Sony Pictures Entertainment scrapped the theatrical release of The Interview, the Seth Rogen-James Franco comedy at the centre of a global geopolitical storm, after North America's major movie theatres declared they wouldn't play the movie because of the potential threat of a terror attack.

Sony announced Wednesday afternoon it was cancelling the film's Dec. 25 theatrical release, even as the studio said it stood by its filmmakers and their right to free expression.

"Sony Pictures has been the victim of an unprecedented criminal assault against our employees, our customers, and our business," the studio said in a statement announcing the move. "Those who attacked us stole our intellectual property, private e-mails, and sensitive and proprietary material, and sought to destroy our spirit and our morale – all apparently to thwart the release of a movie they did not like.

Story continues below advertisement

"We are deeply saddened at this brazen effort to suppress the distribution of a movie, and in the process do damage to our company, our employees, and the American public. We stand by our filmmakers and their right to free expression and are extremely disappointed by this outcome."

The studio had little choice after the top five U.S. theatrical chains and all of Canada's major chains announced they would not show the film out of concern for the safety of their patrons.

The terror threat, posted to file-sharing sites on Tuesday, warns: "The world will be full of fear. Remember the 11th of September 2001." It adds: "We recommend you to keep yourself distant from the places [showing the film] at that time. (If your house is nearby, you'd better leave.)"

On Wednesday, Cineplex Inc., which owns or leases more than 1,600 screens across Canada, said in a statement that it "takes seriously its commitment to the freedom of artistic expression, but we want to reassure our guests and staff that their safety and security is our number one priority. We look forward to a time when this situation is resolved and those responsible are apprehended."

While many in Hollywood and elsewhere decried the exhibitors' apparent cowardice, the owner of Magic Lantern Theatres, an operation of about 85 screens, which includes the Rainbow Cinemas chain, said he was less concerned about the potential security threat itself than the way it might be perceived by moviegoers.

"The prudent owner of a multiplex cinema is concerned with 8 or 10 or perhaps as many as 20 different movies. Not just one," said Tom Hutchinson. "If one movie appears to have conditions attached to it that might influence the success of other movies, then – for whatever reason – it probably isn't a good idea to play it."

He added: "If we had single-screen theatres, I would play [The Interview] in a second. Because that does not affect [other movies]. If we felt there was a credible threat, we could put more security in place, and search people. But can you imagine mom and pop and a three-year-old coming to the multiplex, and the three-year-olds get searched, because there might be a bomb in the stroller? That just doesn't work."

Story continues below advertisement

The cancellation of the film's release is the latest blow for Sony after hackers calling themselves Guardians of Peace broke into its corporate network and downloaded enormous stores of data, including personnel files, e-mails, and digital copies of five new movies.

Late Wednesday, U.S. intelligence officials told reporters the hack had been ordered by North Korea in retaliation for Sony producing the film, a buddy comedy about two U.S. journalists who carry out an assassination attempt on the outcast country's leader. The $40-million (U.S.) movie, which was co-directed by the Vancouver-born Mr. Rogen and shot in his hometown, includes a scene in which Kim Jong-un's head explodes. The scene was reportedly toned down after Kazuo Hirai, the president and CEO of Sony Corporation, personally intervened.

While the hacking incident has been a serious matter for Sony, especially after it led to embarrassing revelations about the conduct of executives and their attitude toward some high-profile talent, it has also been a subject of humour: On a recent episode of Saturday Night Live, Mr. Franco and Mr. Rogen joked about hackers releasing nude photos of the two co-stars snuggling like John Lennon and Yoko Ono on a classic cover of Rolling Stone magazine. But the seriousness of the situation escalated quickly this week.