Sony Damage Assessment: Whom the Hack Has Hurt Most

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Can Michael Lynton and Amy Pascal survive? Perhaps yes, say insiders, as the studio attempts to move past 'The Interview' and Obama's actions draw new ire

A version of this story first appeared in the Jan. 16 issue of The Hollywood Reporter magazine.

The spin coming from Sony in the wake of the devastating cyberattack on the studio is clear. "I am very proud of all employees and all the partners we've worked with as well who stood up against the extortionate effort of these criminals," Sony Corp. president and CEO Kazuo Hirai said Jan. 4 at the Consumer Electronics Show in Las Vegas.

Those words are not an outright endorsement of studio CEO Michael Lynton and co-chair Amy Pascal and therefore do not answer a question that intrigues many after Sony's release of the Seth Rogen-James Franco comedy The Interview turned into a major international incident pitting the U.S. against North Korea: What will the fallout be for those principally involved in the hack and its aftermath?

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On the studio's Culver City lot, as staffers returned from the holiday break, a source with ties to top management maintains the feeling is "radically different than when we left two weeks ago and everything was in the shitter. People feel kind of inspired. They attacked, and we fought back and kind of won the day. And the government of the United States fought back on our behalf, too." While a source with business at the studio says he was told before the holidays that everything was on hold, this person now says projects are moving ahead. The studio "is acting as if it was business as usual," he says.

But questions linger about the future of Lynton, 55, and Pascal, 56, as they attempt to repair relations inside and outside of Hollywood while steering the studio in a challenging year in which they are betting heavily on untested, original material as competitors unleash a slew of established franchises. Pascal's contract runs through 2015, say sources, while Lynton renewed his deal in April 2013 for an undisclosed term (Sony won't say when it expires). And despite the massive damage done by the leak — including relationships with talent, other studios and exhibitors — some believe Sony may not remove either Lynton or Pascal. "It's a Japanese company, and they're loath to fire people," says a producer with long-standing ties to the studio. "That company over the past 25 years has rarely interfered, and a lot of crazy stuff has happened." Adds Dave Logan of the USC Marshall School of Business, "I would bet they won't survive, but, ironically, the Sony leadership has become a victim of cyberterrorism and nobody wants to criticize the victim, so they may have bought themselves some time."

But a top executive at a rival studio thinks Sony will act — eventually. "I'm guessing that they're going to take a little time," says this person. "They're not going to do anything fast. It's just not their way." But with time, he says, "You'd imagine that she'll be a producer and he was going to leave at some point anyway." (Hacked emails revealed that Lynton had been angling to become president of NYU, and he was known to have met with Time Warner chief Jeff Bewkes regarding the top job at Warner Bros.)

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The hack and the on-again, off-again release of The Interview have left their mark on nearly everyone they touched, beginning with Lynton. His Dec. 19 appearance on CNN, just hours after President Obama said Sony "made a mistake" by canceling The Interview's release, stunned Hollywood. When Lynton took on the president by saying, " 'I don't know whether he exactly understands the sequence of events,' " says one rival executive, "My jaw hit the floor. How crazy was that?"

Lynton also angered the major theater owners, who felt he was throwing them under the bus by blaming Sony's decision on them, and smaller exhibitors, who bristled at the suggestion that no theaters would play the film. "When I heard Lynton's comments, I was irritated," Tim Massett, who owns the Sun-Ray Cinema in Jacksonville, Fla., told THR. "I didn't like it that 300 or more independent theaters weren't really considered theaters." There have been muttered threats that exhibitors will extract a price when Sony begins to negotiate terms and playdates for its upcoming movies, but veteran producer Joe Roth, who has projects at Sony, downplays that idea. "I've learned as long as somebody has money, people will play ball," he says. "They may hate it and be disgruntled, but if they're making money, the theaters will play ball."

One source of fascination for many in Hollywood was how, exactly, a self-effacing executive such as Lynton came to speak on CNN in the first place. Lynton was an early Obama supporter, and his wife, Jamie Lynton, is an Obama campaign bundler. He visited the White House more than a dozen times between late 2009 and the end of 2012, meeting at least four times with the president. Several Hollywood power players, some of whom are disenchanted with the president, now feel Obama should never have injected himself into the story. "Sony handled this situation horribly, and so did Obama," says one.

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Another source of amazement to many was the spectacle of Pascal ambushed by a TMZ camera crew as she returned to LAX after the Christmas holidays. But despite that, as well as her much-publicized meeting with Al Sharpton to apologize for racially insensitive emails with producer Scott Rudin, Pascal is sending the message that Sony is going back to its old routines. According to sources, CAA's Bryan Lourd has been serving as her "privy counselor" (along with publicity firms Rubenstein and Hiltzik Strategies after Pascal consulted with Scandal subject Judy Smith), and his advice has been to "take a business-as-usual kind of approach — just keep her head down and go to work." Even if she can't hang on to her job, say these sources, Sony would have to pay out her contract.

Producer Dana Brunetti says he believes Pascal can and should keep her job, decrying the "Monday morning quarterbacking" from industry critics who have said she should not have allowed the depiction of the death of Kim Jong Un in the film. "Amy gave me the opportunity to make great films like The Social Network and Captain Phillips," he says. "I think she's one of the best executives out there." Though some of the leaked emails were embarrassing, he adds, "Those emails showed exactly what I already knew, which is that she's human. God forbid anybody should get into my email."

As fate would have it, Sony is heading into a year in which it can't count on any blockbusters until the latest James Bond movie, Spectre, produced with MGM, hits Nov. 6. It has sequels Paul Blart: Mall Cop 2 (April 17) and Hotel Transylvania 2 (Sept. 25), but the bulk of Sony's schedule is heavy on originals, which represent a gamble. The lineup includes Pixels, the studio's big summer entry directed by Chris Columbus and starring Adam Sandler in a tale of '80s video game characters who attack New York, and the first feature from TriStar head Tom Rothman, who joined the studio in 2013: Robert Zemeckis' The Walk, starring Joseph Gordon-Levitt as high-wire artist Philippe Petit.

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The most problematic film could be its big May 29 release, Cameron Crowe's untitled Hawaii-set movie starring Bradley Cooper and Emma Stone. Following November tests, Pascal wrote in an email that the film "never not even once works" and lamented, "I'm never starting a movie when the script is ridiculous." She also complained that producer Rudin hadn't helped to fix the problems.

Rudin, of course, was another victim of the cyberattack, but his sharply worded emails surprised few in Hollywood, and the consensus is that he will not face much fallout from the embarrassment they might have caused. "Everyone knows who he is," says one producer. "There's nothing new there."

As for Rogen, he and partner Evan Goldberg are working on a new Sony comedy scheduled for release Nov. 25. This time, the premise involves three pals who reunite for a night of hard partying on Christmas Eve. If taking on North Korea's Kim created a stir, just wait until Sony finds itself in the middle of the war on Christmas.

Tina Daunt contributed to this report.

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