Business, Economics and Jobs

Murdoch's News Corp accused of tech piracy in Australia

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Rupert Murdoch's media conglomerate News Corporation has been accused of tech piracy. In response, Murdoch tweeted that the "enemies" are "old toffs" and '"right wingers." (Photo courtesy of David Shankbone/flickr).

An Australian newspaper's investigation into a trove of 14,000 internal emails found that a News Corporation-owned company may have committed corporate espionage in order to gain a leg up in the pay television industry in Australia, and potentially around the world.

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The investigation published by the Australian Financial Review alleges that NDS Group, a company partially owned by News Corporation, encouraged a subsidiary, Operational Security, to damage News Corporation's pay TV competitors from the mid-1990s through the early 2000s. The company strenuously rejects the allegations.

The allegations are based on a review of an archive of more than 14,000 emails held by Ray Adams, a former Metropolitan Police commander who was also the European chief for Operational Security. The emails were passed to the newspaper by an anonymous source.

David McKnight, author of the new book Murdoch: An Investigation of Political Power, said these allegations highlight the global nature of News Corporations dealings.

"It's the sheer scale of what the allegations are that is quite extraordinary," McNight said. "It makes it clear that what seems to have happened also happened in Italy, and even happened in the U.S. in connection with DirecTV."

In 1992, News Corporation bought NDS Group in order to expand into Australia's pay TV industry. Pay TV companies, like cable and satellite companies, sell digital boxes and digital cards that grant subscribers access to specific channels, based on what they've purchased access to. If the boxes or cards are hacked, customers — and even noncustomers — can access channels for which they haven't paid, cutting into profits and revenue for the companies. According to the newspaper, that's exactly what Operational Security did to News Corps' competitors.

"It seems to have begun as an internal thing within News Corporation to stop piracy against themselves," McKnight said. "Somehow out of this evolved a series of events where smart cards were produced which were then, this is the claim, put on the black market and sold to commercially weaken the rivals of News Corporation."

The Financial Review said this "wave of high-tech piracy" debilitated rival Australian telecommunications companies Austar and Optus, paving the way for News Corp to bid to purchase the companies at a reduced price.

News Corporation unequivocally denies the allegations, and in a statement released Wednesday called the claims "laughable"

"The story is full of factual inaccuracies, flawed references, fanciful conclusions and baseless accusations which have been disproved in overseas courts," the company wrote. "News Limited (A News Corporation subsidiary) and FOXTEL have spent considerable resources fighting piracy in Australia. It is ironic and deeply frustrating that we should be drawn into a story concerning the facilitation of piracy."

Early Thursday morning Murdoch sent several tweets out to his followers, rejecting the allegations.

"Seems every competitor and enemy piling on with lies and libels," Murdoch tweeted. "So bad, easy to hit back hard, which preparing."

A few minutes later he added "Enemies many different agendas, but worst old toffs and right wingers who still want last century's status quo with their monopolies."

News Corporation has faced several similar charges of hacking that have been settled out of court, but McKnight said this accusation adds a fresh twist to the scandals surrounding the company, which include accusations of hacking into the cell phones of high-profile citizens in the United Kingdom.

"What is new about this is that the Australian Financial Review has got access to 14,000 emails," McKnight said. "And the paper says that the emails contradict testimony given in some of these court cases that were held previously."

The Metropolitan Police Service of London has yet to decide if they will investigate the claims.