from all over the world, but also expands the Basel brand globally, which we believe also benefits the city and benefits the company.
Art Basel will take place in Basel in June, and the first edition of “Paris+, par Art Basel” will be held in October. What is the difference between the two fairs?
Each of the Art Basel events around the world has a different character. The event in Miami is very different from the one in Basel. The event in Hong Kong is very different from the one in Basel. And the team is focused on making Paris distinctive too. We do not want to repeat what we have already created. The opportunity to host another show in Europe presented itself and it will have a character all of its own. For many years there has been a major international art fair in Paris in autumn, and “Paris+, par Art Basel” now has this place in the calendar, which we find very attractive for the MCH Group, attractive for the community of collectors and galleries, for the Audience. But I am aware that there is speculation that we will move Art Basel to Paris.
Can you confirm that Art Basel will remain in Basel for the next 15 years if it is economically viable? Lupa Systems committed to this when it joined the MCH Group in 2020.
It was with enthusiasm that we made this commitment. Our agreement with the company is that we, as a major shareholder, will support that for 10 to 15 years, and that’s an important part of my approach to this public-private partnership. We have the canton of Basel on our side as the main shareholder and the commitment to how a company can improve the attractiveness of the city.
During the pandemic, online purchases of art jumped 40 percent. Do physical exhibitions still have value in these digital times?
A very big one. Art Basel last September was great given the restrictions. And Miami was incredible. People felt like gathering, seeing art, going to exhibitions and events. People like to gather. You like to see things. You like to talk to people. Zoom is not a complete replacement.
Your Lupa Investment and the canton of Basel-Stadt each want to invest up to 34 million francs next year in order to increase the MCH Group’s capital, repay a bond and secure liquidity. For what reason?
We believe the company needs a strong balance sheet to thrive and we have explored all possible alternatives. A capital increase is the right solution and shareholders, including us, should participate in order to achieve this.
One of the minority shareholders, Erhard Lee, claims that this will happen at the expense of the small shareholders.
Frankly, I disagree. We are very concerned about all shareholders. This is a publicly traded company. We are committed to increasing value and creating value for all shareholders, no more than any other, nor for Mr. Lee more than any other. After considering all alternatives, be it selling major assets or selling the entire business, the company believes this is the right path to take. A rights issue is very shareholder friendly because each shareholder gets an equal number of rights and may or may not participate in those rights and have very close scrutiny.
The parliament of the canton of Basel-Stadt will have to approve this investment and ultimately also the population if there is a referendum. What will you do as a private major shareholder if this deal fails?
We are concentrating on carrying out this capital increase as planned and also within the framework of the necessary political processes. It’s fair, it’s shareholder-friendly, and it’s the best path for our company.
One idea currently being discussed is the spin-off of Art Basel. Is that a possibility at this point?
Actually, the group as a whole makes sense. One should never rule things out. We want to keep the business as strong and lean as possible. But Art Basel is at the heart of the company. It is the leading brand on a global basis. Art Basel is important for the importance of the city, for the strength of the brand, for the development of the community and the market. Here, too, we are obliged to examine all the various alternatives in the interest of the company and the shareholders. But we don’t think that’s the right answer right now.
When you look at the development of the MCH Group since you became an investor, how confident are you that the turnaround will succeed?
It will take time. A turnaround takes three to four years. And the development of a trade fair or a major event takes at least a year and a half until you know exactly what you want to do and then implement it. We only invested in the company at the end of December 2020. So it’s been a year and four months since there was a pandemic. During this time we were looking for a new CEO, we more or less had a completely new board of directors. A lot has happened.
How did you find out about the MCH Group in the first place?
I’ve been interested in the live events business for a while. It’s something I didn’t do in my old career. We were a television station and digital media company, making films and broadcasting sporting events. The proportion of our lives that we spend connecting digitally and in a synthetic reality is increasing, and the natural, physical part of our lives revolving around gatherings and shared experiences through events is becoming increasingly so over time more valuable – maybe because shared experiences are rarer, or maybe because we as humans long for it. So I’ve always been interested in the live events business, especially at the MCH Group, where brands are involved that go beyond a sector or location. A few years ago, I started studying the company a little, just out of interest. When the opportunity then arose that the MCH Group was looking for a new investor, it came at a good time in my life. I had just left my old company and was in the process of starting a private holding company that was very interested in these areas.
They are involved in a variety of ventures. What is your biggest project personally?
Lupa Systems is a private holding company. We have a handful of interests, but the live events are the core business. The Tribeca Festival in New York and our stake in MCH Group are a focus and we are focused on developing an investment business in India. I’m trying not to get too bogged down, we want to be a cooperative shareholder. We want to help strengthen a company and a management team. In particular, looking ahead to the next few years, I’m trying to focus on a small number of things that we believe we can actually make a difference.
Published: April 30, 2022, 10:50 AM (local time)