December 21st, 2014

Sony Pictures CEO Michael Lynton “We did not cave”

Michael Lynton, chairman & CEO of Sony Pictures Entertainment spoke exclusively with CNN’s Fareed Zakaria. In the interview, Lynton addressed President Obama’s criticism today and talked more about the recent cyber-attack on Sony which is now determined to have been launched by North Korea.

The full interview aired on CNN at 10:00amET on Sunday, Dec. 21 on Fareed Zakaria GPS.


A full transcript is available after the jump.



Joining me now is Michael Lynton, the CEO of Sony Entertainment, as well as the chairman and CEO of Sony Pictures Entertainment. In other words,

he is the boss at the companies behind “The Interview,” the movie that provoked the North Korean cyber-attack and threat.  He is here now with me for an exclusive interview.  The president says Sony made a mistake in pulling the film.  Did you make a mistake?

MICHAEL LYNTON, CEO, SONY: No. I — I think, actually, the unfortunate part is, in this instance, the president, the press and the public are mistaken as to what actually happened.

We do not own movie theaters. We cannot determine whether or not a movie will be played in movie theaters.

So to sort of rehearse for a moment the sequence of events. We experienced the worst cyber-attack in American history and persevered for three and a half weeks under enormous stress and enormous difficulty and all with the effort of trying to keep our business up and running and get this movie out into the public.

When it came to the crucial moment, when a threat came out from what was called the GOP at the time, threatening audiences who would go to the movie theaters, the movie theaters came to us one by one over the course of a very short period of time — we were completely surprised by it — and announced that they would not carry the movie.

At that point in time, we had no alternative but to not proceed with the theatrical release on the 25th of December.


LYNTON: And that’s all we did.

ZAKARIA: So you have not…

LYNTON: That’s…

ZAKARIA: — caved in. You’re…

LYNTON: We have not caved. We have not given in. We have persevered and we have not backed down. We have — we have always had every desire to have the American public see this movie.

ZAKARIA: Why not release it online, uh, in some form or the other, video-on-demand?

LYNTON: There are a number of options open to us and we have considered those and are considering them. As it stands right now, while there have been a number of suggestions that we go out there and deliver this movie digitally or through VOD, there has not been one major VOD — video-on-demand distributor — one major e-commerce site that has stepped forward and said they are willing to, uh, distribute this movie for us.

Again, we don’t have that direct interface with the American public. So we need to do through an intermediary to do that.

ZAKARIA: Mitt Romney says why not just put it on YouTube and let everybody — let the whole world see it?

LYNTON: That’s certainly an option and that’s certainly one thing that we will consider. But again, all of this has transpired so quickly that we’re trying to weigh the options as to how we can get this — what to do — how to go forward with all of this.  We were taken by surprise by the theaters, which is what we wanted to do first. And now we’re trying to proceed and figure out what the next steps should be.

ZAKARIA: The president says he wishes — I wish they had talked to me.  What is your response?

LYNTON: My response is that a few days ago, I personally did reach out and speak to senior folks in the White House and talked to them about the situation and — and actually informed them that we needed help. We — the FBI has been with us now for several weeks and has been great. But I did reach out and explain the situation to them at that time.

ZAKARIA: So the president is wrong when he says that you did not reach out to him?

LYNTON: Well, I don’t — what — when he’s asking about reaching out…

ZAKARIA: “I wish they had talked to me first,” is the — is the…

LYNTON: Right. So we definitely spoke to senior adviser or a senior adviser in the White House to talk about the situation. The fact is, did we talk to the president himself and — and talk to him about what was happening — transpiring as the theaters started pulling back and not — and — and being unwilling to distribute the movie?  No. But the White House was certainly aware of the situation.

ZAKARIA: Not only did the theaters all pull out, but you couldn’t get any of the major Hollywood studios to support you. George Clooney writes that he put out a petition and tried to get support. He couldn’t get a single person to sign it.  Have you been surprised at the fact that nobody has been willing to rally around you?

LYNTON: I am surprised, frankly. I mean I understand, on the one hand, that my fellow studios and everybody else has their own commercial concerns and they themselves were worried about becoming a target and it did make for a — make this entire enterprise to be a very, very lonely affair.   But on the other hand, it — it, you know, this is a moment where you would expect the industry to rally around and support you.

ZAKARIA: Is it fair to say — or is it your estimation that the theater owners panicked, because the — the North Koreans do not appear to have the capacity to launch some kind of major simultaneous or really any significant terrorist attack in the United States.  Why do you think they panicked?

LYNTON: Well, what I can only imagine is Homeland Security came out that day and said that there was not a — a viable threat. And my — my sense of it, having had the conversations was there was enormous pressure put on them by the malls, by the shops in the malls, by the surrounding neighborhoods who also were threatened in those e-mails, to say that they shouldn’t show the picture.  And they basically, on the basis of looking at that, they decided that they wouldn’t take the picture.

ZAKARIA: Does that mean that a DVD release also becomes difficult because you would face the same challenge, which is the Walmarts and the Costcos of the world would have to agree to stock the DVD?

LYNTON: Again, we don’t have a direct interface with the American public. So we would require either through an — through online or in a — in a retail situation, we would need distribution. And, yes, it’s fair to say, if we can’t find one of those large retailers or many of those large retailers to sell our DVDs, we wouldn’t be able to provide them with “The Interview.”

ZAKARIA: But it — it feels to me like — is it fair to say, Michael, that your hope and expectation is that the movie will be seen by people?

LYNTON: We have always wanted the American public to see this movie. We have worked tirelessly to do so. So absolutely, we would — that’s — that’s — that’s been the primary objective throughout.

ZAKARIA: Michael, let me ask you to go through the sequence of happened.  When — when did you first realize that you had a problem?

LYNTON: The first time we understood that there was an issue with the North Koreans was back in June of last summer, when they came forward with various, um, e-mails and statements and actually, I think they were in touch with the White House itself and — and — and described, um, their disfavor with the movie.

At that point in time, we actually reached out to experts at various — at think tanks, within the State Department, to try and get a proper understanding of whether or not there was a problem here and whether or not we were providing a security risk.  And we were told that it — there wasn’t a problem here and so we continued to proceed.

ZAKARIA: Including the U.S. government told you there wasn’t a problem?

LYNTON: The U.S. government told us there wasn’t a problem, that’s correct.

ZAKARIA: So when you — when people ask the North Koreans threatened you, why didn’t you take this seriously?

LYNTON: We did take it seriously. We went to the people who we thought were most expert in the area, people in the U.S. government, people in various think tanks and inquired as to whether or not this would be a problem. And they told us that it wasn’t.  And that actually is for the world to see as my stolen e-mails have been presented in public.

ZAKARIA: There’s an e-mail between you and somebody at The Rand Corporation and…

LYNTON: And somebody between me and the State Department.

ZAKARIA: The State Department.

LYNTON: Correct.

ZAKARIA: Right.  Um, when — when you began to experience the cyber attack, um, what was your response?  Because there are a number of people who wonder why did this happen?  Did you have weak malware?  Did you not have the kind of cyber security you needed?

LYNTON: No, we had absolutely sufficient cyber security. I mean both the FBI and (INAUDIBLE) the — the experts who we brought in basically said that the malware was so sophisticated that 90 percent of American businesses was — would have fallen prey to what happened to us. So, no, I don’t — I don’t think we were inadequate at all in our — in our cyber security.

ZAKARIA: So what that means is that this is at a level — that the attack is at a level of sophistication that really very few companies, perhaps no company, would be able to withstand?

LYNTON: That’s what I’ve been given to understand. And as a result, they stole all of our data, wiped it — wiped our computers clean and then destroyed the computers and the servers, all of which is in the FBI report that came out today.

ZAKARIA: What do you — what is your estimate of the damage of that cyber attack to Sony?

LYNTON: We haven’t come to an estimate as of yet.

ZAKARIA: But certainly in the tens — tens of millions…

LYNTON: Very, very significant. It’s very significant, yes.

ZAKARIA: “Variety” reports that you will lose $75 million on this movie.  Is that accurate?

LYNTON: You know, we don’t get into the exact numbers of it. And — and by the way, it still remains to be seen as to how we and if we can get the movie out, at which point that, you know, whatever the losses or the gains might be are — are still to be realized. So it’s too ea — it’s too early to determine.

ZAKARIA: Could you collect insurance on this?

LYNTON: There is insurance as it pertains to the cyber attack itself and — and so we may be able to find ourselves in a situation where we could collect insurance, yes.

ZAKARIA: You know, there are a lot of people who feel that this movie should not have been made, that you’re talking about — it’s a movie about the assassination of a sitting world leader, a country that has nuclear weapons, that it was in poor taste, that you should not have made this movie and risked Sony’s credibility.

LYNTON: Well, a couple of things.  First of all, we made the movie because it was — because we thought it was a funny comedy.  Secondly, there is a long history of political satire in film. And this clearly falls into that realm.

But I would also say that fundamentally isn’t the issue here. The issue here is that having made the movie, we feel very strongly that it should have been in theaters for the American public to have seen. And we did everything in our power to make that happen. We did not cave. We did not back down. And we continued in that pursuit right up until the end.

ZAKARIA: How damaging has it been, because your e-mails, your personnel records, are out there in the open?

LYNTON: You know, it — it’s hurtful to everybody at Sony Pictures, everybody, and — and, by the way, many of the folks who work with us outside of Sony Pictures. That part has been damaging and hurtful. It’s not nice to have your e-mails exposed to the — to the general public. It has had a real effect on the morale of the company and — and many people are frightened because of it.  We’ll recover. We’ve worked very, very hard to do so and — and we’re in the process now.

ZAKARIA: When you look at this, this is one of the great episodes of crisis management in, really, management history.   What is the lesson you take from it?

LYNTON: I take a couple of lessons.  I — you know, first of all, I — I take the lesson, because it’s gone on now for about a month. We — you need to keep a cool and clear and sober mind throughout the process, because everyone in the organization is looking to you to have that attitude and to have that point of view and to be a clear thinker.

You also need to make sure that you keep your eye on what the objective is going forward. And the objective for us has always been and will always be to make sure that the creative artists who work with us can continue in their endeavor, whether that be making television shows or films, and that we be able, to the best of our ability, distribute those out to the public.

And I think we have continued to pursue that objective throughout this period.  Yes, we were thwarted at the end when the theaters chose not to show the movie. But the objective remained very clear in everyone’s minds throughout the process.

ZAKARIA: You are well-known as somebody who supported President Obama.


ZAKARIA: Were you disappointed in what you heard today?

LYNTON: Um, I would be fibbing to say I wasn’t disappointed. I — I, you know, the president and I haven’t spoken. I don’t know exactly whether he understands the sequence of events that led up to the movie’s not being shown in the movie theaters. And, um, therefore, I would disagree with the notion that it was a mistake. It’s a generally held view by the public and the press that that’s what happened and maybe that’s how that view was — was held by — by him.

But knowing as I do the facts and how they — and how they’ve unfolded, um, you know, we stir — stood extremely firm in terms of making certain that this movie would appear in movie theaters.

ZAKARIA: Do you feel that the U.S. government, the FBI in particular, and I gather you’ve been in touch with other agencies, the CIA, the NSA, have they been helpful?  Are you happy with the kind of cooperation you’ve gotten?

LYNTON: The — the vast majority of the interaction has been with the FBI. And they have been absolutely spectacular throughout. They — they came and, uh, stayed with us for the entire period. Um, they came to a resolution as to who was responsible for this in a record amount of time. I can’t speak more highly of the agency than — than that.  Um, the — they were really the folks who were…we were in touch with in this process.

ZAKARIA: Would you make the movie again?

LYNTON: Yes, I would make the movie again. I think, you know, for the same reasons we made — made it in the first place. It was a funny comedy. It was a — it — it served as political satire. I think — I think we would have made the movie again.

I — I — knowing what I know now, we might have, um, done some things slightly differently. But I think a lot of events have overtaken us in a way that we had no control over the…over the facts.

ZAKARIA: And you’re saying you still want the public to see this movie?

LYNTON: We would still like the public to see this movie, absolutely. We have to explore options as to how that might happen, because while everybody comes forward and says, release it digitally, do it on VOD, do this, do that, all of these things are, in their own way, complicated. Many people don’t want to come near the movie because they fear that in some way, shape or form, their systems — their servers might be infected with the malware that came to us.

So, you know, it’s not — it — it’s not for — it — what we really need to do now is evaluate the best way that’s forward for all of us. And that’s what we’re in the process of doing.

ZAKARIA: You’ve been at Sony Pictures for a while. You ran Penguin Press.  Is this a — a very dangerous blow against freedom of expression?

LYNTON: It is. You know, I — I came to Penguin a few years after the publication of Salman Rushdie’s book, which was the book that Penguin published. And in that instance, um, it was a very — for one thing, it was pre-9/11, obviously. Um, but even there, with the fatwa and actually some people were — were killed in — in that instance, um, there were, um, the entire industry came — came together around Penguin. The publishers, the book sellers always stocked the book and the authors all came out in support of the book.

That did not happen in this instance. In this instance, we stood alone in trying to get a movie out.  Um, I think now, part of the reason for that, I suspect, is because the conversation got caught up in — in all of these e-mails. Many of them were deeply unfortunate. A lot of them involved celebrities and people didn’t understand what the real issue at stake was.

And the real issue at stake was you had a…you now — we’ve now discovered it’s North Korea, but we had a group of individuals who were hell bent on making certain that this movie not show up in movie theaters. And we were hell bent on making certain that it did show up in movie theaters.

And the — the problem was, in part, that that support that I sort of saw from the — at the very end was — that was there for “Satanic Verses”…and I wasn’t at Penguin at the time, but came there right after — my predecessor was the publisher. That kind of support was not there for this movie. And I think part of the reason, as I mentioned, is because everybody got caught up in all of this, um, on all of their attention being spent on these other things, which, frankly, are a sideshow in the — in the whole affair.

ZAKARIA: Do you worry what this has done to Sony’s brand?  You’re one of the great electronics companies.



LYNTON: No, I recognize that. I — I think we can recover as a brand or a, you know, we — we have to assess what it means to the brand. I — I — I certainly think that we can recover from this, yes. I think we have, you know, strong relations within the creative community. I think many of them now understand what it is that happened, um, and are sympathetic to what it is we’ve had to go through this process.

ZAKARIA: Somebody asked the president at his news conference, would he watch the movie?  If the president — are you going to send it to him?  Are you going to send (INAUDIBLE)?

LYNTON: If the president wants to see the movie, I would be more than delighted to sent it to him. It would be my pleasure.

ZAKARIA: Michael Lynton, a pleasure to have you on.

LYNTON: Thank you very much.