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The Cannes Debate: Martin Sorrell with James Murdoch and Jeffry Katzenberg

By Prajjal Saha , afaqs!, Cannes | In Advertising | June 25, 2011
Sorrell, along with his guests James Murdoch and Jeffry Katzenberg discuss about creativity, technology and the balance between arts and commerce.

In its initial years, the Cannes Debate delved into the subject of technology. For the last few years, it has been on marketing, when Martin Sorrell debated with CMOs of large consumer goods companies such P&G, Unilever and Nestle. This year the focus was on content developers and owners. Sorrell's guests were Jeffrey Katzenberg, CEO (chief executive officer), co-founder, director, DreamWorks, and James Murdoch, deputy COO (chief operating officer) and chairman and CEO, International News Corporation.

Katzenberg co-owns the $2 billion company DreamWorks, which has produced movies like Avatar and Kung Fu Panda. Murdoch, who needs no introduction, heads a company with market cap of $47 billion and revenue of $33 billion. For his company, 20 per cent of the revenue comes from film and entertainment, while another 20 per cent from the cable business. Newspaper business contributes another 18 per cent while the share of television business is around 13 per cent.

Here are the excerpts of the debate:

Sorrell: In the last 4-5 weeks, I have noticed a change in the attitude of people at a macro level, but not at the micro level?

Katzenberg: Actually, I came returned last week from a world tour, which included Europe, Asia, Australia and South America. Depending on where you are, there is a different essence. In Australia and Asia, things are pretty charged up as the market is very enthusiastic about business and consumers. In Europe, there is a great deal of uncertainty, probably because of the hangover of the recent situation in Greece, Spain and Portugal. The same can be said about the US.

Murdoch: Jeffrey is right. It all depends on where you stand. The first call is that there is an extraordinary shift in the mood. We are looking at what the drivers of growth are. In Asia, the business is growing very strongly.

However, in other markets, where we are kind of a challenger company, the mood is not great. Hopefully, the companies are in good shape after the shock of 2008-09. They are actually in a better position to go forward, but nervous about the macro environment.

Sorrell: How does one maintain the balance between art and commerce? This is fundamental for Cannes, as this year it has changed its name from festival of advertising to festival of creativity?

Katzenberg: It's really a precarious balance, like skiing on the edge. But, when you find the balance on the edge, the reward is spectacular. And, it holds true for any field, be it a TV show or an ad film. Right now, they are out of balance in Hollywood. In the last six months, it's arguably the worst or last creative period in the last decade or so. There is some uncertainty and fear. Originality and creativity require risk and risk equals value. It's a very delicate equation.

Murdoch: In creative, we have to guard against fear. When creative process shifts towards safety in an environment under extreme pressure after the terrible shock, it takes time to get over it. I agree with Jeffery that the ability to take risk is fundamental.

As far as the art and the commerce are concerned, I think art needs to be accountable for what it wants to achieve, and what it wants to sell. We should see it as a cycle of product.

Sorrell: So, what needs to change?

Katzenberg: Hollywood as a movie industry is going through a disruptive point in my 40 years of being around. It's not even closer by order of magnitude and the complexities of what is going on. You have the perfect storm of things in it to occur.

It came in 2008, in which the proposition of price value for everything in anybody's life was put up for revaluation. In that moment, consumers started looking at the ownership of approaches of DVD movies in a completely different light. With a lot of pressure on price, a consumer started to question whether he wants to buy a movie which he is going to watch once or twice. At the same time the transition of new technology, which has not yet arrived, though it will arrive for use, affected the decision. I can say that only 2 per cent of the DreamWorks movies is digital.

Sorrell: What new technology excites you?

Murdoch: We had lot of market place in the past, but now everything is digital. And, it is seamless between different products. For a customer, consumptions over different markets are a completely straight forward and frictionless experience.

In a digital market, it is easy to deploy new technology. We're in a very exciting creative period.

3D is one thing that can bring customers towards home. If we can justify the value proposition, we can provide immersive experience to our customers.

Multi-touch screens are unleashing new kinds of creativity from an editor's point of view, in terms of layout and storytelling, where they have the opportunity to say it through an audio visual media or in written words. For the newspaper business, it's a new kind of paper stock.

Katzenberg: I think 3D is the single greatest technology innovation that has come as an opportunity to Hollywood in many decades, but it is disappointing, if not devastating, to see how badly it has been squandered. It is akin to wasting a Golden Goose.

I think there is an opportunity to bring it back. Technology is surely the friend of an artist. With new technology, artists can create rich stories and images. We're working on some stuff that will revolutionise these images. This new technology is being developed in conjunction with Intel, and will be very relevant to the advertising industry.

Sorrell: Is size the enemy of creativity?

Katzenberg: I don't think so. News Corp for example is an exception in the many functions they are in.

Murdoch: This is one of the big challenges. The real problem is that we're not big enough. And competing at scale, the way big corporations are, and at the same time, being creative, is a challenge. There are six skies around the world, yet the media business is a local business. Keeping in mind regional preferences is what the media business is about, but it is important to think from the global point of view, too.

To view other interviews from Cannes 2011, click here.