By Patrick O’Connor:
2 April 2012
Rupert Murdoch’s News Corporation has been accused of orchestrating a global pay television piracy operation that successfully undermined its rival networks in Britain, the US, Europe and Australia.
The allegations were aired last week on the BBC’s “Panorama” program and in a series of articles published by the Australian Financial Review. They follow the phone hacking scandal in Britain that remains the subject of a criminal investigation. The accusations of pay TV piracy are potentially even more damaging to News Corporation. While Murdoch’s newspapers are central to his political power, his international pay TV interests generate the largest and fastest growing component of News Corporation’s profits.
The BBC and Australian Financial Review (AFR) focussed on the activities of NDS (News Datacom Services), an Israeli-based software company owned by News Corporation. In the 1990s, NDS established an “Operational Security” group tasked with ensuring the security of Murdoch’s burgeoning pay TV interests. It aimed to prevent hackers and criminal gangs from cracking the encrypted codes and “smart cards” that are used to allow paying customers access to certain programs and channels.
Part of this work involved NDS recruiting hackers to crack its competitors’ codes and security systems—in itself, not necessarily an illegal activity. NDS employees, however, are alleged to have also distributed the cracked codes on the internet and encouraged the production of illegal smart cards that would allow people to access pay TV networks for free. As a result, it is alleged, News Corporation’s rivals lost enormous revenue streams, forcing several of them into bankruptcy.