Program claims piracy campaign destroyed BSkyB rival

LONDON

RUPERT Murdoch’s TV media empire is being accused of corporate espionage, computer hacking and piracy in a campaign that allegedly destroyed a rival of the lucrative British satellite broadcaster BSkyB.
News Corporation’s then-software security arm, NDS, recruited a hacker to unlock its competitors’ smartcards in 1996, the BBC’s investigative program Panorama claims.
The cards have a microchip and pay-TV subscribers put them into a set-top box to allow them to receive pay-TV channels. If pirated, they allow viewers to get the channels for free.
Witnesses on Panorama alleged that NDS hired a top computer hacker to crack the smart codes of a rival company, ONdigital, which eventually collapsed amid a bonanza of counterfeiting. This left the pay-TV field in Britain clear for Sky, which is 39.1 per cent owned by News Corp.
News Corp almost wholly owned NDS at the time and Mr Murdoch’s heir apparent and son James sat on its board. While there has been no claim that he knew anything about the alleged espionage, the accusations are likely to be considered by British broadcasting regulator Ofcom as part of its current inquiry into whether News Corp and James Murdoch pass the “fit and proper” test of suitability to run a broadcaster.
Panorama aired emails that apparently showed that the codes of ONdigital were first cracked by a hacker named Oliver Koermmerling. He told the program he had been hired by NDS’s head of British security, Ray Adams. Panorama alleged the codes were then publicised by the world’s biggest pirate website, the The House of Ill Compute (THOIC).
Lee Gibling, who ran THOIC, said Mr Adams sent him the ONdigital codes so other pirates could use them to make thousands of counterfeit smartcards. He said he was being paid £60,000 ($A91,000) a year by Mr Adams and was given thousands more to buy equipment.
He said the site sent people out to update codes: “We wanted them to stay and keep on with ONdigital, flogging it until it broke.”
ONdigital, later renamed ITV Digital, lost more than £1 billion, and 1500 staff lost their jobs when it collapsed in 2002.
News Corp’s lawyers, Allen and Overy, denied the claims even before the program was aired. They told media organisations that the claims NDS “has been involved in illegal activities designed to cause the collapse of a business rival” would be false and libellous and demanded they not be repeated.
NDS also issued emphatic denials: “It is simply not true that NDS used the THOIC website to sabotage the commercial interests of ONdigital/ITV Digital or, indeed, any rival.”
The company does not dispute that it got ONdigital’s secret codes, which is not illegal, and that the material was passed on to Mr Adams, who denies he ever had the codes.
News Corp said in a statement that it fully accepted NDS’s assurance that there had been no wrongdoing: “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 $19 million to cover NDS’s legal fees and costs.”

First published in The Age.