Filed under: Company News, Media, Sony, Entertainment Industry, Investing
Yes, the narrative behind the ill-fated flick has tried to paint Sony as going from zero to hero. Sony went from being the bullied movie studio that pulled its Christmas Day release to a rock star that ultimately scoffed at safety concerns in offering the movie across several digital outlets and through any theater still willing to show it. Even the initial retreat has been whitewashed. It's no longer Sony that buckled under the pressure; it was merely reacting to the handful of leading multiplex operators that refused to screen the movie.
However, what can't be lost in all of the back-patting that Sony is receiving for finally cranking out the critically panned movie is that it was a bad decision executed poorly by a bad company.
Blowing "The Interview"
There is no shortage of debate when it comes to a studio's right to put out a movie. Even if it's as questionably offensive as depicting the graphic death of a sitting political figure, there's an argument to be made in favor of freedom of speech and the expression of art.
The rub here is that the film, by most accounts, is just not very good. More than half of the critics tracked by Rotten Tomatoes don't recommend viewing the movie, and that's not something that holds true for most of the comedies mining controversy and lewd humor for laughs. In other words, it's not as if Sony was necessarily fighting to get a good movie noticed.
The other and potentially bigger problem here is that this may have been an American release, but it's a movie that likely should have never been made by a movie studio owned by a Japanese company, given the tension with and proximity to China and North Korea.
This ultimately led to the hacker attack that exposed a ton of unflattering emails between Sony's top studio executives and the folks that make movies. It remains to be seen how many careers were crushed at Sony over this, but it's a fair bet that some other projects that Sony was working on may suffer as a result of the embarrassing leaks.
Only the Sony
Sony has suffered costly attacks from hackers before, mostly to its Sony PlayStation Network. There was even a Christmas outage, though it wasn't on the same scale as an earlier attack that shut down the online gaming platform for weeks.
Sony wasn't at its best even before the controversy. Back in September, it suspended its dividend for the first time since 1958.
Sony has been profitless in all but one year since fiscal 2008, and it's not necessarily any closer this year after selling off its unprofitable computer business and spinning off its equally profitless TV manufacturing operations. It also recently took a 10-figure impairment hit to write down the value of its smartphone business.
The subsidiary-shedding move has placed a greater emphasis on entertainment, and that didn't seem like such a bad plan a few months ago when the PlayStation 4 became the top dog in the latest generation of consoles and digital distribution offered new ways for creators of content to monetize their catalogs. However, the reputation-damaging email leaks and the latest PlayStation hack find Sony retreating to a core that's under attack. Sony may deserve some praise for its resilience under pressure in recent weeks, but at the end of the day, it's a weaker company after all of the knocks. With profits and now dividends gone, the only real surprise ending here is that Sony shares have beaten the market in back-to-back years now. That's not likely to continue given the decaying fundamentals.
Motley Fool contributor Rick Munarriz has no position in any stocks mentioned, and neither does The Motley Fool. Try any of our Foolish newsletter services free for 30 days. Is your portfolio ready for the new year? Check out our free report on one great stock to buy for 2015 and beyond.
