October 15, 2015

Observations about Sony, The Interview, and free speech

Beyond the news and entertainment value of the leaked emails from what now appears to be a cyber warfare campaign against Sony by the North Korean government for its now aborted release of The Interview, there are more serious issues this incident raises.

Hollywood has had a shameful history of being attuned and responsive to political power.

We have allowed a vitally important industry to be highly concentrated in a handful of large public for-profit companies. Moreover, this is an industry heavily dependent on the good will of both the U.S. and foreign governments. The combination of a need to protect companies’ top and bottom lines and to stay on the good side of governments that can harm those companies causes film studios inside them to be excessively cautious and often shamefully deferential to governments.

Unfortunately, the history of Hollywood studios is replete with examples of what many would call “cowardice.” Although most people in their 70’s and older would remember the “blacklisting” of performers and creative production crew members like directors and screenplay writers in the early 1950’s during the McCarthy era, there are many other examples closer to what happened with The Interview.

In the 1930’s, the studios were so focused on staying on good terms with Adolph Hitler and the Nazis that they did a great deal of self-censorship and worked collaboratively with the Nazis, as the article identified below indicates.


Film projects that might have offended the Nazis were shelved, and even released films were edited to avoid conflict, because of the fact that Germany was the largest foreign market for American films. In fact, as the Nazis conquered more foreign countries, their power over Hollywood entertainment content increased.

The accommodation of the Soviet Union in the 1930’s and 1940’s actually was a factor that triggered the McCarthy era witch hunt in the late 1940’s and early 1950’s. Many innocent people lost their livelihood as entertainers because of the blacklisting of them by all the studios and TV networks.

Inside the United States, we saw a phenomenon in the early days of broadcast television in which African American performers like Nat King Cole had their shows cancelled, despite high ratings and critical acclaim, because the major networks were afraid of the reaction of their affiliates in the Deep South.

Hollywood studio and TV network executives have always been closely attuned to what is “politically correct.” Even where content has been broadly released, many compromises are made to avoid controversy. Some would say that the 1952 Academy Award winning film High Noonwas deliberately set in the old American West to avoid appearing to be a commentary on the McCarthy era suppression of controversial content. During the Vietnam war, we saw the same thing with films like Little Big Man or M*A*S*H, which were deliberately set in the distant past, but which presented content designed to attack current government policies.

If anything, the Hollywood self-censorship is a greater risk than ever because of its business model.

What the Hollywood studios did in the 1930’s to placate the Nazis because of the importance of the German cinema market is multiplied exponentially today. As I learned in trying unsuccessfully to get major studios to finance, produce, and distribute From the Rough, major studios focus on films that they believe have a much bigger opportunity outside the United States. Today, China is the largest market outside the United States, and it is more difficult than ever to make a film that the censors in China will allow to be released if it is even mildly critical of the Chinese Communist government.

Ross Douthat, in an Op-ed piece in the Sunday, December 21, 2014, issue of The New York Times, entitled “North Korea and the Speech Police,” argued that the Sony decision to withdraw The Interview from market release was “a uniquely terrible precedent.” However, he also points out that colleges and universities have trampled on free speech principles by withdrawing commencement speaker invitations.

He also noted that other countries are starting to put constraints on free speech for security reasons, and that these constraints are “exposing people to fines and prosecutions for speaking too critically about the religions, cultures, and sexual identities of others.”

We are clearly at an inflection point in which fear of negative consequences from free speech is eroding free speech rights in ways that were not problematic in the past. The dependence of the entertainment industry on global revenues and the thinner margins for error in selecting films for distribution mean that we may see more challenges in the future of this kind.


Reputational risks are greater today than ever, because special interest groups have more tools than ever to make life difficult for businesses and other large organizations.

Businesses are more likely to get boycotted by prospective customers or investors because they have inadvertently done something some interest group considers to be politically incorrect. Intel Corporation recently had to withdraw advertising on a video gaming site because those advocating for video game portrayals that feature more women in heroic roles thought that Intel was supporting sexist video game offerings.

Free speech is under attack in more places for more reasons than ever before simply because businesses are more attuned to the highly volatile media environments in which they operate. Small issues can become viral because the tools for making them viral are more available than ever.

Andy Grove, in his great book Only the Paranoid Survive, describes early in the book how he and the rest of Intel management did not understand the reputational risk posed posed by a small defect in one of the Intel Pentium chips in 1994. He noted that the defect, called popularly “the floating point error” affected 1 out of every 9 billion calculations and would have no consequence for the vast majority of Intel users. Nevertheless, the story took on a life of its own in a short period in 1994 and Intel was forced to withdraw and recall the chip from the market. Grove noted that we are in a world in which the consequences of not seeing an issue that can go viral today can be disastrous for a large organization.

We have to come to terms with all the implications of cyber warfare.

America has been spared the violence that has been directed at political commentators and artists in places like the Netherlands and Denmark for anti-Islamic content. However, the success of the North Koreans in getting The Interviewrelease stopped will embolden everyone who wants to use cyber warfare as a tool to intimidate his or her adversaries, whatever the issue.

What happened in this case is a blueprint for anyone who wants to attack any large profit-making operation concerned about reputational risk from having emails and other sensitive documents broadly released. The risk goes far beyond entertainment companies and far beyond suppressing public entertainment content. Cyber warriors can select any prospective or current action by a large organization, threaten to use cyber warfare against it, and get that organization to reconsider continuing down a particular strategic or tactical path.

This is a worrisome issue because no organization has the tools to protect itself completely against what happened to Sony and no government has the ability to deter or retaliate adequately against cyber warfare campaigns directed by foreign governments.

Clearly, large organizations have to expand their cyber security strategies to focus more on containment. They also need to have better advance planning about how they would handle certain kinds of inevitable challenges, since human nature being what it is, embarrassing emails, text messages, or conversations will inevitably fall into the wrong hands.

The other thing that the Sony hacking incident demonstrated is that companies have far more involuntary “brand ambassadors” whose behaviors can put the organization in a bad light than was the case in the past. In the past, CEO and C-Suite executives operated in a more public fashion and had to be careful what they said and did.

Today, the risks of reputational risk spread much more deeply into an organization. Amy Pascal of Sony should have expected her communications to be hacked and to be put under a magnifying glass because of her executive position, but there were others who probably thought they had less likelihood of exposure. They were wrong.

My predecessor at Pitney Bowes, George Harvey, once told me, at a much less risky time, that I should say nothing and do nothing as a CEO that would be embarrassing to me and to the company if it were on the front page of The New York Times.

Today, the reach of our media is instantaneous, global, and longer-lasting. Moreover, the tools for capturing sensitive communications are more ubiquitous and the range of interest groups who want to bring down successful organizations whose agenda they oppose is greater than ever.

Mr. Harvey’s advice is more relevant and powerful than ever.