Hard News by Russell Brown

33

Dirty deeds done by Digger?

When I read The Guardian's report on the new BBC Panorama programme that claims Rupert Murdoch's News Corporation used its NDS subsidiary to hack the access cards of competing TV companies I felt a sense of deja vu.

Hadn't there been talk of Sky's alleged dirty tricks in this vein for years? Had I not, in fact, written about this? I had.

In a 2002 Computers column for The Listener, I wrote:

Because the potential rewards are so vast, pay television is a tough business. Some American cable TV operators wouldn't look out of place on The Sopranos. But there has never been anything quite like what is being alleged in a new $US1 billion lawsuit.

The French-based satellite broadcaster Canal Plus is claiming that NDS, a company controlled by Rupert Murdoch's News Corporation - the parent company of Sky TV Europe - spent $US1 million to crack the security on Canal Plus subscriber cards and then gave the information to bootleggers.

Canal Plus, which is owned by the French media giant Vivendi Universal, claims to have evidence that NDS had staff at its lab in Israel conduct "electrical and optical examination of the protected internal software code of the card using expensive machinery". It says the code extracted was then sent on to NDS's American subsidiary, which gave it to Dr7.com, a website frequented by smartcard counterfeiters.

I concluded that the lawsuit would be a show worth watching, given the antipathy between Murdoch and the Jean-Marie Messier, the flamboyant CEO of Canal Plus -- and the similar suits brought by two other pay TV companies, DirecTV and EchoStar. As the FT later reported, that wasn't what happened:

The Canal Plus Technologies suit against NDS was dropped in April 2003, on the day News Corp bought Telepiu, an Italian satellite broadcaster, for almost €1bn from Vivendi, which controls Canal Plus. Similarly, DirecTV dropped its litigation when News Corp took a 34 per cent stake in the US satellite broadcaster in late 2003.

News Corp said the lawsuits against NDS, whose technology has been used by other News Corp companies, such as British Sky Broadcasting, were not a factor in either investment.

Oh no. Of course they weren't. Perish the thought.

The final litigant, EchoStar, won then lost in a saga that finally wound up last week when it paid NDS $US18.9 million after US courts satisfied themselves that NDS played no part in the compromise of EchoStar's security system.

In the 2002 column, I also noted that:

Three days after the suit was filed, the UK Guardian forced NDS to admit that Ray Adams, the former Scotland Yard commander who is head of security at NDS, paid money to a now-defunct website called The House of Ill-Compute.

It is not new for pay TV companies to liase with elements in the cracker community to gain security information. But The House of Ill-Compute was a known source of the code used to create counterfeit ITV Digital cards - and nobody has been able to explain how it got that code.

The Panorama story, as reported in The Guardian, claims to answer that question:

Panorama's emails appear to state that ONdigital's secret codes were first cracked by NDS, and then subsequently publicised by the pirate website, called The House of Ill Compute – THOIC for short. According to the programme, the codes were passed to NDS's head of UK security, Ray Adams, a former police officer. NDS made smart cards for Sky. NDS was jointly funded by Sky, which says it never ran NDS.

Lee Gibling, operator of THOIC, says that behind the scenes, he was being paid up to £60,000 a year by Adams, and NDS handed over thousands more to supply him with computer equipment.

He says Adams sent him the ONdigital codes so that other pirates could use them to manufacture thousands of counterfeit smart cards, giving viewers illicit free access to ONdigital, then Sky's chief business rival.

Like EchoStar, ONdigital -- a disastrous pay TV venture backed by Britain's ITV -- had significant business problems. Its security system -- the same one used by Canal Plus -- was also pretty feeble. But Panorama's evidence seems to say that Sky's security subsidiary NDS secretly paid black-hat hackers to comprise a rival's system and put the codes out into the wild, damaging its ability to earn income.

As The Guardian notes, this has some hefty implications:

The allegations, if proved, cast further doubt on whether News Corp meets the "fit and proper" test required to run a broadcaster in Britain. It emerged earlier this month that broadcasting regulator Ofcom has set up a unit called Project Apple to establish whether BSkyB, 39.1% owned by News Corp, meets the test.

And:

The potentially seismic nature of these pay-TV allegations was underlined over the weekend, when News Corp's lawyers, Allen & Overy, sought to derail the programme in advance by sending round denials and legal threats to other media organisations. They said any forthcoming BBC allegations that NDS "has been involved in illegal activities designed to cause the collapse of a business rival" would be false and libellous, and demanded they not be repeated.

Panorama is sufficiently sure of its case that it decided to go ahead and broadcast anyway. At the same time, a wholly separate criminal trial in Italy, based on similar allegations, has drawn in Tom Mockridge, the safe pair of hands picked by Murdoch to replace disgraced News International CEO Rebekah Brooks.

It's not clear what happens next. But what is clear is that this decade-old story has come back around at a time when the political and legal climate for Rupert Murdoch's media business is more unfriendly than it has ever been.

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