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Sony Hackers Threaten 9/11-Type Attack; Interview with Rep. Peter King of New York; Schoolchildren Slaughtered in Pakistan Terror Attack; Sony Hackers Threaten 9/11-Type Attack; Cafe Gunman Wasn't on Terror Watchlist; Mental Illness Linked to Lone Terrorist Threat

Aired December 16, 2014 - 17:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

WOLF BLITZER, CNN HOST: Happening now, movie terror threat. The Sony hackers warning moviegoers of a 9/11-style attack on theaters showing the new film mocking North Korea's leader.

So how real is this danger?

Targets on film -- is there anything wrong with killing a world leader in a movie that's a comedy?

And school attack -- Taliban terrorists roam the halls, killing children wherever they can find them. We have new details on a horrific slaughter.

I'm Wolf Blitzer.

You're in THE SITUATION ROOM.

ANNOUNCER: This is CNN breaking news

BLITZER: Let's get right to the breaking news -- a chilling new threat from the attackers who broke into the Sony Pictures computer system. This goes way beyond their leaking embarrassing company e- mail and employee records. Now they're actually warning of what they describe as a 9/11-style assault targeting movie theaters in the United States that show the interview. That's the new comedy mocking North Korean leader, Kim Jong-un.

Congressman Peter King of the House Homeland Security and Intelligence Committees, he's standing by, along with our correspondents, our analysts and our guests.

Let's get the very latest, though, right now on the chilling new threat to target movie theaters throughout the United States.

Our justice correspondent, Pamela Brown, is joining us.

What are you hearing -- Pamela?

PAMELA BROWN, CNN CORRESPONDENT: Well, Wolf, it's clear with this latest report from the Sony hackers, they're trying to ratchet up fear leading up to the release of the controversial comedy, "The Interview," next week. In the wake of this, we've learned that film star, Seth Rogen, has canceled all public appearances today and tomorrow. And now U.S. federal investigators are looking into the threat.

(BEGIN VIDEOTAPE)

BROWN (voice-over): Tonight, the FBI is investigating a threatening message purportedly from the Sony hackers promising a bitter fate to anyone who sees the controversial North Korean comedy, "The Interview," set to release on Christmas Day.

(BEGIN VIDEO CLIP FROM THE INTERVIEW, COURTESY SONY PICTURES)

UNIDENTIFIED FEMALE: The CIA would love it if you can take him out.

UNIDENTIFIED MALE: Huh?

UNIDENTIFIED FEMALE: Take him out.

(END VIDEO CLIP)

BROWN: The message says, "Soon, all the world will see what an awful movie Sony Pictures Entertainment has made. The world will be full of fear. Remember the 11th of September 2001."

CRAIG A. NEWMAN, MANAGING PARTNER, RICHARDS, KIBBE & ORBE LLP: With this hack in particular, information is just leaking out day after day after day. And now they've got all these threats against people.

You know, if you go see the movie, you know, be careful. They're threatening of families of Sony employees. I mean this has taken hacking to a level that we've never seen before.

BROWN: A leaked scene from "The Interview" shows the gruesome attack on North Korean leader, Kim Jong-un, something the country has strongly condemned. U.S. law enforcement sources tell CNN the strong suspicion is that the reclusive country is the instigator of the hack, and possibly outsourced it to a group elsewhere, as retaliation for the controversial film.

Tonight, the FBI is scrubbing Sony's computer system, trying to gather enough evidence to be able to definitively point a finger at the hacking culprit.

NEWMAN: It is a complex, nuanced investigation. And it involves not just going into your own IT systems, but the more sophisticated hackers have gone through multiple, multiple infrastructures to get to where they have gotten to. So it's not something that Sony is going to solve in a day or a week or a month.

BROWN: The hack attack has had a devastating affect on the entertainment company, with an avalanche of leaks revealing personal information of employees and salacious e-mail exchanges of A-list celebrities. U.S. law enforcement sources say it's believed the Sony hackers began penetrating Sony's computer system as early as this past summer, but it wasn't until later the company reported it to authorities, who began investigating in November. (END VIDEO TAPE)

BROWN: And today, former employees of Sony filed a class action lawsuit, saying the company was negligent and didn't do enough to protect its computer system -- Wolf.

BLITZER: What a story.

All right, Pamela, thanks very much.

How difficult is it to pin down the source of this new threat?

Our justice reporter, Evan Perez, is working this part of the story for us.

What are you learning -- Evan?

EVAN PEREZ, CNN CORRESPONDENT: Wolf, the hackers in this case are banking on anonymity. They think that by showing that their -- the attacks might have come from China or Thailand or any other country, that the FBI is not going to be able to unmask them.

I'm told that FBI technicians are working around the clock on this case. There's things that they can look at. For instance, they can try to determine what type of keyboard was used to try to carry out -- to write the malware to try to carry out these attacks. They can look at characters and fonts, even misspellings, Wolf, that are found in the malware -- that can tell, can give telltale signs of who might be behind this. And this is leading them to with -- you know, that they're not 100 percent sure, but all fingers point to North Korea -- Wolf.

BLITZER: How seriously are they taking -- we're talking about law enforcement officials in the United States, how seriously are they taking this threat of another, quote, "9/11?"

PEREZ: Well, you know, that's -- it's a little bit of a mixed bag on that, because I think the -- they say that there is not any indication that there's actually any threats against U.S. movie theaters showing this film. In some ways, this might just encourage people outside who might just decide that that's the day to call in bomb threats, and therefore, that's the day to get people to have to be cleared out of movie theaters. That's easily done, Wolf.

We have a statement from the Department of Homeland Security on just this very question. They say, "We are still analyzing the credibility of these statements. But at this time, there's no credible intelligence to indicate an active plot against movie theaters within the United States" -- Wolf.

So -- but this is something, even though they don't believe the people behind the hack are actually able to carry out anything like this, there's plenty of room for other people to do mischief -- Wolf.

BLITZER: Evan, thanks very much. The controversial new film which has so infuriated North Korea's regime is creating a very sensitive situation in Japan, where Sony, of course, is based.

CNN's Will Ripley is in Tokyo.

He has this part of the story.

(BEGIN VIDEOTAPE)

WILL RIPLEY, CNN CORRESPONDENT: Right now, we're driving up to Sony headquarters here in Tokyo. This is where the company's top executives work. And inside that building right now, they're dealing with a major crisis -- a humiliating cyber attack on their American subsidiary, Sony Pictures Entertainment.

(voice-over): Hackers calling themselves Guardians of Peace leaked embarrassing, sensitive insider information. They're promising more punishment on Christmas Day, when Sony is set to release "The Interview."

(BEGIN VIDEO CLIP FROM THE INTERVIEW, COURTESY SONY PICTURES)

UNIDENTIFIED MALE: You want us to kill the leader of North Korea?

RIPLEY: The comedy is about two journalists killing Kim Jong-un. North Korea's Supreme Leader reportedly infuriated. His top officials call the movie "an act of war."

JEFF KINGSTON, PROFESSOR, TEMPLE UNIVERSITY: Obviously, Pyongyang is very upset with this movie depicting the assassination of their leader and the fact that the CEO of Sony was directly involved.

RIPLEY: Temple University Asian Studies professor, Jeff Kingston, says what may be a joke to some is deadly serious to North Korea.

I was in their capital, Pyongyang, a few months ago. Pictures of their leaders are everywhere, almost like gods. They're worshipped and honored.

(on camera): And here in Asia, defending honor is everything. So there's rampant speculation that North Korea orchestrated this cyber attack on Sony to take revenge.

KINGSTON: They are denying that they are directly involved. We all suspect they were.

RIPLEY (voice-over): If Sony suspects anything, they're not saying it publicly. A spokesman acknowledged growing speculation, but would only say the investigation is ongoing.

Waseda University professor, Toshimitsu Shigemura, says to understand why Sony may be hesitant to point the finger at North Korea, you need to know the geopolitics at play.

(on camera): Do you think any Japanese lawmakers would ask Sony not to criticize North Korea?

PROF. TOSHIMITSU SHIGEMURA, WASEDA UNIVERSITY: Maybe.

RIPLEY (voice-over): North Korea still maintains this unofficial embassy in Tokyo. While the nations have no formal diplomatic ties, Pyongyang does have some influence through political and business back channels.

SHIGEMURA: They want to stop the movie.

RIPLEY: And while North Korea may seem distant to most of the world, its military routinely launches projectiles into the Sea of Japan. Pyongyang also admitted to kidnapping Japanese citizens in the '70s and '80s, forcing the abductees to train North Korean spies.

KINGSTON: The abductee issue is extremely politically sensitive in Japan.

RIPLEY: Tokyo and Pyongyang are in the middle of sensitive talks that Japan hopes will lead to more reunions like these from 2002, when North Korea let five Japanese abductees come home.

Some fear it could all fall apart if the Sony hacking controversy escalates.

(on camera): You won't find posters for "The Interview" at movie theaters like this one here in Tokyo, because the film is not being released in Japan. But the hackers warn if Sony doesn't stop the release altogether, the worst may be yet to come.

Will Ripley, CNN, Tokyo.

(END VIDEO TAPE)

BLITZER: Joining us now, a key member of both the House Homeland Security and Intelligence Committees, Republican Congressman Peter King of New York.

Congressman, thanks very much for joining us.

REP. PETER KING (R), NEW YORK: Thank you, Wolf.

BLITZER: So let's talk about this. The Sony hackers, they're threatening what they describe as another 9/11-type attack.

How seriously should we be taking this threat?

REP. PETER KING, (R) NEW YORK: Well, Wolf, we have to take every threat seriously. Having said that, you can be sure the FBI and Department of Homeland Security and all our intelligence sources will track this down as carefully as possible. And right now, there is no credible evidence that there's a credible plot to, you know, that we have to be concerned about, as far as the plot itself.

Having said that, it's going to be looked at and continue to be looked at very, very carefully. But right now, it appears to be a threat which cannot be followed through on.

But that doesn't mean that we should let our guard down. We should take it seriously as far as looking at it. But we should go on with our normal, everyday lives.

BLITZER: Do you believe North Korea is behind this threat?

KING: Well, it's -- to me, it's obviously -- the only evidence is that a nation state is behind it. As far as I'm concerned, North Korea is an organized crime family disguised as a nation state. But there's no -- it's not definitive yet as to who did it. But it's certainly a nation state. And if you're just, you know, looking at the public record, certainly it would appear that if it is a country that did it, it would be North Korea.

But my understanding is -- and certainly I'm not in a position to say that the investigation has been complete, but I think it's probably a safe assumption to say it is North Korea.

BLITZER: If North Korea did this, if they hacked the Sony computers, released all this information, is that an act of war?

KING: It's certainly an act against our country and against our interests. Obviously, an act of war has legal connotations, but I think we have to stop kidding ourselves to think we have any chance of having a cordial or even a working relationship with North Korea.

As I said, this is an organized gang of criminals that runs North Korea. And, you know, the sooner we face up to that and realize that's the reality, the better we are.

What action the president wants to take, of course, as commander-in- chief, that, you know, that's his prerogative.

To call it an act of war, that's probably going too far at this stage. But it certainly is an act against our national sovereignty.

BLITZER: Should this movie, do you believe, this -- in the midst of all of these threats, be released on Christmas Day?

And, if it is, should security at movie theaters and malls, elsewhere around the country, be increased as a result of this threat?

KING: Wolf, I don't believe we should ever be backing down to these type threats. And as far as the security, I would leave that to the local police and to the theaters themselves as to what they want to do.

I know that, for instance, in New York, whenever there is threats of any type, you know, whether it's on a Jewish holiday, whether it's a national event, a national holiday, for instance, you know, the NYPD always takes appropriate security measures.

But again, I would leave that up to them. But I think the overriding point has to be unless we have credible evidence, we should not -- we can't be giving it to these terror threats. Otherwise they can be threatening us all the time and they could stop every major event we have in the country.

BLITZER: Would you go see this movie with your family?

KING: I don't know if I'd go see the movie. I wouldn't be afraid to go to the movie because of the threat. Again, you know, I'm not a big moviegoer. I'd have to see the reviews. Probably I would go now just as an act of defiance, but I'm not a big movie guy.

BLITZER: This is a comedy, this movie. It's not a serious film.

KING: Right.

BLITZER: It's a comedy. But obviously, they're taking it very seriously in North Korea. They hate this movie because it shows that the leader, Kim Jong-un, is going to be killed -- or at least the U.S. is going to try to assassinate him.

Here's the question -- is it appropriate to assassinate a world leader in a comedy, in a film that's a comedy, like this one?

KING: There's no reason not to do it. I'm not saying it's always good form. I'm not that -- to me, if we're talking about -- again, you're the leader of an organized crime country, then I would say that there's nothing immoral or inappropriate about it.

But again, whether it is or isn't, the fact is, you know, today, in the 21st century, you don't threaten to kill people because you don't like a movie. I mean, you know, back in the 1930s and '40s, Charlie Chaplin was making a fool out of Adolf Hitler. I mean this is something that, in a free society, we tolerate. There's terrible things have been said about our presidents and our leaders in movies, but we don't threaten to blow people up because of it.

So, really, it's a question of are you a civilized society or not?

And North Korea is not a civilized society.

KING: Congressman, we have a lot more to discuss.

I want you to stand by.

We're going to move on.

There's other threats out there, including a horrific, horrific attack today on school kids in Pakistan.

Stay with us.

Much more coming up.

(COMMERCIAL BREAK)

BLITZER: Much more with Congressman Peter King in just a moment. He's a leading voice on national security, homeland security issues. But I want to turn now first to the horror that happened in Pakistan today, a Taliban terror attack on a school. Gunmen roaming the halls, slaughtering children wherever they could find them, kids.

The death toll now stands at 132 children murdered. Ten staff members and three Pakistani soldiers. Seven terrorists also died in the assault.

Our chief national security correspondent Jim Sciutto is with me here in THE SITUATION ROOM. Jim, this is brutal what happened. Tell our viewers what we know.

JIM SCIUTTO, CNN CHIEF NATIONAL SECURITY CORRESPONDENT: No question about it. It was an attack so barbaric that even the Afghan Taliban condemned it today. But a U.S. counter-terror official calling this an unprecedented assault, saying it may signal an escalation in what is already a bloody conflict between the Pakistani government and the Pakistani Taliban known as the TTP.

The TTP has been under intense pressure from the Taliban military and have been seeking a high-profile opportunity to retaliate. They found it with children today.

I'm told by the Pakistani military that the attackers had ammunition and supplies to last for days and that this was certainly a suicide operation, that the terrorists intended both to kill and to die there.

Pakistani Taliban's chief aim bringing down the Pakistani government and establishing sharia law in that country, but it does have a history of targeting the U.S. In 2009, a Taliban suicide bomber killed seven CIA officers in eastern Afghanistan. In 2010, the group claiming responsibility for the attempted car bombing of Times Square in New York City. And following the killing of Osama bin Laden in Pakistan, 2011, the group vowed more attacks, Wolf, on U.S. soil.

BLITZER: The Pakistan Taliban says this was revenge against the Pakistani military for an operation that was conducted against them. What do you know about this?

SCIUTTO: An ongoing military operation by Pakistan in the northeastern part of the country, which is their stronghold. It's had an effect. In fact, the U.S. has been pressing Pakistan to take on the group more aggressively on the ground. Pakistan has followed through with the operation, and it seems to be having an effect, both here as well as some 3,000 counterterror operations across the country.

Now, as the Pakistani military took the fight to the Taliban, there have been fears, particularly among Pakistani politicians about blow back. We may have seen that today but one U.S. Official saying that this could be seen as an act of desperation as the Pakistani Taliban comes under pressure.

And also remember, Wolf, this is a matter of competition, right, that the Taliban has to prove its relevance, its capability by carrying out attacks like this. And when you have groups like ISIS, which is drawing support and members and leaders, even the spokesman, from a Pakistani Taliban, in effect changing sides, going to ISIS. It's a competitive atmosphere. They see that ISIS is captivating the world. This is their sick attempt to do this.

BLITZER: And they think this gives them credibility by killing 12- year-olds, 13-year-olds, 14-year-olds?

SCIUTTO: I mean, it's a sick, sick calculus the way these groups operate, right? They consider it a success when they capture your attention. They've certainly captured our attention today.

BLITZER: Brutal. All right. Jim Sciutto, thanks very much.

Let's get some more now. Once again, to Republican Congressman Peter King of New York. He's joining us. He's a key member on both the House Homeland Security and Intelligence committees.

This Pakistan Taliban group, the TTP, Tehreek-e-Taliban Pakistan, as it's called, did this attack on school kids. How concerned are you that, if they're willing to kill Pakistani children, Muslims, how concerned are you about what they might be willing to do to non- Muslims out there, whether Americans, Europeans, or others?

REP. PETER KING (R), NEW YORK: Wolf, you have to be very concerned. It was the TTP, which back in 2009 attacked Times Square with the car bomb attacks. So they have attacked the United States before. Fortunately, that attack was not successful, but it shows that their willingness to attack us here. And if they would kill children, they would murder -- intentionally murder children in cold blood, they're capable of anything. And if they are desperate to get attention, if they do want to show they have viability, we have to be very, very concerned.

It just adds to this list of Al Qaeda affiliates, Islamist organizations that are focused on attacking Westerners, attacking Europeans and attacking the U.S.

And certainly by the TTP, what they did yesterday, just shows that they are absolute animals.

BLITZER: Yes. What they basically said, if you are below purity, you're not going to die, if you're 8, 9 years old; but if you're a little bit older, you are going to die, and they killed more than 130 school kids in this assault.

It's hard to even fathom that kind of brutality. Here's the next question about U.S. drone strikes, which obviously continue in that area in Pakistan.

On balance, do you believe they are productive, even though they may antagonize these groups, make them more anti-American, or are they not productive?

KING: No, I think they are productive, and these groups are going to be anti-American no matter what, and this is one area where I fully agree with President Obama on.

I think he has to continue to use drones, and they should be used as extensively as possible. They are effective. They are not the only answer. But they are effective, and the fact that we may be antagonizing groups like the Pakistani Taliban, if anything that's a vote of confidence, because it shows that we're having an impact on them.

And, again, to me we always use these excuses. If we do this, we're going to do that, we're going to antagonize them. The fact is we did nothing to antagonize them, and they attacked us on 9/11.

During the 1990s, the only time we used military force was during the Clinton administration, it was to defend Muslims in Kosovo and Bosnia. And the response we got to that was the attack on the USS Cole and the attack on 9/11. So no, we have to go on offense and not worry about hurting their feelings, because they hate us no matter what we do.

BLITZER: Is the government of Pakistan, the military there, doing everything it should to go up against these kinds of terror groups?

KING: Well, obviously it's had a mixed record over the years. Certainly intelligence agencies, the military intelligence has been very sketchy over the years. But I would say in more recent months they have been more effective. They have been responding more to cooperating with us.

And the fact that they are carrying out these effective attacks on the Pakistani Taliban is probably the reason -- it is the reason that the school was attacked. As brutal as that was, it does show, though, the impact that we're having on them.

And the fact that they are willing to lose support among the Afghan Taliban to do it shows, again, that the Pakistani military has been effective against the Pakistani Taliban. But now they have to keep it up. They have to use this as an incentive to go forward, not to back off.

BLITZER: Because as you know the Afghani Taliban, they condemned it, saying that the Pakistan Taliban were killing, in their words, "innocent people," which obviously was the case.

KING: Right.

BLITZER: What is the connection, if any, between the Pakistan Taliban, ISIS, Al Qaeda, some of these other splinter groups, whether Al Qaeda in the Arabian Peninsula, al-Shabaab, these various terror groups that are out there?

KING: Well, all of them have connections, but it's like shifting alliances. There are times, for instance, when al-Shabaab will be cooperating. There's times when Al Qaeda in the Arabian Peninsula will be cooperating with Al Qaeda.

It's sort of -- again, these are shifting alliances, but they all come together on the premise that they want to destroy Western civilization. They want to kill Jews and Christians, and they all have targets against the U.S.

So again, it's varying degrees at various times, but the fact is they are all cut from the same cloth. They are all evil, and they are all -- they are all Islamists, and they're focused on getting the United States.

BLITZER: Less than a week ago there have been a lot of these reports that the United States actually released a Pakistani Taliban commander who had been being held at the U.S. military prison in Afghanistan.

Could that have had an impact on what happened today in some sort of perverse way?

KING: Wolf, it's possible. Anytime we release any of these people, we run this risk, and that's why I think we have to stop feeling sorry for them, realize there's such a high recidivism rate.

And, again, what the -- what the motive for today was, I assume the main motive, as I said before, was the fact that it's retaliation against the Pakistani military.

But as far as different people that are released or not released, we have to assume to me that there's a very good likelihood they are going to go back on the battlefield or they are going to have an influence on those that are on the battlefield.

BLITZER: Representative Peter King of New York, thanks very much for joining us.

KING: Wolf, thank you.

Coming up, an overlooked question amid the furor over Sony's movie about Kim Jong-un. Should depicting the assassination of an actual world leader be off limits in a movie, even if it's a comedy?

Also, what more could be done to prevent attacks like the one this week by mentally unstable people inspired by terrorist propaganda?

(COMMERCIAL BREAK)

BLITZER: We're covering the breaking news, the new threat of terrorists attacks on theaters showing Sony's upcoming movie about a plot to assassinate North Korean leader Kim Jong-un.

With us now in THE SITUATION ROOM, joining us, our law enforcement analyst, Tom Fuentes. He's a former assistant director of the FBI. Also, CNN senior legal analyst, Jeffrey Toobin; CNN political commentator Peter Beinart; and Kim Masters. She's editor at large for "The Hollywood Reporter." Guys, thanks very much for joining us.

Tom, let me start with you. Law enforcement officials, they're taking this threat from this group, so-called Guardians of Peace. I assume they're taking it seriously. They have no choice. Are they pretty sure, based on what you're hearing, this is some sort of front for North Korea?

TOM FUENTES, CNN LAW ENFORCEMENT ANALYST: No, I don't think they're sure of that yet, even though it looks like it, Wolf. But yes, they have to take it seriously any time somebody threatens that they're going to use explosive devices somewhere in an incident like this, they are taking it serious. I think they're more thinking that the movie is going to bomb rather than be bombed.

BLITZER: Well, we'll see if that happens. Kim, you're out there in Los Angeles in Hollywood. Is Sony taking this threat seriously?

KIM MASTERS, EDITOR AT LARGE, "THE HOLLYWOOD REPORTER": Sony has to take the threat seriously. They're completely paralyzed. All manner of information has leaked about their employees, about their internal communications, about their relationships with talent, movies that have not even been released yet. All of these things have been leaked, and there are still more leaks to come.

So the studio is in a state of total panic and shutdown and employee morale in the basement; relationships in tatters. This is a very serious act of cyber sabotage. I suspect that no business in any part of the industrial world has seen, in this country, has seen something on this order.

BLITZER: Are they going to amp up security at various premiers of the film, because it's supposed to open nationally on Christmas day?

MASTER: I think they will. There is still to come a premier in New York on Thursday. I'm sure they will amp up security and have done at the premier they've already held in Los Angeles. The stars, Seth Rogen and James Franco, have canceled all their interviews and media appearances. I would imagine they've stepped up their personal security, and I imagine that studio executives are doing the same.

BLITZER: Kim, very quickly, can we assume it's North Korea that is responsible for all of this?

MASTERS: Based on my reporting, I suspect that they actually do know it's North Korea. I think the problem is, if you say that, then you really do have to figure out what you're going to do about it, and this is not only a cyberattack on American soil; but it's now a threatened physical attack. What do you do? So I think it's in everybody's interests for now to say it could be North Korea, but we're not sure.

BLITZER: Peter, this movie, it's a comedy, lighthearted. It's supposed to not be taken all that seriously, but it still begs the question. Is it OK from a -- I guess a philosophical sense to make a comedy about the assassination of a world leader?

PETER BEINART, CNN POLITICAL COMMENTATOR: Look, there are lots and lots of comedies that come out every year that are in very, very bad taste that one can question, but I think it's really beside the point.

I mean, what you have here is one of the most horrific regimes in modern history. It's a blight on the world that this regime still remains in power, acting in, again, an entirely lawless and thuggish way, assuming it is them. And I think the important thing is to make it clear that one gives no quarter to this. So I think the -- just as a -- you know, just as a conversation about whether a picture of Mohammed might also be in bad taste. Once people start using violence to oppose it, I think that becomes the moral focus.

BLITZER: Jeffrey, as you know, the great screenwriter Aaron Sorkin, he wrote an op-ed, a powerful op-ed in "The New York Times," criticizing the news media's coverage of the hack on Sony Pictures, saying what the news media have done is wrong by releasing this information. No useful purpose was done. Does Aaron Sorkin have a good point?

JEFFREY TOOBIN, CNN SENIOR LEGAL ANALYST: Well, let me answer that in two ways. Legally, he doesn't. I don't think there's any doubt that the news media has a right to cover this material, to pick and choose what to cover. And I think by and large, they have kept to their definition of what's newsworthy. So as a legal point, no.

Morally, I think it's a closer question. I think, you know, we live in a society where we have the news media, journalists decide what's newsworthy, not the government, not outsiders; and I think that's the best system.

I think this case, it's a little hard for the media to be on our high horse too much, because I mean, this, after all, is about a movie and a movie studio. This is not exactly the Pentagon Papers.

But ultimately, I do think we have to leave these decisions up to journalists, not to the people that we're writing about, even when we get access to documents in unusual or even distasteful ways, as what happened here.

BLITZER: Tom, you want to weigh in?

TOM FUENTES, CNN LAW ENFORCEMENT ANALYST: Yes. I just want to say that I don't think the U.S. government will be afraid to name North Korea if they think that they've done it and have the evidence to prove it. I mean, just a couple years ago, they brought charges against members of the Chinese military for believing that they were involved in attacking U.S. companies. So if they can tie this to North Korea, they will say so.

BLITZER: And they'll say it was the regime of Kim Jong-un. the Chinese military incident, they blamed some guys in the Chinese military. They stopped just short of saying the Chinese government knew about this, was responsible. It was a very thin line, as I remember.

FUENTES: It was very thin, because they named the individuals involved in the military facility they were working in in Shanghai. So I mean, they did everything but say the government directly, you know, ordered this. But I think in this case, it would be the same thing.

BLITZER: Kim -- Kim, you're plugged in there in Hollywood. Any chance that Sony will decide not to release this film in the United States? As you know, they're not releasing it in Japan.

MASTERS: I think the question is whether the theater owners are going to want to play this movie. Their stock is being hurt right now because of this threat. And I just think that if you're a theater owner, why would you want to take a chance on playing this movie?

And you know, it's all very well and good to talk about we don't want to kowtow to a dictator, but the fact is, I have to say, I think it's in rather poor taste to show the assassination of a leading -- a sitting head of any state, and particularly dangerous to do it when they're nuclear armed and paranoid. And I don't think any other studio in Hollywood would have done this.

And I further think that you will not see Chinese villains. I think they already edit themselves, because China is such an important box office now. So I think you'll see them staying away from Chinese. They already are staying away from Chinese villains. So it's not as though the studios -- they're reporting to their shareholders. They're not trying to make an artistic statement and stand by Seth Rogen with what is, after all, a stoner comedy.

BLITZER: And so Kim, just to be precise on this, you think if Sony had to do it all over again, they would have walked really far away from this screenplay?

MASTERS: I believe no other studio but Sony would have said yes to this. I don't believe Disney or FOX or Warner Brothers would have said yes. And I think this is Sony headquartered in Tokyo. Ever since they bought this studio in 1989, there's been a chasm, geographically, culturally. In this case, they actually negotiated the degree of violence in the depiction of the assassination of Kim Jong-un which is kind of missing the point. I feel confident in saying I don't think any other studio

In Hollywood would have done this and I further think that you will not see Chinese villains. China is such an important box office now. I think you'll see them stay away from Chinese villains so it's not as though the studios -- they are reporting to their shareholders. They are not trying to stand by Seth Rogen with what is, after all, a stoner comedy.

BLITZER: Kim, just to be precise on this, you think if Sony had to do it all over again, they would have walked really far away from this screenplay?

MASTERS: I believe no other studio but Sony would have said yes to this. I don't believe Disney or FOX or Warner Brothers would have said yes. Sony headquartered in Tokyo, ever since they bought this studio in 1989, there's been a chasm.

In this case, they actually negotiated the degree of violence in the depiction of the assassination of Kim Jong-un, which is kind of missing the point. I feel confident in saying I don't think any other studio would have allowed it to be a real person in that role.

BLITZER: Jeffrey, you wanted to weigh in, Jeffrey?

TOOBIN: I mean, look, I don't know how Sony picks its movies, and it's certainly not my department. But the idea that intimidation by thugs and criminals like the people who run North Korean government should be a deciding factor in what movies get made and what movies don't, I think is a very chilling idea, especially if you consider, well, you know, maybe we shouldn't cover the news in North Korea, because then maybe we'll get -- we'll get in trouble, as well, and they will threaten us.

It's a very bad precedent, and I think it's a very scary thing that, notwithstanding the fact that is all based on a comedy movie is something we should all take very seriously.

BLITZER: Peter, what do you make of the fact that...

MASTERS: This is about commerce. This is not about art. This is commerce. This is commerce. This is not art. Studios already edit what they put on the screen out of financial considerations. It's naive, with all due respect, to think that they don't.

BEINART: Of course they do. Just like book publishers also make financial considerations. When Salman Rushdie was threatened, it was a very important moral statement to say, "We do not allow a dictatorship in Iran to make -- to scare people from producing books."

In Salman Rushdie's case they were grateful. In this movie's case, it may be a lousy movie. It doesn't matter. Obviously, there are commercial considerations, but you -- we should make a point. If we give in on this, it seems to me, then, you open the door for all other kinds of movies about North Korea, one of the most under-covered and brutal countries in the world, to not be made.

BLITZER: But Kim, the fact of the matter is Sony, which is based in Tokyo, this movie, at least for now, is not going to be shown in Japan. The Japanese, they love American movies.

MASTERS: And it never was. These comedies don't play in that market. I don't think they were ever planning to release it there.

But I can tell you for sure, every studio in town -- you haven't seen the studios making a lot of noise, jumping to Sony's defense. And it's partly, you could argue, oh, because they're cowards. But really, they are furious. They're furious that a decision that was not well-thought-out, that they had -- that clearly was going to lead to a confrontation, potentially, and honestly, is in questionable taste. I'm sorry, artistic freedom, I wouldn't compare this with Salman Rushdie's book to blow up, as I said, the sitting head of a state, any state.

Would it be better if it were Angela Merkel? I mean, I think it could potentially be offensive. I think it's the kind of thing that studios are really angry that Sony has opened the door to this for a very silly joke. And not -- you know, it's not "Lawrence of Arabia" by David Lean.

BEINART: Sure. But the question about whether you do it in the first place is different from how you react now that North Korea is starting to threaten the country with violence.

MASTERS: Right. And actually, the studios are angry because we got into this situation. Now it's a whole other question of what do you do; but the question is, was this avoidable? Absolutely it was.

BLITZER: Hold on. I've got a very important question for Tom Fuentes. Tom, viewers, a lot of them are going to want to go see this. It's supposed to open nationally on Christmas day.

Should they be scared to go to a movie theater in the United States and watch this film, given the threats that are coming from somebody -- we don't know if they're North Korea, some front group, somebody else. We have no idea. But the suspicion, as you well know inside the FBI and elsewhere, is that it's North Korea.

FUENTES: I don't think people should be afraid. It's one thing to be able to initiate a cyberattack and be able to do it through computer terminals, through computer networks. And it's another thing to bring explosives into a movie theater and carry out that type of an attack.

So I don't think from that standpoint. I think the bigger fear that the FBI and the other authorities have is that other companies could be vulnerable. What if they pick a news media company? When you start having the internal workings of an organization or the destruction of data within an organization, what if they attack this network and start destroying data in the archives of CNN or releasing internal documents and e-mails between senior producers and others?

So the threat that this can happen to any company, that data disruption is part of the program here, that's scary.

BLITZER: It's scary to me. I did an interview with the assistant attorney general of the United States for national security affairs, and he said their estimate is -- and it's shocking -- 90 percent of American companies are vulnerable to what Sony Pictures is now going through, a hacking attack like this.

All right. We've got to leave it right there. But we're going to watch this story. Tom Fuentes, thanks very much. Jeffrey Toobin, Peter Beinart, Kim Masters, guys, thank you very much. We'll stay on top of this story. The ramifications are chilling.

Up next, we move from the threat of terror to this past week's actual terror attack. Are security agencies doing enough to prevent mentally unstable people from becoming radicalized by what they see on the Internet?

And we're getting new details about the abuse allegations involving the same New York City police officer who put Eric Garner in a chokehold.

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BLITZER: New details are coming into THE SITUATION ROOM on the bloody siege in Sydney, Australia where a gunman, a self-styled Muslim cleric with a criminal record held hostages for more than 16 hours at a downtown cafe before a SWAT team moved in.

The gunman and two hostages died. Authorities are still trying to piece together what exactly happened and why. Let's go live to Sydney. CNN's Anna Coren is joining us.

So what are we finding out right now, Anna? What is the very latest?

ANNA COREN, CNN INTERNATIONAL CORRESPONDENT: Wolf, it's hard to believe, but this gunman, 50-year-old Iranian immigrant, Man Haron Monis, was -- he was on the terror list here in Australia many years ago but recently he was taken off because it was deemed no longer to be a threat. So many here including the Australian prime minister questioning authorities as to how this man with a violent history with extremist views was known to police for so many years was allowed to walk the streets freely of Sydney.

We're talking about somebody who was out on bail having been charged with serious offenses. We're talking about accessory to murder his ex-wife and sexual assault, 45 counts. But despite those charges, he was walking the streets of Sydney living his life, able to walk into this cafe with a gunman -- with a gun, I should say, a shotgun.

And now we're also learning more details about the two victims. Katrina Dawson, the 38-year-old mother of three, she was a lawyer here in Sydney. We believe from local reports that she was helping a pregnant woman, shielding her from the gunman when the siege was taking place. We're also learning about the 34-year-old manager of the cafe, Tori Johnson. He tackled the gunman when he was shot in the stomach.

So you can probably see the memorial behind me, this makeshift memorial which really sprung up as of yesterday morning, several hours after this, you know, 16-hour siege ended. There are now thousands of flowers, Wolf. It really is quite incredible. A steady stream of people who just continue to place flowers with cards, that they signed the condolence book. They're writing these -- you know, just powerful messages of respect, of support, of solidarity, really bringing Sydney together.

BLITZER: Yes, it's hard to believe, as you say, Anna, someone with a record, a criminal record like that, accessory to murder, 45-count sexual assault, well-known to law enforcement there had been on the terror watch list was simply walking around doing what he was doing. I'm sure that investigation will continue.

Anna Coren in Sydney for us, thank you.

The Sydney siege is the latest in a series of attacks carried out by individuals who may have been inspired by various terror groups without having a direct, a direct connection to those terror groups. Throw in the factor of mental illness potentially and that makes these attacks even tougher to prevent.

Our Pentagon correspondent Barbara Starr has been looking into this part of the story.

Barbara, what are you finding out?

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Well, Wolf, we've talked to a number of intelligence, counterterrorism and military officials, and what they are saying is look. What if these attackers that we are seeing, they claim a connection to ISIS but basically, they are deranged individuals? How tough is it to track them down?

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STARR (voice-over): While ISIS and al Qaeda have long called for lone wolf attacks, U.S. officials are increasingly looking at a much harder to identify problem. How disturbed and violent criminals in local communities are spurred on by radical Islam to launch attacks.

The horror in Sydney, a wake-up call.

TONY ABBOTT, AUSTRALIAN PRIME MINISTER: The perpetrator was well- known to state and commonwealth authorities. He had a long history of violent crime. Infatuation with extremism and mental instability.

ROBERT MCFADDIN, THE SOUFAN GROUP: There always appears to be that toxic cocktail of events going on in an individual's life where latching on to a cause like the Islamic State seems to be the tipping point.

STARR: The case file, November, Zale Thompson assaults New York police officers with an axe. The NYPD said he converted to Islam and was self-radicalized. His parents tell police he was depressed and spent his time online. He has no known connection to militants but visited radical Web sites in the days before the attack.

October Canadian soldier Nathan Cirillo is murdered on Ottawa's Parliament Hill. The gunman Michael Zehaf-Bibeau has a criminal record involving drugs and violence, according to authorities. He had limited connections to at least one Canadian militant on social media. It's believed he did convert to Islam.

September, Alton Alexander Nolan is charged with first-degree murder for beheading a co-worker in Oklahoma City. He has just lost his job. Co-workers say he tried to convert them to Islam. He'd been jailed on drug charges and trying to escape jail. There was no direct link to Islamic overseas groups.

Identifying perpetrators before they attack may require new solutions.

JEH JOHNSON, HOMELAND SECURITY SECRETARY: The domestic based actor could strike with very little notice, which is why collaborating with state and local law enforcement is, in my judgment, key.

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STARR: Now look, nobody is saying that ISIS and al Qaeda are not trying to send lone wolf attackers to the West, to this country, to launch these types of attacks, people who are religious fanatics, but this notion of these other attackers with these very violent criminal backgrounds, this is something that many people say local law enforcement communities are increasingly going to have to take a look at -- Wolf.

BLITZER: Barbara, thanks for that report.

Let's get some more analysis right now. Back with us here in THE SITUATION ROOM once again our law enforcement analyst Tom Fuentes and CNN political commentator, Peter Beinart.

How do you stop a lone individual like this guy in Sydney, Australia, Man Haron Monis, Peter, if he's got mental problems, may not have direct links to any terror groups but may have been inspired on the Internet by some of these terror groups. What do you do?

PETER BEINART, CNN POLITICAL COMMENTATOR: Well, it seems like in this case there was actually some reason to believe that Australia should have known what was going on. I mean, they gave him asylum in the first place, it seems to me, when there was even some warning signs back then. And since he's been in Australia, he's been in and out of, you know, confrontations with the law for a while.

But I think in general, look. The plus side of this is that one lone person who is not tied to an organization, who's not planning something over a long period of time is not going to be able to commit something on the level of 9/11. But on the downside, it's for that precise reason, because of lack of coordination with an institution, that it's so hard to fight. And so I think this is the new phase we're in. The capacity to do massive damage seems to be down but with it also our capacity to stop it has also become undermined.

BLITZER: Tom, what's the most important lesson U.S. law enforcement, the FBI, other law enforcement agencies should learn from what happened in Sydney?

TOM FUENTES, CNN LAW ENFORCEMENT ANALYST: Well, I think the problem, Wolf, is that in a way there's not too many lessons to be learned as far as the prevention, you can't read people's minds. You can -- you know, this kind of people that do lone wolf type attacks, if they don't share that with somebody else, if they don't try to recruit a partner or advertise it on social media that they're trying to initiate an attack or travel to join ISIS, there's almost no way until they take the action.

So it's very difficult even if somebody has a criminal record. And here in the U.S. we have 800,000 people on our terror watch list. There's no way the CIA, FBI, anybody can track all the people that are out there.

BLITZER: Yes. This guy was convicted of also writing very awful letters to families of Australian service members who died in Iraq or Afghanistan, and so he obviously was on their watch list.

FUENTES: Right.

BLITZER: All right. We're going to continue our analysis.

Tom Fuentes, Peter Beinart, guys, thanks very much.

Coming up, we'll have more on the breaking news. The Sony hackers go far beyond leaked documents. Now they're warning moviegoers of a 9/11 style attack on theaters showing the new film which mocks North Korea's leader.

And we're also learning new details about allegations of abuse involving the same New York City police officer who put Eric Garner in a chokehold.

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