Sony Pictures hack has cost the company only $15 million so far
In announcing earnings delayed by the crippling hack, parent company Sony says it expects its bill for fixing the damage and tracing hackers will be far less than predicted.
Sony Pictures likely garnered hundreds of millions of dollars in unwanted publicity due to last year's crippling security breach, but its cost of dealing with the hack will likely amount to only a fraction of that, the studio's parent company said Wednesday.
Sony's preliminary fiscal third-quarter financial results revealed that the company planned to take a $15 million charge in the current quarter to cover "investigation and remediation costs" related to the breach. The announcement was the first official estimate provided by the technology and entertainment conglomerate of the financial impact of the hack, which forced Sony to shut down its computer network for several weeks and delay issuing its quarterly results.
On Thursday, another shoe dropped: Sony Pictures said that Co-chairman Amy Pascal will be stepping down from her top post, taking on the role of movie producer for films that the Hollywood Reporter said would include the upcoming "Ghostbusters" reboot and additions to the "Amazing Spider-Man" franchise.
"I have spent almost my entire professional life at Sony Pictures and I am energized to be starting this new chapter based at the company I call home," Pascal said in a statement cited by Hollywood Reporter and other publications. Sony Pictures did not immediately respond to a request for comment.
Pascal was a central figure in the messy drama that ensued from the hack and its revelations.
The security breach, which Sony discovered in late November, turned out to be more serious and pervasive than initially believed. A group calling itself #GOP, aka "Guardians of Peace," claimed responsibility and said it had obtained internal information. Hackers leaked the personal information -- including Social Security numbers -- of more than 47,000 celebrities, freelancers, and current and former Sony employees. They also leaked yet-to-be released movies, as well as emails between Sony Pictures executives, among other internal documents.
The hackers, which the FBI traced to North Korea, were apparently trying to prevent the release of the satirical movie "The Interview," which depicts actors Seth Rogen and James Franco as TV journalists drawn into a CIA plot to assassinate North Korean leader Kim Jong-un. In response to threats against theaters, Sony initially canceled the movie's December 25 theatrical release date.
In the face of mounting public pressure and criticism, Sony relented and released the movie for rent or download on a handful of video-on-demand websites and in about 330 theaters. The movie, which had a budget of around $44 million, grossed $15 million online during its opening weekend, leading Sony to call the awkward release a video-on-demand success.
Despite the negative attention generated by the hack, Sony said in January that it didn't expect the security breach to impact its earnings. While some reports pinned Sony's cost to overcome the hack as high as $100 million, Sony Pictures CEO Michael Lynton said in January that "it's actually far less than anything anybody is imagining." He also noted that insurance will cover all costs associated with the hack.
Sony was scheduled to release its final third-quarter earnings results on Wednesday, but in late January it filed a request with the Financial Services Agency of Japan for an extension of its earnings filing deadline from February 16 to March 31. The request indicated that the company was still working on key computer applications after "a serious disruption of [Sony Pictures'] network systems occurred, including the destruction of network hardware and the compromise of a large amount of data on these systems."
Update, February 5 at 11:58 a.m. PT: Added information about Amy Pascal stepping down as co-chair of Sony Pictures Entertainment.