News Corp unit promoted piracy against rivals: report

Rupert Murdoch's News Corporation reportedly funded a secret unit that promoted a wave of high-tech piracy in Australia that sabotaged competitors at a time when News was moving to take control of the Australian pay TV industry.

The Australian Financial Review (AFR) cites documents it obtained over a four-year investigation as revealing that a secretive group of former police and intelligence officers within News Corp., known as Operational Security, to help cripple the finances of Austar, which Foxtel is now close to acquiring, and also targeted Optus.

According to the AFR, the group's actions in unleashing waves of high-tech piracy devastated News's competitors and helped the company to bid for pay TV businesses at reduced prices, including DirecTV in the US, Telepiu in Italy and Austar.

The Australian Competition and Consumer Commission is currently finalizing approval of a $1.9 billion takeover bid by Foxtel, a News Corp. subsidiary, for Austar. The acquisition will cement Foxtel's position as the dominant pay TV provider in Australia.

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Operational Security, headed by Reuven Hasak, a former deputy director of the Israeli domestic secret service Shin Bet, according to AFR, operated within News Corp.'s NDS subsidiary, which Murdoch himself has in the past closely overseen.

News Corp sold NDS this month to Cisco Systems for $5 billion, according to Reuters, adding that James Murdoch sits on the NDS board.

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"NDS sabotaged business rivals, fabricated legal actions and obtained telephone records illegally," the newspaper said.

Meanwhile, the British broadcasting watchdog Ofcom is set to investigate claims that a subsidiary of News Corp. helped to destroy one of the company's British pay-TV rivals via piracy, the Independent reported.

The TV regulator's interest comes after a BBC's Panorama program alleged NDS, a London-based News Corp. company specializing in satellite television technology, leaked codes that could have been used to create counterfeit smart cards for the now defunct ITV Digital

News Corp. has categorically denied any involvement in promoting piracy and points to a string of court actions it has won brought by competitors alleging dirty competitive practices.

In 2008, the plaintiff EchoStar was ordered by a court to pay nearly $19 million in legal costs to News Corp.

In Australia, documents uncovered by the AFR — owned by the Fairfax media group, a rival to News Corp. in Australia — reveal that NDS encouraged and facilitated piracy by hackers of its business rivals.

The AFR is publishing thousands of emails held in an archive by former Metropolitan Police commander Ray Adams, who was European chief for Operational Security between 1996 and 2002, on its website.

In January, Murdoch himself launched a tirade against Google, calling it a "piracy leader" that profited from advertisements sold against pirated materials, CNet News reported.

Murdoch, used Twitter to accuse the White House of being in the employ of "Silicon Valley paymasters." CNet printed excerpts of the tirade here.

His outburst was sparked by the White House raising concerns about antipiracy legislation backed by News Corp. being debated in Congress. 

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