What should Sony do?


Now that Sony Pictures has pulled its controversial comedy “The Interview,” it has a multimillion dollar decision to make: What next?

Sony has dumped considerable money into the film, which came under fire after cyberattackers — possibly backed by North Korea — threatened 9/11-style attacks on any theater screening the comedy, which depicts the assassination of North Korean leader Kim Jong-un.

Published reports suggest Sony sunk $40 million to $45 million toward producing the film, plus another $30 million to 40 million marketing it.


If the movie never sees the light of day, Sony eats those costs and loses any potential revenue.

And that’s to say nothing of the negative public relations hit for Sony over backlash from its decision to pull the movie. Everyone from the Hollywood elite to lawmakers in Washington have chastised the company for its capitulation.

So what do they do?

“I think that they are going to have to bite the bullet and let this one stay on the shelf frankly,” said Jonathan Handel, an entertainment law professor at the University of Southern California Gould School of Law.

Sony has said it has no immediate plans to release the film in any format.

The legal risks are too high to release the film in theaters, Handel said. If any violent activity occurred at a screening, even by copycat attackers, Sony would be doomed legally.


The company was warned, Handel explained, which creates a solid lawsuit foundation.

“You can imagine how that would look to a jury,” he said. “Really at the end of the day, they don’t have any option.”

Gene Del Vecchio, a marketing professor at University of Southern California Marshall School of Business, disagrees.

He argued that the sunk costs are too much to do nothing.

“I think in Hollywood that’s ultimately going to be unacceptable,” he said.

Many have floated the idea of releasing the movie via some streaming option — Netflix, for instance — or straight to DVD. Former GOP presidential nominee Mitt Romney urged the movie studio to put the movie up online for free and ask for voluntary donations to help fight the Ebola crisis.

“That can be worthwhile to help defray some of the costs,” Del Vecchio said.

He argues Sony should reverse course and release the film to capitalize on its publicity.

“It’s almost as though it’s the 1920s and the U.S. government has decided to have prohibition,” he said. “The allure of alcohol now that you can’t have it greatly increases.”

Doug Stone, president of film industry newsletter Box Office Analyst, predicted “The Interview” would have raked in $120 million at the box office before it was pulled.

A reversal “greatly increases the box office potential,” Del Vecchio said.

He believes Sony has a small window — perhaps only a week or two — to capitalize on the intense focus surrounding the film.

To go back on its decision, though, Sony would need at least one of the major theater chains on board. The top five chains in North America, with Sony’s permission, jointly decided to withdraw “The Interview” from their lineups.

If one theater chain reverses, there’s a “great probably the others will follow,” Del Vecchio said.

All parties would also need some conclusive statement from the government that there are no credible threats against moviegoers. The Department of Homeland Security has said it currently has no direct evidence, but that the agency is still investigating the matter.

Even if Sony chooses to stick by its decision, all is not lost, said Kathryn Arnold, a veteran film producer.

Sony can file an insurance claim for its sunk costs, she said. In fact, that claim gets easier if the film has no revenue.

“If they don’t put the film out at all, it’s a total loss and you can be very specific about the costs,” she said. This would allow Sony to maximize potential returns.


If the studio goes with a DVD or streaming release to recoup costs, “it muddies the waters,” Arnold said, on how much Sony could request on an insurance claim.

A decision to bury the movie and file an insurance claim could set up another, perhaps unprecedented, decision.

After the claim is settled, “Who owns that asset?” Arnold wondered.

If it’s the insurance company, it may have the option to release the movie itself to recoup its losses.

So while the storm may bury “The Interview,” even an unreleased film could eventually find its way into the light of day.