COMMENTARY: Hollywood heads off today for a much needed holiday vacation in the wake of North Korea’s successful cyber-terror attack that stopped the release of the satirical comedy The Interview and had all the cloak and dagger turns of a Homeland episode. I’m going to suggest that Deadline’s core readership spend some time in the coming weeks contemplating why and how this happened, and how all of us will conduct business going forward, way beyond being polite in emails.

obamaThe moment that Sony Pictures cancelled the movie Wednesday after theater chains bailed, foreign cyber-terrorists won an unimaginable victory on American soil that has chilling ramifications in the way that stories will get told onscreen. Is it too much to suggest this is the darkest thing to happen in Hollywood since the 50s Blacklist? There sure are parallels to other regrettable episodes in Hollywood history that remind that the movie industry is known more for self interest than courage. Higher-ups from past eras reportedly put their heads in the sands as the Third Reich built steam, with movie companies varnishing films to tap the lucrative German box office market in the 30s. More heads in the same sand when artistic careers were ended by the communist witch hunt two decades later. So, the idea that Sony Pictures execs Michael Lynton and Amy Pascal stood alone shouldn’t have been a surprise. Everything else that happened in this campaign to kill The Interview is just shocking upon reflection.

This dazzling narrative continued at dizzying pace.

* President Obama today said Sony shouldn’t have bowed to terrorist and cancelled the movie, putting Lynton and Pascal in the barrel again to explain they had no theaters to show it in (residue from Pascal and Scott Rudin email joke about what black movies Obama likes?)

* Terrorists emailed Sony’s Michael Lynton and Amy Pascal this morning to tell them they would call off the cyber-dogs–if The Interview isn’t released on DVD and VOD.

* In the latest clumsy damage control attempt by Sony, Pascal flew to New York yesterday to apologize to Al Sharpton, who embraced her in person and then Tweeted a stern rebuke. This had to be one of the more galling indignities Pascal endured in a week full of them; imagine having to kiss the ring of the same guy many New Yorkers still identify for inflaming racial tensions in New York City to dangerous levels over the Tawana Brawley hoax; now he sits in judgment over Pascal’s capacity for racial tolerance, because she wrote a couple dumb private emails.

brawleyNobody needs this holiday break more than Pascal and Lynton, but leaders in this industry from Hollywood to DC—yeah, you, Chris Dodd–should save room for some soul searching, too. As George Clooney revealed last night on Deadline, not a single powerful person, including Dodd, dared sign a petition that simply recognized one of the six major studios had been cyber-attacked in a blackmail attempt by a foreign country to kill a movie, and a dumb comedy at that.

Everybody had motives for side stepping. For Dodd, what if it was some pimple-faced hacker living in his mother’s basement? Some withheld statements of support out of fear the next harvest of potentially polarizing emails might insult them. Others feared replacing Pascal and Lynton in hacker cross hairs, knowing their emails would be as irresistible to media as the Sony secrets on display.

I never heard the words ‘don’t quote me’ as much as I have the last two days, researching this article and trying to find out if any talent had actually sworn off Sony. Despite bracing private comments about Cameron Crowe, Angelina Jolie, Leonardo DiCaprio, Denzel Washington, Will Smith and others, I couldn’t find a single case of anyone unwilling to make a movie with Pascal. Don’t think they won’t the leverage Pascal lost, but major agents told me they wouldn’t hesitate to sign their clients up there. One producer put it this way: every time people swear off working with a studio, you see them back in bed six months later, partly because there are only six major studios. As one top agent told me: “Amy and Michael have always been the place you go with a challenging project, and everybody still thinks that Hollywood is better off with than without them.”

"The Amazing Spider-Man 2" New York Premiere - Outside ArrivalsServed up without context, many of the published emails seem like bridge burners. But I can tell you definitively that Angelina Jolie hasn’t quit Sony, and continues to develop Cleopatra with Scott Rudin, who himself has many other movies with Pascal, despite dishy back and forth on his decision to take the Steve Jobs movie to Universal. Smith could have taken umbrage over the mention of his kids, Willow and Jaden, in one exchange of emails. Criticizing someone’s children steps over a line, but to TriStar head Tom Rothman, the line established in press reports was one of absurdity.

“Sure, I had a conversation with Will’s partner James Lassiter,” Rothman said. “It was more of a comical than a forgiving conversation for something that was taken entirely out of context. This was about the dating of movies and the question of whether a TriStar movie or an Overbrook film best fit into the Columbus Day school holiday. The joke was that those kids don’t know when the holidays are, because they are home schooled. They don’t have those days off. Not in a billion years would I insult someone’s children. My advice to those writing this stuff? Get some perspective, take a moment to understand what is going on. Anybody really interested in our dating conversations can come on by; I promise they will put you to sleep better than Sominex. But what about the big points here that go beyond this media obsession with regurgitated gossip? The media can help stop terrorists. These are f*cking terrorists. Media, stop helping the terrorists. Stop worrying about emails and start worrying about the threat to free speech.”

Free speech certainly got drubbed this week. The President criticized Sony for that, meaning the studio is taking heat from both sides. The other side is the theater chains that were compelled to take action when Sony wouldn’t. Artists lamenting the chilling effect here are also right. Would North Korea have actually spilled blood in the U.S. over a satirical comedy? Homeland Security found no credible terror threat, and once North Korea was identified as the hacking mastermind, any bloodshed would have made Kim Jong Un the new Bin Laden, and we saw how that ended in Zero Dark Thirty, another controversial Sony Pictures release.

The InterviewDespite all this, it is hard to imagine theaters reacting differently. I’m told they got pressure from all sides, from rival studios with Christmas films that worried about empty houses, and mall shopkeepers near cineplexes. As Clooney explained, there were also lawyers telling theater owners that because they’d been forewarned, the potential liability was enormous.

This is the bottom line in this attack. North Korea seemed to have thought of everything, with a plan that could have come right out of Sun-Tzu’s The Art Of War. These cyber-terrorists played a seamless game of divide and conquer, relying on media to turn Sony leaders Michael Lynton and Amy Pascal into pariahs unfit to lead, to the point that one trade depicted them cooking in a cauldron.

While all this swirled around, we were all too busy to see what was coming or even recognize it for the terrorist master stoke that it was. We all thought media was fed stolen emails to embarrass Lynton, Pascal into halting The Interview release. That wasn’t it. The blitz of tawdry stories were released to give power and credibility so that when the Guardians Of Peace finally issued its specific terror demand, it couldn’t be ignored. That was the note that invoked 9/11 and promised bloodshed in theaters. Such a crudely written note might get ignored, but not when it was the cover letter attached to the first leakage of Lynton’s e-mails, obviously saved for the final assault.

I think Aaron Sorkin’s condemnation of the media is too overt, but as a journalist who has struggled with what to do with those stolen documents, I find it hard not to wonder if the press, bowing to the pressure of the 24-hour news cycle, served as Kim Jong Un’s hammer, delivering the killing blows against that movie. Did the press do its job, or behave like a bunch of kids handed shiny baubles to play with, blissfully unaware what was going on at the adult table?

The Interview featuredOther questions for journalists, government, and corporate executives: how do we retain the integrity of free speech and right to privacy when they have become so at odds in an internet age where information move so quickly, it feels like you are riding your bicycle on the Autobahn? We are at the point where careers are ruined instantly by scandal, often exposed by a surreptitiously recorded phone call that used to be an illegal act. An actresses like Jennifer Lawrence sends a nude picture to a boyfriend and finds it on public display; Quentin Tarantino gives his Hateful Eight first draft script to five people and in no time it’s on a website; and now, studios fear hacker wrath just for making satires that skewer objectionable political leaders. We now know that rather than sympathy for being crime victims, people in Hollywood will be judged with a puritanical scrutiny right out of The Crucible.

I spoke with Lindsay Moran, a former CIA operative who is an author and consultant on security and intelligence matters. She isn’t sure it’s fair to label media outlets as accomplices, or really pass judgment on anyone in this drama. That’s because this was new terrain to everyone, from media to Sony, to law enforcement and government. “The job of government is to safeguard American interests and that includes economic interests so in that regard, a private business like Sony belongs in the same category as a U.S. government agency,” she said. “The media has a job, but is that job to enable a victory by cyber criminals? Do we treat cyber-terror the same way we have other forms of terrorism? This is a debate that is fast coming, but we haven’t had it yet. There hasn’t been an opportunity to formulate policy. It is chilling, and hard to convince the American public to be outraged over something like this. But today it is Sony, and tomorrow, it could be another private company or a government agency.”

Clooney said he didn’t have the answers to the larger questions he raised, and neither do I. Deadline so far hasn’t used stolen emails to create salacious scoops; we just didn’t feel right about it and tried to compensate by hustling to compensate. What I liked about Clooney’s appraisal last night is that he saw the motivations behind how everyone behaved, and condemned none of them. Every editor of a publication knows best what its readership demands and how to meet that. Did Deadline make the right decision? Who knows, but we all felt better when the State Department blamed North Korea.

We all lost here, and the maddening thing is that the bad guys not only have a victory, but a playbook for creating fear and stifling creativity. These next two weeks will be a good time for smart people to start coming up with a new playbook to stop them, next time. The alternative is unthinkable.