News Corp firm is accused of sabotaging rival

Panorama has claimed that NDS, a subsidiary of News Corporation, hired a man who ran a piracy website and had him post codes which allowed viewers to watch ITV Digital channels for free. The widespread availability of the codes led to the collapse of ITV Digital, previously ON Digital, killing Sky TV’s main rival in 2002 just four years after the venture was launched. If proven the allegations will cause even greater damage to the reputation Rupert Murdoch’s empire, and could leave the company facing questions over whether it funded piracy. If true the allegations would also cast fresh doubt on whether News Corporation meets the "fit and proper" test required to run a broadcaster in Britain. The broadcasting regulator Ofcom has set up a unit called Project Apple to establish whether BSkyB, 39.1% owned by News Corp, meets the test. The new allegations were made by the BBC on last night’s Panorama. They focussed on NDS, a company which manufactures smartcards for News Corporations' pay-TV companies across the world. News Corporation recently agreed to sell the company and the deal is in the process of completion. They allege that NDS hired a man named Lee Gibling who ran a website called the House of Ill Compute (THOIC). NDS is said to have sourced the set-top box codes for ITV Digital given them to Mr Gibling and had him distribute them on his website. With the codes available it meant that huge numbers of ITV Digital set-top box owners simply used the codes for free television rather than pay a monthly subscription to the channel. The show alleged that Mr Gibling was being instructed by Ray Adams, a former Metropolitan Police officer who ran the security department for NDS. Internal NDS documents, obtained by Panorama, show a hacked code was passed to Mr Adams from a technology expert inside the company. Mr Gibling claimed he was paid £60,000 a year by NDS and that while the website was in his name it essentially belonged to NDS. The collapse of ITV Digital led to 1,500 job losses and plunged scores of lower league football teams into financial crisis. Shortly before its collapse ITV Digital had entered into a £315m television deal with the Football League. When the money did not materialise many clubs struggled for survival. It is in stark contrast to the riches currently bestowed upon the Premier League by the BSkyB television deal. ITV Digital's former chief technical officer, Simon Dore, told the programme that piracy was "the killer blow for the business, there is no question". "The business had its issues aside from the piracy... but those issues I believe would have been solvable by careful and good management. The real killer, the hole beneath the water line, was the piracy. We couldn't recover from that." NDS has faced similar allegations of piracy previously. In 2002 Canal+ filed a lawsuit in California alleging that NDS “spent large amounts of money and resources” to crack the code on television smart cards used by a Canal+ subsidiary in Italy. That lawsuit — described at the time by NDS as “outrageous and baseless” — ended when News Corp acquired the Canal+ Italian operation and merged it with its own in the country, creating Sky Italia. The following year NDS faced similar allegations relating to another rival, EchoStar. NDS denied the allegations and was later cleared by a US court and awarded $18.9 million (£12million) in damages. NDS denies the current allegations. The company told the BBC that THOIC was only used to gather intelligence on hackers. It said Lee Gibling worked as a consultant who was used legitimately to inform on hackers. Mr Adams denied the allegations when secretly filmed by the BBC saying he “would have arrested” Mr Gibling if he knew he was involved in piracy. Prior to the show’s broadcast a News Corporation spokesman said: “NDS has consistently denied any wrongdoing to Panorama and we fully accept their assurances.” A spokeswoman for NDS said “NDS is a global leader in the fight against pay-TV piracy, having repeatedly and successfully assisted law enforcement in that important effort. “Like most companies in the conditional access industry - and many law enforcement agencies - NDS uses industry contacts to track and catch both hackers and pirates. “This is neither illegal nor unethical. “NDS never used or sought to use the "Thoic" website for any illegal purpose. NDS paid Lee Gibling for his expertise so information from "Thoic" could be used to track and catch hackers and pirates. “It is simply not true that NDS used the Thoic website to sabotage the commercial interests of ONdigital / ITV Digital or indeed any rival. “It is wrong to claim that NDS has ever been in the possession of any codes for the purpose of promoting hacking or piracy.”