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How Much Will The Hack Cost Sony?
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How Much Will The Hack Cost Sony?

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How Much Will The Hack Cost Sony?

How Much Will The Hack Cost Sony?
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It's difficult to know what pulling The Interview from theaters will cost Sony Pictures. Estimates vary widely and Sony hasn't announced whether it will pursue an alternative plan to release the film. At a minimum, though, the $45 million Sony put up to make the move appears to be at risk. And there is an unquantifiable hit to the company's reputation.

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So how much will Sony Pictures lose on "The Interview?" The estimates vary widely, but one thing is clear. The decision announced yesterday to pull the film from opening next week is going to be expensive. At a minimum, the $44 million the studio invested in the film is at risk. And then there's the unquantifiable blow to the company's reputation. NPR's Sam Sanders reports on the guessing game in Hollywood.

SAM SANDERS, BYLINE: There are lots of different estimates on just how much money Sony will lose.

HEMANSHU NIGUM: If you asked me two, three days ago what the losses would be, I would tell you, oh well, somewhere around 100 million, perhaps going over that number.

SANDERS: That's Hemanshu Nigum. He runs SSP Blue, an LA-based cybersecurity firm. He recently upped his estimate for Sony's losses.

NIGUM: Given the fact that Sony has now pulled the movie, these losses can easily be over half-a-billion dollars and rising.

SANDERS: His estimate is on the high end because he's factoring in the overall losses, including those stemming from the hacking of its computer system. First, Sony has to clean up from this hack, install new software and new protections. Second, there's a productivity loss, for days after the hack Sony employees couldn't even check their emails. That time lost for employees is money lost for Sony. Third, Nigum says the Sony and everyone affiliated with "The Interview" has to deal with the hit to their reputations.

NIGUM: You now have executives and A-list talent seen with a mark on their back. If I work with, for example, James Franco, do I now have to watch out for every time I'm communicating with him or my computer systems are going to get hacked, my iPhone is going to get broken into?

SANDERS: Of course, Sony probably had an insurance policy on "The Interview" and depending on how that contract was written it could help recoup at least some of the losses. But Nigum says any insurance company would want to know if they are liable for this or if Sony is, before they pay out.

NIGUM: Part of that equation is going to be could Sony have stopped an attack like this? In other words, were they negligent in some fashion and created their own problem?

SANDERS: Gene Del Vecchio isn't convinced Sony's problems are so big. He's a marketing professor at USC and the author of "Creating Blockbusters!" Del Vecchio says Sony could still make money off this fiasco by releasing "The Interview."

GENE DEL VECCHIO: There's a tremendous amount of buzz about the film. In fact, much more than they could've ever bought in advertising. Plus the fact that Sony pulled the film, and any time you're in a situation where you tell the public, no, you can't see this now, it generates even greater awareness, greater interest to see it.

SANDERS: Of course with theaters pulling out Sony has to find another way to get the film out there, whether streaming or On Demand. And Del Vecchio says the company doesn't have that much time.

DEL VECCHIO: There's a window of opportunity and it's closing because the interest that's been generated today is only going to last - if you're lucky - a month.

SANDERS: So can Sony make this happen?

JONATHAN HANDEL: It seems highly unlikely.

SANDERS: Jonathan Handel is an entertainment and tech lawyer. Handel says Sony probably won't release the film because no one's sure if the hackers are done yet.

HANDEL: If they were to move ahead, we can unfortunately expect there would be more retaliation from these hackers who downloaded, apparently, a hundred terabytes of data and only released a portion of that.

SANDERS: But whatever hit Sony Pictures suffers, it makes up a relatively small part of the entire Sony Corp., and that parent company is doing OK. Its stock is still up for the year and through all this bad news over "The Interview," it's only down a few percentage points.

Sam Sanders, NPR News.

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