Obama Classifies Sony Hack as Cyber Vandalism, Not 'Act of War' The president says the massive hack was a 'very costly' event.

(Reuters) - U.S. President Barack Obama moved to prevent U.S. anger at North Korea from spiraling out of control on Sunday by saying the massive hacking of Sony Pictures was not an act of war but instead was cyber vandalism.

Washington's longstanding dispute with North Korea, which for years has centered on its nuclear weapons program, has entered new territory with the accusation that Pyongyang carried out an assault on a major Hollywood entertainment company.

Obama and his advisers are weighing how to punish North Koreaafter the FBI concluded on Friday that Pyongyang was responsible. North Korea has denied it was to blame.

The U.S. president put the hack in the context of a crime.

"No, I don't think it was an act of war," he told CNN's "State of the Union" show that aired on Sunday. "I think it was an act of cyber vandalism that was very costly, very expensive. We take it very seriously. We will respond proportionately."

Obama said one option was to return North Korea to the U.S. list of state sponsors of terrorism, from which Pyongyang was removed six years ago.

North Korea vowed on Sunday to hit back against any U.S. retaliation.

"Our toughest counteraction will be boldly taken against the White House, the Pentagon and the whole U.S. mainland, the cesspool of terrorism, by far surpassing the 'symmetric counteraction' declared by Obama," according to North Korea state news agency KCNA.

The hack attack and subsequent threats of violence against theaters showing the film prompted Sony to withdraw a comedy, "The Interview," prepared for release to movie theaters during the holiday season. The movie depicts the fictional assassination of North Korean leader Kim Jong-un.

Obama and free speech advocates criticized the studio's decision, but Sony Pictures Entertainment CEO Michael Lynton defended it, saying U.S. theaters did not want to show it.

Sony lawyer David Boies said the Hollywood studio planned to release the movie at some point.

"Sony only delayed this," Boies said on NBC's "Meet the Press" on Sunday. "It will be distributed. How it's going to be distributed, I don't think anybody knows quite yet."

In the CNN interview, which was taped on Friday, Obama acknowledged that in a digitized world "both state and non-state actors are going to have the capacity to disrupt our lives in all sorts of ways."

"We have to do a much better job of guarding against that. We have to treat it like we would treat, you know, the incidence of crime, you know, in our countries."

Republican Senator John McCain disagreed with Obama, telling CNN the attack was the manifestation of a new kind of warfare.

Republican Representative Mike Rogers, chairman of the House Intelligence Committee, would not call the hacking an act of war. But he did criticize Obama for embarking on a two-week vacation in Hawaii on Friday without responding to the attack.

Rogers said on "Fox News Sunday" the United States had the capability to make it very hard for North Korea to launch another similar attack, but that Obama waited too long to act.

"You've just limited your ability to do something," Rogers said. "I would argue you're going to have to ramp up sanctions. It needs to be very serious. Remember - a nation-state was threatening violence."

North Korea has been subject to U.S. sanctions for more than 50 years, but they have had little effect on its human rights policies or its development of nuclear weapons. Experts say the nation has become expert in hiding its often criminal money-raising activities, largely avoiding traditional banks.

NORTH KOREA DENIES ATTACK

It was the first time the United States had directly accused another country of a cyberattack of such magnitude on American soil and set up the possibility of a new confrontation between Washington and Pyongyang.

North Korea said on Saturday it was not involved in the Sony attack and could prove it. Pyongyang said it wanted a joint investigation into the incident with the United States.

Obama says North Korea appeared to have acted alone. Washington began consultations with Japan, China, South Korea, Russia, Australia, New Zealand and the United Kingdom, seeking their assistance in reining in North Korea.

U.S. experts say Obama's options in punishing North Korea could include cyber-retaliation, financial sanctions, criminal indictments against individuals implicated in the attack or even a boost in U.S. military support to South Korea, which is still technically at war with the North.

But the effect of any response would be limited, given North Korea's isolation and the heavy sanctions already in place for its nuclear program.

(Additional reporting by Doina Chiacu and Diane Bartz in Washington; Editing by Frances Kerry, Lisa Von Ahn and Diane Craft)