Pay TV piracy hits News
A secret unit within Rupert Murdoch’s News Corporation promoted a wave of high-tech piracy in Australia that damaged Austar, Optus and Foxtel at a time when News was moving to take control of the Australian pay TV industry.
The piracy cost the Australian pay TV companies up to $50 million a year and helped cripple the finances of Austar, which Foxtel is now in the process of acquiring.
A four-year investigation by The Australian Financial Review has revealed a global trail of corporate dirty tricks directed against competitors by a secretive group of former policemen and intelligence officers within News Corp known as Operational Security.
Their actions devastated News’s competitors, and the resulting waves of high-tech piracy assisted News to bid for pay TV businesses at reduced prices – including DirecTV in the US, Telepiu in Italy and Austar. These targets each had other commercial weaknesses quite apart from piracy.
The Australian Competition and Consumer Commission is still deliberating on final details before approving Foxtel’s $1.9 billion takeover bid for Austar, which will cement Foxtel’s position as the dominant pay TV provider in Australia.
News Corp has categorically denied any involvement in promoting piracy and points to a string of court actions by competitors making similar claims, from which it has emerged victorious. In the only case that went to court, in 2008, the plaintiff EchoStar was ordered to pay nearly $19 million in legal costs.
The issue is particularly sensitive because Operational Security, which is headed by Reuven Hasak, a former deputy director of the Israeli domestic secret service, Shin Bet, operates in an area which historically has had close supervision by the Office of the Chairman, Rupert Murdoch.
The security group was initially set up in a News Corp subsidiary, News Datacom Systems (later known as NDS), to battle internal fraud and to target piracy against its own pay TV companies. But documents uncovered by the Financial Review reveal that NDS encouraged and facilitated piracy by hackers not only of its competitors but also of companies, such as Foxtel, for whom NDS provided pay TV smart cards. The documents show NDS sabotaged business rivals, fabricated legal actions and obtained telephone records illegally. ...
Lots more at Financial Review, this just breaking today, no comment yet from News Corp. This is a significantly different issue to UK surveilance/bugging, this involves powerful people losing real money (but no police corruption ties here .. yet!).
See also
Whistleblower made to change his tune
Hacker who got stung
