For Sony Pictures CEO, cyberattack won't set studio back

Thu Jan 8, 2015 10:28pm EST
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By Mary Milliken

LOS ANGELES (Reuters) - Over the past seven weeks, Sony Pictures' chief executive has dealt with the fallout from a cyberattack he likens to having your house robbed and burned to the ground.

But the devastating hack, he says, might end up being much less of a disaster for the studio than many had anticipated.

Michael Lynton says the costs associated with the cyberattack, the most destructive on a private company on U.S. soil, will be completely covered by insurance and will not mean any more cost-cutting after a few years of painful restructuring.

"I would say the cost is far less than anything anybody is imagining and certainly shouldn't be anything that is disruptive to our budget," Lynton told Reuters in an interview, seven weeks after the hacking attack that the U.S. government has blamed on North Korea.

While Lynton would not elaborate on an estimate for the costs for the entertainment arm of Sony Corp, he said it was "well within the bounds of insurance."

Some experts have put the cost at up to $100 million, which could include computer repair or replacement, steps to prevent a future attack and lost productivity while operations were disrupted. They expect more companies to suffer similar fates.

The attack targeting the entertainment arm of Sony Corp. wiped out massive amounts of data and led to the online distribution of email, sensitive employee data and pirated copies of new movies.

After the attack surfaced on Nov. 21, employees came to work and discovered that not only were their computers disabled, but they had lost all past email, contacts, distribution lists, budgets and anything else stored on the network. At a studio that prided itself on going "green" and paperless, one employee said it was "like the place burned down."   Continued...

Michael Lynton, CEO Sony Entertainment and CEO and chairman Sony Pictures Entertainment, speaks during an investors' conference at the company's headquarters in Tokyo November 18, 2014. REUTERS/Toru Hanai