Sony Hack: One Year Later, What Studios Can Learn

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Sony emerged relatively unscathed in the long-term, following the attacks. But its short-term handling of the matter was a study in ineptitude.

Almost one year ago to the day, Sony Pictures Entertainment received a body blow of the kind not even its most passionate critics would have inflicted on it: The company’s computer system was hacked by a group of outsiders, believed to be based in North Korea and employed by that country’s government — although that still remains uncertain.

What, in the wake of the attack, has Hollywood learned? One thing, of course, is the need for extra security. Each studio and network, and all the other entertainment and media companies directly or indirectly connected to them, have had to spend hundreds of thousands of dollars, and sometimes millions, to beef up their security, often bringing in outsiders to do the job that the skeletal IT security in place at Sony failed to perform so conspicuously.

Nobody knows how much the damage has cost Sony, factoring in repairs to its infrastructure and the many and various lawsuits filed by employees whose most private information was leaked, but insiders estimate it at $10 million or more.

A high-level woman executive told this reporter recently that the attack had at least one notable result for the best: that a sense of solidarity, especially among the studio’s women, had grown greater than before. But as far as the industry as a whole is concerned — and in particular other companies and executives that may find themselves in a similar situation — there are several lessons that have been learned which would be good to remember.



1. Hollywood still treats women worse than men

Only one person’s career was truly derailed by the hack, and that was the career of SPE co-chairman Amy Pascal. After a few weeks of struggling to cling to her post, she was forced to resign — Pascal made few bones of the fact that it was not her choice — even though Sony gave her one of the most lavish golden parachutes in history, when it allowed her to produce several movies, including the new Ghostbusters. Significantly, her most prominent colleague, Sony Corp CEO Michael Lynton, was spared the ax — even though he must share at least some responsibility for the failures that marked the last years of Pascal’s regime. Was it because he was a man, and not a woman? Arguably.

Pascal did not help herself by emailing off-color jokes about President Obama, which raised eyebrows among other corporate executives, including those outside the entertainment field, when they were leaked. “If this weren’t show business, she’d be gone in 24 hours if she did something like that with us,” a Fortune 500 exec told a rival studio chief, who in turn mentioned it to this reporter. Still, Pascal was not the only woman whose treatment seemed worse than that of her male peers. The hack also revealed that one of her top deputies, Hannah Minghella, was paid less than her fellow executive, Michael DeLuca, with whom she shared the title president of production; and it also made clear that two top female stars, Jennifer Lawrence and Amy Adams, earned less than co-stars Bradley Cooper and Jeremy Renner for American Hustle — prompting Lawrence to write a strong op-ed piece of her own about Hollywood’s notorious pay gap.

The lesson from this is: Don't hide these things better, but rather avoid them in the first place. Sony, and every other studio, should set up internal watchdogs to make sure no such discrepancies continue. Discrimination, whether against women or minorities, is a clear and present danger — and the studios haven’t learned from these leaks that they must do something about it.

2. Studios should have crisis PR teams on hand and ready to go

Sony emerged relatively unscathed in the long-term, following the attacks. But its short-term handling of the matter was a study in ineptitude, marked by a notable lack of strategy. It wasn’t just that the company went back and forth over whether and how to release The Interview, the Seth Rogen comedy that reportedly drew the North Korean hackers’ ire; it was also that Lynton seemed to contradict some of the highest members of the U.S. government — including President Obama himself — in some of his early statements. Where was the PR guru coordinating all this? Where were the government liaisons who should have been coordinating with the FBI, CIA and White House? And, if they were there doing their stuff, why were such inept mistakes allowed to happen?

Just as most government agencies have plans in place in case of real-life attacks — computer-based or otherwise — so should all the major media companies. The media today is a global business and at the front line of any potential attack, as visible to foreign assault as any industry outside defense. Preparation is everything — and Sony was unprepared.

3. Make allies with your enemies

It’s been decades since the studios were individual fiefdoms, operated by mogul-tyrants with names such as Louis B. Mayer, Darryl F. Zanuck and Jack Warner. Back in their heyday, stars and directors were locked into each studio with long-term contracts, and if an actor or actress made films at Warner Bros., he or she would rarely if ever get to work with the talent at MGM. In those days, these companies were separate nation-states, jostling for their share of talent and the box office, and aware that if one studio did well it would be at another’s expense. They operated under a 17th century economic philosophy: There was a limited pot of gold, and if one rival got more, then another must get less.

This world collapsed with the end of the studio system. Today, the studios share many political, legal and financial interests, and the Motion Picture Association of America is there (at least in theory) to coordinate them. Talent hops from one place to another, and so do executives. There’s a degree of porousness that was unknown in the golden age of Hollywood. Stacey Snider is working for Universal one day, then DreamWorks the next, and Fox after that; Tom Rothman is at Fox one moment, and then the No. 2 guy at Sony. Given the intricate web of connections that now links these executives and their staffs, it was extraordinarily disheartening that the other studios were so slow to leap to Sony’s defense. Where were the other execs proclaiming outrage and solidarity? They took a leave of absence when it came to taking a stand — and so did the MPAA when it came to corralling them. All these executives must build deeper bonds and learn that in the new world of terrorism and disorder, the old maxim applies: United we stand, divided we fall.

4. Be more transparent

Studios have always zealously guarded their information, happily spinning some journalists (heck, all of them) and keeping the truth about salaries and budgets behind closed doors. Sometimes the budgets they unveil for public consumption are laughably off-base (Universal’s recent claims that By the Sea cost $10 million was one notably egregious case).

Now they must learn that the truth will out. Leaked emails indicated that Spectre was on track at one point to cost $350 million — and none of the finessing by its producers could diminish the hard fact of intra-studio correspondence. Those numbers matter because they affect profits, which in turn affect profit participation and stock price. It’s time other studios learned to come clean before getting egg on their faces. Studios must learn to trust more, even if the final lesson from all of this is that individuals should trust less.

5. Don’t trust anyone

Friendship only goes so far in Hollywood. For those of us who have covered this industry over a number of years, that has been evident for a long time. When Michael Ovitz announced he was joining the Walt Disney Co. as Michael Eisner’s No. 2, he proclaimed that Eisner was one of his best friends — maybe even his best friend, in fact, he announced. That friendship didn’t last as long as Ovitz’s truncated tenure at Disney. Nor did Eisner’s friendship with another lieutenant, Jeffrey Katzenberg, end a whole lot better, when the latter sued the company in a landmark case that turned him into a multimillionaire but also got him forever labeled as the pom-pom to Eisner’s cheerleader.

Pascal got thrown under a bus at Sony. Crocodile tears were barely shed. Guess what? That’s life. Execs get paid millions upon millions to do these jobs; friendship is always secondary. The stakes are high, just as they are in politics. Your real friends are the ones who stick by you when things aren’t going well — and, as everyone knows, in Hollywood, real friendship during bad times is, alas, a contradiction in terms.

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