BBC alleges Murdoch subsid hacked pay TV rival

LONDON — A News Corp. subsidiary used a computer hacker to undermine a U.K. pay TV rival that subsequently went bankrupt, according to a BBC investigation.

The allegations, to air on Thursday in an edition of BBC1′s flagship public affairs show “Panorama” called “Murdoch’s TV Pirates,” claim that encryption technology company NDS obtained information that could be used to allow people to watch pay service ONdigital illegally.

NDS, sold by News Corp. earlier this month, strongly denies the claims, saying they “were simply not true.”

ONdigital, owned by ITV companies Carlton and Granada, bowed in 1998 and was in head-to-head competition with News Corp.’s pay TV satcaster BSkyB.

Rebranded ITV Digital, it went bust in 2002 with losses of more than £1 billion ($1.6 billion) after failing to attract subscribers.

In the program, ONdigital’s former chief technical officer, Simon Dore, said that piracy was “the killer blow for the business, there is no question.”

However, at the time media commentators blamed Carlton and Granada’s lack of experience in pay TV for the demise of ONdigital, which left the way clear for BSkyB to dominate the market.

“Panorama” tracked down computer hacker Lee Gibling who alleges NDS paid him to hack into ONdigital’s encryption system, giving “a full channel line-up without payment.”

NDS, which makes smart cards for News Corp.-owned pay boxes, insists it never authorized or condoned the breaking of a rival’s code.

NDS has faced similar allegations of piracy. In 2002 Gaul’s dominant pay TV company, Canal Plus, filed a lawsuit in California alleging that NDS spent large amounts of money and resources to crack the code on smart cards used by a Canal Plus subsidiary in Italy.

The case — described at the time by NDS as outrageous and baseless — ended when News Corp. acquired Canal Plus’ Italian operation and merged it with its own outfit to create Sky Italia.

The “Panorama” allegations will be scrutinized by U.K. media regulator Ofcom, which is already examining if News Corp. is a “fit and proper” entity to control BSkyB following the long-running phone hacking scandal at News Corp.’s British tabloid newspapers that has severely damaged Rupert Murdoch’s reputation in the U.K.

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