PRESS

RELEASE

FOR IMMEDIATE RELEASE

IN RESPONSE TO NUMEROUS INQUIRIES FROM MEMBERS OF THE PRESS AND THE INVESTOR COMMUNITY FOLLOWING MR. DANIEL LOEBS LETTER TO MR. WILLIAM RUPRECHT, ARTVEST OFFERS THE FOLLOWING STATEMENT NEW YORK, October 7, 2013. We believe that the in-depth analysis of Sothebys that Artvest presented to Citibanks clients in April 2013 detailing limitations on Sothebys growth has precipitated investor activism in that company. We feel it is now important for us to clarify a discussion that is playing out in the press with varying degrees of accuracy. There are a number of points that were raised in Mr. Loebs letter, and in the subsequent direct and indirect rebuttals by Sothebys, that we would like to address: 1. Mr. Ruprecht and his supporters have been referring to the increase in Sothebys stock price as a reflection of his success in managing the firm. This is specious. If one examines the performance of Sothebys stock over time, fluctuations in its price are more closely related to the performance of the equities markets overall, and quite independent of Sothebys performance. Indeed, after Sothebys missed earnings targets in the first and second quarters of this year due to its deteriorating commission margins, Sothebys stock price quite illogically continued to increase. As longtime observers of the stock, we are of the opinion that this is because most of the investment community does not understand the art auction business and in particular the nature of Sothebys competition with Christies since that company is privately held and does not disclose its financials. In addition, many analysts often compare Sothebys to luxury retail that is not at all comparable to the art auction business. We maintain that the recent run-up in Sothebys stock price is related more to speculation over the future of Sothebys ownership and/or management brought to light by our analysis and advanced by the activity of Marcato Capital and Third Point. The fundamentals of Sothebys and future trends in the industry (which we explain below) do not support the current stock price unless significant changes in the companys operating strategy are undertaken soon. It is profoundly ironic now for Mr. Ruprechts supporters to use this price rise as the ultimate signifier of the success of his stewardship.

 October 7, 2013 / Page 2 2. We acknowledge that Mr. Loebs letter was, in style, personal and provocative, but in substance it was correct. Sothebys executive management team has been materially unchanged since before the price- fixing scandal (except for the departure of the then Chairman and CEO). With a management culture that was forged in the mid-90s, long before the rise of the Internet and the ascendancy of Asia and the Middle East, the team is resistant to real change, and US-centric in a way that is deeply out of step with the multicultural mind-set of the wealth dominating the art market today. (During this same period Christies has had two sweeping changes in its executive team.) This is the root cause why Sothebys has followed rather than led Christies in growing Asian and Middle-Eastern markets, as well as squandered its one- time dominance in Asia that it is currently celebrating with its 40th anniversary as the pioneering auction house in Hong Kong. Sothebys own Asian experts, both current and former, are the most vocal about this cultural myopia. If it is not addressed, over the long term Sothebys will continue to decline in market share due to the increasing prowess of auction houses in mainland China as well as from gains by Christies which has consistently treated Asia as one of its highest priorities for the past twenty years. 3. As we reported in our April analysis, the significant growth in Sothebys business from 2003 to 2012 was entirely attributable to a once-in-a-lifetime, exponential growth in the global art market of 151%; a follow-on effect of Asia, Russia and Eastern Europe joining the global economy in the 1990s simultaneously. In fact, because Sothebys had abandoned the low-end of the market during this period, its sales did not even keep pace with the expansion of the art market, growing at 127%, versus Christies sales growth that matched 151% exactly. This is no small matter, as Artvest now expects the Art Market to remain in a mode of slow growth for the next five to ten years. Thus raising the question, how and where will Mr. Ruprecht find ways to grow Sothebys business especially in the context of such serious commission erosion? We have yet to hear a clear vision for dealing with this problem, or even an acknowledgement that Sothebys is facing a more stagnant marketplace, other than their oft-repeated disclosure that competition for key consignments remains fierce. Counter-intuitively, in a riskier, low-growth environment, Sothebys intends to increase its exposure on auction room guarantees, reverting to a practice that got it into very deep trouble in 2008.

 October 7, 2013 / Page 3 4. Sothebys has defended its current strategy of focusing on the high-end as an effort to position itself like a private bank. The flaw with this thinking is that most of the leading publicly traded banks such as JP Morgan, have both private and retail banking divisions, as the two have different business cycles, risks and fees, often supporting and complementing one another in a dynamic marketplace. If JP Morgan were to focus on its private bank at the expense of its Chase retail unit, Wall Street would consider it a much lesser company indeed. This is in fact what has happened to Sothebys in the thirteen years that Mr. Ruprecht has pursued his flawed private banking concept, and the chickens are just now coming home to roost. By focusing exclusively on the high-end where the competition with Christies is most extreme, Sothebys has made itself uniquely vulnerable to the erosion of its Auction Commission Margin, the main revenue stream that accounts for approximately 80% of the firms Total Revenue. Moreover, by leaving the low-end uncontested for Christies, that company can charge higher, non-competitive rates in segments where Sothebys is no longer active, and offset those gains against other losses in commission give- backs at the high-end. (In this regard, we have a material disagreement with Mr. Loeb: Christies is, as Artvest can attest, verifiably buying market share at the high-end. Yet the larger point is true, that Mr. Ruprechts management practices have exacerbated the problem.) 5. Importantly, Sothebys exclusive focus on the high-end has left the company more vulnerable to market downturns. Make no mistake, the art market is cyclical; periodic influxes of large numbers of new collectors has never changed that, and never will. When a downturn hits, wealthy collectors stop selling as they have the liquidity to hold on to their art until prices return to former levels. It is the low- to middle-end of the market, i.e. dealers, estates and less wealthy collectors, who keep the market alive and liquid during a contraction and provide revenue streams across diverse collecting fields to pay for the high fixed costs of an art auction house. This was the case for Sothebys in the busts of 1980 and 1990. Yet in the crash of 2008, Sothebys no longer had this buffer to cushion its fall. Christies, on the other hand, was able to glide to a softer landing during this most recent bust.

 October 7, 2013, Page 4 6. Mr. Ruprecht has transformed Sothebys into a much smaller business versus the competition, a fact that has been disguised by the swift and ongoing inflation of art prices. In 2012, Sothebys sold 14,100 lots to Christies 27,500. And as Mr. Loeb pointed out, Christies sold more lots over $1 million, the segment of the market that Sothebys has targeted as its main focus. One could argue, at least by this measure, that Sothebys has become half the company that Christies is today. 7. Without a stake in the low-end, Sothebys has no entry point for developing a coherent Internet strategy. Christies success with its Internet-only Warhol and Liz Taylor auctions, as well as the market penetration of smaller auction houses and new online bidding platforms, have resoundingly established this fact. 8. Although repeatedly approved by the Board, Mr. Ruprechts compensation has been a corrosive issue within the ranks of Sothebys for some time. For this and other reasons, including Mr. Ruprechts limited role in consignment getting, when Mr. Loeb says, Sothebys crisis of leadership has created dysfunctional divisions and a fractured culture, he is illuminating a concern that none have been courageous enough to voice so publicly. 9. In order for Sothebys to catch up to Christies in the growth areas of the art industry in Asia, Contemporary Art, the Internet and the low-end segment Sothebys will need to attract an influx of innovative executives and deepen its bench. Unfortunately, the same fractured culture described by Mr. Loeb has become a meaningful deterrent for some of the best and the brightest talent to join the firm and Sothebys human resource policies urgently need to be reviewed at the highest level. 10. Sothebys has one of the most valued and respected yet, with its paucity of executive vision, under-leveraged luxury brands in the world. It has many of the most highly regarded art specialists in the industry, and has some strong talent within the current management team. Before Sothebys Board girds itself for a protracted battle with Mr. Loeb on issues he has raised which are legitimate, we would hope that they will consider the toll that such a public dispute is going to take on the brand, on the morale of a dedicated and hard-working staff, and most importantly in the near term, on Sothebys ability to compete for key consignments during a period of management uncertainty.

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Notwithstanding their justifications, the actions taken by Mr. Ruprecht and the Board this past Friday may not in fact serve the broader interests of the majority of Sothebys stakeholders. To engage with Mr. Loeb in a contentious struggle to save Mr. Ruprechts job as CEO is likely to further relegate Sothebys to secondary status for several more years to come. One only need recall Sothebys troubled year immediately after the companys anti-trust guilty plea, to be reminded what the stakes are when clients lose confidence in an auction house. As Sothebys Board faces this very real prospect of handing its competitor an even greater edge in consignment-getting, one has to ask, are they upholding their fiduciary responsibility to shareholders, or are they merely protecting a reassuring status quo? If the Board of Sothebys were only to speak candidly with their own specialist base and neutral parties in the industry, they will find their answer. In short, we agree Mr. Loebs letter was, as Sothebys has responded, incendiary. What it was not, was baseless. For those investors who continue to doubt the validity of the concerns raised by Mr. Loeb as well as those raised initially and early on by Artvest, we would advise them to closely watch Sothebys financial results going forward. Record-setting auction prices are good for garnering press, but they have little to do with the problem of the blinkered strategies for growth in place at Sothebys presently. If the Sothebys Board chooses to disregard these concerns, the real beneficiaries of their intransigence will not be the shareholders of Sothebys but Mr. Francois Pinault. Michael Plummer Jeff Rabin Principal Principal