London police are considering whether to investigate claims that a digital-security unit of Rupert Murdoch’s News Corp. (NWSA:US) in Britain engaged in piracy of smartcard technology to topple a pay-TV competitor.
The subsidiary, NDS, began hacking smartcard codes in the mid-1990s and leaked them online to give viewers free access to programs by competitor ITV Digital, which collapsed in 2002, BBC’s Panorama program reported March 26. The Australian Financial Review newspaper reported similar claims this week.
“We’re aware of the allegations and considering whether the claims made are a matter for police,” the Metropolitan Police Service said today in an e-mailed statement. The department said it can’t speculate on when a decision will be made.
News Corp., based in New York, is already dealing with three parallel Met investigations of phone hacking, computer hacking and bribery of public officials by journalists at its British tabloids, including the now-shuttered News of the World. U.S. authorities are running similar probes of whether the overseas actions violated U.S. law.
The BBC program and the Financial Review both interviewed former hackers who claim they were located by News Corp. and hired to protect its pay-TV technology before being tasked with targeting competitors.
NDS spokeswoman Amy Lucas declined to comment on the potential police investigation. The company, founded in Israel and based in Middlesex, England, denied the claims this week, as did News Corp.’s Australian unit, News Limited. The parent company is also planning a response to the reports, Chairman Rupert Murdoch wrote in a message on his Twitter Inc. account.
The allegations increase pressure on James Murdoch, the deputy chief operating officer of News Corp. and chairman of U.K. pay-TV company British Sky Broadcasting Group Plc (BSY), as he seeks to move past the phone-hacking scandal. The 39-year-old was a non-executive director of NDS when some of the alleged smartcard hacking took place.
The widening scandal could also affect BSkyB’s TV license in Britain. Ofcom, the country’s media regulator, is evaluating whether James Murdoch is “fit and proper” to hold a broadcast license on behalf of BSkyB, in which News Corp. has a 39 percent stake. Ofcom said yesterday it will consider all relevant evidence.
The phone-hacking scandal prompted News Corp. to close the News of the World in July and drop its 7.8 billion-pound ($12.4 billion) bid for full control of BSkyB. More than 30 people have been arrested in the probes, including journalists at News Corp.’s Sun tabloid and the former chief executive officer of its U.K. unit, Rebekah Brooks.
NDS, now co-owned by London hedge fund Permira Advisers LLP, is being sold to San Jose, California-based Cisco Systems Inc. (CSCO:US), the largest maker of equipment for computer networks, for $5 billion.
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