President Barack Obama said Sony Pictures Entertainment was wrong to bow to the threats of North Korean hackers and cancel the release of its movie “The Interview.”

Sony “suffered significant damage. There were threats against its employees. I am sympathetic to the concerns that they faced,” Obama said at a White House news conference. “Having said all that, yes, I think they made a mistake.”

Obama said cyber-attacks like the one suffered by the company are a fact of life in the interconnected world, and submitting to threats from hackers would embolden them to make more demands and possibly lead to self-censorship by the media.

Sony Pictures Chief Executive Officer Michael Lynton defended the decision to pull the comedy about a fictional plot to assassinate North Korean leader Kim Jong Un. Theater owners were refusing to show the film amid threats of violence from hackers calling themselves Guardians of Peace, he said.

“We have not given in and we have not backed down,” Lynton said in an interview on CNN after Obama spoke. He held out the possibility that the film will be released to streaming or video-on-demand services.

The president’s unusual public criticism of Sony came amid calls for retaliation against the North Korean government, which the FBI Friday blamed for the attacks. Obama’s remarks add a new element to the controversy that has enveloped the studio since the release of internal e-mails by the hackers and the decision to cancel the movie’s scheduled Dec. 25 release.

U.S. President Barack Obama speaks during a press conference in the briefing room of the White House in Washington, D.C., on Dec. 19, 2014. Close

U.S. President Barack Obama speaks during a press conference in the briefing room of… Read More

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Photographer: Brendan Smialowski/AFP via Getty Images

U.S. President Barack Obama speaks during a press conference in the briefing room of the White House in Washington, D.C., on Dec. 19, 2014.

U.S. Response

Obama addressed the attack on Sony as part of a year-end news conference in Washington on Friday that covered a range of issues, including the U.S. economy and the administration’s move to restore relations with Cuba. During the almost hour-long session, he only called on female reporters.

The president vowed the U.S. will respond to North Korea’s cyber-assault on the company “in a place and time and manner that we choose.” He refused to specify what the U.S. might do and indicated the full response may not be made public. His administration on Thursday said the size and scope of the hacking made it a matter of national security.

North Korea’s diplomat at the United Nations, Kim Song, on Friday in New York denied the nation’s involvement. The state-run Korea Central News Agency on Dec. 7 cited an unnamed defense spokesman as saying North Korean supporters may have attacked Sony’s computers in “righteous” anger over the comedy about a plot to kill Supreme Leader Kim.

Sony has canceled the scheduled Dec. 25 release of “The Interview,” a film about a fictional plot to assassinate North Korean leader Kim Jong Un, after its computer systems were attacked and threats that movie theaters showing it would be targeted. Close

Sony has canceled the scheduled Dec. 25 release of “The Interview,” a film about a… Read More

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Photographer: Patrick T. Fallon/Bloomberg

Sony has canceled the scheduled Dec. 25 release of “The Interview,” a film about a fictional plot to assassinate North Korean leader Kim Jong Un, after its computer systems were attacked and threats that movie theaters showing it would be targeted.

The purported hackers delivered a new threat to Sony, demanding the film never be shown.

Hacker Threat

“And we want everything related to the movie, including its trailers, as well as its full version down from any website hosting them immediately,’ said an e-mail, which was sent to executives including Lynton and co-Chairman Amy Pascal, according to a person with knowledge of the situation.

In return, the hackers pledged to ‘‘ensure the security of your data unless you make additional trouble,’’ according to the new e-mail.

The president said U.S. society can’t submit to censorship by a dictator in another country.

‘‘If somebody is able to intimidate folks out of releasing a satirical movie, imagine what’s going to happen when they see a documentary they don’t like or news reports they don’t like,” he said.

Obama said he wished Sony “had spoken to me first” before opting to pull the film, starring Seth Rogen and James Franco.

North Korea

“I would’ve told them ‘do not get into a pattern in which you’re intimidated by these kinds of threats and attacks,’” the president told reporters. He also mocked North Korea for mounting such an assault over a comedy.

“It says something interesting about North Korea,” Obama said. “I love Seth, and I love James. But the notion that that was a threat to them gives some sense of the regime we’re dealing with here.”

Malicious software in the Sony attack bore links to malware previously used by North Koreans, according to the Federal Bureau of Investigation. The hacking tools employed also were similar to those used in a March 2013 cyber-attack on South Korean banks and media organizations.

It exposed internal company documents, including personal information about employees, salaries of stars and e-mails from executives. The attack also destroyed company data.

“North Korea’s actions were intended to inflict significant harm on a U.S. business and suppress the right of American citizens to express themselves,” the FBI said in a statement. “Such acts of intimidation fall outside the bounds of acceptable state behavior.”

Tracking Data

Much of the data stolen from Sony’s networks passed through Chinese servers and Internet providers on the way to the hackers, said a person familiar with the investigation who wasn’t authorized to speak on the record.

There is no evidence of direct Chinese participation but the country does keep a close eye on data moving through its networks, suggesting it may have been aware of the North Korean attack. It didn’t alert officials in the U.S., the person said.

When asked if China assisted in the Sony attack, Obama said the U.S. has “no indication that North Korea was acting in conjunction with another country.”

The FBI said it will “impose cost and consequences” on those found to carry out cyber-attacks, though it didn’t name any specific retaliatory actions for the Sony hack.

Secret Action

One thing the Obama administration is unlikely to do is unleash a tit-for-tat cyber-attack, analysts said. Any eventual U.S. response also will likely be unannounced, in order to avoid feeding the North Koreans’ desire for a public showdown with the world’s sole superpower.

“What the North Koreans can’t stand is when no one pays attention to them,” said Joel Brenner, former head of U.S. counterintelligence. “What we do may not be publicly known, but the North Koreans will know who did it.”

The possible options include a covert operation against North Korea’s shadowy Unit 121, believed responsible for training hackers. The unit probably was behind “distributed denial of service” attacks against 40 South Korean government and military websites, according to an intelligence official.

Even so, the Obama administration may be reluctant to retaliate in kind by releasing U.S. cyber-attacks on North Korean computer networks — particularly over the cancellation of a Hollywood comedy. Any such attack would involve showing the North Korean government what part of its network has vulnerabilities the U.S. has identified, thus allowing defenses there to be strengthened, Brenner said.

To contact the reporters on this story: Angela Greiling Keane in Washington at agreilingkea@bloomberg.net; Chris Strohm in Washington at cstrohm1@bloomberg.net

To contact the editors responsible for this story: Steven Komarow at skomarow1@bloomberg.net Joe Sobczyk