28 Mar 2012

Murdoch’s News Corp accused of hacking TV rivals

There are calls for investigations in Britain and Australia into claims that Rupert Murdoch’s News Corp engaged in piracy to undermine pay-TV companies.

The Australian Financial Review (AFR) claims that News Corp used a special unit called Operational Security, to sabotage its pay-TV competitors in Australia.

Originally set up to hunt pirates targeting Rupert Murdoch’s own operations, the AFR alleges that Operational Security later turned into a dirty-tricks campaign to undermine competitors.

The AFR alleges that hackers were employed to find out the codes of smartcards issued to pay-TV customers. The suggestion is that they then sold black-market smartcards using those codes to give viewers free access to rival pay-TV services, costing them millions of dollars.

Operational Security was part of former News Corp subsidiary NDS, which was accused on Monday by the BBC’s Panorama programme of employing hackers to crack the encryption cards of BSkyB’s UK rival, ONDigital, which later became ITV Digital before going out of business in 2002.

News Corp, which owns 39 per cent of BSkyB and has withdrawn its bid to take a controlling stake in the company, is already under pressure over phone hacking at the News of the World.

Referring to the AFR’s claims, a spokeswoman for Australian Communications Minister Stephen Conroy said: “These are serious allegations, and any allegations of criminal activity should be referred to the AFP (Australian federal police) for investigation.”

Australian senator Scott Ludlam, from the Greens, told the BBC World at One programme: “My first reaction was that it sounds eerily familiar given the scandal that’s been unfolding in the UK around phone hacking”.

My first reaction was that it sounds eerily familiar given the scandal that’s been unfolding in the UK around phone hacking. Scott Ludlam, Australian senator

An Australian pay-tv operation, in which News Corp has a stake, is currently hoping to take over a rival firm, and Mr Ludlam said the competition authorities should put this “on ice while these allegations are tested”.

In Britain, a spokesman for the Metropolitan Police said it was aware of the allegations made by Panorama and was considering whether it was a matter for the police.

Labour MP Tom Watson is contacting the regulator Ofcom following Panorama’s claims. He said: “If what Panorama says is true, it suggests a global conspiracy to undermine a great British company, ITV Digital.”

Fit and proper

Ofcom is investigating News Corp and Rupert Murdoch’s son James following claims of phone and computer hacking and bribery at News International, publisher of the News of the World, which has been closed, and the Sun.

It is looking at whether James Murdoch, deputy chief operating officer of News Corp and chairman of BSkyB, is a fit and proper person to hold a broadcast licence.

An Ofcom spokesperson said: “We will consider all relevant evidence as part of our ongoing duty to be satisfied that persons are fit and proper. We are not, however, going to provide a detailed running commentary on which specific pieces of evidence we may or may not be assessing.”

The AFR’s claims are based on 14,400 emails held by a former head of security at NDS, Ray Adams, who is a former Metropolitan Police commander.

NDS has denied any wrongdoing in relation to Panorama’s allegations. News Corp, which this month sold NDS to Cisco Systems for $5bn, said it accepted those assurances.

‘Baseless accusations’

News Corp’s Australian arm, News Limited, denied the claims in the AFS. The company said: “The story is full of factual inaccuracies, flawed references, fanciful conclusions and baseless accusations which have been disproved in overseas courts.

“The United States Department of Justice, a federal court jury and a federal appellate court have all rejected allegations that NDS was either responsible for TV piracy or for distributing codes to facilitate piracy. Moreover, the United States Court ordered NDS’s accuser to pay $19m to cover NDS’s legal fees and costs.”

NDS said: “It is wrong to claim that NDS has ever been in the possession of any codes for the purpose of promoting hacking or piracy.”

Panorama claimed NDS hired a consultant to post the encryption codes of ITV Digital, a rival of Sky TV, on his own website.

Four-year investigation

The AFR, which is owned by a rival of News Corp in Australia, says its four-year investigation shows that piracy undermined the value of News Corp competitors like DirecTV in America and Telepiu in Italy, and helped News Corp to take them over cheaply.

News Corp owns 25 per cent of Australia’s top pay-TV firm, Foxtel, which is looking to take over rival Austar to create the country’s largest pay-TV provider.

Australian senator Scott Ludlam said: “My call today was that the competition regulator should put that on ice while these allegations are tested. To be honest, I think these allegations need to be tested in court. I don’t think this should be fought out in press releases. I think the allegations are of an extremely serious nature and they should be properly investigated.”

Foxtel said NDS was one of many service suppliers it had used, and the pay-TV company had worked hard to combat piracy. “Foxtel notes that there are no allegations of wrongdoing by Foxtel,” a spokesman said.

Media analyst Steve Hewlett said: “There’s no suggestion anywhere that Sky or News Corp knew what NDS was doing. But if it all turns out to be true, then you have a News Corp company once again behaving in ways that are less than proper.”