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Foxtels BBC Panorama

Were TV rivals sabotaged in Oz, too? News Ltd slams 'fanciful claims' by Australian paper

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By Noel Young | Correspondent

March 28, 2012 | 4 min read

The gusher of bad publicity for News Corp flows on today with reports from Australia that a secret unit of the company promoted pirating of pay-TV rivals in that country, similar to allegations earlier this week from the UK . In a statement, Murdoch's Australian company News Ltd. rubbished the Oz claims.

Murdoch: 'laughable claim'

The Australian Financial Review put online a selection of 14,400 e-mails. The AFR alleged that News Corp had used a special unit, Operational Security, set up in the mid-1990s, to sabotage its competitors. Similar claims were made on the BBC's Panorama earlier this week.

The Sydney Morning Herald said, " Pressure is building in Britain and Australia for fresh probes into Rupert Murdoch's News Corp, already under siege over phone-hacking claims." .

A spokeswoman for Australian Communications Minister Stephen Conroy said."These are serious allegations, and any allegations of criminal activity should be referred to the AFP (Australian Federal police) for investigation."

The AFR report said the secret unit promoted a wave of high-tech piracy in Australia, damaging Austar, Optus and Foxtel at a time when News was moving to take control of the Australian pay TV industry.

In a robust denial, Murdoch's Australian arm News Ltd, said in their statement that the AFR story was "full of factual inaccuracies, flawed references, fanciful conclusions and baseless accusations which have been disproved in overseas courts.

"For example, the notion that alleged NDS actions in Australia were done to undermine Austar so that FOXTEL could bid for it 13 years later are so far-fetched as to be laughable"

News Ltd said the US Department of Justice, a federal court jury and a federal appellate court had all rejected allegations that NDS was either responsible for TV piracy or for distributing codes to facilitate piracy.

"Moreover, the United States Court ordered NDS's accuser to pay $19m to cover NDS's legal fees and costs."

The AFR report, after a four-year investigation, claimed that the piracy cost the Australian pay TV companies up to $50 million a year and helped cripple the finances of Austar, which Foxtel - 25 percent owned by News Corp - is now in the process of acquiring.

The AFR said its investigation had 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, said the AFR, 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, added the AFR .

The Australian Competition and Consumer Commission is still deliberating on final approval of Foxtel's $1.9 billion takeover bid for Austar, which will confirm Foxtel as the top pay TV provider in Australia.

The Operational Security unit was originally set up to hunt pirates targeting Murdoch's own operations, said the AFR, but later turned into a dirty-tricks campaign to undermine competitors.

NDS said in a statement: "It is wrong to claim that NDS has ever been in the possession of any codes for the purpose of promoting hacking or piracy."

News Corp said: "NDS has consistently denied any wrongdoing to Panorama and we fully accept their assurances."

Broadcaster and media consultant Steve Hewlett said there was no suggestion anywhere that Sky or News Corp knew what NDS was doing.

"But if it all turns out to be true, then you have a News Corp company once again behaving in ways that are less than proper," he said.

The Australian Financial Review's investigation involved 14,400 emails from a hard drive in a laptop used by Ray Adams, who was the European chief for NDS Operational Security from January 1996 to May 2002.

The AFR is publishing thousands of the emails on its website at http://www.afr.com.

Foxtels BBC Panorama

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